#11161 - Choice Of Law And Enforcement Of Foreign Judgments - International Law II

Choice of Law and Enforcement of Foreign Judgments

1. Choice of Law Clauses

   1. Validity:

      1. Generally considered presumptively enforceable, subject to some exceptions

      2. US courts generally apply the law of the forum to determine the validity of the clause

         1. ie, treat the issue as if it were a question of procedure

   2. Scope:

      1. UCC:

         1. UCC 1995 §1.105

            1. Reasonable relationship between the chosen law and the transaction.

         2. UCC 2001 § 1.301 (not yet adopted):

            1. Applies to transactions that bear a reasonable relation to a state other than the US and that are governed by another provision of the UCC

            2. No requirement of a relationship between the chosen law and the transaction

            3. BUT: reasonable relationship requirement for consumer transactions + consumer cannot be deprived of the protection of any mandatory law designed to safeguard their interests

            4. Public policy exception

      2. 2^nd Restatement on Conflicts § 187(1): choice of law clauses are enforceable regarding matters that could have been resolved by a private agreement by the parties

         1. Eg. time for performance of a contract

      3. § 187(2): choice of law clauses are enforceable on matters that parties could not have agreed on except where:

         1. the chosen law has “no substantial relationship” to the parties or their transaction (2.a), or

         2. where the chosen law would be contrary to a substantial public policy of a state with a “materially greater interest” (2.b)

         3. Eg. : capacity, formalities, validity

      4. Examples of Choice of Law Clauses: Scope of the Clause

         1. “This agreement shall be construed in accordance with the laws of state X”

            1. suggests that peripheral issues such as validity of the contract, capacity, formalities, excuses and damages are not subject to the parties’ chosen law.

         2. “This agreement shall be governed by the laws of state X” or “this agreement and all disputes arising under it shall be subject to the laws of state X”

            1. all issues of contract law are subject to the parties’ chosen law

         3. “all disputes arising out of or relating to this agreement shall be governed exclusively by the laws of state X”

            1. contractual and non-contractual claims (though might raise public policy issues)

2. Method for Choice of Law Analysis
   (in the absence of an agreement)

   1. Characterize the issue (K, torts, property, etc.)

   2. Refer to rules regarding conflict of laws for each particular issue:

      1. State courts generally refer to forum rules on conflict,

      2. fed courts sitting in diversity follow the rules of the state where they sit,

      3. fed courts sitting in fed question jurisdiction apply fed common law of choice of law (tendency to follow 2^nd Restatement approach)

   3. Find out which substantive law is designated by the conflict of law rules

   4. Apply the designated substantive law to the issue

   5. Public policy exception to the result or to the application of foreign law?

3. Proving Foreign Law

   1. Federal Rule of Civil Procedure 44.1 provides:

      1. “A party who intends to raise an issue about a foreign country's law must give notice by a pleading or other writing. In determining foreign law, the court may consider any relevant material or source, including testimony, whether or not submitted by a party or admissible under the Federal Rules of Evidence. The court's determination must be treated as a ruling on a question of law.”

         1. Under Rule 44.1, a court is correct in not dismissing a plaintiff’s claim merely because the plaintiff failed to establish relevant controlling foreign law. Twohy (CB 1211).

            1. Under these circumstances, before a plaintiff’s complaint may be properly dismissed, Rule 44.1 requires the court to conduct a deeper inquiry into the foreign law. Twohy (CB 1211).

4. Territorial Reach of US Law

   1. What is the territorial reach of a federal statute?

      1. Geographic reach explicit in statute

         1. Territorial application: no problem

         2. Extraterritorial application: if the statute contravenes international law, US courts must disregard international law and apply the statute.

            1. ex. FRCP on discovery statutes blocking statutes abroad

      2. Statute silent on geographic reach:

         1. JURIS SPLIT

            1. The Traditional Approach

               1. Presumption in favor of territoriality (see First Restatement) and comity understood as calling “on states to recognize and enforce rights created by other states provided that such recognition does not prejudice the state or its subjects” (Ulrich Huber)

                  1. E.g., American Banana v. United Fruit Co.

               2. Move away from territoriality and requirement of “points of contact”

                  1. E.g. Lauritzen v. Larsen (maritime context)

            2. The Effects Doctrine (1970s)

               1. Acts aboard and effects in the US?

                  1. “We should not impute to Congress an intent to punish all whom its courts can catch, for conduct which has no consequences within the United States” US v. Alcoa

                  2. Acts abroad + Intended effects + actual effects: US law would reach the case

                  3. Intended effects but no actual effect? Court does not reach the issue

               2. Effects + some acts in the US? Leasco v. Maxwell

               3. Effects + comity? Timberlane v. Bank of America

            3. Territoriality encore

               1. Hoffman Laroche v. Empagran (2004)

                  1. Congress’ intent was to prevent US courts from interfering with foreign commerce

                  2. Customary intl law requirement to avoid unreasonable interference with sovereign authority of other nations

               2. Morrison v. National Australia Bank (2011)

                  1. Territorial presumption

                  2. Congress intended the SEC Act to apply territorially

               3. Kiobel v. Royal Dutch Petroleum (2011)

                  1. Presumption against extraterritoriality applies to the ATS

                  2. Claim must “touch and concern” activities occurring in the “territory of the United States.”

5. Judgment Recognition and Enforcement: Terminology

   1. Judgment recognition

      1. A US court relies on a foreign judicial ruling to preclude litigation of a claim or issue previously litigated abroad

   2. Judgment enforcement

      1. A court uses its coercive power to compel the loosing party (“judgment debtor”) to satisfy a judgment rendered abroad

6. Judgment Recognition and Enforcement: Basic Framework

   1. Historically:

      1. a foreign judgment was only prima facie evidence rebuttable by the party who was resisting enforcement

   2. After Hilton v. Guyot:

      1. If the foreign country gives reciprocity to recognition:

         1. The foreign judgment will generally be recognized if the foreign proceedings met certain criteria and there are only limited exceptions to recognition

         2. ELEMENTS needed for a foreign judgment to be recognized:

            1. (1) Full & fair trial abroad

            2. (2) Foreign Ct. had jurisdiction

            3. (3) Trial conducted upon regular proceedings

            4. (4) Due citation or voluntary appearance of the defendant.

            5. (5) Impartial administration of justice between citizens of that country and foreigners.

            6. (6) No prejudice of Ct. or law.

            7. (7) No fraud in procuring the judgment.

            8. (8) No reason why comity should not apply

      2. If the foreign country does not give reciprocity:

         1. Revert to prima facie evidence approach

7. Recognition and Enforcement of Judgments in Canada

   1. General Canadian practice calls for recognition of foreign money judgments on “comity” principles similar to those used by the U.S. Supreme Court in Hilton, that a foreign judgment ought to be treated as equally binding as a domestic judgment if rendered by a competent court having proper jurisdiction over the defendant.

8. Recognition and Enforcement of Judgments in France

   1. Absent an international agreement to the contrary, a foreign judgment, in order to have res judicata effect or to be enforceable in France, needs an exequatur.

      1. There are five requirements that must be met for a foreign judgment to be given an exequatur.

         1. (1) The judgment must have been rendered by a court having jurisdiction under pertinent French rules;

         2. (2) The foreign judgment must comply with the minimum standards of procedural fairness prescribed by ordre public;

            1. The defendant must have been given notice.

            2. The defendant must also have been given adequate time to appear and prepare his defense.

         3. (3) The foreign court must have applied the “correct” law;

            1. The foreign court must have applied the law which would have been applicable in a French court under French choice of law rules.

         4. (4) The judgment must not violate public policy; and

         5. (5) The foreign judgment must be executoire, i.e., the judgment must be capable of immediate enforcement in the place of origin.

9. Uniform Foreign Money-Judgments Recognition Act

   1. Scope: § 1:

      1. Money judgments only, not including tax-related, family law and any fine or other penalty (note: many other countries also refuse to enforce foreign judgments for which there are punitive damages etc).

   2. § 2:

      1. No requirement of exhaust of local remedies

   3. Foreign judgment to be treated as judgment from sister-state except if § 4 grounds:

      1. (a) foreign judgment not conclusive: US Court forbidden from enforcing the judgment

         1. Foreign Ct. not impartial, no due process

            1. This means that for the judgment to be conclusive, the foreign judgment must be rendered only under a system that provides impartial tribunals and procedures compatible with due process of law. Society of Lloyd’s (CB 1251).

               1. The foreign proceedings need not comply with the traditional rigors of American due process. Society of Lloyd’s (CB 1251).

               2. This provision has been interpreted to mean that the foreign procedures must only be...