International Litigation and Arbitration
Epstein, Spring 2006
I.
II.
III.
IV.
EXAM
a. It is a take home final – one day to do
Forms of Dispute Resolution
a. Litigation
b. Arbitration
Role of Intl Lawyer
Litigation in the US, Chapter 3, et seq.
a. CHOICE OF FORUM
i. Why choose the USA to litigate?
1. expansive theory of PJ
2. jury trials
3. potentially large damage recoveries
a. punitive damages
b. consequential
4. discovery tools and procedures
5. substantive law
a. liability
b. choice of law
6. Attorney fees
a. American rule that loosing party is not liable for the
losing parties attorney fees (usually in tort)
b. contingency fees
c. attorney fee award is some statutory and contract
cases
ii. Reasons NOT to litigate in USA
1. very same reasons above in so far as those same factors
adversely effects a party
2. Enforcement of judgment issues
a. assets of defendant is not located USA
i. USA judgment not enforceable in the
country where defendant has assets
ii. Foreign court will not enforce the default
judgment
b. multilateral enforcement of judgment conventions
that USA is NOT a member of
i. Brussels and Lugano
iii. Obstacles to Choosing US Courts
1. forum non conveniens
2. forum shopping
iv. Weintraub Article
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1. he say even if foreign law applies in a case filed in the U.S.,
the fact finder, i.e. judge or jury, is likely to interpret the
foreign law using the U.S. legal world view.
a. E.g. absent specific dollar caps, general level of a
foreign award for a particular injury is irrelevant
2. basically reiterates points made above
a. says most important reason is US damage awards
b. Forum Selection Clauses
i. Bremen v. Zapata Off-Shore Co. – liberal enforcement of FNC
good for international commerce
1. FACTS
a. Zapata a US company and Unterweser a German
company contact to tow a oil rig from Louisiana to
Italy, storm causes damage to rig and forces dock in
FL
b. Zapata files suit in DC FL, Tampa; Unterweser files
parallel suit in London per choice of forum clause
2. ISSUE
a. Who has jurisdiction and is the forum selection
clause valid
3. RULE
a. The prior appellate court relied on Carbon Black
Exports, Inc. v. The Monrosa case to deciding not
enforce the forum selection clause
b. But this court decided that the forum selection
clause must be enforced
i. Future development of international
commerce
ii. Law adopted by Restatement of Conflict of
Laws
iii. Judicial precedent in USA
iv. Freedom of contract
1. bargained for consideration
v. Elimination of uncertainty as to which
forum which is vital to commerce
1. e.g. here mere fortuity that storm
happened near USA
vi. Rationale behind the policy: predictability of
the applicable law and procedure and
neutrality of the legal forum
c. Exceptions to enforcing the forum selection clause:
i. If the party against it can prove it is
unreasonable or unjust
1. e.g. that the forum courts is unable to
be fair and neutral
2. public policy exception
2
a. eg foreign court would
enforce an exculpatory clause
(eg waiving responsibility for
negligent acts) disfavored in
the USA
ii. the clause is invalid for reasons for fraud
and overreaching
1. in this category would be adhesive
contracts where the bargaining
positions of the parties are very
unequal
2. but even in this case the court would
often enforce the forum selection
clause
a. see Carnival Cruise case
(enforced)
b. Leslie v. Lloyd’s of London
(not enforced) - fraud found
3. Generally, challenges based on fraud
are made in the chosen forum – place
designated by the forum selection
clause
ii. Harold Maier article “user friendly”: forum selection clauses
1. avoid home court advantage, prejudice
2. eliminate litigation over forum selections, speeds up
litigation
3. certainty as to applicable law, usually quicker in reaching a
decision, reasonable size of award leads to quicker
settlements
4. unequal bargaining power in negotiating a choice of forum
would effectively deny one party’s day in court may
override selection
5. encourage mutual forbearance in the application of
parochial (i.e. inherent bias of local courts favoring their
own) legal norms
a. In other words, to avoid turf wars between different
legal systems
i. “Permitting transnational traders to negotiate
their own arrangements for dispute
settlement and to enforce the results of those
negotiations subject only to minimum
requirements of fairness under general
transnational standards is essential to
encourage that “mutual forbearance” in the
application of parochial legal norms that is
essential to effectuate the ‘interacting
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V.
interests of the United States and of foreign
counties’ in creating a smoothly functioning
transnational trading system.”
6. systemic values or transnational system considerations –
courts will consider what impact enforcing a forum
selection clause would have not only the USA but also the
international community
a. Scherk case
b. Mitsubishi case
7. Carnival Cruise Line case
a. Because of the nature cruise line business, i.e.
location of personal injury could occur in all the
places the ship travels, there is a need for one forum
for disputes
b. Therefore, even w/ one side having a very weak
bargaining position, an adhesion contract, the
special need of a business activity prevails
c. Arbitration Clauses
i. William W. Park article p. 68
ii. Arbitration not necessarily cheaper or faster
1. depends on each situation
iii. Rx for arbitration
1. reduce risk of biased foreign judge or tribunal
2. Arbitration clauses covered under the NY Arbitration
Convention will have awards enforceable in the approx.
100 counties that are signatories to it
a. Convention awards have res judicata effect
iv. Questions and comment section p. 70 and 71
1. Carnival Cruise
a. Cruise ticket was not negotiated nonetheless court
upheld the forum selection clause because the
company made a reasonable attempt to limit the for
a where it could be sued and the limitation allowed
the company to offer cheap cruises (I could see that
otherwise it could be sued all over the place where
the cruise would go based on where in the world the
negligent act occurred)
d. See the New York Convention
U.S. Plaintiff / Foreign Defendant: Chapter 3, p. 50
a. Personal Jurisdiction and DUE PROCESS Analysis
i. state courts jurisdiction is limited by 14th Amendment
ii. federal court by the due process clause of the 5th Amendment
iii. International Shoe Co. v. Washington
1. Minimum contacts with the forum states exist such that
exercise of jurisdiction would offend notions of fair play
and substantial justice
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iv. tag jurisdiction, jurisdiction based on service of process on a
person only transitorily in the territory of the state – is generally
not acceptable under international law
v. criteria for determining the reasonable of exercise of jurisdiction
by a State courts generally similar to federal courts, but applied on
a state rather than a national basis
vi. Distinction between general and specific jurisdiction
1. General jurisdiction
a. Courts may adjudication any claim against
defendant based on “continuous and systematic”
contacts
b. See Perkins v. Benguet Consolidated Mining Co.
2. Specific jurisdiction
a. Permits only the adjudications of claims that are
related to or arise out of a defendant’s contacts with
the forum state
3. Helicopteros Nacionales de Colombia, SA v. Hall – trying
to find general jurisdiction
a. Facts:
i. Helicopteros, a Columbian corporation,
engaged in helicopter transportation, crashes
a helicopter in Peru, killing 4 US citizens,
ii. citizens employees of a joint venture named
Williams Sedco-Horn (WSH), which is
located in Houston, Texas
iii. contact w/ forums selection clause with Peru
as the choice of forum, payments per
contract to Helicopteros’ account in NY
b. Law:
i. Tx long arm reaches as far as the due
process clause of the 14 amendment permits
ii. Tx supreme court rules that TX has in
personam, i.e. personal, jurisdiction
iii. The Supremes in overruling the TX high
court state first that there was no facts the
justify specific jurisdiction therefore we
must find general jurisdiction but they do
not find enough contacts for general
jurisdiction either
iv. purchases and related training trips, even if
occurring at regular intervals, do not cause
general jurisdiction a.k.a. in personam
jurisdiction.
1. bank where check is drawn is TX
irrelevant – unilateral activity of a
another party or third party – not part
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of the negotiated contract between
the parties and payee does not care
where the money is coming from
4. some state arm statutes set its limit to jurisdiction as the
limits under the U.S. 14 amendment; and, others have their
own that need to by analyzed along with the 14 amendment
b. World-Wide Volkswagen Corp. v. Woodson – minimum contacts plus
intent to serve the market test (p. 85)
i. Facts
1. Plaintiffs get injured in a car accident in Oklahoma, then
files suit in OK federal court for products liability
2. Plaintiffs are residents in NY and bought the auto in NY
ii. Issue
1. Is it fair to confer personal jurisdiction, consistent with the
due process clause of the 14 Amend, when plaintiff’s only
contact was that they had an accident in OK?
iii. Law & Analysis
1. The mere foresee-ability of Ds car ending up in accident in
OK not enough by itself; D must have made more
substantial contacts with the state, for example:
a. setting up distributorship there
b. advertising
c. maintaining bank account
d. having office
2. court rejects the argument that D has revenue benefits
because the item they sell, cars, may be used in OK
3. O’CONNOR TEST: purposeful direction standard: there
must be a placement of a product in a stream of commerce
plus addition conduct of defendant indicating an intent or
purpose to serve the market in the forum state
4. Rationale
a. What is import is whether “the defendant’s conduct
and connection with the forum state are such that he
should reasonably anticipate being haled into court
there.”
iv. Conclusion
1. D does not have enough contacts to justify in personam
jurisdiction
2. My comment: injury happened on OK and what about
specific jurisdiction analysis: claim related to D’s contact
but nature of contact not enough?
c. Asahi Metal Industry Co. v. Superior Court of California – used a
purposeful direction plus a FNC like balance test
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VI.
i. Facts: D manufacturer of valve stems for motorcycle tire
assemblies seek to quash summons in California for products
liability
1. In CA superior court case, defendant Chen Shin filed a
cross-x for indemnification against Asahi
ii. Law & Analysis
1. Injection of product into stream of commerce not enough,
there must be purposeful direction, mere awareness that a
product may end up in a state not enough
2. Balance test
a. Cheng Shin can file suit in Taiwan against Asahi or
Japan
b. international context – judicial restraint find jrs
against foreign entities in USA
c. heavy burden to alien D
d. slight interest to P and forum State
iii. Conclusion: Case dismissed against Asahi Metal because of no
personal jurisdiction
d. Jurisdiction – Subject Matter
e. Restatement, Foreign Relations Law Third (1987)
i. Section 421
1. Listing factors to consider for reasonable exercise of
jurisdiction
a. Domicile, residency, nationality, incorporation,
consent, regular business activity, foreseeability
activity effecting a jurisdiction, substantive activity,
location of a thing, waiver for general appearance
ALTER EGO: Piercing the veil of US subsidiary of foreign parent to gain
personal jurisdiction.
a. Why sue parent of subsidiary
i. Evidence
ii. Deep pockets
b. “Veil piercing” can occur in three different contexts
i. substantive liability issue
ii. PJ
iii. for Service of Process
c. Clark v. Matsushita Electric Industrial Company, LTD. (1993) p 99 – to
find alter ego the degree ownership must be beyond that which in
normally associated with common ownership, a.k.a. ownership plus
something extra
i. FACTS
1. PJ ALTER EGO CASE
2. MEI make a motion to dismiss for lack of PJ in a personal
injury case
3. MEI manufactured a kerosene heater distributed in USA by
DESA
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4. MEI no direct marketing in USA but its subsidiary MECA
does
ii. RULE: May find alter ego if dominion and control by parent
renders the subsidiary its merely instrumentality; however, mere
ownership not enough. If determined to be an alter ego, the parent
corporation may be subject to personal jurisdiction in the forum,
since it is doing business within the state under the façade of the
subsidiary
1. Degree of control must be beyond that which normally
associated with common ownership and control otherwise
presumed separate per Cannon Mfg. Co. v. Cadahy Packing
Co.
a. e.g. No corporate formalities, co-mingling or other
evidence of the independence of corporate entities
iii. ANALYSIS:
1. Ps failed to offer any evidence beyond mere 100%
ownership and subsidiary’s chairman being a member of
the parent’s board, this not enough to establish alter ego
2. Further, there is no evidence presented of sufficient
contacts under the minimum contacts theory to justify
general or specific jurisdiction because you need more than
placing something in the stream of commerce, you need
purposeful direction (Asahi Metal)
a. not enough
i. marketing nationally
ii. national market research
iii. sales figures in dollars and yen
iv. Conclusion
1. no alter ego or personal jurisdiction (through due process
minimum contacts analysis)
d. Color Systems, Inc. v. Metro Photo Reprographic Systems, Inc. (1987) p
104 – for alter ego look at the degree of business integration between
parent and subsidiary
i. PJ ALTER EGO CASE
ii. FACTS:
1. P claimed to have an oral promise for exclusive distribution
rights to sell Meteor-Siegen color copiers in Washington
DC, but no written K, Ds breach and designate Kodak as
exclusive instead, causing the lawsuit
2. Meteor-Siegen (parent) set up Meteor R.R.S. (subsidiary)
iii. RULE: the Chrysler v. GM case: analysis of the separateness of
the parent and subsidiary
1. Performance of subs in business activities that parent would
perform directly w/o subs
2. Partnership in world-wide competition
3. Capacity of parent in influence decisions in the sub
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4. Stock ownership
5. Role that sub play in the overall business activity of parent
6. Existence of an integrated sales and production system
7. Status of sub as a mere marketing arm of parent
8. Use of common trademark
9. Ease of with personnel is transferred back and forth
10. Presentation of common marketing image
11. Sub is an exclusive distributor of parent
iv. ANALYSIS
1. Overlap in directorship
2. Wholly owned
3. Sub set up as a distributor of parent
4. Parent did the distribution before sub set up
5. Parent manufactures and sub distributes
6. Two corporations compete as a team against other copy
manufactures in the world market
v. Conclusion
1. the sub is an alter ego of parent
e. Bulova Watch Company, Inc. v. K. Hattori & Co., LTD (1981) p. 108 –
Alter ego: do a substance over form analysis, how independent is the
subsidiary?
i. FACTS
1. PJ ALTER EGO CASE
2. P sues D for raiding key personnel from it to start a sales
and distribution of a new line of watches for sale in USA
3. D argues lack of PJ, P says alter ego via Seiko Corp. a
wholly owned subsidiary of P
4. key employee Moriya, pres of Seiko Corp. was also and
employee of Hattori, the parent company
ii. RULE
1. Substance over form
2. Has a multinational reached its evolution when it can be
said that its sales and marketing subsidiaries truly have a
life of its own?
iii. ANALYSIS
1. Key employee Moriya did work to benefit the whole group,
subsidiary and parent
2. Financial statement of sub is consolidated with parent for
tax purposes in Japan
a. unrealized profit and loses
3. parent more a manufacturer than a multinational
4. subsidiaries are spokes in a wheel
5. P’s cause of action arose from D activities in the forum –
specific jurisdiction fact pattern
6. Courts also may have gn jrs and the contacts were
systematic and sustained
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VII.
VIII.
iv. Conclusion
1. Court has jrs over D
f. Hargave v. Fibreboard Corp. (1983) [P. 116]
i. Only prima facie showing of alter ego required to withstand a
motion to dismiss for lack of PJ
ii. Less tougher standard for jrs than liability
g. Frummer v. Hilton Hotels (1967)
i. NY expansive jrs rule
ii. A Sub, wholly owned by D, was in the business of making hotel
reservations for D; however, in this case, P did not use D’s sub to
make a reservation so NOT a specific jrs case, nonetheless the
court found PJ over D
1. Rationale: court said D obtained considerable benefits from
subsidiary
a. Comment: is this kind of an alter ego test without
saying it?
Subject Matter Jurisdiction
a. Diversity of Citizenship
i. Usually service requirements are under state long arm
b. Federal Question
i. Jurisdiction by
1. contacts analysis
2. look in the statute to see if there is a provision the confers
jurisdiction
3. national contacts analysis Rule (4)(K) (2) of the FRCP
Class notes on subject of personal jurisdiction
a. remember that judges have much discretion on the PJ issues with different
levels of sophistication
b. Lack of strong majority ruling in Asahi Metal decision doesn’t help clear
the confusion
c. in Federal Court a lack of compliance with discovery rules, the sanction
could be a decision cause a deemed waiver of personal jurisdiction by D
i. US Court have ruled that a court does not need PJ to require Ds to
answer discovery; thus, discovery can be used to establish facts for
personal jurisdiction
1. But Ds must be properly served
2. Discovery starts after the statutory time for D to answer had
elapsed
d. Internet jurisdiction – courts have used the same analysis and non internet
cases
e. Service via state official
i. Does the state official have to comply with the Hague Service
Convention - YES
ii. Mechanics
1. there is a designated agency in each country, eg USA is
DOJ
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IX.
f. Service by Mail – Art 10
i. Practically speaking hard to prove there was service of process that
the mail was actually delivered? Registered mail, UPS,
ii. Problems most countries will not recognize service by mail
g. Waiver of Summons – Rule 4 (d)
i. USA style, send an acknowledgment card to be return but other
countries objected to this type of service.
h. When evading service becomes an issue, the court can get creative
i. Service by internet
ii. Fax
iii. Publication
iv. Etc.
i. From Ds point of view, D will try to delay by stating no service = no due
process = no personal jurisdiction
SERVICE OF PROCESS ON FOREIGN DEFENDANTS
a. Federal Service of Process Requirements and Gap-Filler, p. 122
i. What happened if a foreign D had enough contracts with USA as a
whole but insufficient contact with one state in the Union to satisfy
due process or a state long arm limitation?
ii. FRCP Rule 4(k)(2) covers this gap, in reaction to cases like Omni
below.
iii. PJ Rule: minimum contacts or other jurisdictional test plus valid
service of process equals PJ
iv. Omni Capital Int’l v. Wolff, p. 123 – an illustration of a pre-gap
filler case
1. FRCP SERVICE OF PROCESS CASE
2. Cased decided before FRCP Rule 4(k)(2) – the gap-filler
3. Holding
a. beyond the forth amendment (minimum contacts)
there needs to be valid service of process which is a
wholly separate issue, one is constitutional due
process grounds and the other is statutory ie…
i. “service of summons is the procedure by
which a court having venue and jurisdiction
of the subject matter of the suit asserts jrs
over the person of the party served…”
ii. Remember we need both for PJ
b. here the authority for service of process is not found
in CEA or Louisiana long-arm statute under FRCP
4(e)
c. and the court will refuse to create some common
law rule expanding service of process
b. Volkswagenwerk, A.G. v. Schlunk ( 1988) (p. 126) – HSC mandatory
when attempting to serve outside the country
i. A HAGUE SERVICE OF PROCESS CASE
ii. HOLDING:
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X.
1. mandatory language of HSC, Art 1, applies whenever
service the service takes place within another nation’s
borders
2. HSC does not apply when process was served on the
foreign corporation’s “alter ego” which under the state law
was the foreign corporation’s involuntary agent for service
of process
iii. FACTS:
1. parent of Schlunk filed a wrongful death suit in Illinois
2. Schlunk died in car accident per design defect and
negligent assembly per P
3. P tries to serve VWAG through VWoA a wholly owned
subsidiary
4. there is legislative history directly discuss the scenario and
explicating opting to leave the member state to determine
this issue
c. Bankston v. Toyota Motor Corporation – HSC does not allow service by
mail
i. A HAGUE ART. 10 SERVICE OF PROCESS CASE
ii. ISSUE: Did the wording in Art. 10 (a) of the HSC allow process
service be mail?
iii. No the word “send” and not “service” is used and the over all
context of Art. 10 implies it was not meant to address service of
process but transfer of documents subsequent to service of process
d. Questions and Comments, p. 135
i. Tag jurisdiction in USA
1. acceptable for individual defendants per Burnham v.
Superior Court of Cal.
2. questionable against foreign corporations per MBM
Fisheries v. Bollinger
3. where to find foreign laws on service
a. Office of American Citizens Services of Dept. of
State
b. Office of International Judicial Assistance, Civil
Division of the DOJ
Class Notes on service of process on foreign defendants.
a. Act of making service is not a judicial function, the parties do it
b. In some civil countries the courts are involved in service of process
i. Swiss, Germans
c. Conflict between treaty and federal law which prevails? – latest in time
rule
d. Schluck case held for the exclusivity of HSC
e. Interpretation of treaties
i. Vienna Convention on Treaties
1. Strictly follows the letter and the four corners of the treaty
2. USA not signatory
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f.
g.
h.
i.
j.
k.
ii. USA court generally
1. look at plain meaning
2. legislative history
Inter-American Convention – nonexclusive so there would be alternative
way for service besides through the convention
Hague Evidence Convention – nonexclusive thus if USA courts have PJ
over a foreign D, they must comply to disco rules just like domestic
entities
International-American Convention on Letter Rogatory (used in the
Americas)
i. here the USA courts have decided that it is NOT mandatory
ii. not worked as efficiently as HSC, service usually goes through a
central authority which does not work very well in every country
iii. some latin American counties are signatories to both – eg Mexico
– which prefers the HSC
Hague Service Convention (HSC)
i. Look up – Article 10
ii. Works well service through HSC used to be free but now there is a
charge by DOJ and delegated to private company
iii. Procedure
1. Fill out form and take form to court
2. And file an motion to serve lawsuit pursuant to HSC
3. Judge give authority
4. Lawyer make sure you serve the proper central authorities
in target country
5. The authority takes steps to serve under its own county’s
procedure
iv. ISSUE
1. Exclusivity
2. Service by mail – is it proper under the HSC – see article
10
3 elements for personal Jurisdiction
i. some sort of authority to establish jrs
1. eg. State long arm statutes
ii. service of process
iii. due process
Bankston v. Toyota Motor Corporation
i. A Hague Service Convention (HSC) -- SERVICE OF PROCESS
CASE
ii. At issue the wording of Article 10 (a) HSC
iii. One argument is that to interpret “send” as to not referring to
service of process would violate the clear intent of the statute. It is
a service convention and what else could send mean?
iv. Recent case on Article 10 (3rd theory)
1. When you serve outside the country, you cannot violate
foreign law – Rule 4 of FRCP – does
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a. Brockmeyer v. May 9th Circuit
v. Another argument is that the HSC was never intended to address
service by mail
vi. In USA the meaning or Article 10 has not be address by the US
Supreme Court
l. OVERVIEW OF Hague Service Convention (HSC) a.k.a. “Convention
on the Service Abroad of Judicial and Extrajudicial Documents in Civil or
Commercial Matters”
i. Article 1
1. Limited application: What are “civil and commercial”
cases?
a. Germany rejects a tort case with punitive damages
request, saying it is a criminal case
b. Administrative law – trade matters
i. Antidumping
c. Probate
d. Domestic relations
e. Fraud cases
f. Tax cases
2. does not apply where address is not know, i.e. publication
ii. Art 2
1. shall designate and organize a Central Authority (CA)
iii. Art 3
1. send request to CA
iv. Art 4
1. if request does not comply with HSC provision then
promptly inform
v. Art 5
1. service of process given to Central Authority and service
according to the target county’s law or service by request
method if not incompatible
2. Pick the right government entity
3. Translations requirement: CA may require translation
a. Otherwise – French and English OK, but counties
could opt out and put translation requirement
vi. Art 6 – certificate of service given by a Central Authority
1. USA – will sometimes accept as proof of service mere
service on CA and some proof of actual notice
vii. Art 7
1. standard terms in English or French or of official language
where the document originates
2. ditto for corresponding blanks
viii. Art 8
1. No diplomatic or consular service is required
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ix.
x.
xi.
xii.
xiii.
xiv.
xv.
xvi.
2. a state may oppose theses types of services categorically
unless they are service on a national of the State in which
the documents originate
Art 9 – diplomatic and consulate means to effect service may be
elected
1. USA does not have problem but may countries has opted
out of this Article
a. read declarations and reservations of each country
Art 10
1. judicial officers, officials of each state my correspond with
each other directly
Art 11
1. HSC will not prevent the parties from agreeing to other
methods of service
Art 12 – service is free of charge may be charged for costs
Art 13
1. If service complied with HSC, CA may refuse to comply
only if infringe its sovereignty and security
2. If refusal on these grounds, prompt notice state the reasons
therefore
3. Libia sues Albright – professor handled this case
Art 14
1. problems with HSC shall be resolved through diplomatic
channels
Art 15 – protections against default judgment
1. no default unless
a. service done that complies with the internal law of
State where service was made, or
b. actual delivery or other method provided for HSC
c. and in sufficient time for D to defend
2. not withstanding the rule above, a judge may still give
judgment, even without a certificate of service if:
a. service as provided for under HSC;
b. a period of not less than 6 months has elapsed since
the service; and,
c. no certificate has been received even though
reasonable efforts were made
3. in urgent cases, a judge may order any provisional or
protective measures
Art 16 -- relief from default
1. A judge may relieve defaults if
a. D, w/o any fault, did not have knowledge of the suit
w/in sufficient time to defend, or knowledge of the
judgment in sufficient time to appeal, and
b. D has a prima facie defense on the merits, and
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m.
n.
o.
p.
c. D files w/in reasonable time after having knowledge
of the default
2. the time to file for relief from default shall not be less than
one year
xvii. Art 18
1. Each state is free to designate other authorities in addition
to the CA
2. Each has the right to request directly to CA
3. in Federal systems, may designate more than one CA
xviii. Art 19
1. A state may allow other methods of service (beyond HSC)
for service w/in its borders
2. Who has the burden the proof – issue in USA
3. Up to the county is deciding what service is proper even if
not specified by HSC
xix. Art 20
1. parties may opt out of Articles portions of 3, 5, 7, 12.
xx. Designations by USA under HSC
1. CA = Dept. of state
2. certificates may be filled out by
a. USDS
b. USDJ
c. US Marshal
xxi. Opt in on Art. 15, second paragraph on defaults w/o certificate of
service
xxii. Under Art. 16, third paragraph, no applications for relief from
default after
1. the normal expiration of the period of the procedural
regulations of the court or
2. after one year following date of judgment, which ever is
later
Again major issues in real practice
i. Service of mail
ii. Translation
iii. Use of diplomatic officials and consulate
Why would a foreign plaintiff used DOJ for service?
i. Certificate of service
ii. It was free
Under HSC – there no outgoing authority because USA attorneys and
officers of the state transmits directly to foreign CA
1. Also for incoming authority USA follows Art 19 which
allows other methods – therefore no service via CA
necessary
Rule 4 of FRCP
i. Focus on 4(f) on page 107
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ii. 4(m) time limits – no time limit for service in a foreign company,
judge would still have some say in USA
XI.
Hague EVIDENCE Convention – HEC
a.
Genira Trade &. Finance Inc. v. REFCO Capital (UK court 2001) –
illustrating the possible limitations placed on discovery by HEC, here, opt
out under Article 23.
i. HEC CASE
ii. FACTS: USA litigant wants pretrial discovery and deposition of a
nonparty witness in USA under the HEC
iii. HOLDING: UK has utilized a limited opt out under Article 23, no
nonparty depo is allowed and written production request must
specifically identify the document and must be requested for use at
trial.
iv. Judge out of respect for the USA courts was willing to go through
the petition and “blue pencil” to edit out part that would not
conform to UK law but could not in this case.
Societe Nationale Industrielle Aerospatiale v. USDC (1987) – HEC
nonexclusive, FRCP rules may be used for discovery abroad
i. HEC CASE IN FEDERAL COURT
ii. HOLDING: HEC in not exclusive method of conducting discovery
of evidence in a foreign jrs but a supplement on state and federal
law, in other words, the federal courts are free to use FRCP and
federal discovery rules.
1. Preamble does not speak in mandatory terms
2. Looking at Art 23 – why would common law countries
agree to HEC when most non-common law countries would
simply opt out of pretrial discovery (while the common law
countries that did not opt, i.e. USA, would be under the
unilateral burden of liberal discovery for foreign litigants
who seek it)
3. Art 27 clearly states that HEC would not prevent more
liberal discovery methods
4. As DICTA: Court should consider comity and undue
burden on D concerns but does not state a specific test
iii. FACTS: Two French aircraft manufacturers are being sued in
USA, they say that HEC must be the exclusive law followed for
discovery conducted in France
iv. Post-Aerospatiale cases general place burden on foreign defendant
to prove under Aero case or some comity test that HEC should
apply
c. Husa v. Laboratories Servier (1999) – State can choose to make HEC
exclusive
i. HEC CASE – IN NJ STATE COURT
b.
17
XII.
ii. FACTS: in personal injury action, P seeks to take deposition of
several Ds in French, again the issue of the exclusivity of the HEC,
the issue is before the Supreme Court of New Jersey
iii. HOLDING: since Aero case left the use of convention optional, NJ
Supremes decides that, for cases under similar facts as in front of
the State court of NJ, HEC must be followed unless unfair for
some reason
1. Rx is comity reasons, court should not assume the USA
method is superior without letting the HEC develope
iv. In re Vitamins Antitrust Litigation (2001) – reaffirms
Areospatiale and adds that FRCP applies to the threshold question
of whether the court has personal jurisdiction over the case
1. Ruled that FRCP applies to foreign discovery and also
discovery necessary to resolve dispute over whether the
court has personal jurisdiction over the case
d. JENIA IONTCHEVA – SOVEREIGNTY ON OUR TERMS
i. Sharply critical of In re Vitamins and Aero line of cases
ii. The Vitamins court’s test insinuates U.S. law’s sovereignty over
others and deprives HEC of any real significance, nullifying and
executive and congressional intent
iii. Creates general international antagonism against USA
iv. Lead to increase use in international arbitration
v. Codify the Aero minority opinion, first resort to HEC then USA
law – as suggested by Husa Case
e. Notes and comments on p. 154
i. In real life often parties stipulate to a discovery plan such as a
deposition w/o the formalities and w/o involvement of the foreign
court or judge
ii. Discovery check list
Class notes on the HEC
a. Hague Evidence Convention rules are not exclusive
b. Many counties criminalize unlawful discovery activity in their country
i. This is true often in cases where the witness will voluntarily give
evidence
c. Article 23 of the HEC give counties an out to opt out of “pretrial”
discovery request from common law countries and most have actually
chosen to do so
d. Also possibly of an limited opt out
e. When evidence is allowed, procedure of host country controls
f. In civil law countries, judge will ask deposition like questions, they
control
g. No verbatim transcripts or court reporters
i. US pretrial discovery
1. Rule 26 – FRCP
a. Wide scope of discovery
2. Fishing Expeditions
18
h.
i.
j.
k.
l.
m.
n.
o.
p.
a. Document requests rx calculated to lead to
discoverable evidence
b. A lot of sensitivity by civil law countries for fishing
expeditions, HEC a compromise, Art 23
3. there is a USA government website that guide USA
litigants on this issue
Art 23 – HEC
i. opt out provision for common law pretrial discovery
ii. full Art 23 reservation
iii. limited Art 23 reservation
iv. often for US litigant use foreign lawyers to draft a request tailored
to that countries requirements
1. e.g. when disco is in UK…use UK solicitor
Common law, Civil law
i. judicial sovereignty
1. in civil law countries often you have to make request to the
judge whether you can ask some specific questions
Foreign Statutes – Blocking Statutes, etc.
Evidence Rules
i. party/non-party
ii. voluntary/compulsory
1. it may be possible to get a voluntary deposition through
stipulation
a. e.g. if non-German national, voluntary deposition in
Germany is fine
b. get a USA style transcript
c. e.g. in Holland even voluntary is illegal
i. if so then possible to go to a neighboring
country where it is legal
2. for a non-cooperating witness, must use the HEC or another
international treaty
Role of Hague Evidence Convention
“Letter of Request” under the HEC
Why would the judge in a practical sense let discovery occur under a host
country’s law – it is just practical and all evidence happens to abroad
Practical note: under current USA law, if court has jrs over foreign party
then court can use FRCP over the foreign party and compel discovery in
the USA
When thinking of foreign discovery
i. What treaties are covered – HEC, International Convention on
Letters Rogatory
ii. What kind of docs
iii. Party or nonparty
1. which present employees of a corporate party is a party? It
may depend on how high in the hierarchy
19
2. for party – Aero holding would apply and may be
compelled in USA
3. non-party
a. in USA subpoena
b. out of USA
i. US citizen under special statute may be
compelled
ii. Non US citizen cannot be compelled unless
HEC or letters Rogatory
1. go to USA court and make evidence
request and request goes oversees
and may be compelled through local
law to give evidence
4. but remember for any discovery outside USA, it really
depends on the judge to use FRCP or HEC per Aero case
which made it discretionary
5. if foreign law blocks the discovery, under a comity test,
USA courts may not do anymore
a. but the court can ask foreign party to seek a way
around the foreign law, e.g. a waiver
b. therefore, foreign D cannot hide behind the foreign
law
XIII. PARALLEL PROCEEDINGS
a. Problem 3.6
i. Scenario
1. Canadian D starts a parallel proceeding in Canada
a. parallel proceeding is concurrently lawsuit filed in a
foreign forum over the same subject matter
i. USA Courts consider
1. Adequacy of relief in other forum
2. Issue of fairness to and convenience
of parties, counsel, and witnesses
3. The possibility of prejudice to any of
the parties; and
4. Temporal sequence of filing the
actions
2. UK D and German D seek anti-suit injunction in UK
a. anti-suit injunction is order of domestic court
purporting to stay or enjoin an action in a foreign
forum
i. Remember that this court action would
involve direct intrusion on the judicial
process on another sovereign forum
ii. The enforceability and effect of an anti-suit
injunction may be uncertain as a tribunal
20
may rebuff the attempted intrusion by an
alien court
iii. Courts consider whether
1. Policy of enjoining forum frustrated
2. Maintenance of the action is
vexatious
3. Court’s jrs is threatened
4. Other equitable considerations
5. Delay, inconvenience, expense, and
race to judgment would result if
injunction is not considered. See
China Trade and Development v.
M/V Choong Yong
ii. Simple solution would be first to file but better to have a balance
of interest and comity
iii. USSC has NOT given word on this issue but there are lower court
opinions
iv. Main reason for parallel proceedings
1. USA not party the a Enf of Jdmt convention
2. Vexatious litigation
v. Mike’s Commentary
1. Usually, an anti-suit injunction is requested in the country
where one wants to keep the suit and in the county one
wants to get rid of a suit, a motion to dismiss for FNC and
deference to foreign proceedings grounds would be made
b. Dragon Capital Partners L.P. v. Merrill Lynch Capital Services, Inc.
(NY, 97) – p 163 – not entitle to same relief as a party would get in the
USA, only entitled to adequate relief
i. A PARALLEL JRS CASE
ii. FACTS
1. Parallel proceeding in NY and HK
2. Plaintiff filed the complaint in HK almost 1.5 years earlier
than NY suit
iii. RULE & ANALYSIS
1. Similarity of the parties and issues
a. does not have to be identical
b. HK law allows for amendment to add additional
parties and causes of action – not really prejudice to
the side objecting to dismissal
2. Temporal Sequence of Filing
a. P filed in HK 1.5 years prior
3. Considerations of Fairness and Prejudice
a. Plaintiff first filed in HK and now wants to file in
NY because of a forum selection clause in the
contract
21
b. choice of law question, HK court can still apply NY
law
c. arbitration clause itself merely says that NY law
must be used which in not that it must be litigated
or arbitrated in USA
4. Adequacy of Relief Available in Alternative Forum
a. when P argued that it is entitled to remedies under
USA laws that it would not have access to in HK
the court replies…
i. Court goal is merely to provide adequate
relief not to ensure that P gets the greatest
relief
b. Alternative if not identical forms of relief available
is good enough
c. HK legal system will not be in jeopardy because of
PRC takeover, per Sino-British Joint Declaration on
the Future of HK
5. Judicial Efficiency
a. HK court already familiar with this case
iv. CONCLUSION: Ds motion to dismiss is granted under doctrine of
deference to foreign proceedings and forum non conveniens
c. The Saga of Sir Freddie Laker (UK case) p 168 -- adequacy of laws not a
factor unless clear prejudice is shown
i. FACTS
1. An interesting case, Laker a new UK airline jumps into the
airline business offering discount no frills cheap airfare,
Laker starts winning, shaking up the old guard IATA a
consortium of airlines, eventually IATA lower fares to
Laker’s level and Laker is not able to secure loans through
pressure by D, and Lake fails, files antitrust suit in USA
2. UK airlines file parallel suit in UK both courts enjoin each
other but eventually through the appeals process UK defers
to USA
ii. RULE
1. Reason for deference is that British Airlines has not shown
clear prejudice in USA and what Laker has done is not
unconscionable
iii. Just an illustration of a parallel jurisdiction scenario eventually
LAKER won 63 million
d. General Electric Co. v. Deutz, AG (2001) – p. 171 – anti-suit injunctions
should be used sparingly; following the restrictive approach
i. FACTS
1. P files suit against D for breach of design of diesel
locomotive contract, failure to provide additional funding
2. D moves to dismiss for lack of jrs and arbitration clause, it
was denied by DC, D appeals and files claim with an
22
arbitration panel, panel denies, D petitions a UK court,
court denies and D tries to appeal but D is enjoined by USA
DC therefore D makes this appeal
ii. RULE:
1. anticipatory injunctions are used in only the rarest
circumstances, DC should have left the res judicata effect
of its order to the other forum, ie UK court.
2. Comity
a. reciprocity and cooperation between judicial
systems is a worthy goal of comity
b. Two General Standards
i. Liberal or Lax standard (5th, 7th, 9th )
1. Injunction where the policy of
enjoining forum is frustrated, foreign
proceeding would be vexatious or
other equitable considerations or
result in delay
ii. Restrictive approach (2nd , 7th and DC)
1. Rarely permit injunctions against
foreign proceedings
2. Only to protect jurisdiction or
important public policy
3. Vexatiousness and inconvenience
less important
iii. This court follows the more restrictive
approach
iii. CONCLUSION – injunction denied on comity grounds
e. Kaepa, Inc. v. Achilles Corp. (1996) p. 176 – illustration of the liberal
approach to injunctions against foreign proceedings – allow based on
vexation and oppression
i. Facts
1. Kaepa (USA) and Achilles (Japan) gets into a distribution
contract
2. P files suit in USA, after significant progress on case, D
files parallel suit in Japan against D with the same causes
of action
3. D files for a motion for forum non convenience
4. P for anti-suit injunction
ii. RULE
1. This Court uses the liberal rule which allows anti-suit
injunctions if allowing simultaneous injunction be
oppressive and vexatious to nonmoving party and tends to
frustrate and delay speedy and efficient determination
2. Exception would be the injunction would immediately and
concretely affect adversely foreign relations
iii. DISSENT
23
1. An eloquent dissent says that the court should respect the
fundamental principle of comity
2. Could merely let two proceedings continue its course are
respect the sovereignty of another country
3. Inconvenience to prosecuting two suits does not outweigh
the comity principle
4. Strict standard
a. whether the foreign court threatens the jrs of the
District Court (DC)
b. whether the foreign action is an attempt to evade
important public policies of the DC
iv. CONCLUSION: this court rules that the anti-suit is ok
f. Yahoo v. La Ligue Contre Le Racisme et L’antisemetisme -- the First
Amendment can trump comity
i. Facts
1. Yahoo has an auction site where Nazi stuff can be bought
2. French law prevents selling of Nazi stuff and; therefore, D
filed suit in France against P to enjoin P,
3. French court issued and injunction broadly worded saying
Yahoo.com cannot allow people to buy Nazi stuff
4. P files suit in CA DC seeking injunction
ii. ISSUE
1. “Whether it is consistent with the constitution and laws of
the United States for another nation to regulate speech by a
US resident within the US on the basis that such speech can
be accessed by Internet users in that nation”
iii. RULE
1. Where a foreign order is in direct violation of the first
amendment and will effect people in the USA and a P
operating in the USA, the first amendment will trump
comity
XIV. Class Notes Relating to Parallel Proceedings
a. Professors own experience in DOJ
i. A common type of parallel litigation is criminal suit in USA and a
foreign fraud case in foreign court for stealing money from the
USA government. Cannot file criminal case foreign court because
of lack of standing
b. Parallel Proceeds in Problem 3.6
c. Terminology – parallel proceedings and anti-suit
i. Comity
1. deference to foreign legal system, good will
2. 50/50 split as to use of comity
ii. Vexatious
1. judicial economy
2. avoid duplication of effort
3. exceptions
24
XV.
a. public policy
b. USA jrs based on in rem over property, if the
danger is the property going to get removed
iii. Forum non-convenience
d. D’s option if D does not want to fight the suit in USA
i. Motion to dismiss for lack of personal jurisdiction
ii. Motion to dismiss for forum non convenience
iii. File a parallel suit in a court in a foreign jrs
iv. Ask for an anti-suit injunction in foreign court
e. Laker Case
i. Extreme example of a legal situation involved with politics
f. Keapa, Inc. v. Achilles Corp.
i. Read this case because prof seems to like it
g. Anticipatory suits – negative declaratory relief
i. It is acceptable in some circuits where you can ask for declaratory
relief because you anticipate a damaging lawsuit which is
imminent
h. Yahoo! Case
i. Not an enforcement of judgment case, because plaintiff has not
enforced it yet buy Yahoo is afraid that it might
ii. Why does USA court have personal jurisdiction of French
organization?
1. all they did for contact was sending the injunction order to
Yahoo’s California office
i. remember the Dow Jones defamation case
i. in Australia, and other common wealth countries, burden of proof
defendant in libel and slander and higher damages – choice forum
for these torts
j. Yahoo on appeal
i. 8/12 justices in the 9th Circuit (San Francisco) said that there was
jurisdiction
ii. If USA corporations get sued oversees, then USA company could
come here and sue here in USA
k. Remember whatever the court case outcome in USA, form a company’s
point of view, as long as Yahoo France has assets in France, they must do
what they can follow French orders.
l. Given the Supremes decision in Aero case where they really did not give
any guidance, uncertain if how the Supremes would decide Yahoo case or
other parallel jrs case
m. Country legal reports a good source of evidence
n. USA courts do look at the quality of other foreign courts and considers
that in their decisions
Overview of Litigation Inside the U.S.
a. US P v. Foreign D
i. Choice of forum
25
1. analysis for advantage of jury, discovery rules, contingency
fees, large damage awards, punitive damages, etc.
ii. Service of process
1. HSC
a. Exception under alter ego or agency theory
iii. Obtaining evidence abroad
1. party or nonparty on compulsory discovery need
a. party – FRCP
b. nonparty - HEC
iv. Forum non convenience
1. where are the documents, witnesses, and other evidence
located
2. foreign forum provide adequate protection
v. Anti-suit injunction
b. Foreign P v. US D
i. Choice of forum
1. analysis same but in reverse
ii. Service of process
1. HSC does NOT apply
2. Use FRCP, Rule 4 – often ultimately, service under state
law, Rule 4(e)
iii. Obtaining evidence abroad
1. party or nonparty on compulsory discovery need
a. party – FRCP
b. nonparty - HEC
iv. Forum non convenience
1. US D does have the right but considering factors different
v. Anti-suit injunction
c. Subject Matter Jurisdiction
i. Art. 3 Section 2 – US Constitution
ii. D/C Federal Question
iii. Federal Statutes
iv. State law
v. Restatement Sections 402 & 403
XVI. Foreign Plaintiff – US Defendant (Chapter 4, p. 191)
a. Problem 4.1
i. Players
1. Growfast
a. Delaware corporation
b. Manufacturing in TX and FL
c. has subsidiary in Mexico and Germany
d. has some ingredients of Sollate from England and
Japan
2. Plaintiffs
a. One US technicians
b. 35 Mexican employees killed
26
c. Hundreds of other Mexicans injured
d. Tourist from USA and Europe also injured
ii. Contracts – choice of forum
1. employees of Growfast may have signed choice of forum
clauses, other plaintiffs have not
iii. Growfast would also like to sue their English and Japanese
suppliers
b. Hypo on p. 196
i. Facts, same as Growfast except that Argicolas is a Mexican
contractual distributor for Growfast and two of their employees
were involved in Sollate transport when the accident occurred
ii. Issues
1. choice of forum
2. choice of law most favorable
3. choice of law system in the selected forum
4. procedural rules
a. the forum almost always applies its own procedural
rules
i. e.g. in federal court FRCP
5. enforceability
6. preliminary remedies such as injunctions
iii. analysis
1. determine which court would have jurisdiction
a. which countries
b. state and federal
c. lex loci delicti – where the tort happened
i. e.g. in Texas follows the general jurisdiction
approach so that GF could be sued in TX for
its manufacturing there even though tort did
not happen there or, even if, suit unrelated to
activity
d. locus regit actum – the place governs the act
2. choose a body of substantive tort law that is most favorable
3. to Plaintiff
4. choose a court that would allow you to apply it
5. liability analysis
a. would Growfast even be liable because two
technicians were on loan to Agricolas and Agricolas
may have merely mishandled the product and
explosion not cause by some defect
b. estates of dead USA employees would go through
worker compensation insurance for 100K
6. GF make try to file a lawsuit in Mexico for declaratory
relief as to liability – site deference by USA court to
foreign judgments
27
a. Much case law is heavily against such declaratory
relief
7. In TX, a plea in abatement – action in TX delayed because
a suit in another jurisdiction is pending
8. what about res judicata or collateral estoppel
9. class action rules of the forum
c. Plaintiffs Strategies on P. 202
i. Forum-availability question
1. jurisdiction over subject matter
2. jurisdiction over the person of the defendants
3. proper venue
4. problems of service of process
ii. first the lawyer should do analysis of all the forums available both
in USA and Mexico
iii. also consider defendant-veto contingencies
1. motion for change of venue
2. motion to dismiss for forum non convenience
3. removal actions from state to federal
iv. subject matter jurisdiction for tort is transitory any where in the 50
state that meet personal jurisdiction and venue issues
v. for federal court jurisdiction will be based on diversity jurisdiction
28 USC Section 1332
1. there is diversity jurisdiction if none of the US Ps is a
citizen of the same state as any of the Ds.
2. Here if none of the US Ps are citizens of DL or KS
3. result may be subject matter jurisdiction in all 50 states
and all state courts
4. however the state will go through a personal jurisdiction,
contacts analysis and this law will be state law where the
federal court is located – choice of law issue in diversity
jurisdiction
a. therefore there probably is no jurisdiction against
Agricolas – no contacts
b. but there would be jurisdiction against GF
i. DL – state of incorporation
ii. KS – general jurisdiction, principle
administrative office, permanent, continuous
and regular
iii. TX – probably general jurisdiction or
specific jurisdiction if the Sollate that blew
up was manufactured in TX
d. De Beers Consol v United States
i. Government sought to enjoin future antitrust violations by
preserving a source of fund with may satisfy a contempt action,
should it be necessary
28
ii. In appeal, the requested injunction was denied because it would
create “precedent of sweeping effect”
e. US v. First Nat’l City Bank
i. The government sought to collect taxes of a foreign corporation
ii. This was allowed because property would be “subject of a
provision of any final decree” i.e. if a money judgment was issued
XVII. Forum Shopping
a. Example in the DC-10, Turkish airline case
i. plane flight from Paris to London but filed in CD of California
FDC recast as a product liability case to sue McDonnell Douglas
ii. two orphaned children of British couple got 1.5 million
iii. setting the benchmark for settling the other cases
b. US Supreme court does not like forum shopping
i. Piper Aircraft v. Reyno
1. Court saw an opportunity to reduce forum shopping with
the forum non conveniens doctrine
a. Is FNC as procedural rule and if so then SC
decision apply to federal courts only?
b. Avoid this by filing in a favorable state court?
c. England is quite open to forum shopping and considers its legal system a
type of service export
d. In Germany, authorize suit against any nonresident who owns assets in
Germany – there is no other jurisdiction test
i. justice is quick, no juries, loser pays attorney fees and court costs
e. forum shopping usually dictated by practical and procedural advantages
i. her verdicts, jury, quality of counsel than substantive or choice of
law rules
XVIII. Problem 4.3 – D moves to dismiss for forum non conveniens p 258
a. The doctrine provides a method for removing the case from its present
location to another location that has both personal and subject matter
jurisdiction for various reasons both private and public
i. The analysis proceeds in two steps
1. existence of an adequate alternative forum
2. then the court weighs the balance of
a. private factors of convenience
b. judicial efficiency
c. public factors of community interest and burden
d. and, conflict of laws issues
b. No such concept in Europe
c. Rapidly developed in US because of foreign Ps choosing US to litigate
d. No motion for FNC should be made unless these points are researched:
i. What law would be applied if FNC is successful
ii. If applicable law is foreign law, is it more favorable to Ds
e. A matter of judicial discretion rather than a rule
i. TC has broad discretion, reversal only if discretion is abused
f. GROWFAST scenario
29
i. Would the federal courts apply the state law on forum non
convenience?
XIX. FORUM NON CONVENIENCE, p. 263 et seq.
a. Koster v. Lumbermeans Mutual Casualty Co. – holistic analysis
i. Ultimate inquiry is which forum will best serve the convenience of
the parties and the ends of justice
ii. General deference to Ps choice of forum may be overcome if D
1. show oppression and vexation to D disproportionate to P’s
convenience, or
2. chose forum inappropriate because of court’s legal or
administrative considerations
b. Gulf Oil Corp. v. Gilbert
i. See case for list of private and public factors
c. Piper Aircraft Co. v. Reyno p. 264 – possibility of change in substantive
law in another forum should not be given substantive weight
i. FACTS
1. A bunch of Scottish nationals die in a piper plane
manufactured in USA
2. Accident in Scotland
3. Third Circuit had reversed a DC case where the judge
dismissed the case on FNC ground
a. gave as rationale inappropriate to dismiss for FNC
whenever the law in foreign forum is less favorable
to plaintiff
ii. RULE
1. The possibly of a change in substantive law should
ordinarily not be given conclusive or even substantial
weight in the FNC inquiry
iii. ANALYSIS
1. Deference to choice of forum by P; however generally
limited to residence or citizen of USA and …
2. Gilbert case says the central focus is convenience and
cannot let the factors of substantive law change override
this central factor
3. Need to retain discretionary flexibility
4. If unfavorable change give substantial weight in FNC
analysis, dismissal would rarely be proper
5. Too much burden on the court to do a substantive law
analysis
a. choice of law analysis
6. private factors
a. some of the key witness beyond the reach of
compulsory process
b. ability of D to implead third-party defendants
c. documents and accident reports my be compelled in
Scotland
30
7. public interest side
a. lack of familiarity with Scottish law
iv. Conclusion
1. Reversed court of appeals, P’s suit may be dismissed on
FNC grounds
v. Mike’s comment: note that if there was no relief available in
Scotland, Piper rule would not apply but the court will not get into
the analysis of the adequacy of relief.
d. In Re Union Carbine Corporation Gas Plant Disaster at Bhopal (1984) p.
270
i. India law has British roots therefore ok, procedural delay,
government of India was involved and Indian government gave
assurance that it would move the case along
ii. Balancing factors issue
1. private factors
a. all witness located in India and could not be
compelled to testify in US
b. documents all in India, plant was there, on cite
inspections, accident reports
c. records in Hindi
2. public interest
a. all victim in India and Indian government is
involved
b. safety standard
c. major controversy in India
d. burden on USA courts because of the size of the
case
iii. conditions
1. UCC must consent to jrs of India
2. UCC must satisfy any Indian judgment if meet minimum
due process standard is used
a. Really no need because
i. International convention
ii. Federal court may enforce base on comity
iii. No need now because may raise issue at the
enforcement of judgment phase
iv. Insulting to India
3. UCC would allow discovery under FRCP
a. US court cannot intrude on Indian courts in
procedural matters
iv. Contrast with Bhatnagar v. Surrendra Overseas Ltd. (1995) case
1. battle of experts
2. personal injury case
3. P said that if the case was thrown back to India, result in
extreme delay
4. both sides submitted proof
31
XX.
5. P presented proof that it would take 20 years
6. note that here we do not have assurances from the
government of India
7. P would no longer be a minor after 20 years
Class Notes on FNC
a. It would be a separate procedural motion than a motion to dismiss for lack
of PJ, may be filed at any time with discretion of the court
b. Choice of Forum
i. less deference over foreign party for choice of forum in contrast
the US party
ii. deeper issue: should we not allow injured parties to sue where they
want? But isn’t judicial resources limited.
iii. the Second Circuit (NY) has new tests for FNC that look at the
motivation of the plaintiff – if it is for forum shopping than it
should be refused
c. Choice and proof of Law – and questions as the fair treatment under
foreign law.
i. decide by the conflicts law of the forum
ii. procedural or substantive
1. procedural – usually the law of the present forum
2. for damage many court say that the issue of damages are
procedural
iii. proof of foreign law FRCP Rule 44.1
1. Reasonable notice
2. Any relevant material may be used
a. affidavits by academics
b. foreign legal consultants
3. Question
4. Could be waived if the parties do not advocate
5. Often comes up at PT hearing
iv. comes up procedurally
1. motion to dismiss for FNC
2. motion for summary judgment
3. issue in litigation
v. Legal question decide by the Judge
vi. Interaction between choice of law and proof of law
1. choice is what law applies to the dispute and proof of what
that law is once the law is decided.
vii. In US Federal diversity case look to the State choice of law clause
viii. Generally now the State laws are a balance test
1. which forum has be most legitimate interest in the forum,
etc.
2. procedural or substantive
3. law of damages
d. Adequacy of Alternate forum
32
i. court should consider where the case is being returned to
ii. US courts on this issue all over the place
iii. court would not send a case to a country where a cause of action
would not exist, personal jrs, would not exist, statute of limitations
has expired, or no subject matter jurisdiction
1. court would want some assurance that it would get similar
treatment in a foreign country
2. consider also the quality of legal system
3. is the court system functioning
4. lot of expert testimony on this issue
5. and State Department reports are used
iv. a fundamental question: should we even care about the quality of
justice in another country?
v. general factors
1. often state department country reports
2. more familiar the US court system is, easier to prove
a. EU
b. Common law systems
vi. delay
1. look at holdings in Bhatnagar or Union Carbide
2. 10 years too much?
vii. political issues
viii. legal systems
ix. procedural differences
1. E.g. US system generally will not look at Mexican courts as
generally inadequate for FNC or Enforcement purpose
2.
x. LA laws (Latin American Laws)
1. Person injured in Latin American countries by activities of
US companies so decide to sue in US
2. Some LA countries had laws where once US courts accept
jurisdiction, not able to file in their own countries
a. Often the proponents of this law are plaintiffs
3. Most US courts reject this concept
e. Balancing of Interest
i. balance of public and private issues
1. private case
a. remedies
b. parties need to be joined
c. location of witnesses
i. but still it may easy to deposition the
witnesses anyways through the HEC, letters
rogatory
ii. witnesses beyond reach of US court
1. e.g. how can you compel a third
party witness
33
2. HEC, USA subpoena would not
reach but exception for US citizens
abroad
d. evidence
e. availability of compulsory process for unwilling
witnesses
2. public interest is
a. convenience of the court
i. e.g. loaded dockets
b. foreign court has special interest in the case – like
comity issue
c. desire to in diversity cases to try cases I the same
forum as the state law to be applied
f. Court may place conditions on transfer
i. conditions
1. courts will place conditions even though dismissed for FNC
2. cannot retain control but
3. require the Ds to consent to be sued in foreign forum
4. waive statute of limitation
5. address the issue of delay
g. Standard of Review
i. abuse of discretion standard
1. in appeal there must be great deference to lower court’s
decision
XXI. Questions and Comments on P. 373
a. In German law, having property in Germany may confer general
jurisdiction
b. Article 5 generally in contracts the focus in place of performance on the
obligation
c. P. 369 analysis of VW case under European Law
i. bring suit in place of sale of place on injury
ii. in contract, SC rejected forum in NY or OK
1. purposeful direction – some action by D
iii. Japanese law based on European, German law
d. 28 U.S.C. Section 1782 (allowable discovery in USA by party to a foreign
law suit)
i. Action in foreign court, US party is defendant, how much disco is
possible in USA
ii. request can come in a variety ways
1. HEC
2. Letters Rogatory
3. An interested party, a commissioner
4. DOJ used to get evidence request through HEC then
directed to US Attorney’s office
5. US Attorney’s office would ask for voluntary testimony
6. If not voluntary, US attorney go to court to compel
34
7. But because US is liberal a consulate make take evidence
or a designated individual, such as a law firm ---sometimes
expensive
iii. issue: is there a need for reciprocity when similar discovery is not
available in foreign country
1. Circuits were split
2. Intel Corp. v. AMD – U.S. leaves it to the discretion of
each district court as to whether reciprocity is required for
used of liberal discovery standards
a. Foreign antitrust case
b. Interested party
c. What is a tribune
d. HOLDING
i. AMD is an interested party
ii. AMD may use liberal rules in USA
iii. but each DC has discretionary power to
deny and sets up some standards
a. party
i. here probably likely
you can get in foreign
proceeding
b. nonparty
2. liberal reading of 1782 but give DC
very wide discretionary power
iv. 1782 used to be limited to foreign
proceedings with a tribune not merely
investigatory bodies by Intel case may have
enlarged this scope
XXII. Chapter 6: Recognition of ENFORCEMENT of Foreign Judgments in the
U.S.A.
a. Problem 6.1, same facts except assume that PM won judgment in
Germany and Celsius has no assets in Europe but has assets in the USA
and assume that PM also has a 200K libel damage award against Celsius
b. US Constitution, Article IV (4) – full faith and credit clause
i. Applies the determination of JRS
1. A states own determination that it has jurisdiction, this is
given FFC as well
ii. Applies to all state and federal courts
iii. This clause does NOT apply to foreign judgment and enforcement
of foreign judgment are usually left to the state commonly law
which is replaced now in most states by Uniform Foreign MoneyJudgments Recognition Act, 13 U.L.A. 263 (1986)
c. Hilton v. Guyot, (1895) p. 398 – establishes reciprocity is required for
enforcement of foreign judgments in the USA
i. FACTS
35
1. there is a commercial dispute, P in France and D in USA, P
got a judgment in France and want to enforce it here in
USA
ii. HOLDING
1. P cannot enforce in USA the French judgment because,
according to French law, French law will not enforce
American judgments but will only accept the judgment as
prima facie evidence for P’s case which may be rebutted.
Basically, D is entitled to a trial on the merits.
2. reciprocity is an element of the comity principle
d. Erie R.R. v. Tompkins (USSC 1938) -- there is not federal common law
i. HOLDING
1. denied the existence of Federal common law, federal courts
must look to state law in diversity cases
e. Somportex Ltd. v. Philadelphia Chewing Gum Corp. (3rd Circuit 1971) -in USA foreign default judgments are also enforceable
i. PARTIES
1. Philadelphia Chewing Gum Corp. = Appellant (D)
2. Somportex Limited, a British Corp. = P
ii. FACTS
1. P filed an action against D in England
2. D made special appearance which the court converted to
general appearance
3. D was given an opportunity to contest jurisdiction issue
4. P got a default against D in England
5. P tries to enforce the judgment in Federal court, and DC
allows enforcement
6. D appeals
iii. HOLDING
1. comity should be withheld only when its acceptance would
be contrary or prejudicial to the interest of the nation called
upon it to give it effect
2. applied the In re Chirstoff’s Estate test – Penn case.
3. The fact that P got a default judgment does not change
analysis under comity, judgments for England generally
afford recognition
a. Exception
i. Fraud or collusion
ii. Reasonable method of notification not
employed nor reasonable opportunity to be
heard afforded
iii. Otherwise does not satisfy due process
f. Restatement of Foreign Relations Law: Sections 481 and 482
i. 481
1. generally foreign judgments are recognized except as
provided in 482
36
ii. 482
1. tribunal not impartial
2. no due process in obtaining jurisdiction
3. no subject matter jrs
4. no notice of proceeding w/ sufficient time to defend
5. judgment obtained by fraud
6. contrary to public policy
7. conflicts with another final judgment
8. contrary to a forum selection clause
g. Uniform Foreign Money Judgments Recognition-Act, p. 239 of Suppl.
i. Application
1. all foreign judgments
a. except
i. fine or penalty
ii. tax
iii. family law judgments
2. applies if judgment in final and conclusive even if subject
to appeal
ii. extent of recognition
1. full faith and credit
iii. Section 4 – Ground for non-recognition
1. not conclusive if
a. impartial tribunal
b. no due process
c. no PJ
i. prevailing view is US courts will apply the
US due process analysis, inter alia see page
416
ii. procedures required for foreign adjudication
need not be identical to American courts
iii. only need to be compatible with the
requirement of due process law – Ingersoll
Milling Machine Co. v. Granger (7th Cir.
1987)
iv. mere difference in procedural basis not
enough, serious injustice must be involved
d. no SJ
2. need not recognize if
a. no notice of proceeding w/ sufficient time to defend
b. judgment obtained by fraud
i. does not distinguish between extrinsic and
intrinsic
c. contrary to public policy
i. failure to apply principles consistent with
the US constitution may be one basis
d. conflicts with another final judgment
37
e. contrary to the agreement between the parties to
resolve the dispute otherwise than by proceedings in
that court
f. in case of jrs based only on personal service plus
foreign court was a seriously in convenient forum
[comment – this is only factor not in the
restatement]
i. otherwise described as
1. tag jrs and reverse forum non
conveniens
iv. Section 5 Personal Jrs – read suppl. P. 240
v. Section 6 – stay the case of appeal
vi. Savings clause
1. foreign judgments not cover herein my still be recognized
vii. general comment
1. there seems to be no reciprocity factor!
2. can a foreign P get enforcement in state where it is
favorable and then go the another state to enforce under
FFC
h. Question and Comments, p. 413 et seq.
i. Reciprocity factor in Hilton v. Guyot
1. discretionary in six states and
2. mandatory in two
a. Georgia and Mass
ii. United Nations Convention on the Recognition and Enforcement
of Foreign Arbitral Award (New York Convention)
1. Art III
a. Shall recognize that arbitral awards as binding and
enforce them…
2. Art V
a. Court may refuse to enforce if
i. Incapacity
ii. Not valid under law parties are subject o
iii. Award deals with “difference” not
contemplated
iv. Beyond the scope of the submission to
arbitration
v. Composition of arbitration panel not in
accordance with the agreement of the parties
vi. Award not yet become binding
vii. Award has been set aside
viii. Subject matter not capable of settlement by
arbitration
ix. Contrary to public policy
3. Art VII
a. Does not supersede treaties
38
iii. 9 U.S.C.A. Sections 201-208 – U.S. Federal Arbitration Act
1. 202
a. Deals arbitration clauses in commercial transactions
b. Does not apply to relationship entirely bt citizens of
the USA unless…
2. 203
a. Specific grant of Federal jurisdiction
3. 205
a. Removal from state courts
iv. Comment 14
1. Guiness PLC v. Ward, dicta (4th Cir. 1992)
a. Post-judgment settlement may constitute accord and
satisfaction or a substitute contract would leave the
foreign judgment not “enforceable where rendered”
are required by NYC and, thus, not entitled to
recognition under the NY convention.
i. See section 2 and 3.
v. Bachchan v. India Abroad Publication, Inc., (NYSC 1992) p. 420
– enforcement may be denied on First Amendment grounds
1. P, arguably, a public figure in India got a judgment against
D in England and wants to enforce the judgment here.
2. Holding
a. the elements are different in the USA because of
first amendment concerns – if D is media, there
must be publishing w/ gross negligence.
b. “chilling effect” on first amendment rights same as
if foreign judgments are enforced here –
Enforcement denied
c. Suggest denial is mandatory on first amendment
ground and also on due process grounds
vi. Telnikoff v. Matusevitch (DC Cir. 1998), p. 423 – enforcement
may be denied on First Amendment grounds and under Uniform
Money Judgments Recognition Act section 10-704(b)(2) as
“repugnant to the public policy of the State..”
1. Facts
a. P and D, both in the media business.
b. P gets a judgment, based on defamation, against D
in England and wants to enforce in USA, Maryland.
2. Holding
a. Court looks at both First Amendment, Maryland
law, and the UMJRA says that it will not enforce as
against public policy
vii. ALI says that denial on constitutional grounds should be more
narrow
XXIII. Recognition and ENFORCEMENT of US Judgment in FOREIGN Courts
a. Problem 7.1
39
i. Same facts as problem 3.2 except enforcement against Ds must be
in Europe – Cantire, Drof AG, etc.
b. When seeking enforcement in another country look at
i. Bilateral or multilateral treaties on enforcement
ii. Local law of the target country
iii. In federalist countries like USA, it may depend the “state” law
c. Morguard Investments Ltd v. De Savoye (Canadian Supreme Court
[CSC], 1990) – a Canadian case changing the standards for enforcement of
default judgments – from situs to allowing greater latitude for default
judgments
i. Facts
1. D had resided in Alberta got sued by P over a mortgage in
Alberta, D moved to British Columbia, was served by
“double registered” mail in BC, D never answer and P got a
deficiency judgment against D
2. Now, D wants to enforce judgment against P in BC
ii. Issue
1. Is a judgment in Albert enforceable in BC against an absent
defendant who now resides in BC
iii. Holding
1. Prior Canadian law in enforcement was based on whether
D was present in the jrs at the time the judgment was
rendered – called power or single situs basis for jurisdiction
2. We now need to change to granting enforcement of
judgments when
a. The court in other province has appropriately
exercised jurisdiction
b. There was a real and substantial connection
between the jurisdiction an the wrong doing
iv. Class notes (4/4/2006)
1. emphasis in jurisdiction is the court and the claim instead
of the court and the person
d. United States of America v C. Robert Ivey, Maziv Industries, Ltd.
(Ontario Court of Justice – CANADA-1995) p. 439 – applies the
Morguard rule to foreign judgments.
i. Facts
1. P, through the EPA, got a judgment in the US against Ds,
Canadian nationals, for the cost of environmental clean up,
approx 4.5 million
2. P got won summary judgment against D Ivey and default
against his two corporations.
ii. Holding
1. the Morguard rule applies to foreign judgments as well on
comity grounds
40
2. defendant raised penal, revenue, and other public law
grounds but the court decide it the law was not penal
because damage base on cost of clean up; and,
3. Canadian courts will enforce judgments even if the
substantive law is different for Canadian law.
iii. Class notes – professor involved in personally
1. easier to enforce judgments based on common law rather
than statute in Canada and common law countries because
some what universal recognition
2. analogous to common law action of nuisance to statutory
environmental law
a. this is generally a good idea to couch the legal
theories that underlie the judgment that the foreign
court can recognize
i. e.g. common law fraud for violation of
statutes
3. first consider that it was a default judgment is enforceable
a. not all countries would enforce default judgments
4. accepted argument that damages were restitution is nature
5. Canada has a similar clean up scheme
6. other countries would not be necessarily as generous even
the British would be more conservative, Canada is a good
jurisdiction for us
7. carefully study the national laws and design your argument
with the national laws in mind
e. Germany’s Enforcement of Judgment Law, by Brand, p. 445
i. Statutory provisions under ZPO
1. if certain provision are met, the underlying merits of the
case is not looked into in enforcement
a. general exception to enforcement
i. not final, including exhausted appeal rights
ii. contrary to basic principles of German Law
1. e.g. obvious and fundamental
fairness issues
iii. PJ and SJ – according to German law
1. usually not a problem for US jdgmts,
PJ less rigorous than USA
iv. service of process improper
v. reciprocity
1. the country whose judgment is being
enforced would likely enforce a
similar judgment of a German court
vi. whether contradicting earlier judgment
exists
ii. Class Notes
41
1. if the judgment is based on excessive pretrial discovery, it
may hamper judgment recognition
2. punitive damages are often
3. international judicial assistance
4. conformity with HEC, strict compliance
5. Germany will apply German PJ & SJ rules
6. Germans have a list states that recognize German
judgments
a. Many such States passed the Uniform Foreign
Money Judgment Act
7. no tax or penal judgments are recognized
f. Decision of the German Federal Court of Justice (BGH) – 32 I.L.M. 1327
p. 448 – punitive damages will not be enforced in Germany; the mere fact
that part of the judgment may go to attorney contingency fees or future
medical bill will not effect enforceability.
i. Facts
1. P sued D in the USA and got an award of 750K of which
400K is allocated to punitive damages for sexual battery
2. P now want to enforce in Germany
ii. Issue
1. is the judgment in part or whole not enforceable because it
is contrary basic principle of German law
iii. Holding
1. mere difference in procedure do not constitute ground for
denial based on public policy
a. allocation of attorney fees
i. 40% not recognized, actually contingency
fees not allow but not a fundamental
violation
b. pretrial discovery
c. future medicals
i. not recognized but not a fundamental
violation
d. level of damages for pain and suffering
2. punitive damages portion will not be allowed period. A
German judge should not carve out a portion and allocated
to legal costs because that would be mere speculation
3. punitive damages are contrary to German public policy
a. violates public order, in German punishment is for
the State only
g. Problem 7.2 Enforcement of Judgments Under the Brussels Regulation
i. Same fact pattern as Problems 5.2 and 6.1 regarding Celisius and
the nonconforming IMDs except
1. judgment in Germany
2. seek enforcement in Ireland
h. Comments on the Brussels Convention, p. 461
42
i. If the only source of jurisdiction is “exorbitant” as set out in Art. 3
and Annex 1, then domiciliary of EU member states cannot be
sued in such courts; however, defendants not residents of the EU,
i.e. USA, are subject to the exorbitant jurisdiction (EJ) rules
1. Therefore, exorbitant jurisdictions is available to any EU
resident who asserts jrs against a defendant not resident of
EU
ii. Read Brussels Regs.
1. Art 3-4
2. Arts 33,34(1)&(2) and 34(3)
i. Isabelle Lancray S.A. v. Peters und Sickert, p. 463 [German] –
interpretation of the BC, improper service may only be cured by following
the laws of the jurisdiction that rendered the judgment.
i. Facts
1. a German and French company fighting over a trademark
2. French company seeks to enforce in German court
3. service of process did not accompany German translation
as required by Brussels Convention (BC)
4. French company nonetheless get a default judgment
ii. Issue
1. in default judgment situations, does service need to be
proper (e.g. translation) even the defendant was aware of
the lawsuit and had sufficient time to answer? – NO
2. can improper service be cured by applying the enforcing
state’s national law? – NO, it must be cured according to
the law of the State where the judgment was given.
iii. Analysis
1. look at Article 27(2) of the BC and Article 32, since service
is procedure and curing rules also procedural and follow
the rules of the state which gave the judgment
iv. Class Notes
1. look at Art. 34(2)
a. court was trying to interpret this statute
i. D had two defenses
2. this case is important as examples of how European courts
interpret this section
j. Hoffman v. Krieg, p. 468 [Dutch] – Ruling involving BC 26 (default
judgments will generally not be recognized) and 36 (foreign judgments
will not be reviewed as to its substance).
i. Facts
1. Parties married in Germany but husband moves to Holland.
2. Wife got an order for matrimonial support in Germany and
tries to enforce in Holland but husband got a default
divorce in Holland
3. Germany did not recognize the Dutch decree of divorce
43
ii. Cannot figure out this case, really poorly written, but I think the
final result was that judgment for support will not be enforced.
XXIV. Class Notes on Enforcement of Judgment Issues
a. Outline
i. Jurisdiction/enforcement
ii. US scheme
iii. Differences – civil/common law
b. Status of international enforcement of judgment treaty
i. Because of dispute over
1. tag jurisdiction
2. punitive damages
3. minimum contacts and activity based jurisdiction
ii. US and EU could not ratify a treaty but successful in getting a
treaty of enforcement where there is a forum selection clause
1. This WAS ratified at the Hague, signed last August of 2005
2. however, it still must be ratified by the legislature in US
3. this limited treaty may have broad effect because it is
common in international contracts
c. Brussels Treaty for enforcement within EU
d. EU is often reluctant to enforce US judgments because they do not
recognize many US legal concepts, in contract, US courts are very liberal
and make ruling based on comity and due process,
i. Now there is a movement to add a reciprocity condition to add
more balance to the enforceability of judgments
e. Jurisdiction in relation to enforcement
f. EU jurisdiction concepts
i. Based upon property of the persons for jurisdiction over the person
ii. Based upon nationality – France
iii. EU generally do not accept general doing business jurisdiction
iv. EU likes to limit forum jurisdiction
v. Brussels convention – if you are domiciled, you can be sue in the
domiciled state
1. Special jurisdictions – based upon fixed criteria, article 4
and 5
2. contract dispute – generally forum is the place of
performance
g. commentary on the Asahi case, since in the plurality decision some courts
do not follow reasonable standard although they all do the contacts
analysis
h. US is more interested in discretion than firm rules, US cannot give up
general jurisdiction because there are due process concerns and is
constitution
i. EU
i. Focus is on relationship between the dispute and the forum
j. US
i. Focus is on relationship between person and the forum
44
k. Human rights activists like tag jurisdiction
l. EU regulation of Jurisdiction the Recognition and Enforcement of
Judgments in Civil and Commercial Matters
i. Review the EC regulation in statute book, p. 139
ii. In contrast to US joinder of claims rules
iii. Each claim must satisfy jurisdiction rules
iv. Read chapter 3 of page 149 supp.
m. Order 11
i. Service of process on EU company – like a state long arm statute
n. Public Policy Defense
i. Lack of Impartial Tribunal
ii. Lack of Jurisdiction
iii. Lack of Notice
o. The revenue rule
i. General public law matter are not enforced, e.g. tax judgments
p. Note 15 pg 416
i. Result may be you have to sue where the assets are
q. Note 16, pg 416
i. Lack of impartiality
1. generally, in US court there must be systemic problems for
the court to take this charge seriously
ii. lack of personally jurisdiction
1. due process concerns
a. note that for the “minimum contacts” analysis it is
contract between foreign court and defendant
2. Koster case
a. Dutch judgment trying to be enforced in USA
i. Just a few telephone call and other slight
contacts – lack of personal jurisdiction, lack
of contacts
iii. Lack of opportunity to respond
1. service by publication in a foreign forum will not be
enforced in USA
2. substitute service on a government official
iv. Other Public Policy Cases
1. remember that in US the public policy doctrine like other
enforcement of judgment issue is a matter of state common
law
2. Usury Case
a. Look at the cause of action – enforcement of
promissory note – if it is recognized than we will
not look into the calculation of damages.
3. Attorney fees by German law firm that could not
substantiate part of its legal fees – NY court found it a
fundamental issue of due process
45
XXV. FOREIGN STATE IMMUNITY, Chapter 8, p. 478
a. The Schooner Exchange v. McFaddon (1812) – illustrating sovereign
immunity applied to a military ship
i. Facts
1. American citizen sue in court in America for title to a ship
that was seized by the French
ii. Issue
1. Whether an American citizen can assert in USA court title
to an armed vessel found within the waters of the USA
iii. Analysis
1. court makes a distinction between military vessels and
merchant vessels of another state and says that
2. “It seems then to the Court, to be principle of public law,
that national ships of war, entering the port of a friendly
power for their reception, are to be considered as exempt
by the consent of that power from its jurisdiction.”
iv. Conclusion
1. Court has no jurisdiction and libel (on title) must be
dismissed
v. Commentary on p. 495
1. rational for this case is the separation of powers?
b. Ex Parte Republic of Peru (1943) – an illustration of the theory of
absolute immunity – USA changed to a more restrictive view of sovereign
immunity in the early 1950s
i. Facts
1. On March 30, 1942, Galban Lobo Co., SA, a Cuban
corporation, filed a libel in the district court against the
Ucayali for its failure to carry a cargo of sugar from a
Peruvian port to NY, as required by the terms of a charter
party entered into by libellant with a Peruvian corporation
acting as agent for government of Peru.
2. Peru petitions the Dept. of State to recognize immunity
3. however, Peru, did apply for an extension of time to answer
and took deposition of the master, actions, which in DC
view, which amounted to a waiver of jurisdiction challenge
an a petition to dismiss suit. Therefore, the DC refuses to
release ship to Peru
ii. Issue
1. Whether the jurisdiction which the court had already
acquired by seizure of the vessel (in rem) should be
relinquished in conformity to an overriding principle of
substantive law
2. The court will not address the issue of waiver of immunity
iii. Analysis
46
1. USC courts must follow the determination of the Dept. of
State as to immunity matters in relation to seizure of
foreign vessels
a. Rx – national interest is better served by diplomatic
means and judicial means
iv. Conclusion
1. DC denial of petition must be reversed
c. Jack Tate, Dept. of State letter (1952)
i. Notes that most countries except for Russia and UK follow
restrictive view, US will do same
ii. No immunity for real property except embassies and estate of
deceased
iii. Cite increasing practice by government in engage in commerce
d. Notes on p. 490
i. It took FSIA to put end the State Dept. involvement in immunity
issue
ii. Rx for restrictive version so as not perverse the notion of sovereign
dignity
iii. Restrictive view also state in Restatement of Foreign Relations
Law Sec. 451
iv. De jure imperii & de jure gestionis (governmental;
nongovernmental)
e. Foreign Sovereign Immunities Act in 1976 (FSIA)
i. FSIA provides the exclusive basis for both personal and subject
matter jurisdiction over a foreign state
1. therefore, immunity is not merely a defense, it goes to
jurisdiction itself
ii. General rule under FSIA is that USA courts lack jurisdiction unless
1. waiver
2. commercial activity
3. property taken in violation of international law
a. however property for proceeds must be in USA or
b. held by an agency or instrumentality which is
engaged in commercial activity in USA
4. US property acquired by inheritance/succession or gift or
immovable (i.e. real estate)
5. Tortious act or omission of foreign government employees
of agent in the USA
a. Does not include harm arising from a discretionary
act
b. Also explicitly prohibit
i. Malicious prosecution
ii. Abuse of process
iii. Libel
iv. Slander
v. Misrepresentation
47
vi. Deceit
vii. Interference w/ contractual right
6. Arbitration
7. terrorist acts
8. maritime liens and ship mortgages
a. commercial shipping activities of foreign states
b. rx - ships in foreign ports must be able to receive
necessities, supplies, and repairs
9. counterclaims
a. FSIA may not be a shield and a sword for a foreign
state
b. If a state sues. then it waives immunity to the extent
of the claim it asserts
i. i.e. the sued party may counter sue the
foreign government with claims related to
the suit foreign government brought against
it
iii. Problem 8.1
1. Facts Red Star a Chinese government owned travel agency
ordered 1000 executive chairs from a private Cal company.
Goods were delivered by Red Star refuses to pay
f. Jurisdiction and Exclusivity of the FSIA
i. Argentina Republic v. Amerada Hess Shipping Corp., p. 496 – the
FSIA is the sole source of jurisdiction against foreign states
1. facts
a. Hercules a oil tanker owned by a Liberian
corporation was attacked by the Argentine military
off the coast of the Falklands and the ship had to be
scuttled
b. K was entered into in NY
2. D brought up several arguments shot down by SC
a. Arguments by D
i. Expansive definitions US territory and
waters in sec. 1603(c)
ii. Exception for foreign activity that has a
direct effect on USA under 1605(a)(5)
iii. General admiralty and maritime jurisdiction
should apply
3. Holding: Section 1604 and 1330 should be read in together
the establish FSIA as the sole source of jrs against foreign
states
g. The Commercial Activity Exception
i. General test
1. whether a private actor in the marketplace could engage in
the activity at issue
a. exception
48
i. exporting of natural resources such as
petroleum or animals
1. however there are recent cases that
say contra – USA court looking at
the underlying activity
ii. Republic of Argentina v. Weltover, Inc.( 1992), p. 502 – nature
rather than purpose test
1. Facts
a. two Panamanian corporations held 1.3 million
dollars and Bonods that Argentine government
refused to pay
b. place of payment USA
c. they files suit in USA under 1605(a)(2) _
commercial activity outside the states that have an
effect inside
2. Issue
a. Is Argentina’s delay in payment of Bonods a
commercial activity which had an effect within
USA w/in meaning of section 1605(a)(2)
3. Analysis
a. Section 1603(d) makes it clear that commercial
character of a transaction is to be measured by its
“nature” rather than “purpose”
b. Nature of Bonods is that it is a garden variety debt
instrument – i.e. Argentina barrowed money by
issuing bond is commercial activity irregardless of
its purpose – government trying to fulfill foreign
exchange program
i. Look at the underlying nature of the activity
ii. If you are asking “why” a government
activity, you start getting into the purpose
c. It has direct effect in USA because performance
was supposed to be in USA
i. There is no substantial or foreseeability
requirement in the direct effect test
4. conclusion
a. Argentina must stand suit
iii. De Sanchez v. Banco Central de Nicaragua (1982) p. 507 –
purpose rather than nature test (opposite of Weltover)
1. Facts
a. Revolution in Nicaragua causes P to flea to USA
where she files suit against Nicaraguan Central
Bank on a note for $150,000.00
b. Central bank says note cancelled to preserve the
foreign exchange reserves
c. P says three exception in FSIA applies
49
i. Commercial activity
ii. Expropriation in violation of international
law
iii. Tortuous activity
2. Conclusion – Bank has sovereign immunity (yes, this is
Court came to a contrary conclusion under similar fact to
the Weltover case but in the Weltover case the USSC did
not explicitly overrule this case.)
3. Rule
a. Arango test
i. Whether the particular conduct giving rise to
the claim in question constitutes or is in
connection with commercial activity
b. Whether the conduct is sovereign or commercial
i. Depends on nature rather than purpose
c. Requisite jurisdictional nexus with USA
4. Analysis
a. In defining the act we can look to the purpose, here
the purpose of currency control is a distinctively
governmental one or the whole transactions action
can be viewed as
i. Sale of foreign currency or
ii. As the regulation and supervision of foreign
exchange
b. Subjecting state suit in these circumstance would
touch on national nerves
c. Central Bank was regulating foreign reserve
h. The Three Clauses of the Commercial Activity Exception
i. Commercial Activity in the United States – Clause 1 of
1605(a)(2):
1. Clause 1 of 1605(a)(2): “in which the action is based upon
a commercial activity carried on in the United States by the
foreign state”
2. read the Clause 1 in conjunction with 1603(e) the nature of
the claim must bear substantial contact, i.e., a “nexus” to
the commercial activity carried on in the US
a. 1603(e): “A ‘commercial activity carried on in the
United States by a foreign state’ means commercial
activity carried on by the state and having
substantial contact with the United States”
3. Vencedora Oceanica Navigacion v. Compagnie Nationale
Algerienne de Navigation (1984 USCA) p 513 – nexus test
a. Facts
i. P is a Panamanian corporation and the
owner of a ship called Marcos
50
ii. D is an instrument of the Algerian
government
iii. In 1980 P’s ship loaded with oil was on
route from Egypt to Spain and was damaged
by a fire on the ship and was tugged to an
Algerian port but D would not let them stay
because of treat to public safety and orders
the ship moved to another port in Algiers
where the ship was further damaged by a
sever storm
iv. P sues D in USA, arguing jurisdiction based
upon Ds unrelated continuing business in
USA
v. D makes a motion to dismiss based upon
lack of jurisdiction and FSIA
b. Issue
i. The scope of first clause of 1605(a)(2) of
FSIA
c. Holding
i. The court looks at three different approaches
the literal, liberal and nexus approach and
chooses to adopt the nexus approach
d. Analysis and Conclusion
i. There must be substantial connection
between the nature of the claim and D’s
activity in the USA
ii. Here, there is whole transaction (including
the formation of contract) and accident
happened outside the USA, only connection
is D’s unrelated activity in USA – therefore,
no nexus
iii. D’s motion to dismiss based on sovereign
immunity is granted; remember the FSIA is
also a jurisdictional defense
4. S & Davis Int’l, Inc. v. Yemen (11 Cir. 2000)
a. Import-export transactions also fall within Clause 1
b. Found Clause 1 satisfied where instrumentality of
Yemen breached contract to purchase grain in USA.
Contract causes the nexus.
ii. Clause 2: Commercial activity outside the USA - “or upon an act
performed in US in connection with a commercial activity of the
foreign state elsewhere”
1. e.g.
a. acts of foreign agents in USA
b. acts that in USA that violate securities laws
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c. wrongful discharge in USA of employee of foreign
state who was employed in connection with a
commercial activity in some third country
2. Gilson v. Republic of Ireland (USCA 1982) – illustration
of actions of foreign agents in USA
a. Facts
i. P alleges that D stole his expertise and
equipment and made money from them.
ii. D representatives met with P in the USA and
entered into K in USA on a commercial
venturing involving quartz crystals in
Ireland.
b. Holding
i. D’s activity is within the scope of
1605(a)(2)
ii. Indeed the very same scenario appears on
the House Report on the law –
representation in the US by an agent of a
foreign state that leads to an action for
restitution based on unjust enrichment
iii. Clause 3: Direct Effect in the United State – “or upon an act
outside the territory of the United States in connection with a
commercial activity of the foreign state elsewhere and that act
causes a direct effect in the US”
1. In general, courts have required a substantial nexus
between the commercial activity outside the United States
and the harm alleged
2. Weltover, supra, case says an effect is direct if it follows as
an immediate consequence of the defendant’s activity.
3. Ohntrup v. Firarms Center, Inc. involving Turkish firearms,
sales agreement contemplated sales within USA,
foreseeable language
4. Zernicek v. Brown & Root, Inc., personal injury or death of
US citizen outside USA not enough although it can be said
to have some effect in USA
iv. Comments on 1605
1. MCI Telecommunications Corp. v. Alhadhood
a. A foreign State acting as surety
i. A foreign government merely guaranteed
the obligation of another was not a
commercial activity within the purview of
FSIA
i. Distinction between Foreign State and Agency or Instrumentality
i. Service requirements are different depending on whether the D is
considered a State or a political subdivision of a state under 1603
52
(a), or “agency or instrumentality of a state” under 1603 (b); states
must be served under 1608 (a)
ii. Transaero v. La Fuerza Aerea Boliviana (DC Cir. 1994)
1. Court noted three different test courts used
a. Balancing test, categorical test, and core function
test
i. Eg balance test
1. Sue or sue its own name
2. Contract in its own name
3. Hold property in its own
b. Court combines first and second and used it
c. See p. 524 for more detail
iii. See also the Gates and the Banco de Cuba case on p. 524, 525
iv. Usually government instruments are created as separate juridical
entity recognized separate from government
v. Service of Process
1. Rules are different depending the State vs. instrumentality
distinction 1608(a) & (b)
2. Magness v. Russian Federation (USCA 2001) p. 526
a. Held that for service there must be strict compliance
with 1608 (a) and at least substantial compliance
with 1608 (b)
b. For 1608 (b), service that give actual notice of the
suit is coupled with substantial compliance enough
j. Removal, use of jury, punitive damages, venue, default and executions see
p. 531
i. Venue issues 1391 (f)
ii. Punitive damages under 1606
iii. Jury 1441(d)
iv. Enforcement of judgment under 1610 and 1611
k. Problem 8.2
i. Venezuela nationalizes oil industry and seizes TX company’s
assets
l. Waiver of Sovereign Immunity p. 535
i. Explicit and implicit waiver
ii. Explicit waiver
1. may not be revoked unilaterally but only on its terms
2. intentional and knowing relinquishment of the legal right
3. can occur by virtue of provision contained in an
international agreement
a. Harris case
b. Contrast O’Connel case
iii. Implicit waiver
1. House Report examples
a. Agreed to arbitration
53
i. Merely agreeing may not be enough, but the
sovereign also party to NY Convention
enough
b. Agree to choice of law clause
c. Filed responsive pleadings
2. implicit waivers a construed narrowly generally limited to
House Report examples
m. Waiver of Sovereign Immunity for Purposes of Execution on a Judgment
i. Waiver of sovereign immunity for Jrs does NOT = waiver for
attachment or execution of judgment
1. NOTE because of this when drafting a K with a sovereign
power include both a waiver of jurisdiction and
enforcement
ii. 1609 says generally foreign property in USA is immune from
attachment unless they fit into exceptions in 1610 and 1611
iii. Note that 1610 is prefaced with the property in USA…used for
commercial activity…shall not be immune if..
iv. See FSIA sections 1609, 1610 and 1611
v. Hercaire Int’l Inc. v. Argentina (USCA 1987) p. 540 – A waiver
by the State does not cause a waiver by its instrumentalities
1. Facts
a. P sues D for breach of K on a wing tank for D’s air
force
b. D files a counter claim against P and in doing so
explicitly waives immunity for itself and its
agencies
c. P wins a judgment in USA and executes by
attaching a plane of Aerolineas a airline in which D
has 100% stock ownership
d.
2. Issue
a. Whether D’s express waiver of immunity for itself
and its agencies operated to waive Aerolineas
immunity as well
3. Holding
a. In reading 1610(b), it will not allow execution
against the property of one agency or
instrumentality to satisfy a judgment against another
b. 100% stock ownership by sovereign is not enough,
need to show control and aspects of fraud, i.e. using
subsidiary as a shield
4. commentary on this issue has said that there may even be a
due process issue, depriving the separate entity of its
property
n. Commercial Activity Exception to Immunity p 544
i. Meaning of what is commercial in the jurisdictional sense
54
1. MOL v. Bangladesh (USCA 1984) – regulating natural
resources not a commercial activity; therefore, immunity
applies
a. Facts
i. P had K w/ D to sell rhesus monkeys for
medical research
ii. India stop selling moneys so price of
monkey went up
iii. D cancelled K
iv. P sues D, D raises FSIA
b. Holding – D was regulating a natural resource and
import and exports a sovereign act that individuals
cannot do
c. Conclusion – The Court lacked jurisdiction under
FSIA, commercial activity does not apply
2. Siderman de Blake v. Argentina (USCA 1992) – an
illustration of the liberal application of the commercial
activity exception
a. Facts
i. Ps persecuted and tortured by the military
government of Argentina and Argentina also
took their land and hotel
b. Issue
i. Scope of 1605 (a) (2) – commercial activity
c. Holding
i. P facts fit the requirement of clause 1, 2 and
possibly 3
ii. Clause 1 – nexus test
1. contact with USA through operating
the confiscated hotel which caters to
Americans
2. COMMENT: this is extremely
liberal application because the cause
of action is battery plus conversion
in Argentina. How is there nexus
between this and activity in USA
which is solicitation of customers?
iii. Clause 2 – act performed in USA
1. soliciting customers enough
iv. Clause 3 – direct effect
1. commission are to be paid to Ps in
USA possibly enough but dicta
XXVI. Class Notes for Foreign Sovereign Immunities Act (FSIA)
a. History
i. before this act, you cannot sue states because of absolute immunity
ii. later, when State act like commercial parties, private capacity
55
b.
c.
d.
e.
f.
1. called restricted theory of immunity which was embodied
in FSIA
iii. before the FSIA in the USA it used to be the executive branch that
would claim immunity on behalf of the foreign government
do you have to codify immunity, no but the highest court in a country
should adopted position on this issue
To sue foreign state, officials
i. there are thousands of state owned companies that are doing
business in US
Applies to commercial transactions only and jurisdiction limited to within
USA – territorial
i. commercial activity
1. example of sale of military boots
a. look at the underlying nature of activity
b. contractual sale of military boots is contractual or
commercial
2. labor and tax matters are in grey area
3. labor is generally on the commercial side because it stems
from contract between employee and employer
a. contrast with group labor dispute but reduction in
wages a act of congress, then it may be noncommercial activity
4. accident w/ cable car cut by a plane during military
exercise
a. USA claimed immunity because underlying activity
was military exercise
ii. Saudi Arabia v. Nelson p. 565
1. If you can come within the commercial activity ambit of
the statute, you can sue for a tort case
2. Nelson K w/ Saudi Arabia to work in hospital in SA
3. Nelson cannot sue under tort provisions because tort
happen outside USA therefore use commercial activity
provision
4. But ultimately court finds that what was the occurrence that
gave rise to the suit, the immediate activity, which was the
tort not employment contract
Attachable limited to property related to the claim
Terrorist Exceptions
i. state department against because there will be retaliation in court
of other nations for USA terrorist acts
ii. attachable property is not limited to property related to the claim
iii. terrorist act must be state sponsored
iv. punitive or treble damages
v. but difficult to actually enforce
1. sometimes however there is a political deal involved where
the judgment is used as a bargaining chip and partially paid
56
a. e.g. Chili
vi. there is USA statutes that allow USA fund, from tax payers, to
compensate victims
vii. Torture Victims Protection Act - TVPA
1. Extra judicial killings and torture
2. US citizens can use
g. Foreign sovereign immunity act (FSIA) – only way to gain jurisdiction
over a foreign defendant in a USA court
i. Replaced going through the state department sue governments
ii. 208 USC 1604
iii. Generally governments have immunity
1. exception – commercial activity exception
a. engaging in a regular course of commercial conduct
i. engaging in contracts with private entities
2. 3 Prong Test
a. Action based on a commercial activity
i. Carried on in the USA
b. Commercial activity outside USA and effects USA
c. Act of foreign government in connection with
commercial activity outside the USA but direct
effect inside USA
3. Collection is a different matter
a. Attached property will have to some relationship
with the subject matter of the lawsuit
h. Marcos case
i. If an agent acts outside its official duties, cannot use FSIA to plead
immunity – doing acts outside the scope of employment
ii. Courts are split as to whether you can sue a head of state for acting
outside the scope of employment
XXVII. FSIA Statute Overview [Note insert from Sarah]
a. FSIA is a Jurisdictional statute, does NOT deal w/merits of case
i. Only deals w/immunity
ii. Exceptions to immunity
iii. After FSIA part over, goes to merits of case
b. Divided into two parts
i. Jal1. 28 USC 1602?
2. Claimant files case, has to show exceptions to immunity
3. K, torts, terrorism exception & other exceptions
ii. Executory
1. 28 USC 1609
2. this section tells you how to collect assets of for sov to have
debts satisfied
a. a much more limited section
57
b. hard to attach assts for for sov, limited only to those
assets that relate to claim (nexus prov from claim
to assets).
i. US scheme much more restrictive than other
countries
3. need to file a NEW action (enforcement action)
c. 1602
i. codification of restrictive immunity
ii. pay particular attn to “Claims of foreign states to immunity should
henceforth be decided by courts of the United States and of the
States in conformity with the principles set forth in their chapter”
1. Altman case- paintings stolen in govt- see NY times.
Austrian govt relied on this sentence to say it shows NOT
retroactive
a. Said “Henceforth”- means prospective
i. she said it means use restrictive theory
ii. SCT agreed with Altman.
d. 1603
i. definitions (IMPT)
1. FG v. For agency
2. Def of agency or foreign instrumentality
a. Cases on whether they are separate persons or
organs of foreign state
ii. Need to know that its easier to sue foreign agency than FG
1. Agencies engaged primarily in commercial work in US so
more subject to suit
iii. Def of commercial activity
1. Lays out nature/purpose test
iv. Def of comm. activity carried on in US by foreign state
e. 1604
i. general presumption of immunity
ii. subject to exceptions that start on 1605
f. 1605- general exceptions to general immunity
i. if FG fits in these exceptions, for all intensive purposes, you
can say there is SMJ and PJ over the FG or agency
1. some case law on whether you need to show MCs & DP
over foreign party.
a. DC Court said foreign state is not a person, so once
exception to immunity, you have PJ and SMJ
ii. (a)(1)- waiver- can be implied or express
1. express waiver- i.e. in intl ags btwn US & certain state
a. P says has to be unlimited and clear to constitute an
express waiver
2. Implied waiver- by conduct
a. i.e. must raise immunity in your answer/responsive
pleading
58
iii.
iv.
v.
vi.
vii.
viii.
b. must be clear
(a)(2)- action based on commercial activity
1. Tests- P says use private player test- conduct of FG is
similar to conduct of a private player.
a. But still have to look at underlying nature/purpose
of activity.
2. 3 clauses- J can be established under each clause separately
a. commercial activity carried on in US
i. Ks/transactions in US
ii. Not much litigation here
b. Act performed in US in connection w/commercial
act outside of US
i. Not much litigation here
c. Direct effects clause- act outside US/commercial
act outside of US BUT effects felt here
i. Lots of litigation on this clause
(a)(3)- expropriation of property in violation of intl law
(a)(4)- rights of immovable property
(a)(5)- torts exception
1. patterned after FTCA
2. protective bce torts sensitive to foreign sov- gives wide
protection
3. limited window of J over minor torts
a. i.e. J over automobile tort by embassy driver
b. but closes window for larger tort
4. has territorial limitation
a. act had to occur in US
b. does all tort act have to occur here, what about
injury
i. cts differ in interpretation
5. First part gives J’al framework - two exceptions
a. (A) Doesn’t apply to discretionary function- If you
can show tort involves high level official and
planning/strategizing some aspect of lawsuit still
have immunity
b. (B)- all intentional torts IMMUNE
i. i.e. malicious prosecution, abuse of process,
libel, slander, misrepresentation, deceit, or
interference w/ K rights.
(a)(6)- arbitration
1. if for state agreed to arbitrate dispute (NY convention
enforces arbitral awards & ags), there is J to sue if agreed
to arbitrate & some dispute with NY conv or refuse to
execute.
(a)(7) terrorist exception
1. can sue for terrorist if country is on state terrorist list.
59
2. ONLY PART OF FSIA that is EXTRATERRITORIAL (no
territorial limitation)
3. Large JDs under this action bce country does NOT usually
appear so you see huge default JDs and high punitive
awards.
4. Cong action to use T’s money to be used to satisfy JDs
a. But why use T money to satisfy terrorist countries
obligations
ix. (a)(8) admiralty exception
1. p doesn’t really understand this
g. 1606
i. if FG liable, it is liable just like a private party
ii. some differences in how you calculate damages
1. depends on if JD against for state OR for agency
a. no punitive damages against for state BUT CAN
GET against for agency
2. note in 1608- easier to serve for agency than for sov with
process
XXVIII. Class 4/13/2005
a. Outline: FSIA 1610 – Sovereign Immunity in context of Execution of
Judgments
i. Waiver of immunity/jurisdiction
ii. Waiver of immunity/execution
1. under separate statute because more sensitive area than
jurisdiction, congress did intentionally
2. the practical situation is that most countries do not have
much assets here
3. two Vienna conventions protect consulate or embassy
assets
4. usually bank accounts are no good because embassy will
say it’s for running the embassy
iii. Torts - judgments without a remedy
1. generally, there is no language in section 1610 for
judgments based on torts and congress did this intentionally
a. if we allow tort claim execution here then USA
would be vulnerable abroad for foreign tort suits
under reciprocity and comity principles
iv. Commercial claims – nexus protection
1. nexus between the property to be attached and the claim
v. Instrumentalities
1. presumption of separateness
2. vast majority of cases in this area is for instrumentalities
under 1610 (b) because most cases are commercial in
nature, done by instrumentalities
3. no nexus required – 1610 (b) (2)
a. so it opens up any property subject to limits therein
60
vi. prejudgment attachment 1610 (d)
1. must be explicitly waived
2. even more sensitive than execution therefore express
waiver is required
3. in reality virtually impossible to get
vii. courts are churning out large numbers of terrorist cases under 1610
(a) (7)
b. the arbitration provision in FSIA does not have an nexus requirement
c. another option is to take the USA judgment and try to enforce it abroad,
FSIA does not apply, apply the laws of foreign state where the assets are
located
d. Section 1611 of FSIA
i. Other exception to immunity form execution
1. international organizations, e.g. World Bank
2. foreign central bank
3. military property
XXIX. ARBITRATION & MEDIATION
a. Review
i. Mediation
1. formal mechanism, more frequent than before
2. nonbinding unless parties make it binding
3. mediators generally have no authority to bind the parties
4. customary to share mediation fees between parties
5. many contract require mediation prior to a party
commencing arbitration
ii. Arbitration
1. adhesion arbitration language generally enforced to favor
international transactions
2. advantage of expert in an area resolving a case
a. construction
3. Definition
a. Submission of controversies, by agreement of the
parties thereto, to persons chosen by themselves for
determination
4. nearly unlimited discretions as to all aspects of the process
a. issued to be submitted
b. location
c. who the arbitrator(s) would be
d. substantive law
e. procedural law
f. evidentiary rules
g. enforcement rules
5. choose between institutional or ad hoc
a. ad hoc – parties define all terms
b. institutional
i. AAA (NY)
61
ii. ICC (Paris)
iii. ICSID (Hague)
iv. LCIA (London)
6. Arbitrators must be paid fees that may be very expensive
7. Arbitration v. Litigation
a. Unless parties agree otherwise, in arbitration,
parties do not have the right to
i. Preliminary injunctions or attachments
ii. To jury
iii. Conduct discovery
iv. To appeal the merits of an award
8. arbitration rules for various institutional arbitration
programs vary a great deal
b. Problem 10.1, p 628
i. DSC, seller and BB, buyer of cement
ii. Goal is to facilitate efficient and effective DR, cost effective
closure, not to generate complex and involved proceedings
iii. Enforceability
1. Treaty
a. NY Convention
b. European Convention
c. ICSID
d. Inter-American Convention
e. NAFTA
2. national requirement for enforcement of awards
a. may require reciprocity of award enforcement
iv. Scope of DR provision
1. parties
a. included who
2. the dispute
a. the issue of arbitrability shall be determined by….
3. methods of dispute resolution
a. remember Federal Jrs in USA cannot be created by
contract
4. Institution
a. Avoid boilerplate style and vague clauses
b. Avoid selecting organization located in a party’s
home
c. Consider NOT selecting a arbitral institution (e.g.
AAA) to avoid pay high fees)
5. Rules
a. Discover, subpoena, evidence rules, prejudgment
attachment, etc.
b. Specify the applicable rules with precision
c. Confidentiality issues
d. Joinder or nonjoinder of third parties
62
6. Logistics
a. Choice of language
7. the Award
a. waiver of sovereign immunity for jurisdiction and
enforcement of award if one party is Sovereign
b. attorney fees and costs
c. arbitration fees
d. special, consequential and punitive damages
c. Problem 10.2
i. TEI-HCM contract, TV station gets sued in Federal Court for
defamation by Mexican hospital
ii. First read the language of the contract and then look up applicable
international agreements if any
iii. Note that in NY convention only applies to commercial disputes
d. Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc. (USSC 1985) –
U.S. anti-trust claims my be arbitrated
i. Facts
1. Involves an auto distribution K between P & D
2. D want to get out the arbitration
ii. Issue
1. whether D’s antitrust claims may be arbitrated
iii. Rule
1. First, consider the scope of the arbitration clause, does it
reach anti-trust claims (statutory cause of action)
2. Second, consider whether the legal constraints external to
the parties’ agreement foreclosed the arbitration of those
claims
3. overrules the American Safety holding by saying that antitrust claims are subject to arbitration
4. rational:
a. The Federal Arbitration Act and the Sherman Act
does not have any provision that say anti-trust
claims are not subject to arbitration
b. Comity
c. Bremen case “eschewed a provincial solicitude”
d. Damage the fabric of int’l commerce and trade, and
imperil the willingness and ability of business to
enter into international commercial agreement
e. May attack the fraud in the inducement of
arbitration clause itself
f. We can choose not to enforce and arbitration award
based on anti-trust if contrary to public policy per
Art. V(2)(b)
e. Prima Paint Corp. v. Flood & Conklin Mfg. Co. (USSC 1967, p 645) –
fraud in the inducement must be to the arbitration clause itself
63
i.
Issue
1. whether a claim of fraud in the inducement of the entire
contract is to be resolved by the federal court
ii. Holding: no arbitrator may decide
1. In analyzing section 4 of the FAA, language says: “once
the court is clear on the issue of making of an agreement
for arbitration…is not an issue” then the case be arbitrated
2. fraud in the inducement of the arbitration clause itself
would be subject to judicial review buy not fraud in the
inducement of entire contract
f. Problem 10.3
i. TEI gets an arbitration award for attorney fees of 100K and tries to
enforce on assets in FL
g. Parsons & Whittemore Overseas, Inc. v. Societe Generale de L’ Industrie
Du Papier (RAKTA) USCA 1974 – narrow application of exceptions to
arbitration
i. Facts
1. Arbitration award against P which D tries to enforce in
USA
2. Involves a paperboard mill in Egypt.
3. May 1967, Arab-Israeli Six Day War erupts, Egypt cuts
diplomatic ties to USA
4. project disrupted
5. D an Egyptian Corp.
6. P is USA corporation
ii. Rule
1. Under 9 USC 208, the existing Federal Arbitration Act
(FAA), 9 USA 1-14, applies to the enforcement of foreign
awards except to the extent to which FAA may conflict
with the NY Convention
2. Various defenses raised under the NY Convention
iii. Issue & analysis
1. public policy
a. narrowly applied
b. national policy is not public policy, just because
Agency for International Development (AID) [a
branch of the U.S. gov.] withdrew finance of the
project does not mean it would be against public
policy under the circumstances not the recognize
the contract
c. to deny enforcement of this award merely because
USA had a falling out with Egypt in recent years
would mean converting a defense intended to be of
narrow scope into a major loophole.
2. Non-Arbitrability
64
a. The mere fact that an issue of national interest may
incidentally figure into the resolution…does not
make the dispute not arbitrable.
b. There must be some compelling national interest
3. Inadequate Opportunity to Present Defense
a. Essentially sanctions the application of the forum
state’s standards of due process
b. Inability to subpoena one witness is a right foregone
by giving right to go to court and arbitrate instead
4. arbitration in excess of jurisdiction
a. narrowly construed
b. generally allow arbitrator’s view on the scope of the
agreement
5. manifest disregard of law
a. does not mean the court will review arbitration
proceeding record for errors of fact or law
h. Non-domestic Nature of Award
i. For the NY Convention to apply, the arbitral award must be either
1. the award was made in the territory of a state other than the
state where enforcement is sought, or
2. not considered as “domestic” in the state where
enforcement is sought
a. Bergesen case
i. Not domestic where NY state award but
parties were Swiss and Norweigian
b. Lander Co case
i. Not domestic although both parties were
USA because contract to distribute Poland
i. Spier v. Calzaturificio Tecnica, S.p.A. (USDC, 1999) – when action to
enforce is brought in a foreign state, grounds for refusal to enforce
arbitration limited to Article V of NYC
i. Facts
1. P got an arbitration award in Italy but the award was
nullified by three Italian courts for evidence of pay-off
2. Now P want to nonetheless enforce the award in USA
ii. Rule
1. NY Convention Rule V1(e)
iii. Holding
1. Rule V 1 (e) allows refusal of enforcement of an award
when “The award…has been set aside or suspended by a
competent authority of the country in which, or under the
law of which, that award was made.
2. Dicta: When action for enforcement is brought in a foreign
state (other than where the award is rendered), grounds for
refusal to enforcement is strictly limited to Article V of the
Convention.
65
a. However, when action to enforce is the state in
which or under the laws of which, the arbitration
was made then those courts may consider “the full
panoply of express and implied grounds for relief.”
iv. Conclusion
1. Because Italian courts overturned the award under Rule
V(1)(e), U.S. courts will not enforce the award.
j. Notes
i. Note the NY convention in note 29 US requires reciprocity form
the member of NYC on the actual application of recognition and
enforcement of the awards.
ii. Note the interplay between
1. NY Convention Art. V(1)(e)
a. Court MAY decline to enforce award where an
award is annulled by competent authority
2. NY Convention Art.
a. Convention SHALL not deprive any party of rights
to award to extent allowed under laws where
enforcement is sought
3. result is that decision on both sides in USA where a
judgment has been annulled by foreign court
XXX. Class Notes on Arbitration and Mediation
a. Arbitration v. Litigation
i. Which is more effective in terms of enforcement
1. Arbitration per NY convention better
ii. Risk in products liability
1. for P litigation in US is better because of contingency fee
contracts – low risk
iii. in terms of choice of forum, sometimes unpredictable so arbitration
is better
Last Day Overview
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Tips for Exam
o Read commentary on page 7 and
o Read 28-34
There is a question as to whether forum selection clause applies to torts
For personal jurisdiction / due process issues
o No uniform standards
o Foreseeablility, minimum contacts
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o Service of process + some kind of contacts = due process
 Look at defendant’s attempt to access the market, that forum
intended to be served
 Did defendant benefit from the forum
 Purposeful availment
 VW case says foreseeability is not good enough
 Statistical evidence is used a lot in this field
o Specific vs. General JRS
 Specific – defendants has specific contacts with the forum
 Nexus between the nature of the claim and then contacts
 General – continuous and general contacts with the forum
 Usually nexus between contacts and claim not necessary
o Ashai Case
 Remember it dealt with a third party claim and the 3P connections
with USA
 It was a plurality opinion but nonetheless lower courts generally
still follow event though they do not have to
 Look at O’Conner factors
 Contacts test plus interest balance test
 Interest of the forum in the case
 Remember that what was left in an indemnity action where
CA did not have much public interest
Veil Piercing
o To obtain jurisdiction over foreign parent though a subsidiary here
o Must show complete or undue control, show that acts are attributable to
the foreign parent
o Looks at earmarks, management, common BOD, etc.
o Acts of subsidiary benefiting the foreign parent – this type of analysis is
more prevalent now rather that a mere agency analysis
o Look at Frummer case.
Veil Piercing for Service of Process
o Service on subsidiary enough for proper service of process on parent
o See Schlunk case
FRCP Rule 4(k)(2) – Federal Jurisdiction
o Satisfy clause in statute
o Aggregate contacts w/in USA
 Some countries will not accept this theory and may be a problem
when enforcing
FRCP Rule (4)(f) – look this up and study issues related
Special methods of service
o Eg service by email
HSC
o Mandatory when it applies
HEC
o Does not exclude other evidence methods
Brockmeier case (CA)
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o If service by mail, then make sure the foreign country authorizes it
Tag jurisdiction
HEC
o Generally in civil law countries discovery is tightly controlled by the court
Voluntary – compulsory; party – non-party
o See FRCP 30(b)(6) for definition of who is a “party”
 For a company it would the CEO, etc.
Parallel proceeding
o Anti-suit injunctions, anti-anti suit injunctions
o Supreme court has NOT entered the area
o Two views
 Comity standards
 Rarely allow injunctions
 Vexacious Group
 Vexacious to parties to have two proceedings at the same
time
o Declaratory judgment action – Yahoo case
 Most USA courts would permit
Foreign P suing in USA court
Subject Matter JRS
o Extra-Territoriality
 USA laws generally contained w/in USA
Alien Tort Statute
Forum Non Convenience
o Balance of public and private interest factors
Bussels Convention
o Even with focus on fixed notion of jurisdiction, there still need
interpretation of the statute
Federal Evidence Act
o Intel case – not in cases book
o Foreign parties may get more discovery USA even though it would not be
similarly allowed in their own country
Enforcement of Foreign Judgments
o Public policy defense
 Narrow except for constitutional concerns – freedom of speech
Foreign Sovereign Immunity Act
o Codification of restrictive theory of immunity
o Retroactive
o Exclusive bases of jurisdiction
o General principle of immunity subject to exceptions
 E.g. commercial activity exception
 Weltover case
 Commercial v. Governmental active
o Underlying nature and not the purpose
 E.g. sale of military boots
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Although military is a government
function, but underlying transaction
in a contract
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Nelson
 Transaction happened in Saudi Arabia but P tried to tie to
some activity in USA
 Claim is based on tort
Professor’s email = adepsomsn.com
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