MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) 1/10/2011 9:32:00 AM Federalism, Finality, and Foreign Judgments : Examining the ALI Judgments Project’s Proposed Federal Foreign Judgments Statute ROBERT L. MCFARLAND* ABSTRACT The force and effect of foreign civil judgments in U.S. courts are questions of growing importance. Presently, the United States is not party to any treaty regarding the extraterritorial force of civil judgments. The American Law Institute (“ALI”) recently drafted a model federal statute regarding these questions and asserts that if adopted, the statute would increase U.S. leverage in international negotiations for such a treaty. This Article argues against the adoption of the ALI Judgments Project’s proposed federal statute. This Article responds to the assumption that recognition should be a matter of federal law and argues that displacement of state law would undervalue interests protected by federalism. This Article also argues that preemption of the common law would unnecessarily reduce state authority over justice. The Article argues that the proposed statute’s controversial reciprocity requirement compounds the problem of preemption, ignores the interests of private litigants, and diminishes international respect for the United States’s commitment to the rule of law, weakening its authority in future diplomatic negotiations. * Associate Professor of Law, Faulkner University, Thomas Goode Jones School of Law; J.D., Pepperdine University School of Law; B.A., Oklahoma Christian University. The author would like to thank Justin Seamon for his research assistance and Adam MacLeod for his helpful comments. 63 MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) 64 New England Law Review 1/10/2011 9:32:00 AM v. 45 | 63 INTRODUCTION W
hen Justice Oliver Wendell Holmes famously declared that those who “study law . . . are not studying a mystery,”1 it is unlikely that he had the study of conflict of laws or res judicata2 on his mind. At the intersection of conflict of laws and res judicata jurisprudence, one confronts the difficult question of the extraterritorial force and effect of judgments.3 The complexity of this issue is highlighted by the Court’s lengthy and divided opinion in Hilton v. Guyot,4 decided just two years before Justice Holmes’s declaration of law’s demystification. Throughout Hilton, the Court struggled with the tension between its own competing conceptions of law. On one hand, the Court examined a brooding and omnipresent law of nations5 as a potential source of a universal obligation requiring recognition of foreign judgments.6 Yet the Court ultimately confined law to the realm of territorial sovereignty and rejected universal norms of international law.7 However, the Court then 1 Oliver Wendell Holmes, Jr., The Path of the Law, 10 HARV. L. REV. 457, 457 (1897). 2 Res judicata (“the thing is judged”), also known as claim preclusion, is a common law doctrine that prevents a party from relitigating its claim. The general rule is that a final judgment rendered by a court with jurisdiction over the parties and subject matter is conclusive as to the rights of the parties (and their privies) to the action and bars any subsequent attempt to retry any matter that was, or could have been, raised as part of the cause of action. See Allen v. McCurry, 449 U.S. 90, 94 (1980). Despite the fact that res judicata rests on the relatively straightforward principle that a party ought only have one bite at the apple, the doctrine often results in complex jurisprudential questions mixing procedural and substantive concerns. See RESTATEMENT (SECOND) OF JUDGMENTS ch. 1, pt. II, introductory cmt. (1982) [hereinafter JUDGMENTS]. Unsurprisingly, then, res judicata has generated a complex body of state law intimately connected with the system of civil adjudication within the state’s tribunals. 3 For a useful overview of U.S. law regarding the force and effect of foreign judgments in U.S. courts, see RUSSELL J. WEINTRAUB, COMMENTARY ON THE CONFLICT OF LAWS 746‐53 (5th ed. 2006) [hereinafter WEINTRAUB, COMMENTARY]. See also Cedric C. Chao & Christine S. Neuhoff, Enforcement and Recognition of Foreign Judgments in United States Courts: A Practical Perspective, 29 PEPP. L. REV. 147, 148 (2001) (summarizing foreign judgment recognition practice in U.S. courts). 4 159 U.S. 113, 163‐64, 166‐67 (1895). 5 Two decades after The Path of the Law, Justice Holmes, as part of his quest to rid the law of mystery, opined that “[t]he common law is not a brooding omnipresence in the sky but the articulate voice of some sovereign or quasi‐sovereign that can be identified.” S. Pac. Co. v. Jensen, 244 U.S. 205, 222 (1917) (Holmes, J., dissenting). 6 See Hilton, 159 U.S. at 163‐64 (discussing international law and comity as sources of a quasi‐obligation to recognize and enforce foreign judgments in U.S. courts). 7 See id. at 163. MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) 2010
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suggested that this territorial sovereignty is preempted by comity.8 Citing Justice Joseph Story’s Commentaries on the Conflict of Laws, the Court noted the futility of any effort to articulate the effects of foreign judgments with clarity because the issue “touched the comity of nations, and that that comity is, and ever must be, uncertain.”9 One might be forgiven for finding Hilton and the force and effect of foreign judgments in U.S. courts a mysterious study. Determining whether a civil judgment rendered in one jurisdiction has any effect in another goes to the heart of the law of judgments.10 Civil judgments are not self‐executing; judgments are mere pieces of paper until properly presented for recognition and enforcement.11 Even within a unitary legal system, the enforcement of judgments requires presentment and use of ancillary remedies. For example, one who obtains a money judgment from an Alabama state court may not attach and seize property in Florida without first presenting the judgment to a Florida court for recognition. Doing so does not present a difficult legal question because the Full Faith and Credit Clause of the U.S. Constitution secures the Alabama judgment creditor’s right to enforce the judgment in Florida.12 Contrast this example with one involving a creditor whose judgment was rendered by a tribunal located in a foreign nation like Yemen, rather than a sister state. The Full Faith and Credit Clause does not apply to a foreign nation’s judgments. Courts have struggled to assess whether the Yemeni judgment creditor has a right to recognition in Florida.13 If so, this International law, in its widest and most comprehensive sense—
including . . . [public and] private international law . . . —is part of our law, and must be ascertained and administered by the courts of justice as often as such questions are presented in litigation between man and man, duly submitted to their determination. . . . . No law has any effect, of its own force, beyond the limits of the sovereignty from which its authority is derived. Id. 8 According to the Hilton Court, comity is “the recognition which one nation allows within its territory to the legislative, executive, or judicial acts of another nation.” Id. at 163‐64. 9 Id. at 164. 10 See RESTATEMENT OF JUDGMENTS § 1 (1942). 11 Recognition of judgments is distinct from enforcement of judgments. See infra Part I.A.2‐
3. Hereinafter, both recognition and enforcement will be referred to as “recognition” of judgments unless otherwise noted. 12 See U.S. CONST. art. IV, § 1; infra Part I.B.1 (discussing the Full Faith and Credit Clause and its application in the interstate context). 13 See infra Part I.B.2 (discussing the exclusion of foreign judgments from the scope of the Full Faith and Credit Clause). MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) 66 New England Law Review 1/10/2011 9:32:00 AM v. 45 | 63 issue is complicated further by the questions of what legal basis supports that right to enforcement and whose law determines whether Florida must recognize the foreign judgment—Florida’s law or federal law. If Florida’s law governs, yet another complication emerges because Florida’s judgment may implicate the foreign affairs of the United States. In Hilton, the Court said that a predicate for enforcement of foreign judgments in U.S. tribunals is that the foreign court be part of “a system of jurisprudence likely to secure an impartial administration of justice between the citizens of its own country and those of other countries.”14 But Hilton does not indicate whether comity is a matter of federal law preempting Florida’s sovereign authority to refuse recognition of theYemeni judgment.15 This example points to an interesting choice of law inquiry—whether state courts have sovereign authority to choose to recognize and enforce the judgments of foreign nations’ tribunals.16 The United States is not a party to any judgment‐recognition treaty; there is not international consensus regarding the principles that should govern judgment recognition.17 There are also no existing federal statutes governing the extraterritorial effect of foreign judgments in the United States.18 At one time, the federal courts appeared willing to develop federal common law governing the recognition of judgments from foreign nations.19 Now, however, federal courts applying Erie Railroad Co. v. Tompkins20 and Klaxon Co. v. Stentor Electric Manufacturing Co.21 adhere to state law to determine whether and to what extent the judgments of foreign nations are entitled to 14 Hilton, 159 U.S. at 202. 15 See id. 16 See generally Robert C. Casad, Issue Preclusion and Foreign Country Judgments: Whose Law?, 70 IOWA L. REV. 53 (1984) (discussing the choice of law inquiry in the context of recognition practice). 17 See RESTATEMENT (THIRD) OF FOREIGN RELATIONS LAW OF THE UNITED STATES pt. IV, ch. 8, intro. note (1986) [herinafter FOREIGN RELATIONS LAW]; see also infra Part I.B.2. 18 See Linda J. Silberman & Andreas F. Lowenfeld, A Different Challenge for the ALI: Herein of Foreign Country Judgments, an International Treaty, and an American Statute, 75 IND. L.J. 635, 635‐
36 (2000) (discussing the lack of federal legislation—one impetus of the ALI’s foreign judgment recognition project). 19 See Hilton, 159 U.S. at 163‐64 (stating a rule of federal common law governing recognition and enforcement of foreign judgments). 20 Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938) (declaring that there is no general federal common law and requiring federal courts to apply state law to resolve all matters of substantive right, except where the matter is governed by a federal question). 21 Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941) (holding that Erie requires federal courts sitting in diversity to apply state choice of law rules). MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) 2010
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recognition and enforcement.22 A number of scholars argue that federal law should govern recognition and enforcement of foreign judgments.23 Advocates of this federal approach argue that the national public interest in foreign relations is implicated in each case where a private litigant presents a foreign nation’s judgment to a state court. Under this approach, the federal interest of achieving efficient and uniform regulation of international commerce outweighs the interests of private litigants and the forum, which must accordingly give way.24 Two critics of deference to state sovereignty in recognition law, Professors Andreas Lowenfeld and Linda Silberman, served as reporters of the American Law Institute’s (“ALI”)25 foreign judgments recognition project, which resulted in a proposed “comprehensive federal statute on the subject of foreign country judgments” (“ALI Judgments Project”).26 According to the reporters’ introduction to the ALI Judgments Project’s proposal, the proposed federal statute is intended to achieve two central goals: develop a uniform national approach to the recognition and enforcement of foreign judgments; and provide a complete statement of the law that would “close the gaps in the American law of foreign judgments 22 See, e.g., FOREIGN RELATIONS LAW, supra note 17, § 481 cmt. a (stating that the general practice since Erie has been to apply state law to determine recognition and enforcement of foreign judgments in the absence of a federal question); 18B CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 4473 (2d ed. 2002) (discussing the federal practice of applying state law to determine the force and effect of a foreign judgment in federal court where the court sits in diversity or alienage jurisdiction). 23 See Ronald A. Brand, Enforcement of Foreign Money‐Judgments in the United States: In Search of Uniformity and International Acceptance, 67 NOTRE DAME L. REV. 253, 300 (1991) (arguing that foreign judgment recognition should be a matter of federal law); Casad, supra note 16, at 79 (“Although the Republic can survive without federalizing the law of foreign judgment recognition, the arguments in favor of that position are strong and the principle argument against it amounts to little more than inertia.”); Behrooz Moghaddam, Note, Recognition of Foreign Country Judgments—A Case for Federalization, 22 TEX. INT’L L.J. 331, 343‐49 (1987) (proposing federalization of recognition law). 24 See Brand, supra note 23, at 326 (asserting that preemption of state law is a justifiable response to the lack of uniformity in state recognition law and is necessary to further national interests). 25 Foreign Judgment Recognition: Hearing Before the Subcomm. on Commercial & Admin. Law of the H. Comm. on the Judiciary H.R., 111th Cong. 2‐3 (2009) [hereinafter Hearing] (statement of Linda J. Silberman, Martin Lipton Professor of Law, New York University School of Law); see also Silberman & Lowenfeld, supra note 18, at 336‐37 (stating that “it is virtually impossible to explain to French or Dutch or Japanese lawyers that a judgment originating in their country may be enforceable in New York but not in New Jersey” and suggesting that a preemptive federal statute is necessary to remedy the confusion). 26 RECOGNITION AND ENFORCEMENT OF FOREIGN JUDGMENTS: ANALYSIS AND PROPOSED FEDERAL STATUTE vii (Proposed Official Text 2006) [hereinafter ALI PROPOSED STATUTE]. MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) 68 New England Law Review 1/10/2011 9:32:00 AM v. 45 | 63 that would remain if the solution were left to ad hoc judicial decisions.”27 This Article wades into the mysteries surrounding recognition and enforcement of foreign judgments in state and federal courts. Part I provides an overview of judgment‐recognition law, highlighting important jurisprudential questions implicated by collateral review of foreign judgments. Part II introduces the ALI’s proposed federal foreign judgment‐
recognition statute and examines the two central features of the statute: preemption and reciprocity. Part II.A examines the ALI Judgments Project’s case for preemption of state law regarding the recognition and enforcement of foreign judgments, arguing that preemption undervalues several significant state interests. This Part demonstrates that preemption arguments unjustifiably emphasize the diplomatic implications of judgment‐recognition practice and neglect private interests. Specifically, this Part discusses litigants’ interests in avoiding duplicative litigation, which is protected by res judicata. The ALI Judgments Project’s federal statute would preempt a state’s authority to protect this private right. Finally, this Part argues that the case for preemption rests on flawed assumptions concerning the treatment of U.S. judgments in foreign courts. These flawed assumptions lead to a faulty diagnosis for which the ALI Judgments Project prescribes preemption as the remedy. However, this Part shows that preemption will fail to obtain more favorable treatment of U.S. judgments abroad because it is based on this flawed analysis. Part II.B examines the second central feature of the ALI’s proposed statute—the controversial reciprocity requirement. After introducing the reciprocity proposal and the arguments advanced by its proponents, Part II.B argues that the reciprocity requirement would unnecessarily compel states to extend less recognition to foreign judgments and would require states to expend more judicial resources to accommodate the federal reciprocity mandate. This Part also argues that the reciprocity requirement is unlikely to be successful in increasing U.S. leverage in efforts to secure bilateral or multilateral judgment‐recognition agreements. Finally, Part II.B argues that, although the reciprocity requirement would require courts to focus attention on the public law attributes of the civil judgments presented for recognition, it would be better to allow judges to examine the private rights of the litigants on the basis of common law res judicata principles. I. Recognition and Enforcement of Foreign Judgments There are several layers of jurisprudence implicated by the presentment of a judgment rendered by a foreign nation’s tribunal to a state court for recognition. A brief survey of the fundamental principles 27 Id. at 1. MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) 2010
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and policies of the law of judgments is important before examining the unique questions arising from the presentment of a foreign nation’s judgment in state court. A. Taxonomy of Judgment Recognition and Enforcement 1.
Judgments A judgment is an official decision of a court that determines the rights of private parties as those rights relate to a specific case or controversy submitted to the court for resolution.28 Under U.S. law, a judgment is distinct from a verdict, which is the formal decision or finding of the jury regarding matters of fact submitted to the jury for determination.29 A jury’s verdict generally has no force or effect until a judgment is entered by the court upon the verdict.30 A civil judgment has two significant attributes: it resolves a dispute between private parties, and it is a public act of a sovereign government. A civil judgment is not merely a private agreement; it is a public announcement by a court that derives its authority from the state. As such, the judgment has force and effect within the territorial sovereignty of that state’s government.31 The judgment also has precedential value within the territory of the sovereign that extends beyond the private interests of the litigants who presented the dispute to the court. These two distinct attributes of civil judgments, known as the “double aspect” of civil judgments, provoke challenging questions as one attempts to articulate a consistent rationale for recognition and enforcement of foreign judgments.32 Private rights articulated by judgments might be viewed as private property deserving protection in foreign legal systems—this is the vested‐rights rationale of recognition and enforcement. If civil judgments did nothing more than regulate private rights, recognition and enforcement of foreign judgments would occur as a natural matter of private right.33 But 28 BLACK’S LAW DICTIONARY 918 (9th ed. 2009) (defining judgment as “a court’s final determination of the rights and obligations of the parties in the case”). 29 Id. at 1559 (defining verdict as “a jury’s finding or decision of the factual issues of a case”); see, e.g., Clark v. State, 97 S.W.2d 644, 646 (Tenn. 1936). 30 Compare 89 C.J.S. Trial § 818 (2010) (“In the absence of a statute to the contrary, a verdict is a decision by a jury.”), with 49 C.J.S Judgments § 2 (2010) (defining verdict differently than judgment). 31 See Casad, supra note 16, at 58. 32 See id. (discussing the “double aspect” of a civil judgment as one between private parties and an act of government). 33 Id. (addressing an additional rationale for explaining foreign judgment recognition—the “’vested rights’ theory,’ where [r]ights, obligations, and other jural relations become fixed, or vested”). MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) New England Law Review 70 1/10/2011 9:32:00 AM v. 45 | 63 the judgment is a public act of a sovereign, and it is this public character that implicates the sovereign relations of independent and equal states when the judgment is presented for recognition and enforcement to a foreign sovereign by private litigants. Before discussing these issues, it is helpful to distinguish recognition and enforcement as distinct strands of the law of judgments.34 Both strands address the effect of a final judgment in subsequent adjudication. Nevertheless, the terms are distinct and implicate different public interests and private concerns. Before discussing the interests arising in the context of foreign judgments, it is helpful to consider the distinction between judgment recognition and judgment enforcement within the U.S. system and between the states. 2.
Enforcement of Judgments The law regulating enforcement of judgments is complex and varied.35 When damages are awarded by a court, the judgment creates a negotiable private right to collect from the judgment debtor. However, the judgment is not self‐executing, and the judgment creditor may not generally utilize self‐help to execute the judgment.36 Instead, the judgment creditor is required to enlist the coercive power of the sovereign to consummate enforcement. A set of enforcement remedies, known collectively as ancillary remedies, facilitates the judgment creditor’s enforcement.37 Ancillary remedies are vital to the judgment creditor because most states prohibit judgment enforcement by self‐help seizure of the debtor’s assets. The judgment creditor must enlist the coercive powers of the state court to seize property or compel compliance with equitable orders, and ancillary remedies facilitate enforcement through a court’s acquiescence. Ancillary enforcement remedies implicate several state interests. First, enforcement remedies allow use of a state’s coercive power. As such, they lie at the center of a state’s sovereignty over the administration of justice within its borders. Second, enforcement implicates a state’s sovereignty over its treasury: a state has a strong financial interest in an efficient enforcement process, and streamlined enforcement procedures reduce 34 See FOREIGN RELATIONS LAW, supra note 17, § 481 cmt. b. 35 JUDGMENTS supra note 2, ch. 1, scope, cmt. c (“The law governing execution of judgments is highly complex and in this country is subject to a good deal of technical variation from one state to another.”). 36 Cf. Lassiter v. Virginia, 620 S.E.2d 563, 566 (Va. Ct. App. 2005) (holding that a landlord has the “right to retake possession of property so long as doing so will not affect a breach of the peace”). 37 See JUDGMENTS, supra note 2, ch. 1, scope, cmt. c (discussing enforcement of judgments through alternative means, including injunction or other forms of compliance). MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) 2010
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judicial and executive administrative costs. The ALI Judgments Project’s federal statute would compel states to deny enforcement to foreign judgments because of a lack of reciprocity, effectively requiring states to expend public resources in derogation of their sovereign will.38 The statute would compel state governments to expend public dollars by opening the state courthouse doors to claims previously litigated in foreign tribunals. Third, just and efficient enforcements of civil judgments facilitate the security of commerce within the state. Finally, enforcement remedies implicate the state’s interest in protecting its citizens. One of the primary reasons foreign judgments are not self‐executing is the potential abusive practice of foreign, forum‐shopping plaintiffs who secure judgments on the basis of foreign laws that impair the rights of citizens of the U.S. state where enforcement is sought.39 A state’s enforcement remedies also protect citizens from violence that often erupts from frequent self‐help enforcement. It is important to note that the collateral enforcement action is filed by the party who chose the original forum. Generally, then, the judgment creditor who sought to enlist a sovereign’s coercive powers of enforcement chose to litigate the substantive claims on which the judgment rested in a foreign court. This differs from efforts to use a foreign judgment as a res judicata bar to claims filed in a new jurisdiction, which was chosen by a plaintiff who failed to successfully litigate claims in the foreign forum. These state interests raised by enforcement actions differ from those important to recognition actions.40 3.
Recognition of Judgments Recognition is implicated when a judgment is presented in a collateral proceeding in order to preclude litigation of a claim, determination of a fact, or reconsideration of an issue on the ground that it has been previously and finally resolved by a competent tribunal.41 Recognition law 38 See infra Part II.B. 39 See, e.g., Hilton v. Guyot, 159 U.S. 113, 186 (1895) (“Independent states do not choose to adopt [foreign judgments resting on local law] without examination. [Foreign] laws and regulations may be unjust, partial to citizens, and against foreigners. They may operate injustice to our citizens, whom we are bound to protect.”). One prominent example is the problematic libel tourist who secures a foreign judgment in derogation of a U.S. citizen’s right to freedom of expression. See, e.g., Robert L. McFarland, Please Do Not Publish This Article in England: A Jurisdictional Response to Libel Tourism, 79 MISS. L.J. 617, 625 (2010) (arguing against recognition and enforcement of foreign libel judgments only when issued by a tribunal lacking jurisdition). 40 Compare supra Part I.A.2, with infra Part I.A.3. 41 JUDGMENTS, supra note 2, ch. 1, scope. MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) New England Law Review 72 1/10/2011 9:32:00 AM v. 45 | 63 is most often associated with the doctrines of res judicata42 and collateral estoppel.43 Unlike the offensive context of enforcement, whereby a judgment creditor solicits the state’s coercive powers to secure collection, the context of recognition is usually defensive, whereby a litigant seeks to preclude relitigation of claims or issues previously decided elsewhere.44 The primary state interest advanced by the recognition law is finality: Where a reasonable opportunity has been afforded to the parties to litigate a claim before a court which has jurisdiction over the parties and the cause of action, and the court has finally decided the controversy, the interests of the State and of the parties require that the validity of the claim and any issue actually litigated in the action shall not be litigated again by them.45 This restatement provision presents a rule of finality that is a deeply rooted jurisprudential principle.46 Finality serves two important underlying state interests. First, finality conserves valuable judicial resources. Second, finality avoids inconsistent adjudications that undermine confidence in judicial power. Finality also advances the interests of private litigants in several respects. It resolves disputes, allows parties to move forward with security,47 and protects private litigants from vexatious, repetitive litigation. Therefore, finality is an interest so intimately tied to the law of judgments that the entire body of law is often referred to simply as the law of res judicata.48 42 See supra note 2. 43 Collateral estoppel, also known as issue preclusion, is a doctrine that expands the preclusive effect of judgments by preventing the relitigation of an issue of fact or law in a subsequent case even though the subsequent case involves a different cause of action. See, e.g., Allen, 449 U.S. at 94 (“Under collateral estoppel, once a court has decided an issue of fact or law necessary to its judgment, that decision may preclude relitigation of the issue in a suit on a different cause of action involving a party to the first case.”). 44 See RESTATEMENT (SECOND) OF CONFLICT OF LAWS ch. 5, topic 2, intro. note (1971) [herinafter CONFLICT OF LAWS]; FOREIGN RELATIONS LAW, supra note 17, § 481 cmt. a‐b. 45 RESTATEMENT (FIRST) OF JUDGMENTS § 1 (1942). 46 Note, Developments in the Law—Res Judicata, 65 HARV. L. REV. 818, 820 (1952) (discussing the historical use of the rule of finality to support specific determinations over the ages). 47 WILLIAM M. RICHMAN & WILLIAM L. REYNOLDS, UNDERSTANDING CONFLICT OF LAWS § 311 (2d ed. 1993) (“For the litigant, finality is an important goal; the purpose of litigation is dispute resolution, and the parties want a resolution that they can rely on.”). 48 BLACK’S LAW DICTIONARY 1425 (9th ed. 2009). Black’s Law Dictionary defines res judicata as: 1. An issue that has been definitively settled by judicial decision. 2. An affirmative defense barring the same parties from litigating a second lawsuit on the same claim, or any other claim arising from the same transaction or series of transactions and that could have been—but was MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) 2010
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Despite the significant interests served by res judicata, the doctrine has necessary limits. The interest in finality is often in tension with questions of fairness, due process, and justice. For example, consider whether litigants should be permitted appellate review. When parties appear before a competent tribunal regarding the legal merits of any particular issue, finality says the parties should not have a right to appellate review.49 The public’s interest in economy and avoidance of inconsistent legal results and the private litigant’s interest in resolution and avoidance of vexatious, repetitive legal process are best served by insulating the original tribunal’s judgment from any collateral attack—including appellate review. However, in U.S. (state and federal) courts, litigants have a right to direct appellate review of all legal decisions of the initial tribunal.50 This demonstrates that finality sometimes gives way to competing jurisprudential objectives, even without considering the complication of foreign adjudication. Much of the law of judgments concerns discernment of occasions that justify departure from the general principle of finality. Achieving the proper balance between finality and justice is a complex task that has contributed to the developing doctrine.51 The complexity of res judicata doctrine is an unavoidable consequence of a vast legal system that raises questions regarding the effect of prior adjudication.52 not—raised in the first suit. Id.; see also JUDGMENTS, supra note 2, ch. 1, scope, cmt. a (“Taken together the rules in the Restatement, Second, of Judgments are commonly referred to as the rules of res judicata. The principles underlying these rules are long established not only in common law jurisprudence but also in the law of other legal systems.”). 49 See Chad M. Oldfather, Universal De Novo Review, 77 GEO. WASH. L. REV. 308, 316‐18 (2009) (discussing the importance of appellate review, even though it contradicts interests in finality or other forms of review). 50 THOMAS D. ROWE, JR. ET AL., CIVIL PROCEDURE 294‐95 (1st ed. 2004) (discussing the appellate process). 51 See Developments in the Law—Res Judicata, supra note 46, at 867‐68. “Issue preclusion generally refers to the effect of a prior judgment in foreclosing successive litigation of an issue of fact or law actually litigated.” New Hampshire v. Maine, 532 U.S. 742, 748‐49 (2001). Claim preclusion, also known as “merger” and “bar,” “generally refers to the effect of a prior judgment in foreclosing successive litigation of the very same claim, whether or not relitigation of the claim raises the same issues as the earlier suit.” Id. at 748; see also Jarosz v. Palmer, 766 N.E.2d 482, 488 n.3 (2002). 52 Many questions within the law of judgments arise within one sovereign system of law, including whether a judgment should be enforced or a claim should be precluded; whether a party should be permitted to litigate an issue when that party had a previous opportunity to litigate the issue and chose not to do so; or whether a non‐party should be permitted to assert res judicata on any issue. See generally Developments in the Law—Res Judicata, supra note 46 (discussing the overall effects of a judgment on subsequent litigation). MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) 74 New England Law Review 1/10/2011 9:32:00 AM v. 45 | 63 The interests advanced by finality are most pressing when there is exact symmetry in the subsequent proceeding. Exact symmetry requires an identical claim presenting the same legal and factual issues filed in the same jurisdiction against the same defendant.53 However, the collateral effect of a judgment in a subsequent action with different legal or factual claims, different parties, or within a different court gives rise to more difficult jurisprudential questions. One of the most controversial jurisprudential questions is whether mutuality is required prior to recognizing or enforcing private rights that emerge from prior adjudication. Consider, for example, the issue of non‐mutual res judicata. The common law view was that mutuality was required prior to allowing a party to assert res judicata.54 Some state courts have rejected the requirement of mutuality in certain contexts, allowing strangers to the original litigation to acquire legal rights by the force and effect of the original judgment.55 Other courts continue to adhere to the common law rule requiring mutuality.56 Disputes regarding mutuality also abound in cases that consider the collateral effects of issues, rather than claims, that are litigated in the original action.57 These cases illustrate the difficulty of balancing public interests in the efficient administration of justice with concerns of fairness related to the rights of private litigants. All of the difficulties of res judicata discussed so far presume that the questions are raised within the confines of one sovereign system of justice. But within one unified system of law, res judicata rules need not factor in concerns that emerge in a case involving the legislative or judicial acts of a foreign sovereign. Thus, rules within a unified system focus on the interest of finality and usually give great weight to that concern.58 However, in addition to the jurisprudential questions related to the balance between finality and fairness, concerns related to sovereignty, interstate relations, and international relations are implicated when a litigant presents a judgment of a sister state or a foreign court for recognition. 53 Id. at 822. See also JUDGMENTS, supra note 2, ch. 1, scope (describing the preclusive effects of judgments, namely claim preclusion, issue preclusion, and privity). 54 See generally Comment, Privity and Mutuality in the Doctrine of Res Judicata, 35 YALE L.J. 607 (1926) (summarizing and criticizing the common law requirement of mutuality). 55 See, e.g., Bernhard v. Bank of Am. Nat’l Trust & Sav. Ass’n, 122 P.2d 892, 894‐95 (Cal. 1942) (allowing res judicata in the absence of mutuality). 56 See, e.g., Searle Bros. v. Searle, 588 P.2d 689, 690 (Utah 1978) (requiring mutuality as a condition for res judicata). 57 See Parklane Hosiery Co. v. Shore, 439 U.S. 322, 350‐54 (1979) (discussing the mutuality requirement and its criticism in the context of issue preclusion). 58 See JUDGMENTS, supra note 2, ch. 1, scope, cmt. b. MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) 2010
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B. Recognition and Enforcement in the Interstate and International Settings The extraterritorial effect of U.S. state judgments is governed by the Full Faith and Credit Clause, which compels states to recognize and enforce most judgments entered by sister states. Judgments entered by foreign nations, however, are not entitled to full faith and credit.59 1.
Interstate Judgments One of the first principles of justice in U.S. law is that “no law has any effect . . . beyond the [territorial] limits of the sovereignty from which [the law’s] authority is derived.”60 A civil judgment is an expression of law pronounced by a tribunal that derives its authority from a sovereign state.61 Therefore, a civil judgment has no extraterritorial force and effect.62 A corollary of this conclusion is that a state is not required to recognize or enforce any judgment of any foreign court.63 Therefore, an independent state is free to refuse recognition and enforcement of any or all foreign judgments in the exercise of its territorial sovereignty.64 This does not mean that a state will absolutely refuse to enforce all foreign judgments; many interests supporting recognition are 59 U.S. CONST. art. IV, § 1; see Aetna Life Ins. Co. v. Tremblay, 223 U.S. 185, 190 (1912) (“[Full Faith and Credit is not] conferred by the Constitution or by any statute of the United States in respect to the judgments of foreign states or nations, and we are referred to no treaty relative to such a right.”). 60 Hilton v. Guyot, 159 U.S. 113, 163 (1895); see JOSEPH STORY, COMMENTARIES ON THE CONFLICT OF LAWS 790 (Arno Press 1972) (1834) (“The first and most general maxim or proposition is that, which has already been adverted to, that every nation possesses an exclusive sovereignty and jurisdiction within its own territory.”). 61 See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78‐80 (1938) (demonstrating the fundamental role of territorial sovereignty in American law). But see Swift v. Tyson, 41 U.S. 1, 18 (1842) (“In the ordinary use of language it will hardly be contended that the decisions of Courts constitute laws. They are, at most, only evidence of what the laws are; and are not of themselves laws.”). 62 See 2 EMERICH DE VATTEL, THE LAW OF NATIONS § 84 (Univ. of Mich. Library 2005) (1853) available at http://name.umdl.umich.edu/AHN2062.0001.001 (suggesting a different conclusion with respect to judgments pronounced by foreign courts and reasoning that, where a state acquires jurisdiction over the parties and the subject matter of the dispute, the state’s authority to resolve the dispute ought to be respected by all other states). 63 See Hilton, 159 U.S. at 233 (reasoning that foreign judgments are not entitled to recognition as a matter of private right but only by an exercise of the state’s consent to the comity of nations). 64 This was the view of the colonies prior to ratification of the Constitution. Each colony was sovereign within its borders and was free to reject the judgments of foreign colonies as well as foreign nations. Id. at 180‐81. MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) New England Law Review 76 1/10/2011 9:32:00 AM v. 45 | 63 rooted in state policy.65 However, the fact that states have a sovereign right to reject foreign judgments creates uncertainty that could be an impediment to the stability of interstate commerce and national unity. Recognizing this, the Framers incorporated the Full Faith and Credit Clause into the Constitution.66 The Full Faith and Credit Clause requires a state to extend the same degree of preclusive effect to the final judgment of a sister state as the judgment would have received in the forum where it was entered.67 In 1790, Congress enacted implementing legislation, reflecting this interpretation of the Full Faith and Credit Clause.68 A central objective served by the Full Faith and Credit Clause was the reordering of sovereign relations within the federal republic.69 When combined with the Privileges and Immunities Clause70 and the Supremacy Clause,71 the Full Faith and Credit Clause creates a framework of mutual respect and trust, which is a central feature of the “more perfect Union” created by the Constitution.72 The fact that the Full Faith and Credit Clause was incorporated demonstrates the Framers’ understanding that state sovereignty, absent the command of the clause, included the right to reject the judgment of other states. 2.
International Judgments The Full Faith and Credit Clause does not extend to judgments of foreign courts.73 On initial consideration, one might be surprised by the 65 See, e.g., Pan. Processes, S.A. v. Cities Serv. Co., 796 P.2d 276, 282 (Okla. 1990) (“Strong policies support recognition [of the Brazilian judgment], such as the protection of party expectations, prevention of harassment of one party by the other, conservation of judicial resources and promotion of consistency and uniformity of law.”). 66 U.S. CONST. art. IV, § 1 (“Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State. And the Congress may by general Laws prescribe the Manner in which such Acts, Records and Proceedings shall be proved, and the Effect thereof.”). 67 See Hampton v. McConnell, 16 U.S. (3 Wheat.) 234, 234 (1818) (“[T]he judgment of a state court should have the same credit, validity and effect, in every other court of the United States, which it had in the state where it was pronounced . . . .”); see also CONFLICT OF LAWS, supra note 44, § 93 cmt. b (indicating that, when “a foreign judgment is given the same conclusive effect that it has in the state of rendition,” it is “recognized”). 68 28 U.S.C. § 1738 (2006). 69 Casad, supra note 16, at 59. 70 U.S. CONST. art. IV, § 2. 71 Id. art. VI, cl. 2. 72 See id. art. IV, § 1. 73 Aetna Life Ins. Co. v. Tremblay, 223 U.S. 185, 190 (1912); see also Home Ins. Co. v. Dick, 281 U.S. 397, 410‐11 (1930) (distinguishing Fourteenth Amendment protection of a contractual MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) 2010
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inapplicability of the Full Faith and Credit Clause to foreign judgments. Indeed, courts sometimes overlook the differences between judgments rendered by sister states and those rendered by foreign nations, assuming that the same rules apply.74 Even the Restatement of Foreign Relations Law questionably suggests that “[a] foreign judgment is generally entitled to recognition by courts in the United States to the same extent as a judgment of a court of one State in the courts of another State.”75 Despite the conceptual similarities between determinations of the effects of foreign and domestic judgments, there are significant differences between the two inquiries. Examining the effect of foreign judgments in the same manner as domestic judgments “lead[s] to confusion of concepts which should be kept separate.”76 There are significant differences between domestic and foreign judgments that justify discrimination between them. Given that foreign judgments77 are not entitled to Full Faith and Credit, the questions that remain are whether foreign judgments are entitled to any recognition in U.S. courts and, if so, what law requires the recognition and enforcement of those foreign judgments. These questions were examined in two foundational cases: Hilton v. Guyot78 and Johnston v. Compagnie Generale Transatlantique.79 a.
Hilton v. Guyot In Hilton, the Court examined the extraterritorial effect of a commercial judgment entered by a French court. Hilton was a significant decision because it was the Court’s first examination of “important questions relating to the force and effect of foreign judgments.”80 The plaintiffs in right from Full Faith and Credit obligations); CONFLICT OF LAWS, supra note 44, § 98 cmt. b. 74 See Arthur T. von Mehren & Donald T. Trautman, Recognition of Foreign Adjudications: A Survey and a Suggested Approach, 81 HARV. L. REV. 1601, 1605‐06 (1968) (acknowledging that many courts treat recognition of foreign and domestic judgments alike without noticing the nuances of the differing policies). 75 See FOREIGN RELATIONS LAW, supra note 17, § 481 cmt. c. This comment is ambiguous and possibly meant to suggest that foreign judgments should be given the same effect as domestic judgments under Full Faith and Credit jurisprudence. On the other hand, it may suggest that a foreign judgment should be given at least the same effect as it would have received in the forum where it was rendered. For further analysis of this ambiguity, see Casad, supra note 16, at 56. 76 Von Mehren & Trautman, supra note 74. 77 For clarity, “foreign judgments” will be used from this point forward in this article to refer to judgments of tribunals in a foreign nation or a foreign state (as opposed to judgments of a sister state or the federal courts). 78 See 159 U.S. 113, 162 (1895). 79 See 152 N.E. 121, 122‐23 (N.Y. 1926). 80 Hilton, 159 U.S. at 162‐63. MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) New England Law Review 78 1/10/2011 9:32:00 AM v. 45 | 63 Hilton were French citizens who obtained a civil judgment from a French commercial tribunal against two citizens of New York for debts related to the commercial dealings of the parties in France.81 In an effort to collect on assets located in the United States, the French judgment creditors brought suit in federal court against the American judgment debtors upon their French judgment. The basis of federal jurisdiction in the collection action was alienage and not federal question.82 The Court began its lengthy examination of the force and effect of foreign judgments by searching for a rule of decision. The Court’s search for a relevant rule of decision began with the following: International law, in its widest and most comprehensive sense—including not only questions of right between nations, governed by what has been appropriately called the law of nations, but also questions arising under what is usually called private international law, or the conflict of laws, and concerning the rights of persons within the territory and dominion of one nation . . . is part of our law, and must be ascertained and administered by the courts of justice, as often as such questions are presented in litigation between man and man, duly submitted to their determination.83 This starting point is significant for at least three reasons. First, the Court acknowledged a distinction between private and public international law. This distinction enabled the New York Court of Appeals to reject the Hilton Court’s ultimate holding—that recognition is warranted only where U.S. judgments would receive reciprocal treatment in the tribunals of the foreign sovereign.84 Second, the Hilton Court’s starting point was significant because it located norms of international law, both public and private, within “our law.”85 This view entailed the rejection of notions of universal norms. The Court quickly reinforced this territorial conception of international law by explaining that “[n]o law has any effect, of its own force, beyond the limits of the sovereignty from which its authority is derived.”86 The Court’s conception of international law rested on notions of “utility and the mutual convenience of States” and not on moral or universal duty.87 Finally, the Court’s starting point was important because it begged the question of which law, state or federal, supplied the rule of decision when a foreign judgment was presented for recognition. Because 81 Id. at 114. 82 Id. 83 Id. at 163. 84 See Johnston v. Compagnie Generale Transatlantique, 152 N.E. 121, 123 (N.Y. 1926). 85 Hilton, 159 U.S. at 163. 86 Id. 87 Id. at 166. MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) 2010
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the Court reasoned that international law was part of “our law,” it was then necessary to determine which law the Court considered “our law.”88 In other words, the Court invited the question later presented in Erie Railroad Co. v. Tompkins.89 Because Hilton preceded Erie by several decades, the Hilton Court did not examine whether the issue was a question of state or federal law.90 However, the opinion, written during the height of the Swift v. Tyson vision of a general federal common law, portrayed the issue as one falling within national law. The Court first noted a fact that remains unchanged by Eriethat the “most certain” source of a rule of decision was a “treaty or statute of this country.”91 This indicated that the Court considered the question to be one capable of national resolution via statute or treaty. Finding no federal statute or treaty, the Court then turned to common law in an effort to identify the rule of decision.92 The Court’s extensive analysis of the common law authorities included multiple references to state law, including state statutes and cases.93 The Court in Hilton did not note anything inappropriate about a state’s application of its own law when determining whether or not to extend comity to foreign judgments within its own courts.94 Instead, the Court relied in part on authority from state law to fashion the following rule: In view of all the authorities upon the subject, and of the trend of judicial opinion in this country and in England, following the lead of Kent and Story, we are satisfied that, where there has been opportunity for a full and fair trial abroad before a court of competent jurisdiction, conducting the trial upon regular proceedings, after due citation or voluntary appearance of the 88 Id. at 163. 89 See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938) (questioning whether the “federal court was free to disregard the alleged rule of the Pennsylvania common law”). 90 The Court viewed this issue as one of international law and thus relied on the theory called “the comity of nations.” Hilton, 159 U.S. at 163. “Comity,” in the legal sense, is neither a matter of absolute obligation, on the one hand, nor of mere courtesy and good will, upon the other. But it is the recognition which one nation allows within its territory to the legislative, executive, or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws. Id. at 163‐64. 91 Id. at 163. 92 See id. 93 See id. at 168, 180‐81, 185 n.1, 186, 191, 194‐95. 94 In fact, the Court noted with approval the analysis of the Massachusetts Supreme Judicial Court on the question. Id. at 180‐81. MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) 1/10/2011 9:32:00 AM New England Law Review 80 v. 45 | 63 defendant, and under a system of jurisprudence likely to secure an impartial administration of justice between the citizens of its own country and those of other countries, and there is nothing to show either prejudice in the court, or in the system of laws under which it was sitting, or fraud in procuring the judgment, or any other special reason why the comity of this nation should not . . . , in an action brought in this country upon the judgment, be tried afresh, as on a new trial or an appeal, upon the mere assertion of the party [against whom the judgment was obtained] that the judgment was erroneous in law or in fact.95 It is probable that the Court expected state courts to apply this rule when examining the force and effect of foreign judgments in their own courts. But this question is obscured by the fact that the Court’s “rule” is, in reality, dicta, because the Court ultimately held that the French judgment was unenforceable “for want of reciprocity.”96 The Court explained that given the absence of any federal statute or treaty on point, “[i]t is not to be supposed that . . . any statute or treaty . . . would recognize as conclusive the judgments of any country, which did not give like effect to our own judgments.”97 This statement suggests some uncertainty regarding the source of lawmaking authority. When combined with the Court’s controversial reciprocity requirement, it undermined the authority of the Court’s comity‐based rule of recognition and opened the door for rejection of Hilton’s authority in state courts.98 b. Johnston v. Compagnie Generale Transatlantique Two decades after the Hilton decision, the New York Court of Appeals examined the effect of another French judgment in Johnston v. Compagnie Generale Transatlantique.99 The dispute in Johnston concerned the defendant’s alleged wrongful delivery of goods from New York to Havre.100 Before filing his wrongful delivery action in New York, the plaintiff brought a similar claim in the Tribunal of Commerce at Paris.101 After a trial on the merits, the French tribunal entered a judgment in favor of the defendant.102 Accordingly, in the New York litigation, the defendant 95 Id. at 202‐03. 96 Hilton, 159 U.S. at 210. 97 Id. at 228. 98 See Johnston v. Compagnie Generale Transatlantique, 152 N.E. 121, 122 (N.Y. 1926); infra Part I.B.2.b. 99 Johnston, 152 N.E. at 121‐22. 100 Id. at 122. 101 Id. 102 Id. at 123. MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) 2010
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raised the French judgment and argued that the plaintiff’s claims should be dismissed as res judicata.103 The trial court, citing Hilton, refused to recognize the French judgment for want of reciprocity.104 The New York Court of Appeals examined the “extent [to which New York courts are] bound by Hilton” and held that New York courts were “not bound to follow the Hilton [c]ase.”105 The court offered several reasons supporting its holding that Hilton was inapplicable. First, the Johnston court reasoned that Hilton’s reciprocity requirement was mere dicta because the Hilton majority also discussed fraud as an independent and alternative ground for refusing to extend recognition to the French judgment.106 This dicta rationale for avoidance of Hilton’s reciprocity rule is dubious. The Hilton majority explicitly refused to rest its judgment on the fraudulent procurement rationale.107 Instead, the Court refused to enforce the French judgment on the “distinct and independent ground” of want of reciprocity.108 The New York court, perhaps recognizing the weakness in its effort to characterize Hilton’s reciprocity requirement as obiter dictum, offered an independent justification for its rejection of the reciprocity requirement. The New York court characterized Hilton’s reciprocity requirement (and its underlying comity rationale) as an aspect of the “rules of evidence laid down by the courts of the United States.”109 The court reasoned that because the question of recognition was one of “private right rather than public relations, . . . [New York] courts will recognize private rights acquired under foreign laws and the sufficiency of the evidence establishing such rights.”110 In other words, the New York court’s reasoning here anticipated the dichotomy between substantive right and procedural law that was later recognized in Erie.111 103 Id. 104 Id. 105 Johnston, 152 N.E. at 123. 106 Id. at 122 (citing Hilton v. Guyot, 159 U.S. 113, 227‐28 (1895)). The Johnston court used Hilton’s acknowledgement that “[t]he very judgment now sued on would be held inconclusive in almost any other country than France” to undermine any precedential value of Hilton’s reciprocity requirement. See id. at 123. 107 See Hilton, 159 U.S. at 210. 108 See id. 109 Johnston, 152 N.E. at 123. 110 Id.; see RESTATEMENT (THIRD) OF FOREIGN RELATIONS LAW OF THE UNITED STATES § 491 (Tentative Draft No. 4, 1983); see generally ALI PROPOSED STATUTE, supra note 26. (relying on reasoning consistent with the rule of recognition in Johnston). 111 Compare Johnston, 152 N.E. at 123 (finding that New York was not obligated to adhere to any rule laid out in Hilton), with Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938) (declaring that there is no general federal common law and requiring federal courts to apply state law to MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) 82 New England Law Review 1/10/2011 9:32:00 AM v. 45 | 63 In the introduction to its proposed federal statute, the ALI Judgments Project “rejects the view of the New York Court of Appeals [in Johnston], and takes as its point of departure the view that recognition and enforcement of foreign judgments is and ought to be a matter of national concern.”112 The ALI Judgments Project’s proposed federal statute would preempt all state recognition and enforcement law in order to achieve national uniformity of recognition and enforcement “administered, for the most part through concurrent jurisdiction of the state and federal courts” and subjected to the “control of the Supreme Court.”113 The following section highlights the central features of the ALI Judgments Project’s proposed federal statute and the rationales proffered in support of adopting a uniform national standard. c.
The ALI Judgments Project’s Synthesis of Hilton and Johnston Hilton and Johnston raise a number of significant questions concerning the force and effect of foreign judgments. First, Hilton rested on the premise of territorial sovereignty, which included the sovereign right to determine whether foreign judgments were entitled to recognition and enforcement.114 Free and independent states, Hilton reasoned, are under no legal obligation to recognize or enforce the judicial acts of foreign nations.115 However, Hilton also held that the extent of extraterritorial force and judgments “depends upon what our greatest jurists have been content to call ‘the comity of nations.’”116 Comity, the Court explained, “is neither a matter of absolute obligation, on the one hand, nor of mere courtesy and good will, upon the other.”117 The Court’s reasoning in Hilton relied on comity as a norm, placing a condition on the territorial sovereignty of a state when that state is asked to grant recognition or enforcement to foreign judgments. The Court located this norm in the law of nations.118 So, at first glance, it appears that the Court viewed comity as a universal principle of justice, a view supported by other statements in the opinion. The Court located international law “in its widest and most comprehensive sense” within the territorial resolve all matters of substantive right, except where the matter is governed by a federal question). 112 See ALI PROPOSED STATUTE, supra note 26, intro. note, at 3. 113 Id. 114 See Hilton v. Guyot, 159 U.S. 113, 163 (1895). 115 Id. at 163‐64. 116 Id. at 163. 117 Id. at 163‐64. 118 Id. MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) 2010
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sovereignty of individual nations in an effort to avoid all extraterritorial universal obligations: “[International law] is part of our law, and must be ascertained and administered by the courts of justice, as often as such questions are presented in litigation between man and man, duly submitted to their determination.”119 Assuming the law of nations was part of international law, the Court’s reasoning aligned comity with U.S. law. This internal view was articulated later in the opinion when the Court announced that, absent exceptional circumstances, there was no reason why the “comity of this nation should not allow” foreign judgments extraterritorial force.120 The Court’s comity rationale has been the subject of repeated criticism, but it is important to focus on the question of what law provides the rule of decision when a court is asked to give extraterritorial effect to a foreign judgment. Hilton supports the view that an attribute of the law of nations that is part of “our law” provides the relevant rule.121 The critical question, then, is whether “our law” refers to federal common law or state law. Johnston’s holding rests on the view that New York law, rather than federal law, governed the issue in New York’s tribunals.122 If, however, comity is part of “national law,” as indicated by Hilton, then it is possible that Johnston was wrongly decided.123 If, on the other hand, the question is one of state law, then the enactment of a federal statute preempting state law diminishes state sovereignty. According to fundamental principles of federalism, reallocation of state lawmaking power to the federal government should not occur absent sound justification. Before examining the proposed preemptive federal judgment statute and the justifications for preemption proffered by the ALI Judgments Project, it is necessary to determine which law, state or federal, governs the question of the extraterritorial force of foreign judgments. Hilton, decided in the glory days of Swift v. Tyson124 and relying on Justice Story’s view of the federal common law, located comity in the federal common law.125 Johnston rejected this premise and viewed the issue as one of private right located within state law, thus creating ambiguity in 119 Id. at 163. 120 See Hilton, 159 U.S. at 202‐03. 121 See supra notes 114‐15 and accompanying text. 122 See Johnston v. Compagnie Generale Transatlantique, 152 N.E. 121, 123 (N.Y. 1926). 123 Compare id. (concluding that the issue was one of state rather than national law), with Hilton, 159 U.S. at 163 (finding federal law controlling in the discussion of comity among nations). 124 41 U.S. (16 Pet.) 1 (1842). 125 See Hilton, 159 U.S. at 163‐65 (using Justice Story’s Commentaries as a vehicle to locate comity in federal law); STORY, supra note 60, at 790. MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) 84 New England Law Review 1/10/2011 9:32:00 AM v. 45 | 63 U.S. law regarding the source of lawmaking power that supports the rule of decision in this arena.126 Somewhat surprisingly, given the significance of foreign relations and the outright rejection of the Hilton decision by a state supreme court, the Court has yet to resolve this ambiguity. “[F]or close to one hundred years the Court has essentially abandoned internationally foreign judgments, leaving [Hilton] a derelict on the waters of the law and one that might be thought to pose greater than normal risks precisely because it lies in international waters.”127 The prevailing modern view is that the force and effect of foreign judgments are matters of state law.128 Pursuant to Erie, federal courts apply state law in diversity cases to determine whether to recognize or enforce foreign judgments.129 II. The ALI Judgments Project’s Proposed Federal Foreign Judgments Statute In 1998, with the encouragement of the U.S. State Department, the ALI initiated the development of a model federal foreign judgments statute.130 This ALI Judgments Project was initially formed to facilitate progress in ongoing multilateral negotiations of an international judgments and jurisdiction treaty at the Hague Conference.131 Those negotiations collapsed 126 See Johnston, 152 N.E. at 123. 127 Stephen B. Burbank, Federal Judgments Law: Sources of Authority and Sources of Rules, 70 TEX. L. REV. 1551, 1556 (1992). 128 See id. at 1574‐75; see also CONFLICT OF LAWS, supra note 44, § 98 cmt. c; WRIGHT, supra note 22, § 4473 (stating that most federal courts sitting in diversity apply the judgments law of the states rather than federal law to determine the extraterritorial force of foreign judgments). 129 See, e.g., Somportex Ltd. v. Phila. Chewing Gum Corp., 453 F.2d 435, 440 (3d Cir. 1971) (holding that Erie required application of state law to determine the force and effect of an English judgment in federal court); Svenkska Handelsbanken v. Carlson, 258 F. Supp. 448, 450‐51 (D. Mass. 1966) (holding that Erie required application of state law to determine the force and effect of a Swedish judgment in federal court); Compania Mexicana Rediodifusora Franteriza v. Spann, 41 F. Supp. 907, 909 (N.D. Tex. 1941) (citing Erie in support of application of state policy to determine the force and effect of a Mexican judgment in federal court). 130 See Silberman & Lowenfeld, supra note 18, at 635‐36. For a brief history of the ALI Judgments Project and its relationship to the Hague Convention, see RONALD A. BRAND & SCOTT R. JABLONSKI, FORUM NON CONVENIENS: HISTORY, GLOBAL PRACTICE AND FUTURE UNDER THE HAGUE CONVENTION AND CHOICE OF COURT AGREEMENTS 162‐66 (2007). The State Department utilized the advice of the ALI during its negotiations of the proposed judgments at the Hague Convention. See Negotiations at the Hague Conference for a Convention on Jurisdiction and the Recognition and Enforcement of Foreign Civil Judgments, Before the Subcomm. on Courts & Intellectual Prop. of the H. Comm. on the Judiciary, 106th Cong. (2000) (statement of Jeffery D. Kovar, Assistant Legal Advisor for Private Int’l Law, U.S. Dep’t of State), available at http://judiciary.house.gov/legacy/kova0629.htm. 131 ALI PROPOSED STATUTE, supra note 26, intro. note, at 4. MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) 2010
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in 2002.132 Nevertheless, the ALI’s foreign judgments project proceeded and resulted in the approval of a proposed federal foreign judgment recognition statute in 2005.133 There are two central features of the ALI Judgments Project’s proposed statute. First, if adopted, the statute would preempt state law and interpose a federal rule of decision regarding the force and effect of all foreign judgments presented for recognition in state or federal court. Second, the statute, contrary to the great weight of authority in American law, would incorporate Hilton’s reciprocity requirement.134 A. Examining the ALI Judgments Project’s Case for Preemption of State Law As the ALI Judgments Project acknowledges, preemption of a state’s judgment‐recognition law respecting foreign judgments is a significant redistribution of lawmaking power that “would commit to Congress decisions that have been taken, at least since Erie, by states of the United States or by federal courts applying state law.”135 Nevertheless, the ALI Judgments Project argues that a federal standard is necessary because recognition and enforcement “is and ought to be” a matter of national concern.136 The ALI Judgments Project proffers two central justifications for preemption of state law. First, the ALI Judgments Project’s reporters view individual decisions regarding the effect of a foreign judgment in private litigation as diplomatic activities implicating foreign relations. Accordingly, the reporters explicitly reject Johnston’s private rights rationale.137 Second, the ALI Judgments Project argues that there is a heightened need for uniformity in U.S. law regarding the force and effect of foreign judgments. The reporters assert that this uniformity would 132 See also BRAND & JABLONSKI, supra note 130, at 141‐45 (discussing the development and evolution of the Hague Conference in this area). 133 See ALI PROPOSED STATUTE, supra note 26, intro. note, at 4. 134 See id., intro. note, at 2‐4. 135 Id., intro. note, at 4. 136 See id., intro. note, at 3. Other portions of the ALI Judgments Project’s proposal contradict the claim that judgment recognition ought to be a matter of federal concern. In comments clarifying the Secretary of State’s authority to negotiate agreements with foreign states, the drafters state that “in the case of federal states [bilateral reciprocity agreements] could be made with subordinate units such as the provinces of Canada.” Id. § 7 cmt. c. This statement undermines the argument that states in federal republics lack the authority to determine when to recognize judgments of foreign tribunals. If the U.S. government can negotiate with Canadian provinces, why not allow New York to negotiate with the Canadian government? 137 Id., intro. note, at 3. MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) New England Law Review 86 1/10/2011 9:32:00 AM v. 45 | 63 increase leverage in an effort to obtain greater recognition of U.S. judgments abroad.138 The fundamental assumption on which the ALI Judgments Project’s proposal rests is that the legal effect of a foreign judgment is a jurisprudential question falling wholly within the plenary power of the federal government.139 The introduction to the ALI Judgments Project’s proposal (entitled “National Law in the International Arena”) asserts that viewing the question of enforcement as a matter of state law is “strange.”140 The introduction then “reject[s] the view of the New York Court of Appeals,” stated in Johnston, that the question of enforcement and recognition is one of private rights falling within the purview of state law.141 Instead, the ALI Judgments Project focuses solely on the public law aspect of private civil judgments to assert that every “foreign judgment presented in the United States for recognition or enforcement is an aspect of the relations between the United States and the foreign state, even if the particular controversy that resulted in the foreign judgment involves only private parties.”142 Proponents of the ALI Judgments Project’s proposed statute argue that Johnston and its progeny are a “curious history” and assert that “recognition and enforcement of foreign judgments is and ought to be a matter of national federal concern.”143 According to supporters of the proposed statute, national law ought to govern the effect of foreign judgments and any other view is odd.144 Interestingly, rather than offering constitutional authority for this view of plenary federal power over the intricacies of state judicial process, the 138 Id., intro. note, at 4‐5. 139 See ALI PROPOSED STATUTE, supra note 26, intro. note, at 1‐2. 140 Id., intro. note, at 1 (“A priori, it would strike anyone as strange to learn that the judgment of an English or German or Japanese court might be recognized and enforced in Texas but not in Arkansas, in Pennsylvania but not in New Jersey.”). 141 Id., intro. note, at 3; see also Johnston v. Compagnie Generale Transatlantique, 152 N.E. 121, 122‐23 (N.Y. 1926). 142 ALI PROPOSED STATUTE, supra note 26, intro. note, at 1. 143 Hearing, supra note 25, at 62 (statement of Professor Linda J. Silberman, Martin Lipton Professor of Law, New York University School of Law). 144 Andreas F. Lowenfeld, Nationalizing International Law: Essay in Honor of Louis Henkin, 36 COLUM. J. TRANSNAT’L L. 121, 122 (1998). One of the oddities that strikes one in this endeavor is that a legal relationship can be a subject of international law and yet not be a matter of national law within the United States. How can it be, for example, that the judgment of a French or Italian court may be recognized in Connecticut but not in Massachusetts? Id. MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) 2010
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introduction to the ALI Judgments Project’s statute defensively states that “[t]here is no constitutional problem with the proposed statute.”145 The introduction then identifies various enumerated powers supporting enactment of the proposed statute or ratification of a foreign judgments treaty.146 There is little doubt that the political branches of the federal government have the authority to preempt state law.147 Congress has the power to regulate international commerce, and a foreign judgments statute would be such a regulation.148 The President, with the advice and consent of the Senate, has the power to negotiate a federal judgments treaty149 that, pursuant to Article VI of the U.S. Constitution, would preempt state law.150 But the fact that such enumerated power exists does not mean that it must be used or that states lack all power in the foreign relations arena.151 As stated above, the ALI Judgments Project’s proposed statute is built upon the assumption that states are interlopers in the area of foreign judgments and have no reason, even in the absence of a federal statute or treaty, to apply their own law in this area.152 “[A] foreign country judgment presented in the United States for recognition or enforcement is an aspect of the relations between the United States and the foreign state, even if the particular controversy involves the rights of private parties.”153 The fundamental presuppositions of the ALI Judgments Project’s proposed statute are that Johnston was wrongly decided and that state law must give way to national law. That argument is entirely focused on the public law aspect of the civil judgment and tramples on the private law aspect by requiring uniformity under a single federal application.154 Under the ALI Judgments Project’s proposed statute, where a private dispute involves a decision rendered by a foreign nation, the private dispute automatically 145 ALI PROPOSED STATUTE, supra note 26, intro. note, at 3. 146 Id., intro. note, at 3‐4. 147 See, e.g., LOUIS HENKIN, FOREIGN AFFAIRS AND THE U.S. CONSTITUTION 63‐67 (2d ed. 1996). 148 U.S. CONST. art. I, § 8, cl. 3. 149 Id. art. II, § 2. 150 See id. art. VI. 151 See Jack L. Goldsmith, Federal Courts, Foreign Affairs, and Federalism, 83 VA. L. REV. 1617, 1622‐23 (1997) (arguing that the foreign relations powers enumerated in the Constitution do not mandate federalization of every issue affecting foreign affairs). 152 See ALI PROPOSED STATUTE, supra note 26, intro. note, at 3‐4; see also Hearing, supra note 25, at 62 (statement of Professor Linda J. Silberman, Martin Lipton Professor of Law, New York University School of Law). 153 Hearing, supra note 25, at 62 (statement of Professor Linda J. Silberman, Martin Lipton Professor of Law, New York University School of Law). 154 See ALI PROPOSED STATUTE, supra note 26, intro. note, at 2‐4. MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) 88 New England Law Review 1/10/2011 9:32:00 AM v. 45 | 63 implicates a federal interest, so federal law controls ipso facto. This is not a compelling argument. It is like reasoning that whenever state tort cases effect an important federal interest (e.g., interstate commerce) federal law ipso facto controls. Whether applied in the interstate or international context, such reasoning is inconsistent with federalism and completely ignores the private rights in the individual dispute.155 Regarding federalism, it should be noted that the preemption of state law would implicate at least two significant state interests. First, the federal statute would require states to open courts to litigation and thereby diminish state sovereignty over judicial administration and economy. Many states currently have more liberal recognition and enforcement standards than those proposed by the federal statute.156 The federal statute would require these states to entertain litigation in their courts that is presently foreclosed.157 Because the federal government will not compensate the state for costs associated with such compelled judicial activity, the statute is, in essence, an unfunded federal mandate that would require states to pay the associated costs out of their own treasuries or pass such costs on to the parties.158 Second, the federal statute would diminish lawmaking authority within a state’s territorial borders. Erie and Klaxon demonstrate the fundamental role of state lawmaking authority in our federal system, and the ALI Judgments Project argues that this allocation of lawmaking power should be altered simply to achieve uniformity.159 However, the ALI Judgments Project’s statute incorporates a “public policy” exception allowing U.S. courts to refuse recognition of foreign judgments when the foreign judgment is contrary to state public policy. By incorporating state policy as grounds for nonrecognition, the ALI undermines its own objective of achieving a uniform national standard.160 If recognition of foreign judgments is really a matter of federal law, then state policy is irrelevant. The ALI Judgments Project’s effort to balance international concerns with federalism points to the irreconcilable tension between state and national sovereignty. Deference to state public policy would 155 See supra Part I.B (discussing treatment of interstate and international judgments). 156 See, e.g., MASS. GEN. LAWS. ch. 235 § 23A (2009) (outlining numerous reasons that a foreign judgment may not be recognized in Massachusetts courts). 157 See, e.g., id. (denying recognition to a foreign judgment if it was “rendered under a system that does not provide impartial tribunals or procedures compatible with the requirements of due process of law,” but not requiring any federal oversight). 158 See generally ALI PROPOSED STATUTE, supra note 26 (indicating that states would be required to accept responsibility for added costs that result from this statute). 159 See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941); Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938). 160 See ALI PROPOSED STATUTE, supra note 26, § 5. MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) 2010
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undermine the rationale of preemption and introduce unnecessary confusion in U.S. law. Furthermore, it is not clear that the concerns about the lack of uniformity in U.S. judgments law are warranted. The ALI Judgments Project argues that lack of uniformity results in mistreatment of U.S. judgments abroad.161 They argue that because foreign nations do not know whether judgments will receive recognition in the patchwork of U.S. states, those nations refuse to recognize judgments of U.S. state courts. This argument rests on two suppositions: U.S. judgments are not recognized abroad; and the lack of recognition abroad is retorsion due to a lack of uniformity in U.S. law and fear of nonrecognition in U.S. states.162 Both of these suppositions are flawed. Many assert that U.S. judgments receive less than favorable treatment in foreign courts, and the ALI Judgments Project’s proposed federal statute is intended to remedy that mistreatment.163 Although there are a few well‐
known examples of foreign refusal to recognize U.S. judgments, it is not clear that U.S. judgments are widely refused recognition in foreign courts.164 There is a lack of solid empirical data regarding international mistreatment of U.S. judgments,165 but “judgments obtained by U.S. lawyers who follow proper procedures are readily recognized and enforced abroad.”166 If this is true, then preemption of state judgments law is a remedy to a problem that does not exist. Even if U.S. judgments are mistreated abroad, the assumption that this mistreatment is caused by fears arising from disparate state judgment recognition law is flawed. The most notorious examples of foreign refusals to recognize U.S. judgments illustrate the flaw in this causal reasoning. Consider the judgment entered by a California state court in John Doe v. Eckhard Schmitz.167 In the case, a California resident obtained a torts judgment for sexual battery against a German citizen.168 The German High 161 See id. 162 See id. 163 See, e.g., Kevin M. Clermont, Jurisdictional Salvation and the Hague Treaty, 85 CORNELL L. REV. 89, 89 (1999) (“[T]he United States eagerly gives appropriate respect to foreign judgments, despite sometimes getting no respect in return.”). 164 European courts, for example, have refused recognition of U.S. judgments awarding punitive damages. See Adam Liptak, Foreign Courts Wary of U.S. Punitive Damages, N.Y. TIMES, Mar. 26, 2008, http://www.nytimes.com/2008/03/26/us/26punitive.html. 165 See Friedrich K. Juenger, The Recognition of Money Judgments in Civil and Commercial Matters, 36 AM. J. COMP. L. 1, 4 (1988). 166 Russell J. Weintraub, How Substantial is Our Need for a Judgments‐Recognition Convention and What Should We Bargain Away to Get It?, 24 BROOK. J. INT’L L. 167, 171 (1998). 167 Doe v. Eckhard Schmitz, No. 168‐588 (Cal. Super. Ct. Apr. 24, 1985). 168 Id. MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) 90 New England Law Review 1/10/2011 9:32:00 AM v. 45 | 63 Court refused to enforce the punitive damages awarded by the California court, determining that the U.S. punitive damage awards violated German public policy.169 As this case illustrates, U.S. judgments are denied recognition and enforcement abroad as a result of substantial disagreements with substantive U.S. law—not concerns about U.S. recognition law. This fact is further illustrated by the failed U.S.‐English bilateral judgments and jurisdiction treaty.170 England famously withdrew from the treaty negotiations as a result of significant pressure from English insurers concerned about potential exposure to U.S. tort judgments.171 These concerns regarding American tort judgments will not be remedied by the ALI Judgments Project’s attempt at uniformity of U.S. judgment‐
recognition law through preemption of state law. Instead, the remedy here would require preemption of state tort law in matters affecting international commerce, which will not remedy any problem of nonrecognition abroad, if in fact that problem exists. This discussion leads to an interesting point deserving consideration. If, as the ALI Judgments Project claims, a need for uniformity justifies the preemption of state judgment recognition law,172 then preemption of substantive tort law in cases involving citizens of foreign nations would also be necessary. It is also likely that such substantive preemption would be much more meaningful in facilitating foreign commerce in efforts to secure U.S. judgment recognition abroad. Here the federalism argument emerges with much more clarity. It is not difficult to appreciate that preempting state tort law in every case affecting international commerce, on the basis that the private dispute implicates foreign relations, would significantly redistribute lawmaking authority in our federal system.173 Such preemption, even if accomplished by statute, would require the federal courts to plunge into the development of federal common law to determine rights and provide remedies in a wide array of international commercial litigation. One of the consequences of such preemption would be a significant increase in the number of federal question cases, as the federal courts would hear tort and contract disputes 169 Id. 170 Knut Woestehoff, The Drafting Process for a Hague Convention on Jurisdiction and Judgments with Special Consideration of Intellectual Property and E‐commerce (2005) (unpublished L.L.M. thesis, University of Georgia School of Law), http://digitalcommons.law.uga.edu/stu_llm/54/. 171 Id. 172 ALI PROPOSED STATUTE, supra note 26, intro. note, at 1. 173 See generally Craig Green, Repressing Erie’s Myth, 96 CAL. L. REV. 595 (2008) (dissecting the myths of the Erie doctrine to “clarify general issues of judicial power”). MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) 2010
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in every case implicating the federal common law of foreign relations.174 State policy is unlikely to demand much attention in federal court, especially if the federal court is freed from the confines of Erie and Klaxon. The ALI Judgments Project, of course, is not proposing the preemption of state tort law in all cases involving foreign defendants. However, the proposed statute rests on the rejection of Johnston’s private right rationale, which demonstrates that the ALI Judgments Project is committed to viewing private litigation involving foreign parties, foreign rights, and foreign judgments within the purview of federal law.175 If uniformity and recognition of U.S. judgments abroad are the ultimate goals, the ALI Judgments Project’s proposed statute bodes the question whether there is any room for state contributions to the development of private international law, or whether every foreign judgment is a matter of public import and national concern. Those advancing the view that recognition and enforcement of foreign judgments are questions of federal law overvalue the public law aspect of foreign judgments and undervalue or ignore a state’s legitimate interests in the administration of justice and determination of private rights within its sovereign borders.176 To the extent that states have any legitimate interest in judgments rendered abroad, supporters of the federal view reason that state interests in the private disputes of foreign judgments are outweighed by the national interests of uniformity and exercise of judicial power, which may result in denial of recognition or refusal to enforce a judgment and may affect the foreign affairs of the United States.177 These goals provide an insufficient justification for preemption of state law and require significant departure from the objectives of Erie and Klaxon.178 It is not even certain whether there is actually a problem in need of a federal remedy. Furthermore, if such a problem exists, the ALI Judgments Project’s proposed statute would not address the actual cause of international nonrecognition of U.S. judgments. Indeed, the federal statute proposed by the ALI Judgments Project might, in fact, backfire as a result of the incorporation of a reciprocity requirement. 174 Cf. ALI PROPOSED STATUTE, supra note 26, intro. note, at 1‐4 (discussing national control and need for uniformity where federal law is concerned). 175 See id. at 3‐4. 176 See Goldsmith, supra note 151, at 1622‐23. 177 See Hearing, supra note 25, at 62 (statement of Professor Linda J. Silberman, Martin Lipton Professor of Law, New York University School of Law). 178 See generally Klaxon Co. v. Stentor Elec. Mfg. Co., Inc., 313 U.S. 487, 496 (1941) (holding that Erie requires federal courts sitting in diversity to apply state choice of law rules); Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938) (declaring that there is no general federal common law and requiring federal courts to apply state law to resolve all matters of substantive right, except where the matter is governed by a federal question). MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) New England Law Review 92 1/10/2011 9:32:00 AM v. 45 | 63 B. Examining the ALI Judgments Project’s Case for a Federal Reciprocity Requirement In addition to preempting state law, the ALI Judgments Project’s proposed statute departs from the current majority view concerning the issue of reciprocity by compelling states to open their courts to presently foreclosed collateral attacks on foreign judgments.179 The ALI Judgments Project even acknowledges that its proposal departs from the general view of reciprocity180 and describes its reciprocity rule as “[t]he most controversial issue in the [foreign judgments project] effort.”181 The reciprocity requirement would force many states to extend less recognition to foreign judgments than is currently available under state law. Hilton refused to recognize or enforce a French judgment for “want of reciprocity.”182 Under the French civil system at that time, no foreign judgment was entitled to conclusive effect in French courts.183 Justice Gray reasoned that comity, like all international law, is grounded in the principles of “mutuality and reciprocity.”184 This reciprocity requirement sparked immediate controversy. Hilton was a five‐to‐four decision and the dissent, arguing that res judicata was an issue of private right, criticized the majority’s diminished view of private right by its focus on legislative disagreement between France and the United States.185 The reciprocity requirement was not well received in the state courts. Johnston rejected Hilton’s precedential authority in New York and granted recognition to a French judgment despite an absence of reciprocity. Johnston was a unanimous decision that, like the dissent in Hilton, viewed the questions of recognition and enforcement as one of private right rather 179 See Johnston v. Compagnie Generale Transatlantique, 152 N.E. 121, 122 (N.Y. 1926) (putting forward the majority view that reciprocity is controlled by state, not federal mandate); ALI PROPOSED STATUTE, supra note 26, intro. note, at 3‐4. 180 ALI PROPOSED STATUTE, supra note 26, § 7. 181 See id., Reporters’ Preface, at xiii. 182 Hilton v. Guyot, 159 U.S. 113, 210 (1895). 183 Id. 184 Id. at 228. 185 Id. at 234 (Fuller, J., dissenting). I cannot yield my assent to the proposition that because by legislation and judicial decision in France that effect is not there given to judgments recovered in this country which, according to our jurisprudence, we think should be given to judgments wherever recovered, (subject, of course, to the recognized exceptions,) therefore we should pursue the same line of conduct as respects the judgments of French tribunals. Id. MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) 2010
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than international relations.186 Most states currently reject a reciprocity requirement for recognition of foreign judgments.187 For example, the Uniform Foreign Money‐Judgments Recognition Act (“UFMJRA”),188 promulgated by the National Conference of Commissioners on Uniform State Laws in 1962, does not include a reciprocity requirement189 and has been adopted by twenty‐nine states.190 A few states have adopted a reciprocity requirement or a limited reciprocity requirement in addition to the provisions of the UFMJRA,191 but the UFMJRA’s drafters chose to exclude a reciprocity requirement to demonstrate respect for foreign judgments and secure reciprocal treatment of U.S. judgments abroad.192 General rejection of the reciprocity requirement in state law is further illustrated by several Restatement provisions. The rules of recognition contained in the Restatement (Second) of Conflict of Laws and the Restatement (Third) of Foreign Relations Law do not require reciprocity.193 The general approbation of the reciprocity requirement is also supported by well‐known conflicts scholars.194 One federal district court, sitting in 186 Johnston v. Compagnie Generale Transatlantique, 152 N.E. 121, 123 (N.Y. 1926) (“A right acquired under a foreign judgment may be established in this state without reference to the rules of evidence laid down by the courts of the United States.”). 187 See Walter H. Heiser, The Hague Convention and Choice of Court Agreements: The Impact of Forum Non Conveniens, Transfer of Venue, Removal, and Recognition of Judgments in United States Courts, 31 U. PA. J. INT’L L. 1013, 1025 (2010). 188 UNIF. FOREIGN MONEY‐JUDGMENTS RECOGNITION ACT OF 1962, 13 U.L.A. § 39 (2002) [hereinafter UFMJRA]. 189 See Katherine R. Miller, Playground Politics: Assessing the Wisdom of Writing a Reciprocity Requirement into U.S. International Recognition and Enforcement Law, 35 GEO. J. INT’L L. 239, 253 (2004). 190 See UFMJRA, supra note 188, § 39. 191 See WEINTRAUB, COMMENTARY, supra note 3, at 748 n.75. 192 See Miller, supra note 189, at 253 (“The Uniform Act’s omission of Hilton’s reciprocity rule stemmed from the lack of support for the rule in most state courts, as well as the sentiment that ‘[s]ince the Act was designed as a means to create reciprocity, it does not require reciprocity to operate.’” (quoting Alan J. Sorkowitz, Enforcing Judgments Under the Uniform Foreign Money‐Judgments Recognition Act, 37 PRAC. LAW. 57, 61 (1991))). 193 CONFLICT OF LAWS, supra note 44, § 98 cmt. f (“Except when otherwise required by local statute, the great majority of state and federal courts have extended recognition to judgments of foreign nations without regard to any question of reciprocity.”); FOREIGN RELATIONS LAW, supra note 17, § 481 cmt. d. 194 See Friedrich K. Juenger, A Hague Judgments Convention?, 24 BROOK. J. INT’L L. 111, 113 (1998); Hans Smit, International Res Judicata and Collateral Estoppel in the United States, 9 UCLA L. REV. 44, 49‐50 (1962) (asserting that the reciprocity requirement lacks “any commendable quality”); Weintraub, supra note 166, at 178 (“[P]laying the reciprocity card is likely to be perceived as the negotiating tactic that it is and make a successful conclusion even less likely. MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) 94 New England Law Review 1/10/2011 9:32:00 AM v. 45 | 63 diversity and therefore free of Hilton’s reciprocity rule, described the reciprocity requirement as “a provincial [concept], one which fosters decisions that do violence to the legitimate goals of comity between foreign nations.”195 Despite significant contrary authority in American law, the ALI Judgments Project’s proposed federal statute incorporates a reciprocity requirement.196 The proposed statute states: “A foreign judgment shall not be recognized or enforced in a court in the United States if the court finds that comparable judgments of courts in the United States would not be recognized or enforced in the courts of the state of origin.”197 The statute further provides that the issue of reciprocity is an affirmative defense and that the party resisting enforcement has the “burden to show that there is substantial doubt that the courts of the state of origin would grant recognition or enforcement to comparable judgments of courts of the United States.”198 The statute mandates that the U.S. court “shall, as appropriate, inquire whether the courts of the state of origin deny enforcement to” five separate categories of U.S. judgments as the court determines whether the foreign nation satisfies the reciprocity requirement.199 The statute allows the U.S. court to ignore a foreign court’s denial of enforcement of the “punitive, exemplary or multiple damages” portion of a U.S. judgment so long as the “state of origin would enforce the compensatory portion of such judgments.”200 Finally, the ALI Judgments Project’s reciprocity requirement authorizes the Secretary of State to negotiate bilateral or multilateral reciprocity agreements, which would “establish[] that the requirement of reciprocity has been met as to judgments covered by the agreement.”201 The comments in the ALI Judgments Project’s proposed statute offer justification for the reciprocity requirement: “The purpose of the reciprocity provision . . . is not to make it more difficult to secure recognition and enforcement of foreign judgments, but rather to create an incentive to foreign countries to commit to the recognition and On balance, I do not recommend it.”). 195 Somportex Ltd. v. Phila. Chewing Gum Corp., 318 F. Supp. 161, 167‐68 (E.D. Pa. 1970), aff’d, 453 F.2d 435 (3d Cir. 1971). 196 See ALI PROPOSED STATUTE, supra note 26, § 7(a). 197 Id. 198 Id. § 7(b). 199 Id. § 7(c). 200 Id. § 7(d). 201 Id. § 7(e). Agreements entered into pursuant to this provision “need not be formal treaties, but could be Memorandum of Understanding, exchanges of Diplomatic Notes, or similar bilateral declarations . . . .” Id. cmt. c. MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) 2010
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enforcement of judgments rendered in the United States.”202 In other words, reciprocity is a carrot dangling in front of foreign nations intended to entice them to discontinue their practice of refusing recognition of U.S. judgments. The reporters expect that this carrot, coupled with the authority granted to the State Department to negotiate agreements without involving the Senate,203 will entice foreign powers to a judgments armistice. Each nation will agree to recognize and enforce civil judgments via diplomatic means. The ALI Judgments Project’s inclusion of a reciprocity requirement is controversial and was initially incorporated into the draft by a slim majority vote.204 The inclusion of a reciprocity requirement has garnered mixed reactions in legal scholarship.205 A few states have adopted reciprocity requirements of differing degrees into their own judgment recognition laws.206 But most states have rejected reciprocity as a precondition to recognition and enforcement of foreign judgments.207 As the ALI Judgments Project notes, there is not foreign consensus on the relevance or propriety of reciprocity in private litigation.208 The question of reciprocity is interesting and challenging. There are strong policies advanced by both sides of the reciprocity debate. On the one hand, the goal of increasing leverage in bilateral and multilateral negotiations in order to secure recognition of U.S. judgment abroad is a 202 ALI Proposed Statute, supra note 26, § 7 cmt. b. 203 Id. § 7(e) cmt. e. 204 See Michael Traynor, 82nd Annual Meeting of the American Law Institute, 82 A.L.I. PROC. 94, 159 (2005) (stating that a reciprocity requirement “has been much debated in [the ALI]” and included in the ALI Judgments Project final draft by a vote of sixty‐eight members for inclusion to fifty‐five members against inclusion). 205 See, e.g., Lucien J. Dhooge, Aguinda v. ChevronTexaco: Discretionary Grounds for the Non‐
Recognition of Foreign Judgments for Environmental Injury in the United States, 28 VA. ENVTL. L.J. 241, 284 (2010). Compare Miller, supra note 189, at 287‐94 (arguing that the ALI Judgments Project’s proposed reciprocity requirement should be rejected), with Franklin O. Ballard, Turnabout is Fair Play: Why a Reciprocity Requirement Should Be Included in the American Law Institute’s Proposed Federal Statute, 28 HOUS. J. INT’L L. 199, 233‐37 (2006) (arguing that the reciprocity requirement should be included in the ALI Judgments Project’s proposed statute). 206 See ALI PROPOSED STATUTE, supra note 26, § 7. Unlike the majority of states that presently recognize reciprocity as relevant but discretionary, the ALI Judgments Project’s reciprocity requirement is a mandatory precondition. See id. 207 See Cedric C. Chao & Christine S. Neuhoff, Enforcement and Recognition of Foreign Judgments in United States Courts: A Practical Perspective, 29 PEPP. L. REV. 147, 150 (2001) (examining Hilton’s requirement of reciprocity and noting that most state jurisdictions “have abandoned the reciprocity requirement, and will enforce foreign judgments without regard to whether the foreign court would likewise recognize a United States judgment”). 208 See ALI PROPOSED STATUTE, supra note 26, § 7 (“Foreign countries have taken varying positions on the issue of reciprocal recognition and enforcement of foreign judgments.”). MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) 96 1/10/2011 9:32:00 AM New England Law Review v. 45 | 63 laudable objective. On the other hand, the desire to reach a just and final result between the parties to the private dispute, without regard to the broader, diplomatic relations of nations in which tribunals reside, is also a worthy objective. Nevertheless, the ALI Judgments Project’s reciprocity requirement should be rejected. First, the reciprocity requirement sacrifices private rights on the diplomatic altar. While it is true that leverage in diplomatic negotiations would probably be enhanced by adopting a national rule that uniformly rejects foreign judgments unless the foreign nation relents and enters into a reciprocity agreement with the U.S. government, such a rule ignores the interests of individual litigants in private commercial litigation. One purpose behind the res judicata doctrine is to protect private interests in finality and also protect litigants from vexatious and duplicative litigation. These private interests will be sacrificed to the public interest of federal uniformity if reciprocity is required.209 Consider, for example, a routine commercial dispute between a U.S. company and a German citizen involving a defective product manufactured by the company and sold in Germany. If, after appearing and fully litigating their respective rights in the German court, the German citizen secures a civil judgment against the U.S. company in judicial proceedings that were consonant with due process and fundamental fairness, then it is true that the German judgment is final as between the parties because the dispute was fully and fairly resolved. The doctrine of res judicata is used not merely to ensure efficiency, but also to demand that all litigation obtain finality. Therefore, the question of reciprocity is irrelevant to the private dispute. When the German citizen asserts a right to collect in a U.S. court on the basis of the German judgment, the question of Germany’s reciprocal treatment of U.S. judgments is relevant only if the judge in the U.S. action is permitted to consider policies and issues beyond the confines of the particular case presented to the court. This sacrifice of private right for the greater good is explicitly acknowledged in the introduction to the ALI Judgments Project’s proposed statute.210 The fact that the ALI Judgments Project rejects the authority of states to protect the private rights of litigants also highlights the federalism concerns discussed above.211 A second problem regarding reciprocity emerges as one considers the 209 See supra notes 196‐208 and accompanying text. 210 See ALI PROPOSED STATUTE, supra note 26, intro. note, at 3 (noting that “[t]he present project rejects the view of the New York Court of Appeals” in Johnston, which held that recognition of foreign judgments was a matter of private right rather than public international law); see also Johnston v. Compagnie Generale Transatlantique, 152 N.E. 121, 122 (N.Y. 1926). 211 ALI PROPOSED STATUTE, supra note 26, intro. note, at 3; see supra Part II.A. MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) 2010
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effect of the requirement in individual cases. For example, assume that the German citizen’s above‐described judgment is presented to a New York state court for enforcement. Also assume that the ALI Judgments Project’s proposed statute has been adopted, thereby compelling the New York state court to deny recognition and enforcement if it determines that German courts would not recognize or enforce “comparable judgments of courts in the United States.”212 After entertaining expert testimony, the New York court determines that German courts would not recognize or enforce U.S. products liability judgments; therefore, it determines that the German judgment is not entitled to recognition or enforcement in the United States. This scenario leads to the question of what happens next—whether the German citizen must file an entirely new products liability action in the New York court to obtain any relief. If so, the matter is further complicated, as the proposed statute does not indicate whether the factual findings of the German court are entitled to recognition or whose law determines the rights or liabilities of the parties to this private dispute. A third practical problem regarding imposition of a reciprocity requirement is the burden of determining whether the reciprocity requirement has been satisfied. The ALI Judgments Project’s proposed statute contemplates a hearing where expert testimony is received regarding the state of origin’s laws and recognition of similar U.S. judgments. This effort will increase costs and demand judicial attention. This will likely be an especially difficult inquiry when the judgment arises from a legal system in a non‐democratic nation or a culture that does not share U.S. conceptions of law.213 A fourth problem with the reciprocity requirement is its circularity, related to the renvoi trap.214 The ALI Judgments Project’s reciprocity requirement forbids a state from enforcing a foreign judgment until the foreign nation recognizes the state’s judgments. If the foreign state adopts the same reciprocity requirement, then the problem of circularity arises.215 This becomes as annoying as the childish game when one responds to every insult with the statement “I know you are but what am I?” As in all 212 ALI PROPOSED STATUTE, supra note 26, § 7(a). 213 See Brand, supra note 23, at 281‐82 (explaining that foreign countries who engage in reciprocity analysis struggle to understand and correctly interpret U.S. law due to a poor understanding of Erie). 214 See id. at 282‐83 (“Reciprocal reciprocity requirements lead to the problem of ‘renvoi,’ in which the forum jurisdiction’s rule requires reference to the granting jurisdiction’s rule for conflict of laws purposes.”). Professor Brand asserted that “there is no easy exit from this analytical circle.” Id. Accordingly, the best strategy is to avoid the circle altogether and unilaterally determine whether a foreign judgment should be recognized within U.S. courts without reference to foreign law. Id. 215 See ALI PROPOSED STATUTE, supra note 26, § 7(a); Brand, supra note 23, at 282‐83. MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) 98 New England Law Review 1/10/2011 9:32:00 AM v. 45 | 63 cases of retorsion, there is a danger that outright rejection of the judgments from nonreciprocating nations, rather than being viewed as an enticing carrot, will be viewed simply as a disrespectful and hostile act.216 This should not be surprising, because the incorporation of the reciprocity requirement can be easily perceived as a hostile act rather than as an expression of respect for the rule of law. Rather than attempting to leverage power with carrots and sticks, the better approach would be to demonstrate respect for the rule of law by attempting to achieve justice in individual cases. The maxim “you’ve got to give respect to get it” expresses this thought well. Rather than attempting to secure international respect for U.S. judgments abroad by manipulating the outcomes in an effort to maximize diplomatic leverage, our courts should promote adherence to judicial power as an exercise in recognizing and enforcing private rights between the parties before the court.217 Arguably, the U.S. common law approach to foreign judgments, which the ALI Judgments Project seeks to preempt and change, and the practice of many states’ unilateral extension of comity to foreign nations, have promoted, rather than deterred, a new trend in international law toward respect and mutuality, even absent reciprocity.218 A fifth problem with the reciprocity requirement is the underlying assumption that such reciprocal recognition agreements are workable. Reciprocity is, in fact, very important to the formation of a cohesive political community. The Framers understood this and incorporated a reciprocity requirement—the Full Faith and Credit Clause—into the U.S. Constitution. The European Union is another example of a political community committed to reciprocal judgment recognition between member states.219 The reciprocity obligations among the United States and among member states of the European Union are made possible by more significant political commitments codified in the U.S. Constitution and the European Conventions.220 The obligation of reciprocal treatment is secured by the unity of the polity as expressed in the positive law. In the United States, reciprocity is secured by the Supremacy Clause, and, in the event 216 See, e.g., Weintraub, supra note 166, at 178 (recommending rejection of a reciprocity requirement because it could be viewed as a negotiating tactic). 217 See supra notes 214‐15 and accompanying text. 218 See Stephen B. Burbank, Jurisdictional Equilibration, the Proposed Hague Convention and Progress in National Law, 49 AM. J. COMP. L. 203, 204 (2001) (discussing the relationship between interstate practice within the U.S. federal system and the development of international standards). 219 See Yaad Rotem, The Problem of Selective or Sporadic Recognition: A New Economic Rationale for the Law of Foreign Country Judgments, 10 CHI. J. INT’L L. 505, 526 (2010). 220 See U.S. CONST. art. IV, § 1; Council Regulation 44/2001, OJ 2001 (L 12)1; Council Regulation 1347/2000, OJ 2000 (L 160) 19. MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) 2010
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that one state attempts to shirk its obligations, the Supreme Court has the authority to strike down nefarious activity.221 In the European Union, member states have a similar right to secure enforcement of reciprocity obligations in the European Court of Justice.222 Reciprocity, then, works together with supremacy to bind a polity together. Even if the United States secured bilateral or multilateral agreements regarding reciprocal treatment of judgments, these agreements would lead to less security and certainty than available within a cohesive polity. Unlike the reciprocity provided by the Full Faith and Credit Clause, such bilateral agreements would not be enforceable by any supreme court applying supreme law. Instead, assuming that law is nothing more than an expression of sovereign power, any reciprocity agreement negotiated by the Secretary of State pursuant to the ALI Judgments Project’s proposed statute would be subject to executive (or judicial) fiat in either country, demonstrating that the “rights” created by the proposed statute would likely be remediless if violated.223 Finally, the reciprocity requirement fails to acknowledge that some foreign courts refuse to recognize or enforce U.S. judgments simply because the foreign power opposes the U.S. judgment. Some foreign courts are troubled by U.S. tort judgments that are perceived as excessive,224 showing that foreign courts reject U.S. judgments for reasons unrelated to judgment‐recognition practice. Negotiations to achieve bilateral consensus regarding these difficult disagreements are challenging and have previously failed.225 Multilateral efforts are less likely to result in consensus. Furthermore, as those representing the U.S. will be required to overcome concerns about state jury verdicts without having the power or authority to preempt state tort law, foreign negotiators will likely be asked to accommodate U.S. concerns about their own judgments, which is offensive on different grounds. For example, as English negotiators will raise concerns about U.S. jury verdicts, U.S. negotiators must raise concerns about offensive English libel judgments.226 Securing a judgment recognition 221 See U.S. CONST. art. VI, cl. 2. 222 See Rotem, supra note 219, at 526‐27 (“Examples . . . include the Brussels I and II Regulations applying to EU Countries.”). 223 See generally ALI PROPOSED STATUTE, supra note 26 (outlining the statute requirements and applications). 224 See Weintraub, supra note 166, at 182‐83 (discussing recent international decisions denying U.S. judgments recognition on the basis of concerns about excessive U.S. jury verdicts and noting that these decisions serve as a “red flag warning us that treaty negotiations are likely to focus on punitive and ‘excessive’ damages, particularly U.S. jury awards in what Lord Denning termed ‘fabulous’ amounts”). 225 See Rotem, supra note 219, at 526‐27. 226 English libel judgments that fail to accommodate First Amendment interests are a MCFARLAND_FINAL‐PG63‐100PROOFED (DO NOT DELETE) 100 New England Law Review 1/10/2011 9:32:00 AM v. 45 | 63 agreement will require more than simply removing the impediment created by the ALI Judgments Project’s reciprocity requirement. The ALI Judgments Project’s reciprocity requirement would be a significant step away from the common law and would make private litigation more complex and less certain. This risks diminishing the perception of the United States as a nation committed to the rule of law. Although there may be tempting justifications for such a requirement, it is not warranted and should be rejected by Congress and by state and federal courts. CONCLUSION The force and effect of extraterritorial judgments is a significant issue for any legal system. The ALI Judgments Project’s proposed federal judgments statute is a significant contribution to an important discussion regarding this issue, and their efforts to increase respect for U.S. judgments abroad are laudable. However, because the proposed statute significantly departs from state common law and undervalues the legitimate interests of both state governments and private litigants, the statute should not be adopted. The ALI Judgments Project contends that its statute is necessary to decrease international confusion regarding U.S. law, yet the proposed statute sends out mixed messages about U.S. respect for foreign courts. The preemption of state law, coupled with the reciprocity precondition, would result in less favorable treatment of foreign judgments in many state courts. The ALI Judgments Project’s statute rests on concerns about international inability to understand the Erie doctrine and federalism. In an effort to clear up this confusion, the ALI Judgments Project proposed a uniform federal standard that incorporates a hostile reciprocity provision. This is a curious way to increase respect for U.S. judgments abroad. The ALI Judgments Project insists that reciprocity will be viewed as a carrot, not a stick. But the words of Justice Holmes come to mind: “[E]ven a dog distinguishes between being stumbled over and being kicked.”227 The real question is whether it is better to explain principles of federalism or to rationalize retorsion with our partners at the international bargaining table. In this case, the answer should lead to rejection of the ALI Judgments Project’s proposed statute. matter of significant concern. See ALI PROPOSED STATUTE, supra note 26, § 5 (describing recent U.S. decisions denying enforcement of English civil judgments on the basis of the public policy exception to enforcement and the First Amendment). 227 OLIVER WENDELL HOLMES, JR., THE COMMON LAW 2 (ABA Publ’g 2009) (1881).