Turnabout is fair play: why a reciprocity requirement should be included in the America Law Institute's proposed federal statute.

AuthorBallard, Franklin O.
  1. INTRODUCTION II. HISTORICAL DEVELOPMENT OF FOREIGN JUDGMENT RECOGNITION AND ENFORCEMENT IN THE UNITED STATES A. Common Law Development 1. Hilton v. Guyot 2. Johnson v. Compagnie Generale Transatlantique 3. Erie R.R. Co. v. Tompkins B. Reciprocity in State Law 1. The Uniform Foreign Money-Judgments Recognition Act 2. Restatement (Second) Conflict of Laws [section] 98 3. Restatement (Third) of The Foreign Relations Law of the United States [subsection] 481-482 4. Summary of Existing State Law C. The International Landscape: A Need for and Lack of International Agreements on Recognition and Enforcement 1. United Kingdom-United States: Convention on the Reciprocal Recognition and Enforcement of Judgments in Civil Matters 2. The Hague Convention on Jurisdiction and the Effects of Judgments in Civil and Commercial Matters D. The ALI's International Jurisdiction and Judgments Project III. THE RECIPROCITY DEBATE A. Arguments Against Including the Reciprocity Requirement in the Draft Statute Rely Too Heavily on Domestic Precedent and Fail to Adequately Consider the Long-Term Effects of the Change 1. The Lack of Precedent 2. Legal and Fairness Principles 3. Secondary Considerations B. Arguments in Favor of Reciprocity Support its Inclusion in the Draft Statute 1. The United States Needs to Create Incentives for Foreign States to Enter Meaningful Negotiations for an International Judgments Recognition Treaty 2. The Reciprocity Requirement Will Improve the Recognition of U.S. Judgments Abroad 3. Turnabout is Fair Play IV. CONCLUSION I. INTRODUCTION

    One can hardly debate the fact that the United States is a vital player in a global economy that is becoming more global every day. In 2003, the value of worldwide exports was $7.294 trillion and the value of worldwide imports was $7.569 trillion. (1) This represents a 16 percent increase over 2002 for both imports and exports. (2) Likewise, in 2003, the United States ranked second among worldwide merchandise exporters with a total value of $723.8 billion, representing 9.6 percent of the global exports and a 4 percent increase over 2002 exports. (3) In addition, the United States ranked first in merchandise imports with over $1.3 trillion in merchandise representing 16.8 percent of the global market and a 9 percent increase over 2002. (4) International trade is growing rapidly, and the United States is a major factor in this growth.

    The astounding volume and growth of international trade has heightened the importance of uniform, efficient, and predictable recognition and enforcement of judgments rendered by sovereigns in this global economy. (5) The impact of judgment recognition and enforcement has been summarized as follows:

    Traders seek the security provided by the enforcement of legal rights and the provision of an adequate remedy. Accordingly, without secure means by which that remedy may be given effect, exporters may undervalue the gains from trade. Consequently, they may fail to take advantage of trading opportunities that would otherwise be socially beneficial, taking into account both the gains for individual traders and the benefits that would flow to third parties. At the same time, the inability of importers to vindicate their legal rights through the effective enforcement of judgments would also distort incentives for trade, leading exporters not to appreciate fully the costs of their activities and encouraging them to exploit trading opportunities that would be better left unrealized. (6) The purpose of this Comment is to examine the wisdom of imposing a requirement of reciprocity in the Proposed Foreign Judgments Recognition and Enforcement Act drained by The American Law Institute's International Jurisdiction and Judgments Project. This issue is particularly relevant in light of the fact that both the American Law Institute (ALI) and The National Conference of Commissioners on Uniform State Laws (NCCUSL) are simultaneously working on foreign judgment recognition projects, and they have taken conflicting positions on the issue of reciprocity. (7) While there are many other important considerations in the analysis of foreign judgment recognition, this Comment is confined to the issue of reciprocal recognition of foreign judgments.

    To set the stage for this analysis, this Comment begins with a summary of the historical development of foreign judgment recognition and enforcement in the United States. Since the United States is currently not a party to any international convention governing the recognition of foreign judgments. (8) the Comment will first highlight select cases that have defined the common law landscape in the United States. Next, the current Uniform Foreign Money-Judgments Recognition Act, promulgated by the NCCUSL in 1962, (9) will be discussed in addition to Restatements related to the recognition and enforcement of foreign judgments. The Comment will proceed to briefly highlight the issues encountered during the Hague Convention and then will examine the factors leading to the ALI's proposed Foreign Judgments Recognition and Enforcement Act.

    Part III of the Comment will provide a brief account of foreign judgment recognition and enforcement in select international jurisdictions. The intent of this brief review is to highlight the role reciprocity has played abroad in order to better understand how a reciprocity requirement in the United States would potentially affect the status quo.

    Finally, the analytical focus of the Comment will be dedicated to examining the arguments both for and against requiring reciprocal recognition of U.S. judgments as a prerequisite to U.S. courts recognizing foreign court judgments.

  2. HISTORICAL DEVELOPMENT OF FOREIGN JUDGMENT RECOGNITION AND ENFORCEMENT IN THE UNITED STATES

    Article IV of the U.S. Constitution provides: "Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State." (10) However, it is undisputed that the Constitution confers no such right to judgments rendered by foreign nations. (11) Therefore, the enforcement of foreign judgments in the United States has traditionally been governed by state common law and the Uniform Foreign Money-Judgments Recognition Act. (12)

    1. Common Law Development

      While the intent of this Comment is not to provide an exhaustive review of the U.S. case law surrounding the issue of foreign judgment recognition and enforcement, it is important to recognize the cases that have shaped the current policy in this area in an effort to provide a fundamental backdrop for the reciprocity debate.

      1. Hilton v. Guyot

        The 1895 Supreme Court decision of Hilton v. Guyot (13) is considered landmark in the area of foreign judgment recognition. (14) This case involved a suit brought by a French partnership against its U.S. trading partners operating in France. (15) The case was tried in a French court and a final judgment was rendered, awarding a substantial sum to the French plaintiffs. (16) The case was appealed in French courts, but the U.S. defendants liquidated their assets in France prior to the judgment on appeal. (17) After working its way through the U.S. court system, the French plaintiffs action to have its French judgment recognized and enforced in the United States made it to the Supreme Court on a writ of error. (18)

        Justice Gray's opinion based the recognition of foreign judgments on "the comity of nations." (19) He defined comity as:

        [T]he 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. (20) Justice Gray then proceeded to define comity's scope and composition, concluding:

        [W]here 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 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 allow it full effect, the merits of the case 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 that the judgment was erroneous in law or in fact. (21) While the French judgment appears to have met these criteria for granting comity, the judgment was not afforded conclusive effect for the independent ground of a "want for reciprocity"--French courts would not have recognized and enforced a U.S. judgment without a trial on the merits. (22) Furthermore, Justice Gray reviewed the current laws of numerous countries around the world and concluded reciprocity was a prerequisite to allowing conclusive effect of foreign judgments in the majority of foreign jurisdictions. (23) He was careful to note the holding was not based on a theory of retaliation, but on "the broad ground that international law is founded upon mutuality and reciprocity...." (24)

        Hilton was a 5-4 decision, and Justice Fuller authored a forceful dissent in which he argued the doctrine of res judicata should be applied to foreign judgments. (25) Since the court was competent; afforded equal treatment to all litigants (regardless of nationality); and appeared to have acted judicially, honestly and fairly, he argued the judgment should not be disturbed. (26) In addition, he noted that while several nations require reciprocity to enforce the judgments of other countries, countries governed by common law, such as England, simply require the court of...

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