Jurisdictional conflict and jurisdictional equilibration: paths to a via media?

• Author: Burbank, Stephen B.
• Position: Transatlantic Business Transactions: Choice of Law, Jurisdiction, and Judgments

1. INTRODUCTION

   My goal in this article is to offer some reflections on jurisdictional conflict stimulated by Professor Posch (1) and on jurisdictional equilibration stimulated by Professor Silberman. (2) Thus, having brought to bear on the understanding of jurisdictional conflict an account of the etiology and current dilemmas of American jurisdictional jurisprudence, I will assess the roles and prospects of two jurisdictional equilibration devices--the Latin twins, forum non conveniens and lis pendens--in resolving such conflict, with special attention to international business disputes.

2. JURISDICTIONAL CONFLICT

   Professor Posch's article lays firmly at the door of disagreements about appropriate rules of adjudicatory jurisdiction the difficulties that delegates to the Hague Conference have experienced in crafting a global convention on jurisdiction and judgments. (3) In his view, certain grounds of jurisdiction accepted in the United States but regarded as exorbitant under the Brussels Convention and its replacement regulation, combined with the American Rule on cost (including attorney's fee) shifting, the availability of contingency fee representation, and the right to jury trial in civil cases, prompt overreaching by entrepreneurial American plaintiffs lawyers and risk aversion in foreign defendants. The latter are therefore often led either to settle rather than to litigate once a lawsuit has been commenced in the United States, or to anticipate and try to avoid that dilemma through a forum-selection (including an arbitration) clause.

   According to this account, the differences in jurisdictional conceptions that have prevented agreement at The Hague overwhelm other differences in the rules and practices applicable in the United States and the E.U. countries that Professor Posch discusses, including differences regarding forum-selection clauses and the recognition and enforcement of foreign judgments. (4)

   One need not agree with Professor Posch's account to find interesting the conclusion that what he calls "sociological differences" are probably more important than legal differences to an understanding of the jurisdictional conflict he describes. For present purposes, I would highlight one difference that might be so conceived and that has obvious legal impact.

   In many developed countries in the western world, the State directly affords or provides administrative or other mechanisms that afford--assistance to those who have been injured to a far greater degree than does the United States, where, as a result, litigation picks up the slack. The same is true of mechanisms to vindicate important regulatory interests. These differences reflect, in turn, fundamental differences in attitudes toward the proper role of the State and of private initiative in ordering social life, with predictable effects on general attitudes toward not only litigation but also the status quo and how, if at all, it should be altered. (5)

   However regrettable the contingency fee, the American Rule on cost-shifting, and the institution of the jury trial in civil cases may appear to a European, they are logical incidents of a system that distrusts government and leans heavily on private litigation to compensate for injury and to enforce important social norms, but that does not provide legal aid that is worthy of the name. (6) It is not only the self-interest of entrepreneurial American plaintiffs lawyers that prompts resistance to attempts to reduce the availability of litigation forums in the United States when an American alleges injury for which a foreign enterprise may be legally responsible or where the activities of that foreign enterprise are alleged to trigger an American regulatory interest. Forced to pursue vindication thousands of miles from home, and without alternative (that is, non-litigation) means of vindication, our putative American plaintiff might lose not only favorable substantive law but that which experience suggests may be more important in many cases, to wit, the ability to secure representation and to develop evidence necessary to establish liability (discovery).

   That said, it is probably equally important for this discussion to note that the current, plaintiff-friendly regime of jurisdictional rules in the United States is a relatively recent phenomenon. For much of our history jurisdictional law and the nature of the society whose needs it served constrained forum shopping. "[T]he greater latitude to assert jurisdiction afforded the states by International Shoe and its progeny dramatically enhanced the opportunities for interstate forum shopping and, coupled with loose federal control of state choice of law, the incentives of both litigants and state courts to run a race to judgment, creating a [domestic] market for litigation.... " (7) Moreover, just as United States courts in effect assimilated internationally foreign judgments to interstate judgments for purposes of recognition and enforcement, (8) so have they assimilated internationally foreign actors to domestic actors for purposes of applying jurisdictional rules. (9) That has meant that, with the increase in global commerce following the Second World War, the market for litigation enabled in large part by the contemporaneous expansion of acceptable jurisdictional bases in the United States--became a global market as well. (10)

   The use of American jurisdictional law to draw the world into our courts has cast in relief failures of imagination that are evident even in domestic cases. One such failure has been that of the Supreme Court to take a dynamic and comparative view of jurisdiction when adjusting federal constitutional limits on its exercise. Thus, for example, although the Court used the vehicle of International Shoe (11) to abandon fictions that had previously bridged the gap between a perceived territorial imperative and the needs of an increasingly mobile society, it has never made clear whether there is a continuing need, and hence a proper place, in the new order for the fiction of corporate presence in a state through the conduct of systematic and continuous business activities. (12) There is an argument to be made that, with the adoption of grounds of activity-based or specific jurisdiction that International Shoe invited, and given the continued acceptance of domicile (including state of incorporation) as a basis of general jurisdiction, "doing business" jurisdiction should net be permitted, or should be substantially scaled back, in litigation involving domestic (U.S.) defendants. (13)

   The same argument is harder to carry in a case involving a foreign defendant precisely because such a defendant has no domicile or seat in the United States. Yet, to say that a defendant is subject to jurisdiction because, and only because, it is doing systematic and continuous business in this country implies that the claim does net arise out of that activity and hence that there is lacking the sort of connection between the underlying transaction or occurrence and the forum that is usually assured by grounds of specific jurisdiction in the United States and, to a lesser extent, by rules of "category-specific jurisdiction" (14) common in many foreign legal systems. It is one thing to say that a corporation should net be heard to complain if sued on an unrelated claim in the place that is its legal home. (15) It is quite another endlessly to proliferate such homes--to debase the notion of a jurisdictional "headquarters" (16)--in the process neglecting the fact that the original fiction was "presence," not "domicile."

   Until such time as the Court does approach the constitutional inquiry from a dynamic and comparative perspective, however, the best hope for moderation (other than the forum non conveniens doctrine, to which I turn below) may be the application to this ground of general jurisdiction of a second order reasonableness analysis now firmly part of the constitutional evaluation of grounds of specific jurisdiction--analysis that, its provenance suggests, is particularly apt in a case involving a foreign defendant. (17) Such analysis has the capacity to distinguish the lot of an individual from that of a corporate (as well as that of a domestic from that of a foreign) litigant, plaintiff or defendant, and hence (even if sub silentio) to accommodate the sociological facts of litigation life to which I have referred. (18) Certainly, it could put an end to the worst excesses of "doing business" jurisdiction in transnational litigation, namely those occurring when the contacts of a domestic subsidiary (or related entity) are imputed to the foreign defendant under an alter ego or agency theory. (19)

   This discussion brings to light another failure of imagination in American jurisdictional law, or at least federal constitutional law, which unfortunately has largely displaced state law in fact and in American legal thinking about jurisdiction: (20) the failure to recognize a possible need for different rules depending on the characteristics of the litigants.

   Th[e] disposition to assimilate international to domestic interjurisdictional cases has been reinforced by the very powerful impulse of modern American procedural law, including for these purposes choice of law, to apply the same rules to all cases. American courts have pursued domestic doctrinal uniformity even when doing se resulted in international disuniformity, as in the interpretation of treaties. (21) Yet, as Professor Posch reminds us, one should net neglect the possibility that a sociological explanation may cast as much light on this phenomenon as does a legal explanation. Indeed, it would be surprising if the same foundational attitudes regarding the proper roles of the State and of private initiative in social ordering were not operating in and on the rules of adjudicatory jurisdiction.

   It was perhaps easier for continental jurisdictional jurisprudence, with its focus on the...