MEMORANDUM IN SUPPORT OF MOTION BY

GUY MILLER STRUVE, ET AL. CONCERNING PROPOSED FEDERAL

STATUTE ON RECOGNITION AND ENFORCEMENT

OF FOREIGN COUNTRY JUDGMENTS

BY K. KING BURNETT

 

            Although there are numerous reasons to support the Motion, this Memorandum is limited largely to the issues of federalization. It is based in large part on a memorandum submitted to the Reporters in December 2003.

 

            1.  Federalization of the recognition and enforcement of foreign country judgments is neither necessary nor good public policy.

            A.  Introduction

 

            As the Supreme Court has indicated on numerous occasions, the fact that Congress has the power under the Constitution to act says nothing about the wisdom of that action. This is an area that traditionally has been left to state law, a fact acknowledged not only by the state courts, but also by the federal courts post-Erie.[1] Federal courts have not found this to be an area in which sufficiently important federal interests are involved to create post-Erie federal common law; instead they have applied state law to these cases.

 

            Further, Congress has not thought this area important enough from a federal perspective to even propose legislation dealing with it; the federal government’s primary focus in this area has not been on recognition and enforcement of foreign country judgments in our courts, but rather on the lack of recognition and enforcement of our judgments in foreign courts. That problem, and not problems with the current state law recognition and enforcement system in this country, has been the primary motivation for the federal treaty negotiations in this area.

 

            Federalizing this area would be a significant change in the law, and, as discussed below, one that will place an increased burden on federal court and administrative resources. Those advocating this change have failed to meet the burden of providing a rationale for why the change should be made.

 

            B.  There is no reason why the law of recognition and enforcement of foreign country judgments should be federalized.

 

            If state law in this area were not effective, or if it were being applied in a biased or provincial fashion, that might provide a justification for passing a federal rule. The Reporters, however, have not pointed to any major problems caused by the application of state law. Indeed, they seem to agree with others who have noted that the U.S. is among the most liberal of nations in recognizing and enforcing the judgments of foreign country courts.[2]

 

            Lack of uniformity also could provide an argument for federalization of the law in this area. Despite their statement that “[b]y establishing national rules concerning the effect to be given to foreign judgments, the Act looks to eliminate forum shopping in this area among the several states, and between state and federal courts,”[3] the Reporters do not contest the fact that there is a high degree of uniformity in the current law on recognition and enforcement of foreign judgments.[4] This uniformity exists because the states are applying the same tests with regard to the core issues relating to the recognition of foreign judgments, including “public policy,” jurisdiction and due process issues — issues with which they have a great deal of experience. Indeed, the Uniform Act contains a provision that says that courts should interpret it to make uniform the laws of the states. Uniform Act, § 8. Further, under the supremacy clause, states must consider Federal policy.

 

            It is also argued that a Federal statute would permit the U.S. Supreme Court to settle issues arising under it. The likelihood of even minimal interpretation by the U.S. Supreme Court over even a span of decades is remote. Under the Act, there will simply be an additional level of potential forum shopping available to the litigants — state and Federal courts.

 

            There has been some suggestion that federalizing this area of law might assist the State Department in its negotiation of a recognition and enforcement treaty. This argument, however, has not been advanced much beyond speculation as to the possible effect that insertion of a reciprocity requirement, with other more liberalizing provisions, might have on the willingness of other nations to negotiate a treaty granting more enforcement of U.S. judgments. Even that speculation can be challenged. With regard to the reciprocity issue, which is the apparent focal point of this speculation,[5] one could just as easily argue that a reciprocity requirement would lead to less enforcement of U.S. judgments.[6]

 

            Evidence suggests that the fact state law governs this area has not been a significant impediment to entering international agreements. Which countries do we seek to “punish” or influence by insertion of a “reciprocity” requirement? Are we assuming that the potential of punishing some individuals will cause foreign states to change their negotiating stance? One would seemingly have to posit numbers of significant judgments denied recognition in the U.S. because of a mandatory reciprocity requirement leading to organized citizen/business pressure on foreign governments to grant recognition to more U.S. judgments. Those pressure groups would have to wield more political clout than those who do not want U.S. judgments enforced.

 

            Further, does the U.S. State Department really want this assistance? Is this a role the ALI should attempt to play? In my view, the answer is “no” to both these questions. The question of reciprocity should be addressed on its merits. A Restatement or other format could permit that to occur with a section addressing how such a requirement should be applied, if the court, or a statute, made reciprocity either a requirement or an option (see, e.g., Restatement Third, Torts: Apportionment of Liability).

 

            When questioned at the 2003 ALI Annual Meeting as to why this area should be federalized, the Reporters indicated that the answer seemed obvious to them because it is an area that involves foreign relations. As the New York courts stated over seventy years ago, however, that alone is not a justification for the application of a federal rule, because enforcement of foreign judgments is a question of private, and not public, international law.[7] Many areas governed by state law “involve” foreign relations in a private international law sense. Every contract or domestic dispute in which one of the parties is a foreign national involves foreign relations in the sense of involving the relationships between individuals of different nationalities. We do not federalize these areas of the law, however, simply because a foreign element is involved. The issue is not whether recognition and enforcement of foreign judgments “involves” foreign relations but whether it involves it in such a significant fashion that, despite its private law character, the impact on the public relations of this country with other countries is such that it should be governed by federal law.

 

            I submit that the case has not been made for the sort of significant impact on the United States’ conduct of foreign relations that would justify federalizing this area of the law.

 

            C. Federalization of the law governing recognition and enforcement of foreign judgments will create a significant new burden for the federal courts and federal enforcement officials.

 

            When law is federalized, it does not simply create a federal rule, but also expanded federal court jurisdiction and an expanded role (particularly in light of Printz) for federal administration. Under the proposed ALI statute, while state courts are given concurrent jurisdiction over § 9 civil actions to recognize and enforce judgments, the § 10 registration procedure is available only in the federal courts, and § 8 provides for removal of actions filed in state court to federal court without regard to citizenship, amount in controversy, or whether the recognition issue forms the basis of the complaint or is raised as a defense. The result is likely to be a significant increase in the number of recognition and enforcement actions heard in the federal courts and an increase in the amount of judgment enforcement required to be undertaken by federal law enforcement officials. Increased federal court control not only will deprive the future development of the law in this area of the expertise developed by state court judges over the years with regard to this subject matter, but will further crowd the dockets of the federal courts with matters not central to their core purpose of the interpretation and enforcement of federal rights. Any rationale for the federalization of this area of the law must be sufficient to justify the simultaneous waste of state court judicial expertise and increased burden and expense on the federal system.

 

            D. Political Risk.

 

            There are considerable political risks of seeking (or since the ALI does not lobby “encouraging”) federal legislation versus placing the proposals in the form of a Restatement or Reporters’ Note. There is no real constituency for such a Federal statute and a great number of probable opponents both on the basis of lack of need and principles of Federalism. To the extent that there would be a possibility of serious consideration in Congress in the foreseeable future, a substantial rewrite would be a probability, particularly since many of the concepts are fleshed out only in the Comments which would not form a part of any Federal statute and because of the breadth of the proposal. Most notably, the question of reciprocity and the definition of public policy could be expected to undergo considerable debate. Some U.S. business interest, notably in the intellectual property area, might well propose significant changes. There are also well-known concerns at the Federal level about the reach of international tribunals and foreign treaties which might well result in significant changes undermining the traditional support in the United States for enforcement of foreign money judgments.

 

II.  The Project will not be as influential on development of the law in this form.

 

            A. Drafting the Project as a Restatement or Reporters’ Note would place many of the collateral rules relating to recognition and enforcement into one source.

 

            The Uniform Foreign Money-Judgments Recognition Act currently is the main source of state law on the recognition and enforcement of foreign judgments. That Act, however, is limited both in its scope — it only covers certain money judgments — and its approach — it deliberately deals only with the minimum standards for recognition of foreign money judgments, leaving many collateral issues related to recognition and enforcement to be determined by the courts, largely through the use of well established common law principles.[8] Courts often look to three ALI products to supplement the Recognition Act rules — the Restatement Second of Conflict of Laws, the Restatement Third of Foreign Relations Law, and the Restatement Second of Judgments. The ALI proposed statute deals with many of the collateral issues not addressed in the Recognition Act. If it is promulgated as a Restatement or Reporters’ Study, then it can serve the useful purpose of placing these rules in one location to guide courts as to the appropriate common law rules to apply to supplement the statutory law in this area.

 

            Attempting to address issues relating to enforcement of court orders and decrees other than money judgments complicates an already complicated statute. There is good reason to limit a stature to money judgments, as the Uniform Act has done, and its updated version will do.

 

            The ALI proposed statute is not entirely consistent with the position taken in ALI Restatements with regard to the issues that it covers. Most notably, its mandatory reciprocity requirement is diametrically opposed to the position taken by the Restatements, which side with the Recognition Act (and its proposed replacement) in finding that a reciprocity requirement for enforcement of foreign country judgments is ill-advised. Drafting the Project as a Restatement or Reporters’ Study would provide a means for clarifying, as well as explaining, the ALI’s current views on issues addressed in both the proposed statute and the ALI’s previous Restatements.

 

            B. The Project is drafted in the form of a Restatement.

 

            The ALI Proposed Statute is drafted as a Restatement, with Comments and Reporters’ Notes, rather than as a federal statute, which contains only the black letter text of the statute. As many commentators at the 2003 Annual Meeting pointed out, one result of this drafting style is that many substantive rules currently are not in the proposed text of the statute, but in the Comments and Notes.

 

            Even if the Comments and Reporters’ Notes end up as part of the legislative history of a statute, there is no assurance that they will end up as part of the law. As Judge Easterbrook and others pointed out at the Annual Meeting, a judge with a textualist philosophy of statutory interpretation is not going to be willing to go beyond the text to find interpretive guidance, much less further substantive rules. Textualist judges are quite common, particularly in the federal courts.

 

            On the other hand, redrafting the Proposed Statute to place all of its substantive rules into the text will result in a much more complicated statute, and one that may not convey the information gathered by the Reporters as well as does its current Restatement form. Although there is considerable uniformity on the basic rules regarding recognition of foreign country judgments, there are varying views on some of the collateral issues that are covered by the ALI Proposed Statute. Especially with regard to these issues, a format that allows for explanation, persuasion, and nuance is the best format. Indeed, this may explain why the Reporters naturally gravitated to the Restatement format rather than a more orthodox statutory style of drafting — such a format allowed them not only to set out proposed rules but to explain the positions those rules take and how they should or should not apply.

 

Conclusion

 

            Our state courts have more experience in solving the issues of enforcement of judgments from other jurisdictions than any other courts anywhere in the world. While many of these are in the full faith and credit context, there are in both contexts issues of res judicata, estoppel, jurisdiction, due process, and many other issues. It is unrealistic to try to solve all these issues in any statute, particularly one limited to enforcement of non-U.S. judgments. There is well established state common law in these areas, and no need to replace it with Federal common law, a result that might flow from a Federal statute.

 

            A Restatement or Reporters’ Study would more greatly influence the law because, unlike a proposed statute, it is more likely to be cited by courts and discussed by legal commentators. It would have a much more significant and lasting intellectual force. Its influence on state law would be enhanced. A document that can persuade and inform the courts as they supplement the statutory rules regarding recognition of foreign judgments is the best service that the ALI could provide, and in its own institutional interest.

 

 

 

 

 

 


[1] Indeed, as discussed in note 7, the fact that recognition and enforcement of foreign judgments is a matter for state law arguably was recognized even before Erie.

[2] E.g., Linda Silberman, Comparative Jurisdiction in the International Context: Will the Proposed Hague Judgments Convention be Stalled?, 52 DePaul L. Rev. 319, 321 (2002) (noting that the “United States is extremely liberal in enforcing the judgments of other countries”).

 

[3] April 2005 Proposed Final Draft, § 2, Comment a (p. 37).

 

[4] See, e.g., Tonga Air Services, Ltd. v. Fowler, 826 P.2d 204, 208 (Wash. 1992) (procedure for recognition and enforcement of foreign country judgments is similar in all states, with some following the common law, and others the Recognition Act which reflects the common law). In part, this uniformity is based on the Uniform Foreign Money-Judgments Recognition Act, which has been adopted in thirty states, as well as the District of Columbia and the Virgin Islands. That Act, however, simply codified the majority views under the common law of recognition and enforcement; thus, even jurisdictions that have not adopted the Act apply the same principles as those contained in the Act. The most significant nonuniformity in the subject matter area covered by the Act deals with the issue of reciprocity. Eight of the thirty-two jurisdictions that have the Recognition Act have a nonuniform amendment making a lack of reciprocity a ground for denying recognition to a foreign judgment, although only three have made reciprocity a mandatory ground for nonrecognition. Review of the cases in those states however, suggests that even in jurisdictions with a reciprocity requirement, the courts tend to be very lenient in finding reciprocity. Thus even in jurisdictions with this requirement, there is uniformity of result — most foreign judgments are recognized and enforced.

[5] See ALI Proposed Statue, § 7, Comment b (purpose of reciprocity requirement in the ALI statute is “to create an incentive to foreign countries to commit to recognition and enforcement of judgments rendered in the United States.”).

[6] More persuasively, foreign governments want to have only one source to look at for law in the U.S. (as we would ideally want in the European Union); that is something we should only concede in a treaty. Further, at least one commentator has argued that, rather than encouraging enforcement of U.S. judgments, the reciprocity requirement established in Hilton v. Guyot is in large part responsible for existing reciprocity requirements in foreign nations. Nadelmann, Reprisals Against American Judgments? 65 Harv. L. Rev. 1184 (1952). Indeed, one of the main purposes of the Uniform Foreign Money-Judgments Recognition Act was to encourage courts in other countries that had reciprocity requirements to enforce U.S. judgments, Recognition Act, Prefatory Note. One of the key ways in which the Act sought to accomplish that purpose was by making it clear that reciprocity was not a requirement for enforcement of a foreign judgment in the U.S. The existence of a U.S. reciprocity requirement would have created a much higher degree of uncertainty as to whether a foreign judgment would be enforced here when that question became relevant to enforcement of a U.S. judgment in a foreign country that has a reciprocity requirement. See, e.g., American Bar Association, Section of International Law & Practice, Enforcing Foreign Judgments in the United States and United States Judgments Abroad 25 (1992) (noting that the existence of reciprocity requirements in both the state of origin and the state in which enforcement of a foreign judgment is sought creates an “analytical circle” from which “there is no easy exit).”

[7] Johnson v. Compagnie Generale Transatlantique, 152 N.E. 121, 123 (N.Y. 1926).

[8] NCCUSL has appointed a drafting committee to revise the 1962 Uniform Act, but with a much more limited scope than the Reporters’ draft Federal statute. Prospects for widespread adoption appear to be fairly good. Final action is anticipated in July of this year. The latest draft is available on nccusl.org and contains no reciprocity requirement.