Choice Of Law And Enforcement Of Foreign Judgments Outline

Choice of Law and Enforcement of Foreign Judgments

1. Choice of Law Clauses

   1. Validity:

      1. Generally considered presumptively enforceable, subject to some exceptions

      2. US courts generally apply the law of the forum to determine the validity of the clause

         1. ie, treat the issue as if it were a question of procedure

   2. Scope:

      1. UCC:

         1. UCC 1995 §1.105

            1. Reasonable relationship between the chosen law and the transaction.

         2. UCC 2001 § 1.301 (not yet adopted):

            1. Applies to transactions that bear a reasonable relation to a state other than the US and that are governed by another provision of the UCC

            2. No requirement of a relationship between the chosen law and the transaction

            3. BUT: reasonable relationship requirement for consumer transactions + consumer cannot be deprived of the protection of any mandatory law designed to safeguard their interests

            4. Public policy exception

      2. 2^nd Restatement on Conflicts § 187(1): choice of law clauses are enforceable regarding matters that could have been resolved by a private agreement by the parties

         1. Eg. time for performance of a contract

      3. § 187(2): choice of law clauses are enforceable on matters that parties could not have agreed on except where:

         1. the chosen law has “no substantial relationship” to the parties or their transaction (2.a), or

         2. where the chosen law would be contrary to a substantial public policy of a state with a “materially greater interest” (2.b)

         3. Eg. : capacity, formalities, validity

      4. Examples of Choice of Law Clauses: Scope of the Clause

         1. “This agreement shall be construed in accordance with the laws of state X”

            1. suggests that peripheral issues such as validity of the contract, capacity, formalities, excuses and damages are not subject to the parties’ chosen law.

         2. “This agreement shall be governed by the laws of state X” or “this agreement and all disputes arising under it shall be subject to the laws of state X”

            1. all issues of contract law are subject to the parties’ chosen law

         3. “all disputes arising out of or relating to this agreement shall be governed exclusively by the laws of state X”

            1. contractual and non-contractual claims (though might raise public policy issues)

2. Method for Choice of Law Analysis
   (in the absence of an agreement)

   1. Characterize the issue (K, torts, property, etc.)

   2. Refer to rules regarding conflict of laws for each particular issue:

      1. State courts generally refer to forum rules on conflict,

      2. fed courts sitting in diversity follow the rules of the state where they sit,

      3. fed courts sitting in fed question jurisdiction apply fed common law of choice of law (tendency to follow 2^nd Restatement approach)

   3. Find out which substantive law is designated by the conflict of law rules

   4. Apply the designated substantive law to the issue

   5. Public policy exception to the result or to the application of foreign law?

3. Proving Foreign Law

   1. Federal Rule of Civil Procedure 44.1 provides:

      1. “A party who intends to raise an issue about a foreign country's law must give notice by a pleading or other writing. In determining foreign law, the court may consider any relevant material or source, including testimony, whether or not submitted by a party or admissible under the Federal Rules of Evidence. The court's determination must be treated as a ruling on a question of law.”

         1. Under Rule 44.1, a court is correct in not dismissing a plaintiff’s claim merely because the plaintiff failed to establish relevant controlling foreign law. Twohy (CB 1211).

            1. Under these circumstances, before a plaintiff’s complaint may be properly dismissed, Rule 44.1 requires the court to conduct a deeper inquiry into the foreign law. Twohy (CB 1211).

4. Territorial Reach of US Law

   1. What is the territorial reach of a federal statute?

      1. Geographic reach explicit in statute

         1. Territorial application: no problem

         2. Extraterritorial application: if the statute contravenes international law, US courts must disregard international law and apply the statute.

            1. ex. FRCP on discovery statutes blocking statutes abroad

      2. Statute silent on geographic reach:

         1. JURIS SPLIT

            1. The Traditional Approach

               1. Presumption in favor of territoriality (see First Restatement) and comity understood as calling “on states to recognize and enforce rights created by other states provided that such recognition does not prejudice the state or its subjects” (Ulrich Huber)

                  1. E.g., American Banana v. United Fruit Co.

               2. Move away from territoriality and requirement of “points of contact”

                  1. E.g. Lauritzen v. Larsen (maritime context)

            2. The Effects Doctrine (1970s)

               1. Acts aboard and effects in the US?

                  1. “We should not impute to Congress an intent to punish all whom its courts can catch, for conduct which has no consequences within the United States” US v. Alcoa

                  2. Acts abroad + Intended effects + actual effects: US law would reach the case

                  3. Intended effects but no actual effect? Court does not reach the issue

               2. Effects + some acts in the US? Leasco v. Maxwell

               3. Effects + comity? Timberlane v. Bank of America

            3. Territoriality encore

               1. Hoffman Laroche v. Empagran (2004)

                  1. Congress’ intent was to prevent US courts from interfering with foreign commerce

                  2. Customary intl law requirement to avoid unreasonable interference with sovereign authority of other nations

               2. Morrison v. National Australia Bank (2011)

                  1. Territorial presumption

                  2. Congress intended the SEC Act to apply territorially

               3. Kiobel v. Royal Dutch Petroleum (2011)

                  1. Presumption against extraterritoriality applies to the ATS

                  2. Claim must “touch and concern” activities occurring in the “territory of the United States.”

5. Judgment Recognition and Enforcement: Terminology

   1. Judgment recognition

      1. A US court relies on a foreign judicial ruling to preclude litigation of a claim or issue previously litigated abroad

   2. Judgment enforcement

      1. A court uses its coercive power to compel the loosing party (“judgment debtor”) to satisfy a judgment rendered abroad

6. Judgment Recognition and Enforcement: Basic Framework

   1. Historically:

      1. a foreign...

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