Last Wednesday, I attended ALM’s Cross-Border Litigation Forum. After the opening remarks, whose theme was that the complexity of cross-border litigation has (unsurprisingly) increased with globalization, we had a keynote address from Franco Ferrari, the Executive Director for the Center for Transnational Litigation and Commercial Law at New York University School of Law. His keynote focuses on Enforcing US Money Judgments Abroad: Debunking a Myth.
Enforcing US Money Judgments Abroad: Debunking a Myth
Ferrari wanted to correct the misconception of what happens to US judgments abroad, and he said that the idea that it’s difficult is "nonsense." Some people believe that you shouldn’t even try to enforce judgments because it’s costly, time-consuming, and foreign courts are corrupt, but Ferrari said that this was also nonsense.
The US has never completed a bilateral treaty for the automatic enforcement of money judgments, and it is one of the most liberal countries in the world for enforcing judgments. Statistics show that US companies being awarded judgments from foreign companies do not even attempt to enforce them – Ferrari said that this is a mistake because foreign courts regularly enforce compensatory damages.
For example, Brazilian courts say that they enforce foreign judgments, so do not shy away from enforcing judgments there and in other countries. Ferrari could cite Supreme Court decisions around the world that refer to pro-enforcement. Just because there is no treaty doesn’t mean that it’s not possible to enforce a judgment. But without a treaty, you do have to go with domestic laws – you can’t assume that US procedural rules will determine what happens abroad.
Normally, the enforcing court will require that certain steps be taken in the rendering country (like the US), and it’s often assumed that these steps have been taken. There are many presumptions in place that will allow US judgments to be enforced abroad.
Ferrari added that while some will believe that this is true, they may not believe that default judgments will be enforced. However, they can and are being enforced against local judgment debtors abroad.
Ferrari commented that there have been two acts enacted in the US that will make enforcement easier. Eleven US states require reciprocity – but only four of them require it all of the time. Reciprocity is not required in Italy, France, Brazil or Canada – abroad, they can say it’s a non-issue more often than not. In the Philippines, reciprocity is required, but this just means that the courts will look at it, not that the judgment won’t be enforced. The only country where there might be problems according to Ferrari is China, though it’s not necessarily true.
Difficulties arise more when a claim is peculiar to the US. Other supreme courts don’t care about substantive claims or procedures in the foreign courts. In certain cases in the US, they have stated that the argument that foreign courts are corrupt cannot be used in the US. In order to be able to use the corruption argument, you have to show that there was corruption in a particular case.
At this point, an audience member asked practically, how do you enforce a judgment. Ferrari said that they should’n’t rely on their own skills, but should contact someone who is allowed to appear in front of the foreign court. For example, in one type of procedure, you might have to bring a new lawsuit in that country, using the US judgment as evidence. Ferrari added that a judgment also doesn’t necessarily have to be enforced against someone in the country in which they are located – it could be elsewhere depending on where the person’s assets are located.
Another audience member asked whether he felt strongly about binding arbitration agreements as well as judgments. Ferrari said that it’s even easier to enforce a US arbitral award abroad.
A third audience member asked whether general rules exist about how costly it is to enforce a US judgment abroad, or whether they vary from jurisdiction to jurisdiction. Ferrari said that either you decide to apply the court fees to the judgment or you don’t, so it depends on the jurisdiction. In some jurisdictions, they may apply court fees to the losing side.
Someone asked whether there is research that in some countries, the public policy can be abused. Ferrari said that in a lot of countries, no, but he knows that it happens in Egypt.
The final question came from an audience member who asked him to comment on non-monetary US judgments. Ferrari said that these have often been enforced in jurisdictions where monetary judgments have not.
Litigating a Cross-Border Class Action in Canada: What You Really Need to Know
The next session was a panel discussion on litigating a cross-border class action in Canada, with moderators Sonia Bjorkquist and Deborah Glendinning of Osler Hosking & Harcourt and panelist Rissa Revin, Associate General Counsel for the Bank of Montreal.
The panelists began by saying that Canada is the last line of defense beyond the US, because we’re such close neighbors. So jurisdictional issues are very important because of the federal court system in which they operate. Canada’s class action regime is much newer than the US, and has really only been around since 1992. Generally speaking, the perception is that it’s easier to get a certification judgment in Canada than the US, which is the reason for the influx of class actions.
While there are similarities between the US and Canada, there are also some important differences. For one, north of the border, you’ll see a variety of judges throughout a particular case, not just one. Also, because almost everything gets certified, companies realize that they can’t settle, so companies are more willing to go to trial. However, just because they get a certification doesn’t mean that they’re getting a check any time soon.
Not all proceedings in a class action will follow the same timeline – so unfavorable rulings could happen in cursory matters before the class action. For this reason, it’s important to take coordinated and fully thought out positions everywhere when involved in a class action.
Also, while we’re talking about US and Canada when we’re talking about cross-border litigations, we’re also talking about borders between provinces. Canada’s federal court is not like the US and it’s the provincial superior courts that you’ll generally be dealing with. Jury trials are rare in the types of cases that the panelists were speaking about, which changes a company’s risk analysis. Punitive damages are only awarded in very exceptional circumstances.
For more details on this session, check out the panelists’ handout.
EJustice – Enforcing Judgment Abroad Faster and Easier
Following a short networking break, we were back for a panel on EJustice – enforcing judgments abroad faster and easier. On this panel, we had David Booker, the Director and Senior Counsel of the Legal Department at Credit Agricole, Stacey Blaustein, an Attorney in Corporate Litigation for IBM Corporation, and the Honorable Ronald J. Hedges (Ret.), a former US Magistrate Judge.
The panelists began with an informal survey of the audience to find out how many of them have already had cross-border e-discovery issues – most of them had. Cross-border discovery is the discovery of information for litigation, investigation or proceedings from one territory to another. Cross-border discovery also includes consideration of all rules, policies, and the regulatory environment for the countries at issue.
The panelists again took an informal poll of the audience to determine the type of court system the audience members come from – the majority were from common law countries, while only a couple were from civil law countries. The panelists used the Supreme Court decision regarding Aerospatiale from 1987 to illustrate their points.
They then moved on to discuss the EU Directive 95/46/EC of the European Parliament and the Council of 24 October 1995. The history behind this directive is that it was driven by inter alia, the atrocities of WWII, specifically the confiscation by the Nazi regime of personal property that was traced using people’s personal information. In the US, we don’t have that fundamental right of privacy – there are various protections, such as HIPAA, but no overall right.
The principal points of the directive include:
- Personal Data: defined as any information relating to an identified or identifiable natural person, such as numbers, addresses, union membership, etc.
- Identifiable Natural Person/Data Subject: this is a person who can be identified, directly or indirectly, by a reference to an identification number or to one or more factors specific to his physical, physiological, mental, economic attributes, or cultural or social identity.
- Qualifications: Email is considered personal data by the EU Commission, and is therefore subject to the directive.
The panelists said that privacy laws are the trend – everyone is enacting them. So we’re no longer just dealing with the EU’s privacy laws, but everyone’s. So it’s essential to educate yourself and take the necessary measures.
But there’s also a newer regulation – the Regulation of the European Parliament and of the Council. This will be on the protection of individuals with regard to the processing of personal data and on the free movement of such data. This regulation hasn’t been passed yet, but it will probably pass at the end of the year and take two to three years to come into full effect.
The key features of this are:
- Near complete harmonization under EU law.
- Would make companies with operations in multiple EU member states subject to the jurisdiction of a single Data Processing Authority (DPA) based on the main place of establishment in the EU.
- Companies with more than 250 employees would have to appoint a Data Protection Officer.
There were also a number of other features included in their PowerPoint, but rather than delving into them all, the panelists suggested setting up a Google alert to keep track of what’s happening.
They said that thanks to Aerospatiale, there are factors to consider when determining whether overseas discovery is necessary. These include the importance of the information to the litigation, the specificity of the request, whether the information originated in the US, whether alternative means exist to obtain the information, and whether the interests of the US outweigh the interest of the foreign jurisdiction. Another factor is the potential hardship that the producing party might suffer from complying with the requests.
Judge Hedges said that he doesn’t think many judges care what happens to a litigant in a foreign jurisdiction. He noted that the first rule of litigation is "Don’t piss off the judge" and added that just because something is confidential doesn’t mean that it’s sealed – this is a very important distinction. The panelists noted that there’s a big divide between common law and civil law countries – civil law countries don’t have discovery as a general rule.
Google predicts that every eleven hours, you’re going to double the amount of electronic information that you have. And the panelists brought up another interesting point – do your employees every cross borders with their handheld devices? Most likely the answer to this is yes. When you’re in litigation, bring up any cross-border discovery issues early on.
The panelists suggested that the audience members check out the Sedona Conference website, and added that the American Bar Association also has a working paper on reconciling EU privacy laws with US federal rules.
An audience member asked whether companies generally use Safe Harbor, and Judge Hedges said that you’re not safe in the US from discovery. He said that companies should take measures to avoid violating US discovery law, but they should keep the information in the country where it is. However, the Safe Harbor provision can help to facilitate the transfer of data – it will still be subject to US discovery law, but it can help.
Thanks to ALM for another great conference!