The role of the reciprocity requirement in the harmonization of standards for the recognition and enforcement of foreign judgments

Part II - Reciprocity Proposed Role: The Renewed Interest in the Reciprocity Requirement

As a result to the criticism addressed to the notion of reciprocity along with the spread of the phenomenon of globalization and the growth of international trade and transportation of goods and peoples, many scholars predict the disappearance of reciprocity from the law of the recognition and enforcement of foreign judgments. In other words, the underlying basis of reciprocity - the notion of sovereignty - is disappearing. The fast-growing factor of globalization attacks one of the basic elements of sovereignty: the boundaries of the sovereign state. Therefore, for reciprocity to subsist, it has to find new justification for its application.

Yet, despite the criticisms addressed the reciprocity, the notion seems to resurrect. The resurrection was the result of long debates and discussions in the United States. In effect, where the United States is considering its own system of recognition and enforcement of foreign judgments, reciprocity appears as a fundamental concept in the American new consideration. Efforts were made by the American Law Institute (ALI)^234(*) to give reciprocity a new role in judgments recognition.

While reciprocity has always been applied as a defence for the protection of the notion of sovereignty, the new approach of the ALI introduces reciprocity only as defence for non-recognition of American judgments abroad.

Starting from this point, and in order to better understand the question, we should address the question of the reasons which led to make from the concept of reciprocity a policy underlying the recognition and enforcement of foreign judgments in the United States (Chapter I), before addressing the question of its application and implication in the landscape of the recognition and enforcement of foreign judgments (Chapter II).

Chapter I: The Reasons behind the Resurrection of the Reciprocity Requirement

While the United States is one of the leading players of global economy^235(*), it is suffering from the refusal of recognition and enforcement of its judgments abroad. This situation is described as unique since the United States is considered among the countries which have the most liberal judgments recognition on the basis of comity. The situation is aggravated by the fact that the United States is not party to any international convention on the recognition and enforcement of foreign judgments and its attempts to secure the recognition and enforcement of its judgments through international agreements on the matter failed. The refusal to recognize American judgments and the failure to enter into an international agreement on the matter are basically due to the lack of uniformity and complexity of the American system of judgments recognition. Therefore, we will discuss in a section one the liberal practice of the United States (Section I) before addressing the question of the reasons of the non-recognition of American judgments abroad (Section II).

Section I: The liberal US practice in the Recognition and Enforcement of Foreign Judgments

The liberal judgments recognition and enforcement practice of American courts can be drawn from the rejection of the concept of reciprocity in both common law and states law. Therefore we will start with discussing the reciprocity in common law in a first paragraph (Paragraph I) before discussing the rejection of the reciprocity in state law (Paragraph II).

Paragraph A - Rejection of Reciprocity in Common Law

Since there are no federal standards for recognition and enforcement of foreign judgments in the United States, it was the duty of the courts to fill this gap in the field of judgments recognition. Relying on the English practice on subject, the US courts did not require reciprocity as a condition to give effect to foreign judgments^236(*). However, despite the introduction of reciprocity in the landscape of recognition and enforcement of foreign judgments by the U.S Supreme Court, the doctrine of reciprocity was criticized by the Supreme Court itself (I) later it will be neglected by state courts (II) and the federal courts (III).

I) The Watershed Case: Hilton v. Guyot:

All scholars in the United States agree that the 1895 Hilton case decision was the landmark in the area of recognition and enforcement of foreign judgments^237(*). It was so considered because of many reasons: Firstly, it provided a kind of uniformity in the landscape of the recognition and enforcement of foreign judgments as it was an attempt to give some structure to the system^238(*). Secondly, it defined the notion of comity and laid down the criteria for its applicability in the field of recognition and enforcement. Finally, it constructed comity as to require reciprocity and thus, it introduced the reciprocity requirement for the first time in the foreign judgments recognition and enforcement practice in the United States.

The facts of the case were a suit brought by a French plaintiff who presented a French judgment for enforcement in the United States against American defendants after a full litigation of the dispute in France by both sides. But during the trial and appeal in France, the defendant liquidated his assets in France leaving no property outside the United States that could satisfy the plaintiff's judgment. The lower court (Court of Southern District of New York) held in favour of the French plaintiff. The defendant then brought the case before the Supreme Court.

The issue that the Supreme Court had to answer was whether a judgment for a sum of money, rendered by a competent foreign court in the absence of a treaty or an act of Congress^239(*), was re-examinable on the merits? The Supreme Court confirmed its duty to recognize and enforce foreign judgments on the basis of comity and set forth requirements for its establishment. In fact, the Supreme Court found that U.S courts had no duty to exercise comity in a foreign country's favour when it appears that the foreign country denies effect to American judgments on the ground of reciprocity^240(*). Consequently, giving the fact that French courts reviewed the merits of any foreign judgment according to the doctrine «revision au fond», the Supreme Court found that reciprocity was lacking and thus, the French judgment should not be granted a conclusive effect.^241(*)

However, the Supreme Court asserted a limited scope for the reciprocity requirement since it only applied to executory money judgment against nationals of countries that fail to honour American judgments^242(*). Moreover, only in personam judgments imposing personal liability on a defendant were subject to reciprocity as contrasted to in rem judgments or judgments affecting the status of property of those affecting status of persons. Finally, reciprocity did not apply in judgments between two foreigners or against an American citizen^243(*). The purpose of the Hilton's reciprocity appears, accordingly, to be limited to the protection of Americans sued abroad^244(*).

Nevertheless, in spite of its limited scope, rejecting the recognition of the French judgment on the basis of reciprocity solely did not enjoy unanimity and did not convince four Justices of the Supreme Court. The outraged dissent, led by Chief Justice Fuller, stated that the principle of reciprocity should not be applied. He presented several arguments for that: firstly he stated that «the notion of res judicata applied to domestic judgments should apply to foreign judgments as well and rests on the same general ground of public policy that there should be and end of litigation»^245(*). He expressed «I am unable to perceive why a judgment in personam which is not open to question on the ground of want of jurisdiction... or fraud or any other recognized ground for impeachment should not be held inter partes, though recovered abroad, conclusive on the merits»^246(*). He argued that the notion of comity, as altered by the Supreme Court, would vest the federal courts an un-reviewable discretion to accept or reject foreign judgments. Consequently, it is preferable to apply a res judicata principle which provides transparent and clearly defined policies.

He asserted secondly that the holding of the majority of the court was affected by a fundamental lack of fairness. He stressed on the fact that the defendants «took the chances of a decision in their favour»^247(*) and consequently, «the last persons who should be heard to complain are those who identified themselves with the business of that country, knowing that all their transactions there would be subject to the local laws and modes of doing business»^248(*).

Chief Justice Fuller continued his disagreement with the majority by stating that while several nations require reciprocity to enforce foreign judgments, countries governed by common law, such as England simply require the court of the judgment to have a proper jurisdiction over the matter^249(*). Finally, Chief Justice Fuller concluded that the doctrine of res judicata does not rest on discretion and described reciprocity asserted by the majority as a principle of retortion that hurts the separation of power in the United States^250(*).

Apparently the arguments of Chief Justice Fuller's dissent were well founded, so that reciprocity was rejected by the New York Court of Appeal and then by majority of state courts in the United States.

* ²³⁴. The American Law Institute is one of the oldest and venerated private institutions in the United States. It was established in 1932 in order to promote the clarification and simplification of the law and its better adaptation to social needs, and to secure the better administration of justice. Katherine R. Miller, Playground Politics: Assessing the Wisdom of Writing a Reciprocity Requirement into U.S International Recognition and Enforcement Law, Georgetown Journal of International Law, winter 2004, p. 262 available at www.westlaw.com.

* ²³⁵. Franklin O. Ballard, Turnabout Is Fair Play: Why a Reciprocity Requirement Should Be Included in the American Law Institute's Federal Statute, Houston Journal of International Law, Vol 28:1, 2006, p.200

* ²³⁶. Eugene E. Scoles, Conflict of Laws - Third Edition, Hornbook Series, ST. PAUL, MINN., 2000, p. 1188

* ²³⁷. Russell J. Weintraub, How Substantial Is Our Need For a Judgments-Recognition Convention And What Should We Bargain Away to Get It?, Brooklyn Journal of International Law, 1998, p. 176

* ²³⁸. Katherine R. Miller, Playground Politics: Assessing the Wisdom of Writing a Reciprocity Requirement into U.S International Recognition and Enforcement Law, Georgetown Journal of International Law, winter 2004, p245 available at www.westlaw.com.

* ²³⁹. Hilton v. Guyot, C.J. Fuller, Dissent; Andreas F. Lowenfeld, International Litigation and Arbitration - Second Edition, American Casebook Series, 2002 p.401-404

* ²⁴⁰. Hilton v. Guyot, 159 U.S.

* ²⁴¹. Id.

* ²⁴². Friedrich Juenger, The Recognition of Money Judgements In Civil and Commercial Matters, Selected Essays on the Conflict of Laws, p. 314

* ²⁴³. Katherine R. Miller, Playground Politics: Assessing the Wisdom of Writing a Reciprocity Requirement into U.S International Recognition and Enforcement Law, Georgetown Journal of International Law, winter 2004, p 249

* ²⁴⁴. Willis L. M. Reese, The Status in this Country of Judgments Rendered Abroad, 50 COLUM. L. REV. 783, 783 (1950).Rees, p. 792

* ²⁴⁵. Hilton v. Guyot, C.J. Fuller,Dissent; Andreas F. Lowenfeld, International Litigation and Arbitration - Second Edition, American Casebook Series, 2002 p.401-404

* ²⁴⁶. Id.

* ²⁴⁷. Hilton v. Guyot, C.J. Fuller,Dissent; Id p.401-404

* ²⁴⁸. Id, «the subject of the suits were commercial transactions having their origins and partly performed in France under contract there made and alleged to be modified by the dealing of the parties there...the courts were competent and they [Plaintiffs] took the chances of a decision in their favor. As traders in France they were under the protection of its law and bound by its laws...the fact that they were Americans and the opposite parties were citizens of France is immaterial...»

* ²⁴⁹. Id

* ²⁵⁰. Chief Justice Fuller wrote that » Although no special ground exists for impeaching the original justice of a judgment, such as want of jurisdiction or fraud, the right to retry the merits of the original cause ...should be accorded in every suit on judgments recovered where our own judgments are not given full effect, on that ground [reciprocity] merely. I cannot yield my assent to the proposition that, because by legislation and judicial decision in France that effect is not there given to judgments recovered in this country which, according to our jurisprudence, we think should be given to judgments wherever recovered (subject, of course, to the recognized exceptions), therefore we should pursue the same line of conduct as respects the judgments of French tribunals. The application of the doctrine of res judicata does not rest in discretion; and it is for the government, and not for its courts, to adopt the principle of retorsion, if deemed under any circumstances desirable or necessary». Id