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

II) Rejecting the Reciprocity Requirement by State Courts: Johnston v. Compagnie Générale Transatlantique

After the divided ruling of the Hilton case, it was time to test the reciprocity requirement in state courts. Until 1926, the recognition and enforcement of foreign judgments was a federal issue. This means that federal and state courts applied intentional law under the guidance from the Supreme Court^251(*) and applied the standards ruled in Hilton case including reciprocity requirement^252(*). However, the New York Court of Appeal, thirty-one years after the Hilton's decision, directly rejected the Hilton's ruling on reciprocity in Johnston v. Compagnie Générale Transatlantique decided in 1926^253(*).

The case arose from an alleged wrongful delivery of goods in which the American plaintiff first sought relief in the French courts but he failed to win the cause of action. He decided, then, to bring a separate action before the Americans courts in the State of New York. Lower courts refused to give effect to the French judgment on the ground of the reciprocity requirement following by decision of the Supreme Court in the Hilton case^254(*). The case then went to the New York Court of Appeal.

The question that the New York Court of Appeal had to answer was whether or not state courts in New York were bound by Hilton v. Guyot? The court answer was no, as it was mentioned above. In justification of its answer, Justice Pound, writing for the court, asserted that even though questions of international relations and comity are to be determined by the Supreme Court of the United State - and therefore the Hilton's decision is controlling such questions as a statement of law^255(*) - the courts in New York were not bound to follow the Hilton's ruling because «the question is one of private rather than public international law, of private right rather than public relations and [American] courts will recognize private rights acquired under foreign laws»^256(*). Consequently, «a right acquired under foreign judgment may be established in this state [New York] without reference to the rules of evidence laid down by the courts of the United States»^257(*). Therefore, the New York Court of Appeal reached the conclusion that the Hilton ruling was not binding outside federal courts.

It was clear that the New York Court of Appeal could have distinguished the facts of the case from the facts in Hilton. It was clear that facts of the case in Johnston were excluded from the reciprocity's scope of Hilton. In fact, the case was brought by an American before a foreign court and the French judgment was sought to be used defensively^258(*). Nevertheless, the court preferred to speak generally, and established a general principle by which reciprocity is not a condition for the recognition and enforcement of foreign judgments in the state of New York. The court went even further in disregarding the Hilton's ruling. It declared that since impeachment of foreign judgments is always possible for fraud in the State of New York, «the precedent fifty-four pages of the [Hilton's] opinion may be regarded as magnificent dictum»^259(*). Therefore, given the fact that the French court heard and decided the case «judicially, honestly, and with full jurisdiction and with intension to arrive at the right conclusion...the French judgment should be given full faith and credit.»^260(*)

Thus, the New York Court of Appeal effectively eliminated the requirement of reciprocity from consideration in New York's courts. Ultimately, this position was adopted by the majority of the States throughout the United States^261(*). However, Federal Courts continued to apply the teaching of the Supreme Court and to be bound by the Hilton reciprocity rule until the Erie case.

* ²⁵¹. ALI's Proposed Federal Statute, p. 2

* ²⁵². William G. Southard, The Reciprocity Rule and Enforcement of Foreign Judgments, Columbia Journal of Transnational Law, 16:327, 1977, p. 328 available at www.heinonline.com

* ²⁵³. Johnston v. Compagnie Generale Transatlantique, 152 N.E. 121, 123 (N.Y. 1926).

* ²⁵⁴. Id

* ²⁵⁵. Id

* ²⁵⁶. Id

* ²⁵⁷. Id

* ²⁵⁸. Andreas F. Lowenfeld, International Litigation and Arbitration, American Casebook Series, Second edition, ST.PAUL, MINN., 2002, p.408.

* ²⁵⁹. Johnston v. Compagnie Generale Transatlantique, 152 N.E. 121, 123 (N.Y. 1926)..

* ²⁶⁰. Id

* ²⁶¹. J. Noelle Hicks, Facilitating International Trade: The U.S. Needs Federal Legislation Governing the Enforcement of Foreign Judgments, Brookline Journal of International Law, 2002.