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

Section II: The Anticipated Impact of Reciprocity as Described in the ALI's Project on the Harmonization of Standards for Recognition and Enforcement of Foreign Judgments

The drafters of the proposed federal statute are expecting that the inclusion of reciprocity as mandatory requirement along with the efforts that would be undertaken by the Secretary of State and the other advantages provided by the federal draft statute will create incentives for foreign countries to conclude international agreements with the United States. During the debates inside the ALI, this system was described as the carrot and the stick in the meaning that «reciprocity...operates a bit as a stick to encourage agreements under section 7 (e); for carrots [there are] section12, section10 and to some extent section 11»^367(*).

With this respect and in the light of the reciprocity provision of the ALI's proposed federal statute, it is interesting to analyse the effects propposed reciprocity requirement on the harmonization of standards for the recognition and enforcement of foreign judgments and that through analysing, at first, its impact on the recognition and enforcement of judgments (Paragraph A), before addressing in a second paragraph its limits (Paragraph B).

Paragraph A - Impact of the Reciprocity Requirement on the Recognition and Enforcement of Foreign Judgments.

The very obvious implication from introducing the reciprocity requirement in the landscape of the recognition and enforcement of foreign judgments in the United States is that whenever American judgments would not be recognized or enforced abroad, foreign judgments would be refused recognition and enforcement in the United States. With this regard, it is worth addressing the question of the impact of reciprocity on the recognition and enforcement of American judgments abroad (I) before addressing the question of its impact on the recognition and enforcement of foreign judgments in the United States (II).

I - Impact of the Reciprocity Requirement on the Recognition and Enforcement of American Judgments Abroad

What would be the impact from introducing the reciprocity requirement on the recognition and enforcement of American Judgments abroad?

As it was already advanced, American courts have always been liberal in their judgments recognition practice. Such practice, however, has always been unilateral. Thus, the main target from the proposed federal statute and from including the reciprocity requirement in it is to secure the recognition and enforcement of American judgments abroad. With this respect, they advanced the argument that because the United States is generous in its judgment recognition and enforcement practice, foreign countries lack motivation to enter into a judgments recognition convention since their judgments are already liberally given effect in the United States^368(*).

The ALI envisaged two ways to achieve this goal. At first, they argued that the United States needs to create incentives for foreign countries to enter meaningful negotiations for an international recognition treaty^369(*). In addition, the drafters of the proposed federal statute believe that the inclusion of the reciprocity requirement would result in the improvement of American judgments abroad^370(*). They argue that by writing a mandatory reciprocity provision in the proposed federal statute, foreign countries will stop ignoring the American judgments because they know if they do so, their own judgments will be refused in return as a matter of reciprocity. In other words, «U.S. courts would offer to reward cooperation and punish non-cooperation by courts of other states»^371(*).

To summarize, the drafters of the proposed federal statute relate the unsatisfactory and unique situation of the United States and the absence of a reciprocity requirement as a prerequisite to the recognition and enforcement of foreign judgments. For them «the widespread recognition of foreign judgments in the United States without the threat of non-recognition undermined the effectiveness of this strategy in securing the recognition and enforcement of U.S. judgments abroad»^372(*).

Will the reciprocity requirement work as it is expected by the drafters of the proposed federal statute?

From a non-U.S. point of view, it was always expressed that the real problem of the non-recognition of the American problem is not the lack of reciprocity rather it is the complicated and unclear recognition system in the United States. In addition, what make things more difficult are the unique legal concepts of the American scholarship especially those with respect to the minimum contact jurisdiction such as doing business jurisdiction^373(*) or tag jurisdiction^374(*). One scholar stated that «judgments obtained by...proper procedures are readily recognized and enforced abroad»^375(*). Judgments rendered in the United States and which are based on what is considered as broad and unclear bases of jurisdiction^376(*).

Even with the reciprocity requirement in the law of the American judgments recognition system, foreign countries will continue to refuse the enforcement of such judgments especially those which really contradict the international common sense of the acceptable jurisdiction. In this context, A Survey on Foreign Recognition of U.S. Money Judgments conducted by the Committee on Foreign and Comparative Law of the Association of the Bar of the City of New York^377(*)states that «most of the states surveyed have concept of jurisdiction which are inconsistent or incompatible with U.S. concepts of long-arm jurisdiction and are not prepared to see such U.S. concepts expanded into their countries»^378(*) and consider matters of punitive damages as matter of public policy. By committing themselves to recognize and enforce American judgments, foreign countries will be obliged to give effect to such judgments rendered in the United States. Therefore, reciprocity will not be that helpful.

The solution may be in concluding international agreements according to the section 7 (e) which authorizes that the State Department to conclude treaties related to the recognition and enforcement of foreign judgments. However, by sticking in its unique legal system, the United States gives the impression that it wants to have the cake and to eat it too i.e. to ensure the reception of American judgments abroad without making concessions^379(*). It is important to point out that to have the benefit of judgment recognition treaty of the Brussels Convention, the United Kingdom had to consent to stop using of doctrine such as forum non conveniens^380(*) and to accept as exorbitant jurisdiction the temporarily presence of the defendant in its territory (tag jurisdiction) or to accept jurisdiction on the ground that English law is applicable. The United States is far from willing to make these concessions since it considers these matters as constitutional matters^381(*). The American delegation at the Hague Conference refused to include the doing business jurisdiction in the black list. The United States seems to be trying to adjust the whole world to its unique situation rather than be adjusted to the international situation.

Recently, American judgments have received more favourable acceptance whenever the judgment does not include excessive amount of damages or was not rendered on the basis of what is considered exorbitant basis of jurisdiction^382(*). Therefore, by requiring American courts to deny effect to foreign judgments on the sole basis of lack of reciprocity, foreign countries may retaliate. Such situation may lead to the isolation of the United States in a world where countries are enjoying reciprocal recognition and enforcement practices either at a bilateral level or at a regional level^383(*). If the United States wants to improve its judgments recognition situation, there is only one solution: to align itself with international standards.

* ³⁶⁷. Linda Silberman, American Law Institute, 2004 Proceedings, Thursday Morning Session, May 18, 2004 available at www.ali.org

* ³⁶⁸. 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, Vol. 35, 2004, p. 290 available at www.westlaw.org.

* ³⁶⁹. Franklin O. Ballard, Turn About Is Fair Play: Why Reciprocity Requirement Should Be Included in the American Law Institute Proposed Federal Statute, Houston Journal of Law, Vol. 28:1, 2006, p. 233.

* ³⁷⁰. Id, p. 234.

* ³⁷¹. Id.

* ³⁷². Id, p. 236.

* ³⁷³. This doctrine allows American courts can establish jurisdiction to hear a case on the ground of continuous and systematic activities in the forum i.e. the merely doing business or conducting operations otherwise unrelated to a lawsuit can establish the American court jurisdiction to decide a case. See Brandon B. Danford, The Enforcement Of Foreign Money Judgments in the Unites States and Europe: How Can We Achieve a Comprehensive Treaty?, The Review of Litigation, 2004, p. 408

* ³⁷⁴. American courts can assume jurisdiction over a person bases solely upon his temporary presence in the country. See Brandon B. Danford, The Enforcement Of Foreign Money Judgments in the Unites States and Europe: How Can We Achieve a Comprehensive Treaty?, The Review of Litigation, 2004, p. 409

* ³⁷⁵. Russell J. Weintraub, How Substantial is Our Need For a Judgments-Recognition Convention and What Should We Bargain To Get It ?, Brooklyn Journal of International Law, 1998 available at www.westlaw.com.

* ³⁷⁶. Recall the British Protection of Trading Interest Act which allows recovering the non-compensatory amount of damages. There is also a provision in Australian law (Foreign Proceeding [Excess of Jurisdiction] Act, 1984, §§9 (1)(b)(ii) which authorizes the recovery of an entire judgment paid on antitrust action where the assumption of jurisdiction by the foreign court is «contrary to international law or inconsistent with international comity or international practice»; See Russell J. Weintraub, How Substantial is Our Need For a Judgments-Recognition Convention and What Should We Bargain To Get It ?, Brooklyn Journal of International Law, 1998 available at www.westlaw.com.

* ³⁷⁷. The aim of this survey is to determine «what practical obstacles exist to obtain recognition of money judgments obtained in the United States». See The Committee on Foreign and Comparative Law, Survey on Foreign Recognition of U.S. Money Judgments,

* ³⁷⁸. The Committee on Foreign and Comparative Law, Survey on Foreign Recognition of U.S. Money Judgments,

* ³⁷⁹. With this respect, note that the United States launched an attempt to enter into a bilateral agreement on the recognition and enforcement of judgments with the United Kingdom. This attempt consisted basically in protecting the US nationals from exorbitant bases of jurisdiction in the United Kingdom. The negotiations had to go through a long process and showed the difficulties that are inherent in the development of a convention on the recognition and enforcement of foreign judgments despite the fact that the two countries share the same legal background and common law traditions. Although a draft had been initiated in 1976 and revised in 1979, the treaty was never signed. The non signature of the treaty is due basically to differences and the distrust of the United Kingdom of the American system and especially to the extraterritorial application of American antitrust laws which is sometimes referred to them as «long arm statutes» and the excessive amount of damages and the fear of British insurance companies to see British courts compelled to recognize and enforce American judgments based on unique and non-accepted American bases of jurisdiction or which award shocking damages compensation.

* ³⁸⁰. «Under the doctrine of Forum Non Cnoveniens, a court which otherwise has jurisdiction may decline to hear the case because it believes that a better forum exists elsewhere to hear the dispute». Brandon B. Danford, The Enforcement Of Foreign Money Judgments in the Unites States and Europe: How Can We Achieve a Comprehensive Treaty?, The Review of Litigation, 2004, p. 409, the same author continues to conclude that «Continental legal system are typically not friendly to this notion; thus, when Britain became contracting party to the Brussels Convention, its courts had to give up the right to decline jurisdiction pursuant to forum non conveniens. Id.

* ³⁸¹. Matters related to judicial jurisdiction are well rooted in jurisprudence of the Supreme Court of the United States.

* ³⁸². 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, available at www.westlaw.com

* ³⁸³. 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 available at www.westlaw.com