Problem 7'1

1
Problem 7.1

• Recognition and Enforcement of U.S. Judgments in
  Foreign Courts

2
Relevant Facts

• Plaintiffs
• Two U.S. Citizens
• NJ residents
• Two UK citizens

3
Relevant Facts

• Defendants
• CANTIRE
• Headquartered in Niagara, Canada
• Manufactured tires
• DROF AG
• Headquartered in Badenburg, Germany
• Manufactured SUV
• German-UK joint venture
• DROF-UK PLC
• Plant facility in Ipswich, UK
• Tire assembly and installation
• VUSCO
• Distribution franchise in NY-NJ region
• US plaintiffs purchased SUV here

4
Relevant Facts

• Agreements among parties
• VUSCO and DROF AG
• Forum selection clause in contract
• Choice of forum is court of the Netherlands
• VUSCO and CANTIRE
• Forum selection clause
• Venue for disputes should be in court in England

5
Procedural Considerations

• Claims
• Injured parties decide to bring suit in NJ
• CANTIRE, DROF AG, DROF-UK PLC and VUSCO all named
  as defendants
• Cross-claims between Defendants
• VUSCO against DROF AG
• Liability alleged for faulty design and
  manufacture by DROF AG
• DROF AG and VUSCO
• Indemnity against CANTIRE tires defective and
  cause of the accident

6
Procedural Considerations

• Defendant strategy
• CANTIRE plans to rely upon forum selection clause
  in the contract with DROF AG
• Verdict
• Judgment awarded by NJ Federal District Court
  against CANTIRE, DROF AG, and DROF-UK PLC all as
  jointly and severally liable.
• Amount
• 50,000 for lost wages
• 125,000 for past medical expenses
• 75,000 for future medical expenses
• 400,000 in punitive damages (based on finding of
  intentionally reckless conduct)

7
Question to Consider

• In what countries do the defendants have assets
  sufficient to satisfy the judgment?
• Liability is joint and several we should pursue
  judgment where enforcement is most likely to be
  accomplished

8
How can we gain relief in a foreign country from
a U.S. judgment?

• Ideally, the country where we seek enforcement of
  judgment is party to a reciprocal recognition and
  enforcement of judgment treaty, along with the
  state where litigation took place.
• Example EU has the Brussels Regulation among
  member states
• Allows for recognition and enforcement of
  judgment between Member States of the EU (See
  Chapter III, Recognition and Enforcement)

9
How can we gain relief in a foreign country from
a U.S. judgment?

• The United States is not a party to any bilateral
  or multilateral treaty dealing with recognition
  and enforcement of judgments.
• As such enforcement of the U.S. judgment in
  foreign countries will be a matter of local law
• What are some problems with reciprocity and
  enforcing U.S. judgments abroad?
• Civil law tradition many countries demand a
  physical presence by a party when a court asserts
  jurisdiction, rather than a seemingly nebulous
  standard such as purposeful availment or minimum
  contacts.
• This activities based standard for jurisdiction
  in the U.S. is not followed by many other
  countries.

10
Cases

• Enforcing judgment in Canada against CANTIRE
• Morguard Investments Ltd. v. De Savoye
• United States of America v. C. Robert Ivey, Maziv
  Industries, Ltd.
• Enforcing judgment in Germany against DROF AG

11
Can the U.S. ruling be enforced in Canada?

• Inter-Provincial enforcement Morguard
• Enforcement of foreign rulings Ivey
• Uniform Enforcement of Foreign Judgments Act

12
Morguard Investments Ltd. v. De Savoye

• Facts
• Defendant defaulted on mortgage of property in
  Alberta
• Plaintiffs obtained a default foreclosure
  judgment in Alberta court and the property was
  sold at judicial sale
• Plaintiffs then initiated suit in British
  Columbia Court for the deficiencies between the
  value of the property and the amount owed on the
  mortgage

13
Morguard Investments Ltd. v. De Savoye

• Canadian Supreme Court essentially created a
  full faith and credit obligation among Canadian
  courts
• As long as the court of origin had jurisdiction,
  the judgment should be enforced
• Jurisdiction over a Defendant outside the forum
  is based on the Defendants real and substantial
  connection to the forum

14
Morguard Investments Ltd. V. De Savoye

• Real and Substantial Connection Test
• In product liability actions
• Is it reasonably foreseeable that the products
  produced outside the forum would be used or
  consumed in the forum?
• In contract actions
• Where was the contract made?
• Where is the object of the contract located?

15
United States of America v. C. Robert Ivey, Maziv
Industries, Ltd.

• Facts
• The Defendants were Canadian shareholders of LDI,
  a Michigan corporation that operated a waste
  disposal site in Michigan
• The EPA forced remedial measures in relation to
  this waste disposal site
• The EPA initiated an action in U.S. District
  Court against LDI and won a default judgment for
  reimbursement under CERCLA

16
United States of America v. C. Robert Ivey, Maziv
Industries, Ltd.

• The court imported the Morguard rationale to the
  enforcement of foreign rulings
• In the name of comity the court will usually
  enforce foreign judgments as long as valid
  jurisdiction existed in the court of origin
• Defendants had real and substantial contacts
  with the United States
• Operated business in US
• Defendant Ivey made decisions concerning
  environmental issues and appeared before
  environmental agencies on behalf of LDI

17
United States of America v. C. Robert Ivey, Mariz
Industries, Ltd

• However, the Canadian courts will not enforce
  foreign judgments when enforcement would be
  contrary to public policy
• The foreign judgment must be so offensive to the
  morality of society to the extent that it is not
  consonant with the Canadian system of justice in
  order to trigger the exception
• This does not include situations where the
  applicable Canadian law just happens to be
  different than the foreign law

18
Canadian Uniform Enforcement of Foreign Judgment
Act

• So far Saskatchewan is the only province that has
  enacted it
• The Act would largely create statutory authority
  for rulings in Morguard and Ivey

19
Six Prerequisites for German Enforcement 

• Finality - 723(2) ZPO requires that judgments be
  final and conclusive in the foreign jurisdiction.
• Jurisdiction - 328(1)1 ZPO requires that the
  judgment was rendered by a court with
  jurisdiction over the parties and the dispute.
• Service of Process - 328(1)2 requires that the
  defendant appeared to defend himself in the
  action, or if he did not that he was given notice
  of the proceedings.

20
Six Prerequisites for German Enforcement

• No Earlier Judgment - 328(1)3 requires that the
  judgment does not contradict an earlier judgment
  or proceeding.
• Public Policy - 328(1)4 ZPO requires that
  enforcement of the judgment is not contrary with
  basic principles of German law.
• Reciprocity - 328(1)5 requires that the judgment
  was rendered by a court that would enforce a
  similar German judgment.

21
Procedure for German Enforcement

• 722 ZPO governs the procedure for the
  enforcement of foreign judgments. It requires
  that an action for enforcement be brought by the
  enforcing party in a County or District Court
  that has jurisdiction over the debtor.
• Note - There is no review of the merits of the
  case in this action (723(1) ZPO).

22
Decision of the German Federal Court of Justice

• Facts
• California action based on a sexual offense
• Defendant remained in Germany
• Court awarded plaintiff damages, including
  400,000 in punitive damages
• German Procedural History
• District Court - issued an enforcement order
• Appellate Court - upheld the enforcement, limited
  to 275,325

23
Decision of the German Federal Court of Justice
(cont.) 

• Public Policy
• Pre-Trial Discovery
• American Rule of Costs
• Level of Damages
• Contingency Fees
• Punitive Damages

24
Application to Facts 

• Finality
• Jurisdiction
• Service of Process
• Earlier Judgments
• Public Policy
• Lost Wages Future Expenses
• Contingency Fees
• Punitive Damages
• Reciprocity

25
Conclusion/Application

• Recognition and Enforcement of Judgment in Canada
• According to case law in Morguard and Ives
• The court will usually enforce foreign judgments
  as long as valid jurisdiction existed in the
  court of origin
• Valid jurisdiction is dependent on real and
  substantial contacts test established in
  Morguard
• CANTIRE, like Ivey, operated a business in the
  U.S.
• As manufacturer of tires, CANTIRE was deemed
  liable for the accident by NJ District Court

26
Conclusion/Application

• Recognition and Enforcement of Judgment in
  Germany
• Statutory provisions exist to govern the
  enforcement of foreign judgments by German courts
• Assuming finality, valid jurisdiction, valid
  service of process, no previous contradictory
  judgment, no curbing of German public policy, and
  full reciprocity foreign judgments will be
  enforced
• DROF AG is headquartered in Germany,
• As manufacturer of SUV purchased by plaintiffs,
  DROF AG was deemed liable by NJ District Court
• NJ District Court asserted valid jurisdiction
  over DROF AG in the dispute, and satisfied other
  723 and 328 statutory requirements

27
Conclusion/Application

• Checklist
• Look for bilateral or multilateral recognition
  and enforcement agreements between countries in
  order to get a treaty/statutory basis for
  pursuing judgment
• Other countries may severely limit ability to
  enforce multiple damages or punitive damages
  awarded by a U.S. court of valid jurisdiction
• But countries willing to respect U.S. notion of
  activities based personal jurisdiction are more
  likely to enforce a U.S. judgment within their
  courts
• Look for parallel jurisdictional requirements in
  foreign law to the country in which a judgment is
  obtained,
• Given a similar jurisdictional requirement, seek
  enforcement of judgment by the foreign court
  assuming valid jurisdiction was obtained in the
  original trial