[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
RECOGNITION AND ENFORCEMENT OF
FOREIGN JUDGMENTS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON COURTS, COMMERCIAL
AND ADMINISTRATIVE LAW
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
NOVEMBER 15, 2011
__________
Serial No. 112-109
__________
Printed for the use of the Committee on the Judiciary
Available via the World Wide Web: http://judiciary.house.gov
_____
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COMMITTEE ON THE JUDICIARY
LAMAR SMITH, Texas, Chairman
F. JAMES SENSENBRENNER, Jr., JOHN CONYERS, Jr., Michigan
Wisconsin HOWARD L. BERMAN, California
HOWARD COBLE, North Carolina JERROLD NADLER, New York
ELTON GALLEGLY, California ROBERT C. ``BOBBY'' SCOTT,
BOB GOODLATTE, Virginia Virginia
DANIEL E. LUNGREN, California MELVIN L. WATT, North Carolina
STEVE CHABOT, Ohio ZOE LOFGREN, California
DARRELL E. ISSA, California SHEILA JACKSON LEE, Texas
MIKE PENCE, Indiana MAXINE WATERS, California
J. RANDY FORBES, Virginia STEVE COHEN, Tennessee
STEVE KING, Iowa HENRY C. ``HANK'' JOHNSON, Jr.,
TRENT FRANKS, Arizona Georgia
LOUIE GOHMERT, Texas PEDRO R. PIERLUISI, Puerto Rico
JIM JORDAN, Ohio MIKE QUIGLEY, Illinois
TED POE, Texas JUDY CHU, California
JASON CHAFFETZ, Utah TED DEUTCH, Florida
TIM GRIFFIN, Arkansas LINDA T. SANCHEZ, California
TOM MARINO, Pennsylvania [Vacant]
TREY GOWDY, South Carolina
DENNIS ROSS, Florida
SANDY ADAMS, Florida
BEN QUAYLE, Arizona
MARK AMODEI, Nevada
Sean McLaughlin, Majority Chief of Staff and General Counsel
Perry Apelbaum, Minority Staff Director and Chief Counsel
------
Subcommittee on Courts, Commercial and Administrative Law
HOWARD COBLE, North Carolina, Chairman
TREY GOWDY, South Carolina, Vice-Chairman
ELTON GALLEGLY, California STEVE COHEN, Tennessee
TRENT FRANKS, Arizona HENRY C. ``HANK'' JOHNSON, Jr.,
DENNIS ROSS, Florida Georgia
BEN QUAYLE, Arizona MELVIN L. WATT, North Carolina
[Vacant]
Daniel Flores, Chief Counsel
James Park, Minority Counsel
C O N T E N T S
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NOVEMBER 15, 2011
Page
OPENING STATEMENT
The Honorable Howard Coble, a Representative in Congress from the
State of North Carolina, and Chairman, Subcommittee on Courts,
Commercial and Administrative Law.............................. 1
WITNESSES
Linda J. Silberman, Martin Lipton Professor of Law, New York
University School of Law
Oral Testimony................................................. 3
Prepared Statement............................................. 6
H. Kathy Patchel, Uniform Law Commissioner, Indianapolis, IN
Oral Testimony................................................. 46
Prepared Statement............................................. 48
John B. Bellinger, III, Partner, Arnold & Porter, LLP, on behalf
of the U.S. Chamber of Commerce and the U.S. Chamber Institute
for Legal Reform
Oral Testimony................................................. 55
Prepared Statement............................................. 58
APPENDIX
Material Submitted for the Hearing Record
Prepared Statement of the Honorable Steve Cohen, a Representative
in Congress from the State of Tennessee, and Ranking Member,
Subcommittee on Courts, Commercial and Administrative Law...... 73
Prepared Statement of the Honorable John Conyers, Jr., a
Representative in Congress from the State of Michigan, and
Ranking Member, Committee on the Judiciary..................... 74
Response to Post-Hearing Questions from Linda J. Silberman,
Martin Lipton Professor of Law, New York University School of
Law............................................................ 75
Response to Post-Hearing Questions from H. Kathy Patchel, Uniform
Law Commissioner, Indianapolis, IN............................. 83
Response to Post-Hearing Questions from John B. Bellinger, III,
Partner, Arnold & Porter, LLP, on behalf of the U.S. Chamber of
Commerce and the U.S. Chamber Institute for Legal Reform....... 87
Letter from Louis B. Kimmelman, Chair, the New York City Bar..... 110
Letter from Forum Nobis PLLC..................................... 113
Letter from John B. Bellinger, III, Arnold & Arnold LLP.......... 175
Letter from William E. Thomson, Gibson Dunn...................... 178
RECOGNITION AND ENFORCEMENT OF FOREIGN JUDGMENTS
----------
TUESDAY, NOVEMBER 15, 2011
House of Representatives,
Subcommittee on Courts,
Commercial and Administrative Law,
Committee on the Judiciary,
Washington, DC.
The Subcommittee met, pursuant to call, at 1:30 p.m., in
room 2141, Rayburn House Office Building, the Honorable Howard
Coble (Chairman of the Subcommittee) presiding.
Present: Representatives Coble, Gowdy, Cohen, and Watt.
Staff Present: (Majority) Daniel Flores, Subcommittee Chief
Counsel; Blaine Merritt, Counsel; Johnny Mautz, Counsel; Ashley
Lewis, Clerk; and (Minority) James Park, Subcommittee Chief
Counsel.
Mr. Coble. The Subcommittee will come to order.
I don't believe in penalizing people who get here in a
timely way, and you all are here in a timely way, so we will
proceed.
I think there is a scheduled vote on or about 2:30, so we
will try to move along and not keep you all here excessively.
It is good to have you with us, each of the three witnesses.
This hearing is an outgrowth of the libel tourism project
that resulted in passage of the SPEECH Act in the 111th
Congress. The SPEECH Act addresses the issue of so-called libel
tourism lawsuits and how they may be enforced against American
citizens. The Ranking Member, Mr. Cohen, will be here shortly;
and he was actively involved in that legislation as well.
The recognition and enforcement of libel tourism judgment
is a subset of a larger concern, namely how are most judgments
rendered by foreign courts recognized and enforced in the
United States. The purpose of the hearing is to provide general
background on the subject matter so Members can determine
whether Congress should create a Federal statute to address how
foreign judgments are treated in our country. This will
dovetail into an analysis on the American Law Institute's 2006
report on the subject, which included a proposed Federal
statute.
The recognition and enforcement of foreign judgments in the
United States is governed by State law and there is no Federal
statute on the subject. The United States is not a party to any
international agreement that addresses the topic, though it has
participated in multilateral negotiations in the 1900's and
early 2000's that led to the development of a choice of courts
treaty that has been signed but not ratified.
Aside from uniform model acts, many States have adopted in
whole or in part State law regarding the recognition and
enforcement of foreign judgments is a function of comity, the
principle that courts of one State or jurisdiction will give
effect to laws and judicial decisions of another State or
jurisdiction, not as a matter of obligation but out of
deference and mutual respect.
In addition, States frequently revoked the restatements of
lawful authority when deciding foreign treatment cases. The two
most cited texts are the restatement third of foreign relations
law and the restatement second conflict of laws.
The Subcommittee wants to explore the extent to which State
law is doing a good job of recognizing and enforcing foreign
judgment in a way that is equitable to litigants. How do the
individual States vary in their treatment on this
jurisprudence? Does this variation result in forum shopping?
Should the Federal Government preempt the States and create
an exclusive and uniform way of recognizing and enforcing
foreign judgments? These are some of the issues we want to
explore this afternoon.
I will conclude with this final point. The hearing is not
about sticking a square peg in a round hole. We don't want to
write and process a bill if this would create havoc. The
hearing is an opportunity for the Members to learn more about
the subject matter so that we can learn and make more informed
decisions about proceeding or not proceeding at a later time.
Again, I thank the witnesses for your being here today, and
I recognize the--well, the only Member we have is Mr. Gowdy
from the land of the palmetto. Do you have an opening statement
to make?
Mr. Gowdy. No, sir, Mr. Chairman.
The gentleman from North Carolina has since joined us as
well, Mr. Chairman.
Mr. Coble. I recognize Mr. Watt, the distinguished
gentleman from North Carolina. Do you have a statement to make?
Mr. Watt. No.
Mr. Coble. No statement, so we will proceed.
We have a very distinguished panel of witnesses today. Each
of the witness's written statements will be entered into the
record in its entirety.
I ask that each witness summarize his or her testimony in 5
minutes or less, if possible. You will have--the red light will
illuminate that your 5 minutes are expired. Now you won't be
keel hauled if you violate it, but we would like to comply with
the 5-minute rule as do we here and particularly since there is
a scheduled vote that is probably imminent. When the red light
becomes amber, that's a 1 minute warning that the ice on which
you are skating is getting thin. When the light switches from
green to yellow, that will be your note.
Without objection, all Members have 5 legislative days
within which to submit materials for the record.
Our first witness is Professor Linda Silberman, the Martin
Lipton Professor of Law at the New York University School of
Law. She is the first tenured woman full professor at the
school where she teaches conflict of laws, civil procedure,
comparative civil procedure, transitional litigation, and
international commercial arbitration.
Prior to joining the NYU faculty, Professor Silberman
practiced law in Chicago, worked at a professor in residence at
the Department of Justice, and served as a member of numerous
State Department delegations to The Hague Conference on Private
International Law. She is the author of case books and numerous
law review articles of great relevance to our hearing. She was
a co-reporter of the 2006 American Law Institute Project on the
Recognition and Enforcement of Foreign Judgments. Professor
Silberman received her undergraduate and law degrees from the
University of Michigan, and she was a Fulbright scholar as well
in London.
Our second witness is Mr. John Bellinger, partner at the
law firm of Arnold & Porter in Washington, D.C.
Earlier in his career, Mr. Bellinger served in a number of
senior positions of the Federal Government, including as legal
advisor to the Department of State, the legal advisor to the
National Security Council and the Council for National Security
Matters in the Criminal Division at the Department of Justice.
He was also an Adjunct Senior Fellow in International and
Security Law at the Council of Foreign Relations. Mr. Bellinger
earned his undergraduate degree from Princeton, his M.A. in
Foreign Affairs from the University of Virginia, and his J.D.
From the Harvard School of Law, where he was the editor of the
Harvard International Law Journal.
Our final witness is Ms. Kathy Patchel, an Indiana
Commissioner of the National Conference of Commissioners of
Uniform State Law, also known as Uniform Law Commission. She
will be testifying on behalf of that organization.
Ms. Patchel is also an emeritus professor at the Indiana
School of Law in Indianapolis. Through the years, she has
taught legislation, constitutional law, commercial paper,
remedies, and other subjects. In addition, Professor Patchel
has taught at Northern Illinois University and the University
of Mississippi, clerked for the Honorable Frank M. Johnson,
Jr., of the 11th Circuit and practiced law in Atlanta.
She earned her B.A. Degree in English from Huntington
College, a J.D. From my alma mater, University of North
Carolina--and Mrs. Watts spent some time at Chapel Hill as
well, if my memory serves correctly. As I said, from Huntington
College and then the J.D. From the University of North Carolina
Chapel Hill, her L.L.M. From Yale. Professor Patchel has
published widely and served on a number of Uniform Law
Commission committees.
Welcome to each of you. The witnesses will be allowed, as I
said, 5 minutes; and we will recognize Ms. Silberman to begin
with.
TESTIMONY OF LINDA J. SILBERMAN, MARTIN LIPTON PROFESSOR OF
LAW, NEW YORK UNIVERSITY SCHOOL OF LAW
Ms. Silberman. Thank you, Chairman Coble. I am delighted to
have this invitation and delighted to find the Subcommittee
interested in considering Federal legislation in this area.
I testified before this Subcommittee when it was
considering Federal legislation to deal with concerns over the
recognition and enforcement of foreign defamation judgments
which eventually resulted in the SPEECH Act, and I suggested
then that perhaps more comprehensive legislation might be in
order at a later time. So to summarize points made more
extensively in my written testimony, I think the need for
Federal legislation is more important now than ever before.
A comprehensive Federal statute will have an impact in two
areas. First, it will provide a Federal uniform standard for
recognition and enforcement in foreign judgments in the United
States; and, second, it has the potential to enhance
recognition and enforcement of U.S. judgments in other
countries.
Let me first address the point about recognition practice
in the United States. As you know and as you have said,
recognition and enforcement is presently a matter of State law,
although there is a curious history about that which I detail
in my written testimony. Notwithstanding the existence of two
uniform State laws, there is still no uniformity of practice.
And that is because, first, not all States have adopted the
Uniform Acts, which differ in various ways themselves; second,
the adoptions, when they occurred, are not necessarily uniform;
and, three, interpretations by State courts of those Acts are
not necessarily uniform.
Just to give one significant example, some States and even
some that have the Uniform Act have added a requirement of
reciprocity. Reciprocity is the requirement that if a foreign
country judgment is to be recognized and enforced in the United
States, the foreign country must also respect a United States
judgment in similar circumstance. Most States do not have a
reciprocity requirement. Some do.
So, in short, the Uniform Act is not uniform; and only a
Federal statute can ultimately achieve the maximum level of
uniformity.
Now you might wonder whether uniformity is actually
important in this area, and my answer is yes for several
reasons. A judgment can be enforceable in New York or Illinois
but not in Texas or Georgia. In the absence of uniformity, both
the judgment creditor in an enforcement proceeding or the
judgment debtor in a declaratory judgment proceeding for
nonenforcement can forum shop for a State law favorable to its
position.
Moreover, at the earlier stage of deciding whether to
commence litigation abroad--because you are trying to decide
whether a judgment abroad will be enforced--a prediction is
difficult because a potential litigant may not know in which
State in the United States eventual enforcement action will
take place. And, perhaps even more significantly, uniformity is
tied to the need for Federal legislation because this issue of
recognition and enforcement involves relations between the
United States and foreign governments.
The Supreme Court itself has commented on aspects of the
reciprocity requirement in other contexts as saying States are
improperly intruding into the field of foreign affairs. But
whether reciprocity is or is not to be required as a
precondition of foreign judgment lies with the Congress.
Another example of the impact on foreign relations relates
to one of the traditional defenses that can be raised and that
is the failure to have a system of impartial tribunals or to
have procedures that are compatible with due process of law.
And although it is accurate to say that all States would
probably recognize such a defense, each State is entitled to
make that assessment according to its own interpretation.
Questions about the quality and fairness of a foreign judicial
system would seem to easily fall within foreign relations
concerns of the United States, and so there should be uniform
Federal criteria.
Potential corruption in a judicial system is another issue
that has arisen. Again, that is a decision that should be
decided by Congress; and the criteria about making that
assessment should also be determined by Congress. State and
Federal courts can interpret those provisions, but the ultimate
guidance should be that of the Supreme Court. In this way, a
uniform level of the proper protection of American interests
can be established within a framework of recognition practice
that encourages and sustains international global commerce. I
recognize that there is also an important role for State
policy, and where the issues pertain to State rather than
Federal policy, State policy can apply in the context of a
Federal statute.
There are other aspects of Federal judgment recognition
where the patchwork of State laws I think also leads to
uncertainty and predictability. The constitutional issue I
think is quite clear. The concern about the recognition of
foreign judgments abroad is also enhanced by a uniform statute.
Recognition and enforcement of foreign judgments as well as
nonrecognition and nonenforcement is and ought to be a matter
of national concern. We are in an age of globalization and
international commerce, and the relevant standards and criteria
should be in the hands of the Federal Government.
I thank you for this opportunity.
[The prepared statement of Ms. Silberman follows:]
__________
Mr. Coble. Thank you, Professor Silberman.
Professor Patchel, you are recognized.
TESTIMONY OF H. KATHY PATCHEL, UNIFORM LAW COMMISSIONER,
INDIANAPOLIS, IN
Ms. Patchel. Thank you, Chairman Coble and the Committee,
for inviting me to testify on behalf of the National Conference
of Commissioners on Uniform State Laws.
My testimony focuses on two issues that I believe the
Committee needs to consider. They are raised by Professor
Silberman in her testimony.
The first is whether there are specific problems in the
legal system as it exists under State law which would justify
federalizing this area and disrupting the 70 years of State
governance of recognition and enforcement.
The law in this area in my experience is well settled, it
is familiar to courts and to practitioners, and it has been
effective. The United States is recognized as one of the most
cooperative nations in the recognition and enforcement of
judgments and yet the legal regime gives courts the ability,
when they need to, to deny recognition to a judgment that
should not be recognized.
My experience in this area is based in large part in
serving as a reporter for the 2005 revision of the Conference's
Recognition Act. In preparing to be a reporter for that Act, I
did some research. I looked at a large number of cases. I also
looked at all of the nonuniform amendments under the 1962 Act,
which is the primary source of law in this area.
I found, somewhat to my own surprise, that there is an
amazing degree of uniformity here. I believe there is as much
uniformity of interpretation in the courts as there would be if
there were only one statute being interpreted by courts, rather
than a number of State uniform laws. This doesn't mean that
there is complete uniformity of interpretation. You cannot have
that with any statute. But there is a high degree.
Professor Silberman mentions reciprocity. That is, I think,
the most significant area in which I found that there was
variance. It was actually statutory in my research. There were
eight of the 32 States that had adopted the 1962 Act which had
amended it to require reciprocity. North Carolina was actually
one of those. But we have found that the 2005 Act is being
adopted in those States to update their law that the States are
dropping that reciprocity requirement. In fact, North Carolina
recently adopted our law; and they adopted it without that
reciprocity requirement. So I believe that that particular
nonuniformity is going away as States are adopting the 2005
Act.
I think that the Subcommittee needs to identify specific
problems if it is going to overturn this law in favor of
federalization in this area in favor of a new Federal law which
then will require new interpretation. And necessarily whenever
you have a subject that has shifted from the State to the
Federal domain, you are going to have a period when you are
having to reinterpret any law. And I think that there need to
be problems with the current law, problems that implicate an
important Federal interest in order to justify that sort of
disruption.
Mr. Coble. You may continue.
Ms. Patchel. I believe that simply the fact that a judgment
is issued by a foreign court which gives this private right
isn't a sufficient Federal interest here. I think the Federal
courts have implicitly recognized that when they have said that
it is not enough of a Federal interest to give rise to Federal
question jurisdiction. There needs to be some more specific
interest identified, as the Subcommittee identified when it
passed the SPEECH Act. There, even though the uniform law was
following what the SPEECH Act did, it was striking down these
libel decisions under the public policy exception. This
Committee and Congress felt that a stronger statement, a
Federal statement needed to be made; and I think that there
would need to be an identification of particular other issues
that are problematic that would cause that.
Secondly, I think that the Committee needs to consider the
costs and weigh those. Federal courts are available in their
diversity jurisdiction under State law, but if this area is
federalized then they will become the primary adjudicators in
this area, and they will have Federal question jurisdiction.
That means that necessarily their case load will increase vis--
vis the States; and it also means that their enforcement
officials, the U.S. Marshals, will be burdened with these
additional enforcement actions.
Finally, with regard to those enforcement actions, I would
like to point out, which I don't think is often noted, the
relationship between recognition and enforcement. Recognition
is a precondition to enforcement, to being able to get your
monies. And the procedures for getting your money are State
procedures. They differ from State to State, and they are very
local in nature. And so if the area of recognition is
federalized it takes away the State's ability to control the
prerequisite to invoking these local State procedures.
[The prepared statement of Ms. Patchel follows:]
__________
Mr. Coble. Thank you, professor.
We have a vote. I am going to recognize the distinguished
gentleman from North Carolina for his questioning. We will then
go vote and return after the vote.
Mr. Watt. Mr. Bellinger.
Mr. Coble. Oh, I stand corrected. Mr. Bellinger, let me get
to you now, and then we will go vote. I apologize, sir.
TESTIMONY OF JOHN B. BELLINGER, III, PARTNER, ARNOLD & PORTER,
LLP, ON BEHALF OF THE U.S. CHAMBER OF COMMERCE AND THE U.S.
CHAMBER INSTITUTE FOR LEGAL REFORM
Mr. Bellinger. Thanks, Mr. Chairman; and thank you and Mr.
Gowdy and Mr. Watt for having me here today. I am testifying
today on behalf of the U.S. Chamber of Commerce and the U.S.
Chamber Institute for Legal Reform.
As you correctly noted, I was the legal advisor for the
Department of State during the Bush administration under
Secretary of State Condoleezza Rice. In fact, I spent my very
last day in office, almost my last minutes in office, dealing
with these very issues when I signed The Hague Choice of Court
Treaty in The Hague on January 19th, 2009. I will come back to
that in a moment.
I want to make six very brief points today, and I will stay
under 5 minutes because I don't want to be keelhauled by the
Chairman.
First, and most important, the business community supports
recognition and enforcement in U.S. courts of appropriate
foreign judgments. Recognition and respect for foreign
judgments serves our interests. When U.S. Courts recognize and
enforce foreign judgments in our country, foreign courts are
more likely to recognize and enforce U.S. judgments out of
reciprocity.
But, second, the business community is concerned, however,
about the potential abuse of the U.S. system for recognition of
foreign judgments rendered by politicized or corrupt foreign
judicial systems; and in recent years there have been some
controversial judgments coming out of courts in Latin America
against U.S. companies that plaintiffs have sought to enforce
in U.S. courts.
In one case, plaintiffs sought to enforce a $96 million
judgment in Nicaragua rendered against the Dole Food Company
and Dow Chemical under a special law that had been specifically
designed to discriminate against U.S. companies.
And then earlier this year Ecuadorian plaintiffs obtained
an $18 billion judgment against Chevron for alleged
environmental harm in Ecuador based on another special law
designed specifically to limit Chevron's ability to defend the
suits.
Now, so far, U.S. courts have refused to recognize both the
Nicaraguan and the Ecuadorian judgments, but these cases are
being very closely watched by the U.S. business community as
the possible tip of a dangerous iceberg.
Now, last month, the U.S. Chamber Institute for Legal
Reform published a report which I would commend to the
Committee's attention on recognition of abusive foreign
judgments like this. And the report describes the recent rise
in global forum shopping and explains how U.S. courts must
ensure that foreign judgments comport with U.S. legal
requirements and the basic norms of due process before they are
enforced in the United States.
Third, and touching on the points that my colleagues have
mentioned, the business community is concerned about the
patchwork of State laws that currently govern recognition and
enforcement of foreign judgments----
Mr. Coble. Mr. Bellinger, I am going to ask you to suspend.
Mr. Bellinger. Certainly.
Mr. Coble. Because the second vote has already been called.
We will probably be gone from between 35 to 40 minutes. So you
all rest easy, and I apologize for this problem, but the
problem appears to be universal and consistent. We will stand
in recess.
[Recess.]
Mr. Coble. I apologize to you, folks.
Mr. Bellinger, I particularly owe you an apology. Not only
did I fail to recognize you in order, I may have muzzled you in
the middle of your testimony. So if you will resume, we will
proceed.
Mr. Bellinger. Mr. Chairman, it is better to be muzzled
than keelhauled.
Mr. Coble. You are right about that.
Mr. Bellinger. Thank you very much.
I was just making several points on the recognition and
enforcement of foreign judgments, and I had made the point that
the business community generally supports recognition and
enforcement of appropriate foreign judgments but has a concern
about some recent cases that may be the beginning of a trend of
efforts to enforce inappropriate foreign judgments. And just
resuming my quick points, we are also concerned about the
current system of State laws, which, as my colleagues have
said, currently govern enforcement and recognition of foreign
judgments in the United States.
As you know, 17 States are currently governed by the 1962
Uniform Foreign Money Judgments Act; another 17 have adopted
the 2005 revised Recognition Act, which has slightly different
standards from the 1962 Act; and then the remaining States have
no statutory provisions at all and instead rely on common law
doctrines. So this is a patchwork of State laws, which creates
a problem for the U.S. business community.
This lack of uniformity amongst the State laws jeopardizes
the procedural rights of judgment debtors; it encourages forum
shopping, both here in the United States and abroad; and it
enables plaintiffs to circumvent rules that would prevent
recovery under U.S. law. So that is my third point.
And then, fourth, turning to my colleague, Professor
Silberman and the American Law Institute's proposal, they have
proposed a very useful Federal statute that would address some
of the problems in this patchwork of State laws.
A Federal statute would establish a uniform standard for
recognition and enforcement of foreign money judgments. In my
view, however, the ALI statute could be significantly improved
in some ways. And we need to bear in mind that it was put
together 5 or 6 years ago, and there have been some significant
changes in international litigation since that time that I
think the ALI might take into account.
So, for example, the proposal could clarify the public
policy exception for nonrecognition. The U.S. business
community is concerned that plaintiffs may try to circumvent
U.S. laws by obtaining judgments in politicized forums abroad
and then seek enforcement of those judgments here. Courts need
to have clearer authority to reject judgments that are based on
foreign suits that would not prevail if brought originally in
the United States.
Fifth, the 2005 Hague Convention on Choice of Courts
Agreements, which as I mentioned I signed in The Hague on my
last day in office, is an important treaty that is likely to be
transmitted by the Obama administration to the Senate for
advice and consent in the near future. The convention provides
that a judgment by a court that has been chosen by the parties
in a commercial agreement must be recognized and enforced in
the courts of countries that are parties to the convention. In
order for the Senate to approve the convention, legislation by
both Houses of Congress will be needed to ensure that the
United States is in a position to enforce judgments reached
under the terms of the convention. So if this treaty is
transmitted to the Senate, both the House and the Senate will
have an opportunity to consider Federal legislation in any
case.
And then sixth and my last point, although greater
uniformity in the recognition and enforcement of foreign
judgments would be desirable in my view, the Committee should
consider whether the law should be fully federalized or whether
some discretion should be left to the States. My personal view
is that a purely Federal statute would have certain advantages.
So, with that, I will conclude my remarks and am happy to
take your questions. Thank you, Mr. Chairman.
[The prepared statement of Mr. Bellinger follows:]
__________
Mr. Coble. Thank you, Mr. Bellinger.
Thanks to all of you.
I believe it was Professor Patchel, I believe, mentioned
the uniformity, did you not, Professor?
Ms. Patchel. Yes.
Mr. Coble. And I want to go down that path, Mr. Bellinger,
with you. In your opinion, how much uniformity exists among the
several States when it comes to enforcing and recognizing
foreign judgments, A? And, B, is there a great deal, in your
opinion, of forum shopping that occurs in this area of
jurisprudence?
Mr. Bellinger. Thank you, Mr. Chairman.
There really is not uniformity at all amongst the State
laws. There are some States that have adopted the 1962
Recognition Act, some that have adopted the 2005 Recognition
Act, and then some States that don't have a statutory framework
at all.
As Professor Patchel said, there has tended to be greater
uniformity in the way the courts have interpreted these
statutes, but still the statutes and the common law framework
are significantly different, and it does create a tremendous
incentive for a judgment creditor to pick the State where it is
going to be the easiest to enforce a judgment. And so it does
encourage forum shopping. The business community I think would
like to see greater uniformity in the recognition and
enforcement of foreign judgments, and that would have
sufficient protections for judgment debtors.
Mr. Coble. Thank you, Mr. Bellinger.
Professor Patchel, what is the best argument you can submit
in defense of the status quo to a foreign national trying to
enforce a judgment in the United States?
Ms. Patchel. Well, the best argument for the status quo is
that it has been around for 70 years. And so the people who are
going to be enforcing those judgments on behalf of foreign
nationals are familiar with it, and they know what they need to
do under it.
If we federalize the area, you are going to have a brand
new Federal statute which will have to be interpreted by the
court in its own light. If it is interpreted consistently with
the current State law, then I suppose it will be familiar. But
if it isn't changing the current State law, then I don't see
the argument there for federalizing.
Mr. Coble. I thank you for that.
Professor Silberman, if we in the Congress decide to in
fact write a Federal statute, your belief is what? Should we
adopt the ALI model in its entirety, or does the model contain
provisions that may be difficult to include in a final draft?
Ms. Silberman. Yes, thank you.
As I said in my testimony, I was not making a special plea
for the ALI statute. Much more importantly was the principle
that Mr. Bellinger also identified, which was to have a uniform
Federal statute.
There are areas, I think, of the ALI provision that may
well be useful, including issues about accepted bases of
jurisdiction, which for the moment I think are unclear. There
are also developments since we have done the ALI statute which
may indicate a rethinking of certain provisions. For example,
the issue of whether or not you look to the specific
proceeding, for example, is one that was rejected at the time
of the ALI; and I think one might want at least to revisit
that.
So the ALI statute also dealt with some broad issues that I
think may not have to be done by the Congress, and so I think
the ALI proposal ought to be looked at as just that.
And I think it can actually be improved upon. Like all of
us, when you have done something and it sits for a while and
you take a second look, I think you are never completely
satisfied with the product you have, and there is always room
for improvement, and I suspect that it can be improved upon.
Mr. Coble. Thank you, Professor.
I stated to the panelists, unlike you all, it is an area of
the law in which I am not proficient. So I am learning as we go
along.
And I thank you all again for your attendance today,
reiterate my apology. But I think, as you know, you assume that
risk when you come to Capitol Hill.
But without objection, all Members will have 5 legislative
days to submit--I want to be sure no one else is up here--to
submit to the Chair additional written questions for the
witnesses, which we will in turn forward to the witnesses. Mr.
Cohen may be on his way. Do you all want to submit anything
additionally while we are waiting? Feel free to do so.
Mr. Bellinger. Nothing here, but happy to wait for Mr.
Cohen to hear his questions as well.
Mr. Coble. Let me go ahead and complete what I was about to
do until Mr. Cohen arrives.
All Members will have 5 legislative days to submit to the
Chair additional written questions for the witnesses, which we
will in turn forward to the witnesses; and I ask that you
respond as promptly as possible so that your answers may be
made a part of the record. Without objection, all Members will
have 5 legislative days to submit any additional materials for
inclusion in the record, and then I will thank you again once
Mr. Cohen arrives.
Ms. Patchel. Chairman Coble?
Mr. Coble. Yes.
Ms. Patchel. I would perhaps make one more statement, if we
have time for that.
Mr. Coble. Sure.
Ms. Patchel. Because both of my colleagues had expressed
their concern about the patchwork nature of the State law,
although, as Mr. Bellinger noted, the patchwork, the lack of
uniformity is in the form that the law takes and not so much in
the rule. And the results from jurisdiction to jurisdiction
come out the same, for the most part, as I said, as much as I
think you would find under the interpretation of one statute.
And the reason for that, I think, is that when you look at
the development of this area of the law, it started as common
law, but common law that was interpreting international comity.
And so it was looking at uniform rules. The 1962 Act simply
codified those rules, and the 2005 Act was a clarification. And
so although you have the law in different forms in the States,
the rules are basically the same and have been continuous over
time.
Mr. Coble. I thank you for that.
The distinguished gentleman from Tennessee has just
arrived, and we will be glad to hear from him. Unlike me, he is
proficient in this area of the law.
Steve, I just admitted that I am not that proficient in
this area of the law, but you are. But it is good to recognize
the gentleman from Tennessee--Memphis, specifically.
Mr. Cohen. Thank you, sir. I appreciate that.
It shows that you and Rick Perry have something in common.
You all are honest. Because he was honest when Ron Paul gave
him the third branch of government; and instead of going for
it, yeah, that is the ticket, I am for getting rid of the EPA,
he said, no, and oops.
Mr. Coble. Would the gentleman yield?
Mr. Cohen. Yes, I yield.
Mr. Coble. I don't know Governor Perry, but I empathized
with him that night. Because it has happened to me, and it has
happened to a lot of people, and I think he probably handled it
about as well as he could have.
I yield back.
Mr. Cohen. Thank you, sir.
This is an important subject, and I appreciate the hearing.
I apologize for being late.
I was pleased to sponsor the SPEECH Act, which started out
as a different name, but we went through the Senate and worked
with Senator Leahy, and I really appreciated his help. We had
some problems getting it passed at first with a couple of
Congresses. We passed it here before the Senate did, in I think
it was the 110th or 109th, and then we got it passed the next
Congress, the 110th.
The libel tourism was important, and I think it is maybe
the forerunner of this particular hearing. We have got certain
standards that we should have for First Amendment issues before
we let folks get judgments and come here and try to collect on
them on things that are really antithetical to the American
perspective of First Amendment rights. And we check that. If
they don't have it, we don't enforce the judgment. So that is
important.
I appreciate the assistance I had from Chairman Smith and
Subcommittee Chairman Coble on that bill, Chairman Conyers, and
everybody else that worked on it, particularly Senator Leahy,
who was a gentleman, as he always is.
We heard testimony from Professor Silberman in favor of a
Federal statute to cover the recognition and enforcement of
foreign judgments generally, rather than ones simply limited to
defamation suits. That was when we had our hearing on the
SPEECH Act in the Congress. My priority at that time was free
speech, and we had some particular issues concerning a New York
author and a book in England and some Saudi or Middle Eastern
objections and problems.
What you said made sense to me, that we need to have
something uniform on the Federal level. So I appreciate your
bringing that issue to the fore.
There is a Federal interest, I think, in having foreign
judgments recognized by our government. I don't see where there
is a problem. The States might object, but it is not exactly
like making them have folks carry pistols that they didn't
authorize. It is not like that, which is something we will,
without my vote, pass tomorrow.
But that is different States' rights. This is a different
situation, where there truly is a Federal interest, and there
should be uniformity among the States and among the
jurisdictions.
I am not sure what the other nations have done with having
foreign judgment statutes similar to this. I presume they have
something, and I will ask that question when I get a chance.
But I think it would help us in having that clarity and
predictability for foreign judgments, when it is to be enforced
and when it is not. They should be uniform throughout the
country, and I think it would be a bipartisan effort. Since the
1920's, it has largely been a State law issue. And that is not
anything that was intended. It just happened because there were
State court decisions and there was no Federal common law.
Congress never had Ms. Silberman then. You were born too late
to have us have a law at the right time. But you came around,
and we are adjusting well to it. So we are catching up with
history.
If we go far with our Federal legislation, which I hope we
do, we would seek the State Department's input and might
consider an initial step of enacting legislation implementing
The Hague Choice of Court Convention that John Bellinger, a
former State Department legal adviser and witness we have here,
alluded to in his written statement.
With the enactment of the SPEECH Act and the United States
signing The Hague Choice of Court Convention, we have already
been down--begun the road of federalizing law governing
recognition and enforcement of foreign judgments. This broader
Federal foreign judgment statute seems like the next logical
step.
I am sorry I missed the discussion. I am happy that we have
had this hearing. I compliment the distinguished Chair of the
Subcommittee from the 51st State of East Carolina for
scheduling this and having this important hearing.
I could ask one question of Ms. Silberman. Are you related
to Judge Silberman?
Ms. Silberman. I am not.
Mr. Cohen. He is also a brilliant legal mind.
Ms. Silberman. Thank you. I would be delighted to be in his
company, which I have been on some occasions. But he once asked
me if my family was in steel. And I said, no, unless you
spelled it s-t-e-a-l.
Mr. Cohen. My great grandfather immigrated from Lithuania,
and my grandfather had newsstands. And my father at one time
had a meeting with somebody that was like one of these
publisher types, whatever. He said, my family was in papers;
and my father said, mine was, too.
The other man was publishing newspapers. My grandfather
sold them on the curb stand. But we were in papers as well.
Mr. Coble. Steve, the witnesses have already submitted
testimony. If you want to examine them, you may do so.
Mr. Cohen. Just one question I would ask. What is the law
in other nations concerning uniform statutes?
Ms. Silberman. Well, in unitary systems, of course, the
U.K. Has a statute or common law standards. Australia has a
statute. Germany has a statute. But those, of course, are
unitary systems.
Canada, of course, is different; and Canada does deal with
these issues province by province. But that is also an
interesting development, because Canada, in terms of its treaty
powers, deals with international treaties province by province,
unlike the United States, where these foreign relation issues
are those of the national government and of the Congress.
Mr. Cohen. Let me ask you--this may go back to Government
101, and I may pull a Rick Perry--but you said Germany has this
unitary--I thought they had Landers, and I thought the Landers
had some--like they were similar to States in their authority
to pass laws.
Ms. Silberman. Well, I mean, they have--I don't purport to
be an expert on German law, but I have done a kind of survey of
judgment recognition in other countries. And Germany does have
a statute that deals with recognition of foreign judgments as
to third States such as the United States. Of course, within
Europe, there is the European Regulation or the Brussels
Regulation, which deals both with jurisdiction and recognition
of judgments among European states.
At the moment, there is a review of the European Regulation
ongoing, which would look to, if you will, federalize the rules
at least with respect to jurisdiction as among third States. So
they would then--all the rules of jurisdiction in Europe would
be the European rules, and you would no longer look to
jurisdiction or rules in England or in France or in Germany.
There would now be European rules, and they would apply to
defendants from the United States. So the move toward treating
these issues as Federal subject I think is, I would say,
pervasive.
Mr. Cohen. Has the bar or any other body of legal authority
in the United States taken any position on this? The ABA?
Ms. Silberman. Well, the ALI has recommended a proposed
uniform statute on recognition. I mean, that was the proposal.
Because we looked at this--the ALI looked at this and decided
that the concept of a single uniform Federal law was very
important in this growing age of commerce and particularly
international commerce and transnational litigation.
It is also, I think, important, as I said in my written
remarks and my comments earlier, that when other countries are
thinking about recognizing judgments in the United States, that
is, taking U.S. judgments and enforcing them abroad, they often
have a reciprocity requirement. And it will be much easier,
much more transparent, much less costly if those countries can
look to the United States and say here is the position of the
United States in terms of what we do about foreign country
judgments.
Mr. Cohen. Thank you, Mr. Chairman. I yield back the
balance of my time and celebrate Memphis' first basketball
victory on their way to New Orleans.
Mr. Coble. Thank you. And I want to ask you a football
question after we adjourn.
I have already submitted my concluding remarks. Again,
thank you all for your attendance, as well as those in the
audience. Come back, stay tuned.
This hearing stands adjourned.
[Whereupon, at 3:13 p.m., the Subcommittee was adjourned.]
A P P E N D I X
----------
Material Submitted for the Hearing Record
Prepared Statement of the Honorable Steve Cohen, a Representative in
Congress from the State of Tennessee, and Ranking Member, Subcommittee
on Courts, Commercial and Administrative Law
Last Congress, I introduced and successfully pushed to enactment
the ``Securing the Protection of our Enduring and Established
Constitutional Heritage Act'' or ``SPEECH Act.'' That law addresses the
so-called ``libel tourism'' phenomenon, whereby defamation plaintiffs
seek to do an end-run around our free speech protections by seeking a
more favorable, less speech-protective foreign forum.
Among other things, the SPEECH Act prohibits a court in the United
States from recognizing or enforcing a foreign defamation judgment
unless such judgment provides as much protection for speech as our
First Amendment and comports with our due process standards. As far as
I know, it is the first time that Congress has enacted a national
standard regarding recognition and enforcement of a type of foreign
judgment.
I am proud of having shepherded the SPEECH Act to enactment. I am
grateful for the support and assistance that Subcommittee Chairman
Howard Coble, full Chairman Lamar Smith, then-full-Committee-Chairman
John Conyers, and our Senate colleagues provided in achieving that end.
At our hearing on libel tourism that preceded introduction of the
SPEECH Act last Congress, we heard testimony from Professor Linda
Silberman arguing in favor of a federal statute to govern the
recognition and enforcement of foreign judgments generally, rather than
one limited just to defamation judgments.
While my priority at the time was to protect our Nation's free
speech guarantees, Professor Silberman's idea made a lot of sense to
me. I am glad that she can be with us again to focus on the argument in
favor of a broader federal foreign judgments statute.
There is an overriding federal interest in matters affecting the
foreign relations of the United States.
This is particularly so with respect to ensuring a smoothly
functioning global commercial system, one which is vital to America's
economic well-being, and in ensuring comity with other countries.
A federal foreign judgments statute would serve this interest by
ensuring nationwide uniformity and consistency in this area of the law,
providing clarity and predictability for both U.S. and foreign parties
in determining when a foreign judgment will be enforced and when it
will not.
This discussion should not be framed in an ideological or partisan
way. American parties, be they plaintiffs or defendants, have the same
interest in clear, uniform, and predictable rules regarding the
recognition and enforcement of foreign judgments in U.S. courts.
That the recognition and enforcement of foreign judgments has,
since the 1920's, largely been a state law matter is a bit of an
historical accident, largely based on state court decisions, the
absence of federal common law, and Congressional acquiescence rather
than a specific constitutional prohibition or policy decision by
Congress.
These historical circumstances, by themselves, do not seem like
good reasons for Congress not to act.
Should we go forward with federal legislation, we should seek the
State Department's input and might also consider taking the initial
step of enacting legislation implementing the Hague Choice of Court
Convention that John Bellinger, former State Department legal adviser
and one of our witnesses, alluded to in his written statement.
With enactment of the SPEECH Act and the U.S.'s signing of the
Hague Choice of Court Convention, we have already begun down the road
of federalizing the law governing the recognition and enforcement of
foreign judgments. A broader federal foreign judgments statute seems to
be the next logical step.
I look forward to an interesting and fruitful discussion.
Prepared Statement of the Honorable John Conyers, Jr., a Representative
in Congress from the State of Michigan, and Ranking Member, Committee
on the Judiciary
Today we consider whether Congress should enact a federal statute
to govern the recognition and enforcement of foreign judgments.
I approach this topic with an open mind, and I hope that during the
course of our discussion, the witnesses can help address a few
questions.
First, what are the concerns with the status quo when it comes to
the recognition and enforcement of foreign judgments?
The recognition and enforcement of foreign judgments traditionally
has been a matter of state law.
Among possible concerns with continuing under such a state-based
system is that the existence of a patchwork of state laws governing
foreign judgment recognition and enforcement undermines necessary
uniformity in this area of the law.
Additionally, Congress ought to have the final say when it comes to
matters that affect the foreign relations of the United States. The
framework under which U.S. courts will recognize and enforce foreign
judgments may fall within that federal interest.
Still, any time Congress treads on an area of law traditionally
left to the states, we must be sensitive to federalism concerns. Even
where the Constitution allows us to intrude on areas traditionally left
to states, we must consider whether doing so would be good policy.
We should also examine the extent to which the recognition and
enforcement of foreign judgments in fact impacts the Nation's foreign
relations, and what effect a federal statute may have on our relations
with other countries.
I am particularly interested to know how the exceptions to
enforcement of foreign judgments that are part of current law--and that
would presumably be made part of any federal statute--impact the
willingness of other countries to recognize or enforce the judgments of
U.S. courts.
For example, if a U.S. court refused to recognize a foreign
judgment on public policy grounds, would that simply open the door to
other countries refusing to recognize or enforce U.S. judgments?
Perhaps a reciprocity requirement such as the one contained in the
American Law Institute's model federal foreign judgments statute could
help assuage that concern.
Finally, I would also like the witnesses to address whether,
assuming it chooses to go ahead with a federal foreign judgments
statute, Congress should adopt the ALI's model federal statute.
The ALI's proposal appears to be comprehensive and thoughtful.
If, however, there should be additions or changes made to the ALI
proposal, or even a different approach altogether, I would like to hear
the witnesses' thoughts on what those additions or changes should be,
as well as the reasons for them.