Copyright 2008 by The American Law Institute. Reproduced with permission. All rights reserved.
INTELLECTUAL PROPERTY:
PRINCIPLES GOVERNING JURISDICTION, CHOICE OF LAW,
AND JUDGMENTS IN
TRANSNATIONAL DISPUTES
(with Comments and Reporters’ Notes)
Part IV
RECOGNITION AND ENFORCEMENT
OF FOREIGN JUDGMENTS
IN TRANSNATIONAL CASES
Chapter 1
In General
§ 401. Foreign Judgments to Be Recognized or Enforced
(1) A court in which recognition or enforcement of a foreign judgment is sought shall
first ascertain whether the rendering court applied these Principles to the case.
(a) If the rendering court applied the Principles, then the enforcement court shall
recognize or enforce the judgment pursuant to these Principles.
(b) If the rendering court did not apply the Principles, then the enforcement court
shall determine whether to recognize or enforce the judgment pursuant to its domestic
rules on recognition and enforcement of foreign judgments.
(2) In order to be recognized or enforced, a foreign judgment must be final in the
rendering State and not stayed by a court in that State.
(3) The preclusive effect given a foreign judgment shall be no greater than the preclusive
effect of the judgment in the rendering State.
(4) For purposes of this Part IV of the Principles, a provisional or protective order
rendered in accord with § 214(1) shall be considered a judgment entitled to recognition
and enforcement.
Comment:
a. Enforcement and recognition distinguished. These Principles utilize the same
definitions of enforcement and recognition as are employed in the ALI Foreign Judgments
Project § 2; see § 2, Comment b.
b. Enforcement and recognition under the Principles. This provision creates two
conditions on enforcement and recognition. The first is that the dispute was declared by the
rendering court as within the scope of the Principles. In cases not covered by the Principles,
the enforcement court will rely on local law to determine enforcement. Second, the
adjudication must be “final” in the place where the judgment was rendered. If a party wishes
to stay recognition or enforcement of a judgment that is the subject of review in the rendering
State or whose time limit for seeking review in that State has not expired, it should so move in
the rendering State.
c. Reference to the law of the State of the rendering court. The enforceability of the
judgment depends on the law of the State of the rendering court, both as to finality
(§ 401(2)) and scope (§ 401(3)). If that law deems the decision final and enforceable, the
enforcement court should treat it as such (but see Comment d).
d. Greater or lesser effect. Applying the rendering court’s law on the upper limit of the
preclusive effect of the judgment is necessary to allow the parties to understand the stakes of
the litigation at the time when they are making litigation decisions. Moreover, if another
jurisdiction applies preclusion that would be denied by the rendering court, the parties could
inadvertently lose claims or arguments.
It could be argued that the enforcement court should not give an effect lesser than that
of the rendering court because that would also undermine the finality of the decision.
However, sometimes there are significant local public policies of the enforcement State at
stake that the rendering court did not take into account. Accordingly, lesser effect may
sometimes be given; see §§ 411-413. For further discussion, see ALI Foreign Judgments
Project § 4 and § 4, Reporters’ Note 2.
e. Preclusive effect of dismissals based on the statute of limitations. A dismissal on the
merits, otherwise entitled to recognition, precludes another action on the same set of claims.
When a dismissal is based on the statute of limitations, it may be unclear whether it should be
accorded preclusive effect. The emerging view is that time bars are substantive—that the
applicable law prescribes a time limit and if it is determined that the time has passed, the
claim is extinguished. However, a statute-of-limitations dismissal can merely represent a
decision by the rendering court that under its procedures, stale claims cannot be adjudicated
fairly. In that case, the dismissal should not be recognized as claim-preclusive.
The characterization of statutes of limitations as substantive or procedural poses a
general question of private international law beyond the specific ambit of the Principles; see
Part I, Introductory Note. Accordingly, it is left to the law in the relevant State. If the law that
governs the dispute supplies a substantive limitations provision, that limitations period should
be applied to the claim by the rendering court. This is particularly true in cases where the
parties chose the law (§ 302), because they may well have anticipated that the chosen law will
prescribe the limitations period. If the rendering court dismisses the case on the ground that
the claim has expired, a subsequent action on the same claims should be regarded as
precluded. If, by contrast, the rendering court applied the forum’s procedural rules, rather than
the applicable substantive law, to dismiss the action, then the second court should proceed
with the case, unless its own procedural rule would prohibit it from entertaining it.
Illustration:
1. NicoleMarie is a trademark registered for handbags and accessories in Patria and in
Xandia. Patria has a six-year statute of limitations for trademark claims; Xandia’s limitations
period is three years. The trademark owner initiated an action against David Co., another
handbag manufacturer, in Xandia, claiming that David Co. infringed the NicoleMarie mark in
both States. The action was brought four years after the alleged infringement occurred and the
Xandian court dismissed the action as time-barred. The trademark owner then instituted a
second action in Patria, once again asserting four-year-old infringement claims in both Xandia
and Patria. David Co. moves to dismiss the action on claim-preclusion grounds.
In order to decide the effect of the Xandian judgment, the Patrian court must determine
the grounds for the Xandian dismissal. If the court determines that the claims were dismissed
because Xandia has a public policy against adjudication of four-year-old claims, it should not
assume that all of the claims are barred in Patria. Since Patria has a six-year statute of
limitations for Patrian trademark infringement, the court can entertain the Patrian claim. As to
the Xandian claim, the Patrian court must decide whether the Xandian dismissal can also be
ascribed to a substantive view of the appropriate length of trademark claims. If the Patrian
court decides the Xandian statute of limitations is substantive, then it should recognize the
dismissal of that claim as giving rise to a defense of claim preclusion.
f. Delaying enforcement or recognition pending appeal. In some judicial systems, a
judgment is entitled to enforcement as soon as it is entered, irrespective of whether an appeal
is pending. This rule could create substantial mischief if the appeal reverses aspects of the
first judgment, especially in complex cases such as those contemplated by the Principles.
However, a party may move for a stay of execution of the judgment. In such cases, the
enforcement court should delay both recognition and enforcement until the time for reviewing
the decision is over, see § 401(2).
g. Enforcement of other judgments. Nothing in this Part addresses a court’s authority to
enforce a judgment rendered by another court, if the rendering court did not rely on the
Principles in the adjudication of the dispute.
REPORTERS’ NOTES
1. Timing. Like the ALI Foreign Judgments Project § 1(b), these Principles look to the
law of the State of the rendering court to determine when a judgment is final. Enforcing
judgments pending appeal raises a variety of problems. In some cases, litigants are treated
differently, depending on whether they joined the appeal, see, e.g., Federated Dep’t Stores,
Inc. v. Moitie, 452 U.S. 394 (1981) (parties who appealed receive different treatment from
parties who brought a second action); rights may be uncertain, see, e.g., Reed v. Allen, 286
U.S. 191 (1932) (property rights left indeterminate); the appeal may be mooted by
enforcement if the situation cannot be restored, see, e.g., Duncan v. Farm Credit Bank of St.
Louis, 940 F.2d 1099 (7th Cir. 1991) (appeal by mortgagor dismissed as moot because of sale
of property by mortgagee pending appean( � Fink v. Cont’l Foundry & Mach. Co., 240 F.2d
369 (7th Cir. 1957) (appeal dismissed as moot because court could not undo sale of property
after execution). These problems are compounded in the context of the Principles, where
disputes arising under multiple laws and involving multiple parties are being adjudicated.
Accordingly, some jurisdictions permit delay of enforcement or recognition of judgments
until after the appeal is decided. See Brussels Regulation art. 37(1); cf. Restatement Second,
Judgments § 28(1). In States where this is not the case, the parties should move to stay the
judgment pending appeal.
2. Res judicata. The Principles avoid the term “res judicata” because it has different
meanings in different places. Instead, they utilize the terms “enforcement,” “recognition,” and
“preclusive effect.” These terms should be understood to cover the gamut of consequences
that a judgment may have.
3. Characterization of limitations period. The Principles leave the characterization of the
limitations period to the laws of the relevant States. For a full discussion of time bars, see
Restatement Second, Conflict of Laws (1988 Revisions) § 142 and Comments a-g. The
Principles’ approach to recognition is consistent with that of the ALI Foreign Judgments
Project § 3(d)(ii), which exempts courts from an obligation to recognize foreign courts’
dismissals of claims as time-barred “unless the party seeking to rely on the judgment of
dismissal establishes that the claim is extinguished under the law applied to the claim by the
rendering court.” However, Comment e of the Principles expresses a view similar to that of
the National Conference of Commissioners on Uniform State Laws (now known as the
Uniform Law Commission), Uniform Conflict of Laws-Limitations Act (1982), available at
http://www.law.upenn.edu/bll/archives/ulc/fnact99/1980s/uclla82.htm (last visited January 3,
2008), see § 2(a)(1) and Prefatory Note (“[L]imitations laws should be deemed substantive in
character, like other laws that affect the existence of the cause of action asserted”).
§ 402. Default Judgments
In addition to the provisions of § 403, the enforcement court shall not enforce a foreign
judgment that has been rendered in default of appearance unless the enforcement court
determines that the rendering court’s assertion of personal jurisdiction was consistent
with the law of the rendering State.
Comment:
a. Judgments rendered in default of appearance. This Section implements the same
policies as those reflected in § 3(b) of the ALI Foreign Judgments Project; see § 3, Comment
c. Enforcement can also be resisted on any of the grounds specified in § 403.
REPORTERS’ NOTE
Default generally. The notion that enforcement and recognition are predicated on a
review of the jurisdictional basis for decision is not controversial, see, e.g., Pennoyer v. Neff,
95 U.S. 714 (1877); Brussels Regulation art. 35(1).
§ 403. Judgments Not to Be Recognized or Enforced
(1) The enforcement court shall not recognize or enforce a judgment if it determines
that:
(a) the judgment was rendered under a system that does not provide impartial
tribunals or procedures compatible with fundamental principles of fairness;
(b) the judgment was rendered in circumstances that raise substantial and
justifiable doubt about the integrity of the rendering court with respect to the judgment
in question;
(c) the judgment was rendered without notice reasonably calculated to inform the
defendant of the pendency of the proceeding in a timely manner;
(d) the judgment was obtained by fraud that had the effect of depriving the
defendant of adequate opportunity to present its case to the rendering court;
(e) recognition or enforcement would be repugnant to the public policy in the State
in which enforcement is sought;
(f) the rendering court exercised jurisdiction on the basis of a court-selection
clause inconsistent with the safeguards set out in
§ 202(4);
(g) the rendering court exercised jurisdiction solely on a basis insufficient under §
207; or
(h) the rendering court exercised jurisdiction in violation of the forum’s own rules
of judicial competence.
(2) The enforcement court need not recognize or enforce a judgment if it determines
that:
(a) the rendering court exercised jurisdiction on a basis inconsistent with the
norms of §§ 201, 202(1)-(3), 203-206;
(b) the rendering court chose a law inconsistent with the norms of §§ 301-324;
(c) proceedings between the same parties and having the same subject matter are
pending before the court designated by § 221 or before a court cooperating in the
adjudication or chosen for consolidation under § 222; or
(d) the judgment is inconsistent with the judgment of the court designated by §
221, or the actions were coordinated in accordance with § 222 and the judgment is
inconsistent with the judgment of the court of consolidation or of the courts that
cooperated in resolving the dispute.
(3) Except with respect to judgments rendered in default of appearance, the
enforcement court, in making any determination listed in subsections (1)(e)-(g) or (2),
shall defer to the facts found by the rendering court. In other cases, the court shall make
its own determinations of fact and law.
Comment:
a. Nonrecognition generally. Sections 402 and 403 are the main vehicles for promoting
use of these Principles in a manner that protects the parties’ interests in due process while
providing a means for efficiently adjudicating worldwide disputes. Under
§ 403(1), the court is to deny enforcement in certain circumstances; § 403(2) permits
nonenforcement in certain other instances. The mandatory provisions, § 403(1), are derived
from the mandatory provisions of the ALI Foreign Judgments Project § 5(a) and (b) and §
6(a). The discretionary provisions, § 403(2)(c) and (d), echo the discretionary provisions of
the ALI Foreign Judgments Project § 5(c)(ii) and (iii). Subsections (2)(a) and (2)(b) of § 403
are unique to these Principles; they create a mechanism for enforcing Parts II and III of the
Principles. Subsections (1) and (2) should be read in conjunction with § 403(3), which
requires the enforcement court to defer to the rendering court on factual issues. The Principles
do not otherwise derogate from traditional private- international-law precepts, such as those
barring the relitigation of the rendering court’s findings of fact and conclusions of law
respecting the merits of the case.
b. Fundamental fairness, § 403(1)(a)-(d). These subsections seek to ensure the panoply
of generally recognized procedural guarantees, such as an impartial tribunal, both generally
and with respect to the rights at issue; proper and timely notice; an opportunity to be heard;
and assurances that the judgment was not obtained by fraud. For further discussion, see ALI
Foreign Judgments Project § 5, Comments c-e and g. See also ALI/UNIDROIT Principles of
Transnational Civil Procedure, Principle 1. If recognition is challenged on one of these
grounds, the usual bar to relitigating the rendering court’s fact findings does not apply, see
subsection (3).
A question may arise as to whether a State that has jury trials should consider their
unavailability in the rendering court to be “incompatible with fundamental principles of
fairness.” As most States do not afford civil jury trials, it is unlikely that, as a matter of
international norms, the unavailability of a jury trial would violate fundamental principles.
Moreover, even in States where jury trials are common, they may be regarded as necessary
only for adjudication in courts where they are expressly required.
The availability of discovery could also raise difficult questions. If the State addressed
has discovery rules that are more liberal than the State where the trial was conducted,
important procedural opportunities would appear to have been lacking. However, before
enforcement is denied on this ground, the enforcement court must consider whether there
were issues in the case that required more discovery than was available, whether other courts
could have provided that discovery in aid of the court entertaining the case, and whether the
lack of discovery amounted to a violation of fundamental principles of procedure.
Illustration:
1. Patentee sues A, a French resident, in France, claiming infringement of parallel
French and U.S. patents. A defends on the ground that the U.S. patent is invalid because
Patentee had put the invention on sale in the United States for more than a year before the
patent application was filed, in violation of 35 U.S.C
§ 102(a). To demonstrate the offer for sale, A requires discovery of information in Patentee’s
customer files. Assume that such discovery is not available under French law, and A loses the
case. Patentee tries to enforce the judgment in the United States and A resists on the ground
that the French proceeding was incompatible with fundamental principles of U.S. law.
A’s claim should be rejected. The lack of discovery on the on-sale issue does not amount to a
fundamental denial of process. Moreover, discovery may have been available in the United
States under 28 U.S.C. § 1782, which permits U.S. discovery in aid of foreign proceedings.
Note that under §§ 211(2), 212(4), 213(3), and 413(2), the judgment of invalidity is effective
only between the Patentee and A; it does not affect the registration of the patent in the U.S.
Patent and Trademark Office. Thus, the judgment does not implicate broader public-policy
interests of the United States.
c. The public policy in the State addressed, § 403(1)(e). The authority to deny
enforcement on public-policy grounds is common to all regimes concerned with the
enforcement of foreign judgments; see ALI Foreign Judgments Project § 5, Comment h. A
provision such as this one is especially necessary in Principles involving intellectual property
because there are often strong public interests in access to the material protected. Indeed,
excessive private control over information can violate free-speech norms and undermine the
political process. Nonetheless, enforcement of judgments in favor of intellectual property
holders should be denied sparingly. Intellectual property rights represent legislative
judgments on the appropriate balance between creating incentives to produce and disseminate
information products and promoting access to them. Individual States achieve that balance
differently. Thus, at a minimum, the enforcement court should consider only the outcome of
litigation, not the substance or procedure by which the outcome was achieved. Second, the
court should consider how the outcome affects interests in the forum State and whether any
clash with local interests can be softened through the remedial procedures of §§ 411-413.
These provisions are explicitly designed to allow the enforcement court to tailor the remedy to
local concerns. Most important because of its free-speech implications, an order awarding
injunctive relief need be locally recognized only to the extent that similar relief could have
been granted by courts in the enforcing State in the same circumstances (§ 412(2)). Similarly,
a judgment regarding the validity of a locally registered right is valid only inter se; see
Illustration 1 above.
Strong arguments have been made that American public policy can be implicated even
in cases that lack a territorial connection or nexus with the United States; see ALI Foreign
Judgments Project § 5, Reporters’ Note 7(d). While these concerns may certainly be important
in the context of hate-speech legislation and defamation actions (where these arguments are
commonly made), international obligations to respect the territoriality of intellectual property
law represent a shared understanding that each nation’s interest in intellectual property
enforcement is usually coextensive with its borders. As a result, § 403(1)(e) should be
reserved for cases where the remedy will deleteriously impact local interests. The provision
should not provide an opportunity for relitigation of the case.
Illustrations:
2. An advertisement for a UK company is broadcast in the United States using a picture
of the United Kingdom’s Prince Charming without his permission. Prince Charming sues for
violation of his U.S. right of publicity. A U.S. court, following
§ 301(1)(b), applies U.S. law and awards damages. Prince Charming seeks enforcement of the
award in the UK; the defendant company opposes on the ground that the UK does not
recognize rights of publicity.
Under the Principles, the judgment should be enforced. The absence of protection of a
given right in the enforcement jurisdiction does not, of itself, demonstrate a strong local
public policy against recognition of the right at issue.
3. Paco of Patria, a fashion designer, displays his latest collection in a fashion show in
Patria. Phil Phlash, a Xandian resident, attends the show and takes unauthorized photos,
which are published in a fashion magazine sold in Patria and Xandia. Fashion designs are
protected under the copyright law of Patria, but not of Xandia. Paco sues Phlash in Patria,
claiming damages on account of both distributions. The court awards monetary damages for
the local publication, but declines to award damages for the copies distributed in Xandia. Paco
then seeks enforcement of the Patrian judgment in Xandia. Phlash resists enforcement on the
ground that the Patrian judgment violates the strong Xandian public policy that fashion wants
to be free.
Under the Principles, the judgment should be enforced. Xandia may not invoke ordre
public to deny enforcement, because Xandia’s public policy is not affected by applying
Patrian law to events occurring in Patria. By contrast, had the Patrian court erroneously
enjoined distribution of the magazine in Xandia, then a Xandian court might properly decline
to enforce that part of the judgment. The basis for declining to enforce is not that the Patrian
court misapplied Xandian law (that would be relitigating the merits), but that the remedy is
repugnant to Xandian public policy.
d. Choice-of-court agreements, § 403(1)(f) and (2)(a). Section 403(1)(f) deals with
judgments of courts that were chosen in a standard form choice-of-court agreement. It
instructs the enforcement court to deny effect to the judgment if the agreement did not include
the procedural guarantees set out in § 202. Section 403(1)(f) applies even if the validity of the
standard form agreement was considered in an earlier phase in the litigation, because a party
who is summoned by surprise to a remote forum may be ill-equipped to mount an effective
challenge to the alleged agreement. More important, denying the enforcement court discretion
to enforce the agreement encourages parties to draft transparent agreements and to choose
courts that are fair to all sides.
It is anticipated that the discretionary provisions of § 403(2)(a) will usually come into
play when the rendering court is other than the one chosen by the parties. In the case of
negotiated agreements, § 403(2)(a) seeks to effectuate two goals: on the one hand, to give
effect to party autonomy; on the other, to discourage delay and avoid excess expense. To
accommodate both goals, the Principles give the enforcement court discretion to decide
whether to enforce the judgment. When deciding, the court should consider whether the party
seeking to avoid enforcement was prejudiced by adjudication in a court other than the one
selected in the agreement; the costs of relitigation; whether the objection to the rendering
court was raised in an earlier stage in the litigation and why the objection was denied; and
whether the objection was deliberately waived at an earlier stage. In cases where the parties
had entered into multiple and divergent choice-of-court agreements and the rendering court
was one of the fora chosen, the enforcement court should consider whether the rendering
court was reasonable in light of the factors set out in § 202, Comment e.
Section 403(2)(a) is also applicable in two other circumstances: first, to a judgment of a
court chosen in a negotiated choice-of-court agreement that the resisting party claims to be
invalid under the criteria set out in § 202(3); second, to the judgment of a court other than the
one selected in a standard form agreement. In both cases, an argument can be made that the
mandatory provision of § 403(1)(f) should apply. Nonetheless, the Principles take the position
that these situations do not present a compelling case for a mandatory approach. When
exercising its discretion, the enforcement court should, however, consider whether the party
resisting enforcement had an effective opportunity to present its objections to the rendering
court.
Illustrations:
4. A, a Patrian, sells to B, a Xandian, a software program accompanied by a shrinkwrap
license that specifies that all disputes will be litigated in Patria. B resells the software in
Xandia, in contravention of a term in the agreement. A sues B in Patria and the court declares
the case within the Principles. B objects on the ground that Patria has no connection to the
events and litigation there is burdensome. The Patrian court nonetheless holds the court-
selection clause valid, and finds B to have breached the contract. A is awarded damages and
seeks enforcement in Xandia; B resists on the ground that the judgment is predicated on a
jurisdictional basis inconsistent with § 202.
Because the court in Patria was chosen in a standard form agreement,
§ 403(1)(f) is applicable and the Xandian court must consider the legal validity of the
agreement de novo (bound, however, to the facts found in Patria; see § 403(3)). If the Xandian
court decides the agreement was not valid and that the Patrian court would not have had
jurisdiction over B in the absence of the court-selection clause, it should decline to enforce the
judgment. Allowing the Xandian court to deny enforcement gives teeth to the Principles and
encourages parties like A to choose fair fora.
5. Same facts as in Illustration 4, except that the choice-of-court agreement between A
and B was negotiated. B contends that the forum-selection clause is invalid under § 202(3)
because the agreement was improperly executed under the law of the State chosen in the
contract. The rendering court rejected this objection.
Section 403(2)(a) is now applicable. The Xandian court may reexamine the Patrian
court’s legal conclusion. If the Xandian court, on the facts as found by the Patrian court, finds
the agreement was properly executed, the Xandian court should enforce the judgment (§ 401).
If the Xandian court, on the facts as found by the Patrian court, finds the agreement was
not properly executed, the Xandian court may nonetheless exercise its discretion to enforce
the judgment.
e. Jurisdiction, § 403(1)(g), (h), and (2)(a). Section 403(1)(g) requires courts to refuse to
enforce judgments when jurisdiction was obtained in a manner contrary to generally shared
norms of fundamental fairness. Similarly, § 403(1)(h) mandates refusal to enforce a judgment
entered in violation of the rendering forum’s own rules of judicial competence. Barring courts
from enforcing judgments predicated on an unfair or unauthorized exercise of judicial power
over the defendant encourages plaintiffs to choose appropriate fora and discourages courts
from adjudicating cases without jurisdiction. See also ALI Foreign Judgments Project §§
5(a)(iii) and 6(a)(i)-(iv) and § 6, Comments a and b.
Section 403(2)(a) is a discretionary provision. Together with § 401, it creates an avenue
for encouraging adoption of the Principles and applications of the jurisdictional rules set out
in §§ 201-206 by ensuring that a judgment rendered by a court that did apply §§ 201-206 will
be recognized and enforced. Section 403(2)(a) adds a stick to this carrot by allowing a court to
refuse to enforce judgments when jurisdiction was not obtained consistently with §§ 201-206.
f. Choice of law, § 403(2)(b). The Principles recognize that much of the controversy
concerning adjudication of multiterritorial intellectual property claims derives from
apprehensions that the court will apply laws inappropriate to the multinational character of the
case, in particular, that the court will apply its own State’s law to the full range of alleged
infringements occurring outside the forum. As a result, the Principles take care to distinguish
issues going to choice of court from those pertaining to choice of law, and to propose distinct
approaches to each. See, e.g., § 103(1) (“[c]ompetence to adjudicate does not imply
application of” forum law). For this reason, Part III offers provisions on applicable law. The
general rule of territoriality strongly informs these provisions. Section 403(2)(b) is intended to
ensure that these provisions are respected. Like § 403(2)(a) with respect to judicial
competence, § 403(2)(b) offers a carrot-and-stick approach to legislative competence.
Judgments applying laws designated in a manner consistent with the rules set out in §§ 301-
324 will be enforced. Recognition of judgments that do not is left to the enforcement court’s
discretion. Section 403(2)(b) is limited: the enforcement court must, per § 403(3), defer to the
rendering court’s factual findings on the choice-of-law issue. Furthermore, in deciding
whether to decline to enforce the judgment, the enforcement court should consider whether
the objection to applicable law was considered in an earlier phase of the litigation.
Accordingly, a rendering court can protect its judgment by providing reasoned decisions for
the choices it makes, and the parties are free to urge the court to articulate its views on
applicable law for the benefit of the enforcement court. So long as a reasonable jurist could
take the court’s position, the judgment should be considered enforceable. This approach thus
seeks to provide an additional safeguard against inappropriate extrusions of one State’s norms
upon another.
Arguably, the special scrutiny that § 403(1)(f) gives to court-selection clauses found in
standard form agreements should be applied to standard form choice-of-law clauses.
However, the Principles take the position that so long as the party resisting enforcement
litigated in a fair forum, it had a fair opportunity to present its objections to the law that was
applied.
g. Inconsistency with the coordination Principles, § 403(2)(c) and (d). In order to
promote efficient adjudication, it is important not only to facilitate parties’ applications to
coordinate, but also to discourage continued proceedings in other fora once an action has been
coordinated. An effective way to discourage those proceedings is to deny enforcement to any
resulting judgment. Subsection (2)(c) deals with the situation where the case is pending in
courts coordinating or cooperating in the adjudication or in the consolidation court.
Subsection (d) deals with judgments inconsistent with the decisions of these courts. These
provisions echo the ALI Foreign Judgments Project’s approach to lis pendens, §§ 11, 5(c)(ii)
and (iii).
Section 223(4) permits a court, where an action was filed and was suspended on account
of coordination elsewhere, to revive the action if coordination does not proceed in a timely
fashion. It is implicit in § 403(2)(c) and (d) that the judgments in such revived cases are
enforceable according to the law of the enforcement court.
h. Defaults, § 403(3). The general rule in subsection (3) accords with ordinary
principles of private international law, which prohibit courts from reexamining the merits of
the dispute under the guise of examining procedural regularities, see ALI Foreign Judgments
Project § 2, Comment d. An exception is made for cases where the defendant did not appear.
When judgment is rendered in default of appearance, there is rarely a finding of fact.
However, in the rare case where facts are found, deference is inappropriate as there has been
no opportunity for the defendant to contest the findings. The same is not true when the
defendant defaults after contesting personal jurisdiction, for in such cases, the defendant
chose to bypass the opportunity to present its side of the case.
REPORTERS’ NOTES
1. Inconsistency with fundamental procedures in the State addressed. In the context of
these Principles, jury trials and discovery pose the most troublesome issues.
a. Jury trials. The availability of jury trials in the United States should not be regarded
as a procedure so fundamental as to bar U.S. enforcement of non-U.S. judgments. Although
the Seventh Amendment’s jury-trial requirement is binding in the courts of the United States
(federal courts), it has never been viewed as binding in state courts. See, e.g., Geoffrey C.
Hazard, Jr., et al., Pleading and Procedure, State and Federal 1120-1122 (8th ed. 1999).
Moreover, issues decided in the absence of a jury may be binding for issue-preclusion
purposes, even in the proceedings of courts where a jury trial would have been required on the
precluded issue. See, e.g., Parklane Hosiery Co. v. Shore, 439 U.S. 322 (1979). Indeed,
foreign judgments have routinely been enforced in U.S. courts. See also Society of Lloyd’s v.
Ashenden, 233 F.3d 473 (7th Cir. 2000) (not requiring that identical procedures be used by a
foreign court for its judgment to be enforceable).
The converse situation—enforcement of a judgment based on a jury verdict in a
jurisdiction that does not use civil juries—should be equally unproblematic. Many
jurisdictions that lack civil juries nonetheless use them in special cases and in criminal cases.
Thus, the use of a jury should not be considered a breach of fundamental process.
b. Discovery. The quality of discovery opportunities may pose a more difficult problem
than jury trials, particularly in patent cases where there may be substantive provisions of law
that rely on a form of discovery available in the jurisdiction whose law is in issue, but not in
the jurisdiction where the case is tried. In fact, however, discovery in foreign courts may be
more widely available than American jurists assume, see, e.g., Nichia Corp. v. Argos Ltd.,
[2007] EWCA Civ 741 (Ct. of Appeal 2007). An example from patent law is a defense of
invalidity, where the ground is that the patentee was not the first to invent, 35 U.S.C. §
102(a), and where laboratory notebooks may be a necessary part of the proof. In some cases,
there may be opportunities for assistance from other tribunals, such as under the Hague
Evidence Convention, or pursuant to U.S. federal law. See 28 U.S.C. § 1782; Intel Corp. v.
Advanced Micro Devices, Inc., 542 U.S. 241 (2004) (reading 28 U.S.C. § 1782 to give courts
broad discretion to offer assistance). See generally Hans Smit, American Assistance to
Litigation in Foreign and International Tribunals: Section 1782 of Title 28 of the U.S.C.
Revisited, 25 Syracuse J. Int’l L. & Com. 1 (1998). See also Council Regulation 1206/2001;
see also Pro Swing, Inc. v. Elta Golf, Inc., [2006] SCC 52, 45 (Can.) (suggesting the use of
letters rogatory). Where these procedures are not available, and the failure of proof is
attributable directly to their absence, the enforcement court should consider whether the
absence gives rise to a lack of fundamental procedural fairness.
The converse situation—enforcement of a judgment rendered after use of discovery
devices unavailable in the jurisdiction where enforcement is sought—should not pose a
problem. Although the discovery devices available in the United States can be regarded as
intrusive, privacy protections are available, see, e.g., Fed. R. Civ. P. 26. See also Fed. R. Civ.
P. 16. Accordingly, while approaches and standards differ, any court interested in
participating in a project such as this one is unlikely to view the differences as fundamental.
2. The public policy in the State in which enforcement is sought. Section 403(1)(e)
deals with incompatibility with the public policy in the State of the enforcement court. The
phrase “in this State” includes territorial subdivisions, such as the 50 states of the United
States. The intent is to describe a narrow category of cases. This is not to deny that intellectual
property raises difficult policy issues: exclusive control over information through copyright
protection can violate free-speech norms and undermine the political process. See, e.g., Neil
Weinstock Netanel, Copyright and a Democratic Civil Society, 106 Yale L.J. 283, 364 (1996)
(arguing that copyright protects democracy, but that “a copyright of bloated scope . . . would
stifle expressive diversity and undermine copyright’s potential for furthering citizen
participation in democratic self-rule”). For example, the rendering court might prohibit the
reproduction of a trademark in the context of a political commentary depicting the trademark
on a T-shirt. Or it might enjoin the public performance of a song parody. Patent rights have
direct impact on health and safety. See, e.g., Arti K. Rai, The Information Revolution Reaches
Pharmaceuticals: Balancing Innovation Incentives, Cost, and Access in the Post-Genomics
Era, 2001 U. Ill. L. Rev. 173. Both patents and copyright can interfere with scholarly pursuits,
as in CA 2760/93, 2811/93, Eisenman v. Qimron, 54(3) P.D. 817 (Isr.). See, e.g., David
Nimmer, Copyright in the Dead Sea Scrolls: Authorship and Originality, 38 Hous. L. Rev. 1
(2001); Neil Wilkof, Copyright, Moral Rights and the Choice of Law: Where Did the Dead
Sea Scrolls Court Go Wrong?, 38 Hous. L. Rev. 463 (2001) (focusing on choice-of-law
aspects to the Israeli decision). However, these Principles deal with many of these problems
through the remedial provisions of §§ 411-413. Only if these provisions are inadequate should
resort be made to public policy. For a domestic decision adopting a public-policy approach to
awarding relief, see eBay Inc. v. MercExchange, L.L.C., 126 S. Ct. 1837 (2006). See also
Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 578 n.10 (1994) (positing denial of
injunctive relief in favor of damages in certain copyright cases); Abend v. MCA, Inc., 863
F.2d 1465, 1479 (9th Cir. 1988) (finding “special circumstances” that would cause “great
injustice” to defendants and “public injury” were an injunction to issue), aff’d sub nom.
Stewart v. Abend, 495 U.S. 207 (1990). This approach is particularly appropriate in an
international setting, where cultural differences and levels of technological development are
so widely disparate. Together, the remedy provisions make sure that the level at which
infringement is deterred—or, the level of noncompliance with intellectual property law—in
the State of the court where enforcement is sought is not substantially altered by reason of its
adopting these Principles.
Given these other avenues for addressing policy concerns, subsection (1)(e) should be
reserved for cases where enforcing the judgment would cause extreme incompatibility
problems. Subsection (1)(e) echoes provisions of other instruments, see National Conference
of Commissioners on Uniform State Laws (now known as the Uniform Law Commission),
Uniform Foreign-Country Money Judgments Recognition Act § 4(c)(3) (2005) (“repugnant to
the public policy of this state or of the United States”), available at
http://www.law.upenn.edu/bll/archives/ulc/ufmjra/2005final.htm (last visited Jan. 3, 2008);
Brussels Regulation art. 34(1); the Convention on the Recognition and Enforcement of
Foreign Arbitral Awards (New York Convention), June 10, 1958, 330 U.N.T.S. 38, available
at http://www.uncitral.org/uncitral/en/uncitral_texts
/arbitration/NYConvention.html (last visited Jan. 3, 2008). Furthermore, the commitment to
territoriality means that there should be a close connection between the State and the activity
at issue in the dispute. Thus, it is important to distinguish between cases involving intellectual
property disputes and libel disputes. U.S. courts have declined to enforce British libel
judgments rendered concerning acts of defamation occurring outside the United States, on the
ground that a U.S. court’s participation in enforcing the judgment would be inconsistent with
First Amendment values. See, e.g., Bachchan v. India Abroad Pubs. Inc., 585 N.Y.S.2d 661
(Sup. Ct. N.Y. County 1992); Matusevitch v. Telnikoff, 877 F. Supp. 1 (D.D.C. 1995), aff’d
on state-law grounds (table), 159 F.3d 636 (D.C. Cir. 1998). See also Telnikoff v.
Matusevitch, 702 A.2d 230 (Md. 1997) (enforcing British libel judgment would violate
Maryland public policy). Whatever the position one takes on whether the contacts between
these disputes and U.S. courts warrant refusal to enforce the foreign libel judgments, it should
be noted that defamation standards—unlike norms of intellectual property—remain largely
unharmonized and thus present a greater likelihood of policy incompatibility.
Permitting nonenforcement (or refusing to enforce elements of a judgment, such as an
order for injunctive relief) on public-policy grounds could be considered of a piece with the
TRIPS Agreement, which also contemplates the possibility that a general obligation imposed
on all member States could have a disparate impact for certain members. Indeed, the
provisions of TRIPS that deal with these situations could be used to elucidate the
determination of when a judgment is manifestly incompatible with public policy. For
example, art. 27(2) of the TRIPS Agreement permits a State to exclude otherwise patentable
subject matter from the scope of protection when:necessary to protect ordre public or
morality, including to protect human, animal or plant life or health or to avoid serious
prejudice to the environment . . . .
Similarly, art. 31(b) of the TRIPS Agreement contemplates that efforts to obtain
authorization for certain usages can be waived in the case of “national emergenc[ies]” or
“extreme urgency.” Finally, all of the major provisions of the Agreement permit limitations
that do not unreasonably prejudice the legitimate interests of the rights holder. See TRIPS
Agreement, arts. 13, 17, 26(2), and 30; World Trade Organization, Ministerial Declaration of
14 November 2001 on the TRIPS Agreement and Public Health, 5(b) WT/MIN(01)/DEC/2,
available at http://www
.wto.org/english/thewto_e/minist_e/min01_e/mindecl_trips_e.htm (last visited Jan. 3, 2008)
(the “Doha Declaration”).
In some cases, the clash between an intellectual property decision rendered by one court
and the public policy of another State may occur because the rendering court failed to
carefully consider what law ought to apply to the controversy. To the extent this is true, the
matter is more appropriately resolved by reference to the Principles on applicable law, §§
301-324. These Sections and commentary better frame the decision by setting parameters for
determining whether an inappropriate law was utilized.
3. Choice of law. In France, for example, the traditional rule was that the conflicts rules
chosen by a foreign court were reviewed by the court considering enforcement, see Court de
cassation, première chamber civile [Cass. 1e civ.], Jan. 7, 1964, JCP (1964) II 13590 (Munzer
v. Munzer) (Fr.). See generally Bernard Audit, Droit international privé 454-468 (3d ed.
2000) (French judge must verify several conditions, including whether law chosen by the
foreign court is consistent with French conflicts rules).
However, this is not the universal approach. For example, the European Convention on
Recognition and Enforcement of Decisions Concerning Custody of Children and on
Restoration of Custody of Children, May 20, 1980, ETS 105, available at
http://conventions.coe.int/Treaty/en/Treaties/Word/105.doc (last visited Jan. 3, 2008), does
not permit nonenforcement on choice-of-law grounds, arts. 9-10. The Principles also depart
from the ALI Foreign Judgments Project §§ 5 and 6, except to the extent that the court issuing
the judgment did not have jurisdiction to prescribe, § 5(c)(i). See Séverine Gressot-Leger,
Faut-il supprimer le contrôle de la loi appliquée par le juge étranger lors de l’instance en
exequatur?, 130 Journal du droit international 767 (2003). However, in both the United States
and European Union, the interest in the free movement of judgments is especially high, and
direct review in the courts of last resort provides a check on exorbitant choices. Most
important, the jurisdictions subject to the rule barring collateral attack generally share a
common approach to law and to choice of law, which makes it unlikely that an incorrect
decision by the rendering court will lead to outcomes that are radically wrong. Such is not the
case for Principles addressed to the entire world; if it were the case, then §§ 301-324 would
not be needed. Given that they are required, it is necessary to give them teeth.
Three approaches are possible. First, conflicts rules could be closely reviewed for
accuracy. The approach was rejected because it would lead to relitigation of many cases.
Second, the enforcement court could examine the rendering court’s judgment to see if the
appropriate procedure was utilized. This approach was regarded as overly deferential. Third is
the approach chosen: the enforcement court could assure itself that the choices made were not
inconsistent with the norms set out in the Principles. This approach is intended to give courts
incentives to think carefully about choice of law, to consult with each of the courts from
which a consolidated case was drawn, and to articulate the reasons underlying their choices. It
is also intended to give parties a disincentive to contend for an unreasonable choice, even if
they might achieve that objective in the rendering court.
A sense of the standard of review can be garnered from comparing Phillips Petroleum
Co. v. Shutts, 472 U.S. 797 (1985), with Sun Oil Co. v. Wortman, 486 U.S. 717 (1988). Both
cases involved a nationwide class action in which members of the class claimed interest
payments on royalties owed on account of the exploitation of gas rights. The cases were
litigated in Kansas, but the class members and the leaseholds involved were not all from
Kansas. In Shutts, the Supreme Court held that Kansas substantive law could not be applied to
all of the claims because, in many of the individual cases, the underlying transactions had
“little or no relationship to the forum.” 472 U.S. at 821. In contrast, in Sun Oil, the Court
allowed Kansas to apply its own statute of limitations to all of the cases on the theory that
limitations periods arguably implicate the procedural concerns of the court entertaining the
case.
4. Factual issues. Arguably, accuracy would be further promoted by allowing
relitigation of factual findings or by making the accuracy of the rendering court’s fact finding
a presumption, which could be rebutted in the enforcement court. Such a procedure has the
added advantage of avoiding questions on how to review mixed questions of law and fact. On
the other hand, rearguing facts is costly and time consuming. The traditional private-
international-law restriction on reexamining factual predicates represents an attempt to strike
a balance between the interest in finality and the interest in accuracy.