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Thank you Mr. Chairman and
members of the Subcommittee for inviting me to testify on behalf of the
Department of State.
The Department is leading U.S.
efforts at the Hague Conference on Private International Law to negotiate a
Convention on Jurisdiction and the Recognition and Enforcement of Foreign Civil
Judgments. The Hague project -- which was undertaken at the initiative of the
United States in 1992 -- would create harmonized rules of jurisdiction in
international civil cases as well as common rules for recognizing and enforcing
abroad the resulting judgments. Most foreign judgments are already recognized
and enforced in the U.S. under state law, but most of our trading partners do
not usually grant the same treatment to U.S. judgments. A successful convention
would level the international playing field for American litigants and fill a
major gap in the legal infrastructure of the global marketplace.
Although international commerce,
trade, and communications are accelerating at a breathtaking pace, and the
growth of the Internet promises to make boundaries less relevant for commerce,
the judicial settlement of transnational disputes remains largely confined to
national territories. There is no effective regime for coordinating and
enforcing the work of national courts in resolving transnational legal disputes.
If this widening gap between the global marketplace and the isolated national
court systems is not addressed, it could well slow progress and inhibit growth
in trade.
The Hague Convention
negotiations, if successfully concluded, hold out the promise of addressing this
important need. In this testimony, we will provide some history and background
to the Hague negotiations, including how the Convention would work, describe
some of the major obstacles facing our delegation, explain how we are addressing
the critical issues raised by electronic commerce, and give some sense of what
we think the road ahead looks like.
BACKGROUND
The recognition and enforcement
of judgments from one legal system to another has long been understood as a
fundamental requirement for fully integrated markets. Thus, the framers of the
U.S. Constitution included the Full Faith and Credit Clause to ensure that
judgments from one state would be enforceable in every other. In the same way,
as part of their movement toward a unified market several European countries
concluded a convention in 1968 to provide recognition and enforcement of each
other's judgments. This convention, called the Brussels Convention, became a
required ticket of admission to the Common Market and then to the European
Union. The Brussels Convention scheme was extended to non-EU countries in Europe
in 1988 through a companion instrument called the Lugano Convention. It is now
the subject of a regulation of the European Commission, scheduled to come into
force in spring 2002.
For many countries the
enforcement of foreign judgments is not a matter of general law but is addressed
through treaties. The United States is not a party to any convention or
bilateral agreement on the recognition and enforcement of foreign judgments. We
made an effort to conclude a treaty with the United Kingdom in the 1970s, which
failed due to opposition in the UK toward the enforcement of U.S. tort judgments
in UK courts.
By contrast with the practice of
most countries, however, the United States has led the way in enforcing foreign
country judgments on the basis of comity. The Supreme Court embraced this
approach over 100 years ago in the case of Hilton v. Guyot, 159 U.S. 113
(1895). The National Conference of Commissioners on Uniform State Laws then
codified the common law standard in the Uniform Foreign Money Judgments
Recognition Act in the 1960’s, which has been adopted in about 2/3 of the
states. Judgments from countries with reliable legal systems are now predictably
enforceable in federal and state courts in the United States under the common
law or under the Uniform Act. Although the Supreme Court in Hilton
suggested that it was appropriate also to require a showing of reciprocity in
the country where the judgment was rendered, this requirement is not included in
most states’ law.
Thus, while U.S. courts are
perceived as the most open in the world to the recognition and enforcement of
foreign civil judgments in the absence of a treaty obligation to do so, the
ability of U.S. judgment holders to enforce their judgments abroad is much more
problematic. Even in those countries that will, in principle, enforce foreign
judgments in the absence of a treaty, the reach of U.S. long-arm jurisdiction,
what they perceive to be "excessive" jury awards, and punitive damages
are sometimes considered reasons not to enforce U.S. judgments. U.S. litigants
deserve the same opportunity to have their judgments enforced abroad as that
enjoyed by foreign litigants in the United States.
THE NEGOTIATIONS
The successful negotiation at the
Hague Conference of a convention on jurisdiction and the recognition and
enforcement of foreign civil judgments would be a huge step toward an
international regime for enforcing foreign court judgments. The negotiations,
which have been underway since 1996, involve more than 45 countries from around
the world, including virtually all major U.S. trading partners. The Hague
Conference is well known for producing the Conventions on Service of Process and
the Taking of Evidence Abroad, Abolishing the Requirement of Legalization, and
International Child Abduction to which we are a party. Moreover, the Senate has
given Advice and Consent to the Hague Intercountry Adoption Convention, and
Congress has enacted implementing legislation for it. The Department of State is
now preparing implementing regulations prior to depositing our instrument of
accession. The Hague Conference has traditionally been a professional and
non-political forum of experts in the area of conflict of laws.
If successful, the Hague
Jurisdiction and Enforcement of Judgments Convention would establish a regime
governing jurisdiction to sue defendants from party states in tort and contract,
and would improve predictability in the enforcement of the resulting judgments.
However, the requirement that the Convention create uniform rules of
jurisdiction comes as a surprise to many Americans. It reflects the approach of
the EU Brussels Convention and a deep-seated feeling among many other
delegations that they do not wish to enforce U.S. judgments unless we make our
jurisdiction practices consistent with their view of what constitutes
appropriate international rules. Since litigants from most developed countries
have no substantial difficulties enforcing judgments in the United States, their
governments believe they have substantial negotiating leverage over us. This
would perhaps not be the case if our states included reciprocity requirements in
their law.
Agreeing on a rigid set of
jurisdictional rules poses special difficulties for the United States. Because
the Due Process Clause puts limits on the extension of jurisdiction over
defendants without a substantial link to the forum, the United States is unable
to accept certain grounds of jurisdiction as they are applied in Europe and
other countries. For example, we cannot, consistent with the Constitution,
accept tort jurisdiction based solely on the place of the injury, or contract
jurisdiction based solely on the place of performance stated in the contract.
At the same time, civil law
attorneys (and their clients) are profoundly uncomfortable with jurisdiction
based on doing business or minimum contacts, which they believe is vague and
unpredictable. They feel strongly that certain aspects of U.S. jurisdictional
practice must be restricted under the Convention. Although this difference has
been partially reconciled by agreement to permit some grounds of jurisdiction
under national law to continue outside the Convention, critical choices and hard
negotiations remain. If the Convention is to regulate jurisdiction in
international litigation it must bridge vast differences in approach toward
general and specialized jurisdiction among the various countries involved. It
must also provide strong and clear benefits to outweigh the inevitable concerns
about giving up some current litigation options in international cases.
Apart from a host of difficulties
related to jurisdiction, agreement must also be reached on how to handle a wide
array of other issues raised by this sweeping and ambitious project. Some of the
issues include: concurrent filings in the courts of more than one state; forum
non conveniens; provisional and protective measures; injunctions and other
non-monetary judgments; punitive, non-compensatory and "excessive"
damages; a lack of fairness or impartiality in the judgment court;
non-application to antitrust; and scope of application to government litigation.
The fifth negotiating session in
October 1999 produced a preliminary draft text, and the original schedule called
for a final negotiating session in 2000. However, after extensive consultations
with industry and consumer groups, the private bar, and with government
litigators, 1 the Department of State concluded that this text is not close to
being ratifiable in the United States and cannot be an effective vehicle for
final negotiations.
Acutely aware of the need for
more time, we successfully requested the Hague Conference to extend the
negotiations, and to split the final session into two parts. The first session
is scheduled to be held June 6 – 20 in the Hague. Over the last nine months we
have met several times in informal sessions with key foreign government
delegations and listened with them to the views of international private sector
experts and non-governmental organizations. The purpose of these sessions was to
prepare the way for the June meeting by seeking to find new approaches to the
most difficult issues facing the negotiations. Some constructive ideas have
emerged from these informal sessions, but we are still far apart on many issues.
If other delegations do not begin to show more flexibility on many key
provisions we will be unable to achieve a convention that could attract
sufficient support in the United States.
ELECTRONIC COMMERCE ISSUES
When the Hague Convention
negotiations were first proposed by the United States in 1992, and when they
began four years later, no one predicted the immensely difficult issues that
would suddenly arise from the explosion of electronic commerce. The result,
however, has been that the Hague Convention has provided a forum to discuss at
the international level the tough issues involving jurisdiction over Internet
transactions. The fact that the Convention negotiators are grappling with these
issues has led to intense efforts around the world to consider the problems
raised in drafting international rules of jurisdiction governing Internet
transactions. In the U.S., as well, the law is in flux and courts are struggling
with applying traditional U.S. jurisdiction rules to the Internet.
The Hague Conference has made an
effort to facilitate the focus on electronic transactions. The Conference
organized a roundtable workshop in Geneva in September 1999 and called special
experts meetings in Ottawa in February 2000 and February 2001 devoted to
electronic commerce issues raised by the draft Convention. Moreover, the Hague
Conference arranged with the World Intellectual Property Organization to hold a
special session on intellectual property issues raised by the Convention this
past January, with a special focus on IP issues raised by electronic commerce.
The Department of State, working
closely with the Departments of Commerce and Justice, the Federal Trade
Commission, the Copyright and Patent and Trademark Offices, and other relevant
agencies, has consulted closely with concerned private sector interests in the
business and consumer communities on these difficult issues related to the
Internet. Just last week we held two day-long public meetings at the Library of
Congress and the FTC for which we had excellent attendance. We have found no
consensus on the electronic commerce and intellectual property issues in the
United States or elsewhere, and the Department believes we must take an
extremely careful and deliberate approach in the Hague negotiations. We do not
have firm views on the proper outcome of these provisions, and are seeking to
ensure that all the various interests continue to be heard. We hope very much
that effective solutions will emerge that will enable the Convention to move
forward to a successful conclusion.
THE ROAD AHEAD
A carefully conceived and
properly balanced Hague Convention would represent a tremendous opportunity for
many American litigants, and we are trying vigorously to reach the right balance
of provisions that would enable us to achieve a convention to which the United
States could become a party. However, given the strong litigation orientation of
our society and the differences between our established jurisdiction practices
and those of many of the other participating countries at the Hague, the
Convention negotiations present special challenges. When you add the enormous
uncertainties raised by the growth of trade and commerce on the Internet and
complex choices for intellectual property litigation, the obstacles can seem
overwhelming. Nevertheless, the promise is great, and we hope that we can
ultimately succeed.
I will be leading the U.S.
delegation to next month’s negotiations in the Hague. We will have a strong
and diverse delegation, including members from the Departments of State,
Commerce, and Justice, as well as the Federal Trade Commission, the U.S. Patent
and Trademark Office, and the U.S. Copyright Office. We will also have
distinguished advisers from private practice and academia, including
representatives of the American Bar Association, the Association of Trial
Lawyers of America, U.S. business, and U.S. consumer interests. Moreover, we
expect to see private sector interests strongly represented as observers at the
negotiations.
At the end of the June session
decisions will be made at the Hague Conference on how to proceed. If
negotiations have not been refocused in a manner that protects U.S. interests,
we will evaluate our options.
When we return we will continue
to reach out to as many groups, associations, and experts as we can from the
private and public sector to make them aware of the draft Convention and seek
their views on the opportunities and difficulties it presents for us. It is only
by understanding as clearly as possible the litigation issues raised that we can
be in a position to attempt to achieve a balance of provisions that could allow
the United States to ratify and implement the final Convention.
We hope, Mr. Chairman, to be able to remain in
close contact with the Subcommittee on these issues, and thank you very much for
the interest you have shown.
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