Academic journal article Houston Journal of International Law

Resolving Business Disputes through Litigation or Other Alternatives: The Effects of Jurisdictional Rules and Recognition Practice

Academic journal article Houston Journal of International Law

Resolving Business Disputes through Litigation or Other Alternatives: The Effects of Jurisdictional Rules and Recognition Practice

Article excerpt


The rules on jurisdiction and recognition practice in the various U.S. jurisdictions on the one hand and in the European States on the other hand differ in several aspects. Therefore, their impact on transatlantic business transactions and the litigation resulting from those transactions may be significant. There is no doubt that in a globalized economy differences between domestic rules governing jurisdictional issues and the recognition of foreign judgments may hamper the functioning of international trade and commerce. Unification of the rules on conflict of jurisdiction in civil and commercial matters, as provided within the European Union by the recent "Council Regulation Brussels Nr. 1" (1), appears to not only be necessary for an internal market within a trade union or within a large nation consisting of a plurality of jurisdictions such as the United States of America. A uniform set of rules on jurisdiction and the recognition and enforcement of foreign judgments would also be necessary for the resolution of conflicts in cross-border business relations between independent states adhering to different traditions and concepts of international civil procedure laws.

It has been well-known for some rime to practitioners specializing in the field of international business transactions that a reduction of the differences in the domestic laws on civil procedure would face great or even insurmountable difficulties. In the course of the negotiations on a global Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters within the institutional framework of the Hague Conference on Private International Law, these difficulties became apparent. In particular, it was the conflict between the members of the U.S. delegation and the delegates of the Member States of the European Union that prevented any substantial approximation of the differing views on key issues of the envisaged Convention.

Originally, the negotiations on a global "Convention on Jurisdiction and Recognition and Enforcement of Foreign Judgments" (Judgment Convention) had been initiated by the United States in the early 1990s, (2) and at the 18th session of the Hague Conference in October 1996, the delegations decided to put the Judgment Convention on the agenda for the 19th session in June 2001. However, the preliminary daft convention of 1999 (3) that formed the basis for deliberations during the 19th session had been rigorously rejected by the head of the U.S. delegation, Jeffrey Kovar. Kovar asserted that "the project ... stands no chance of being accepted in the United States" because of "fatal defects in the approach, structure, and details of the text." (4)

From the U.S. perspective, an important aim of the Judgment Convention was the facilitation of the enforcement of decisions of U.S. courts abroad, particularly in Europe, since the enforcement of decisions rendered by European courts is easier in most U.S. jurisdictions and does not depend on the requirement of reciprocity as it does in the majority of the European States. (5) Contrary to that, several delegations of the European States argued in favor of the elimination of certain rules of U.S. federal and state civil procedure law which led to what Europeans believe to be an exorbitant exercise of jurisdiction by U.S. courts. In detail, the Europeans were particularly opposed to the ongoing U.S. practice of recognizing merely "doing business in an American State" as a sufficient basis for exercising U.S. jurisdiction.

Obviously, the diverging expectations of the U.S. and European delegations could not coincide, since the position of the Europeans complies with the domestic laws in most European States, which deny jurisdiction based on "doing business" without any causal connection between the subject matter of a dispute and the place of the business activity. European judges and lawyers are simply not familiar with the practice of U. …

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