Litigation Isolationism

By Bookman, Pamela K. | Stanford Law Review, May 2015 | Go to article overview

Litigation Isolationism


Bookman, Pamela K., Stanford Law Review


B. The Resulting Legal Landscape

As a result of the combination of developments in U.S. and foreign courts, more and more transnational disputes--particularly in certain categories of cases--are appearing in foreign fora. They may be refiled in foreign courts after they are dismissed from U.S. court, filed in foreign courts instead of in U.S. court, or filed in foreign courts in parallel with U.S. litigation. These cases usually have some connection to the forum in which they are brought, but this fact should not undermine the significance of the development. (232) As for transnational litigation with only remote connections to the forum, Canada and the Netherlands are currently the most likely countries to entertain such suits. (233)

Although it is too early to see the full effects of the recent Supreme Court decisions and still-emerging foreign trends, (234) evidence of the transition toward foreign fora is beginning to appear. (235) I do not claim that avoidance trends are causing the foreign developments but rather that they are contributing to plain tiffs' choices to bring suits abroad. Some commentators contend that foreign-judgment enforcement actions are growing in U.S. courts. (236) This trend suggests plaintiffs are suing in foreign courts, which may then impose substantial judgments on companies with U.S. assets.

This may be happening in two main ways. First, some plaintiffs are refiling lawsuits in foreign courts after U.S. courts dismiss them on avoidance grounds. (237) Although avoidance doctrines, especially forum non conveniens, have ostensibly contemplated this happening for decades, in practice such refiling rarely occurred. (238)

Second, plaintiffs may bring certain types of cases in foreign fora in the first instance. (239) In these types of cases, the United States is no longer presumptively plaintiffs' favorite forum. Securities, environmental, and human rights litigation provide examples of types of litigation that are gradually migrating abroad. (240)

Global securities litigation, for example, is beginning to move to the Netherlands and Canada, even in cases in which the only connection to the forum is that some of the plaintiff-investors were citizens of those countries--a rather low threshold. (241) Both fora have replicated some of the most attractive attributes of the U.S. litigation system. (242)

The Dutch have created an innovative collective settlement procedure under which putative plaintiffs and defendants "can jointly petition the Amsterdam Court of Appeals to approve the settlement and make [it] binding on all class members who do not opt out." (243) Dutch civil procedure affords Dutch courts jurisdiction if at least one of the plaintiffs requesting the declaration or one of the defendants is a Dutch domiciliary. (244)

Canada is also becoming an increasingly popular jurisdiction for bringing transnational securities litigation. (245) Securities actions in Ontario, (246) for example, are not limited to securities traded on Canadian exchanges (if the issuer has sufficient connections to Canada) (247) and can include plaintiffs from all over the world. (248) On the merits, Ontario also does not require plaintiffs to prove reliance to certify a class. (249) And while the Ontario Securities Act caps a defendant corporation's liability, this provision does not apply to knowing misrepresentations or other potential damages, which limits the cap's practical effect. (250)

Some environmental tort litigation is also going overseas. For example, Nigerian plaintiffs sued Royal Dutch Shell and its Nigerian subsidiary in a Dutch court, alleging damages resulting from an oil spill in Nigeria. (251) The court held the wholly owned Nigerian subsidiary liable to compensate one farmer but dismissed claims against the Dutch parent company. (252) To the Dutch court, the suit against the Nigerian subsidiary was foreign-cubed, but that did not stay the court's hand. …

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