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- January 7, 2009
- Los Angeles, USA
- International Law Section
- Los Angeles County Bar Association
- Presenters
- Jeffery J. Daar, Daar & Newman
- Malcolm S. McNeil, Fox Rothschild, LLP
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- Inter-American Convention
- Except for Mexico, Argentina, and Venezuela, most Central and South
American countries have not
ratified the Hague Convention
- Members: Argentina, Brazil, Chile, Colombia, Ecuador, Guatemala,
Mexico, Panama, Paraguay, Peru, U.S., Uruguay, and Venezuela
- Similar to Hague Convention, except:
- Fill out Form USM-272/272A and send to “Central Authority”
- Must include Letters Rogatory as part of request
- All documents must be translated
- Form must bear seal and signature of Clerk of the Court where process
issues and signature and stamp of Central Authority
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- A plaintiff has the initial burden of demonstrating facts, by a
preponderance of evidence, justifying the exercise of jurisdiction in
California.
- The merits of the complaint are not at issue at a challenge over
jurisdiction. However, when
personal jurisdiction is asserted on the basis of a nonresident
defendant’s alleged activities in California, facts relevant to
jurisdiction may also bear on the merits of the complaint.
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- A plaintiff must do more than merely allege jurisdictional facts. The plaintiff must present evidence
sufficient to justify a finding that California may properly exercise
jurisdiction over the defendant. The plaintiff must provide affidavits
and other authenticated documents in order to demonstrate competent
evidence of jurisdictional facts.
- Allegations in an unverified Complaint are insufficient to justify this
burden of proof.
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- Once a plaintiff satisfies the initial burden of proof of showing a
defendant’s minimum contacts in California, the burden shifts to the
defendant to present a compelling case demonstrating that the exercise
of jurisdiction by our courts would be unreasonable.
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- California courts may exercise jurisdiction on any basis that is not
inconsistent with the state and federal Constitutions.
- The court is to weigh the facts of each case to determine whether a
non-resident defendant has sufficient “minimum contacts” with California
so that the exercise of jurisdiction is reasonable and comports with
principles of fair play and substantial justice.
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- Personal jurisdiction may be general or specific.
- A nonresident who engages in substantial, continuous and systematic
activities in a state is subject to its general jurisdiction.
- A non-resident must have fair warning that a particular activity may
subject it to jurisdiction in California.
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- A non-resident defendant that does not have sufficient contact in
California to establish general jurisdiction may be subject to specific
jurisdiction of California courts if there is a sufficient nexus among
the defendant, the state and the litigation.
- Specific jurisdiction depends upon the quality and nature of the
defendant’s activity in the forum in relation to the particular cause of
action.
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- A court may exercise specific jurisdiction over a nonresident defendant
only if:
- (1) the defendant has purposefully availed itself of forum benefits;
- (2) the controversy is related to or arises out of the defendant’s
contacts with the forum; and
- (3) the assertion of personal jurisdiction would comport with fair play
and substantial justice.
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- The term “purposefully availed” means an action of the defendant
purposefully directed or aimed toward the forum State.
- Purposeful availment occurs where a nonresident defendant:
- purposefully directs activities at residents of California,
- purposefully derives benefit from its activities in California,
- creates a substantial connection with California,
- deliberately has engaged in significant activities within California,
or
- has created continuing obligations between itself and the residents of
California.
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- The purposeful availment requirement ensures that a defendant will not
be haled into a jurisdiction solely as a result of random, fortuitous,
or attenuated contacts.
- A defendant should have clear notice that it is subject to suit in
California so that it can act to alleviate the risk of burdensome
litigation by procuring insurance, passing the expected costs on to
customers, or, if the risks are too great, severing its connection with
California.
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- When the non-resident defendant is from another nation, rather than from
another state, courts will be even more cautious in their application of
the law of personal jurisdiction.
- A determination of the reasonableness of the exercise of jurisdiction
involves evaluation of several factors, including the burden on the
defendant, the interests of California, and the plaintiff’s interest in
obtaining relief.
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- Courts will also weigh the interstate judicial system’s interests in
obtaining the most efficient resolution of the controversy and in
furthering fundamental substantive social policies.
- Where international defendants are concerned, the courts will also
consider the procedural and substantive policies of the other nations
whose interests are affected by the assertion of jurisdiction by a
California court.
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- Strategy considerations include:
- Venue agreement
- Favorable forum
- The substantive law that could be applied
- If it is the law at the place of the venue there is a danger that an
international dispute becomes too local
- Lawsuit versus arbitration.
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- Alien and alien corporation defendants may be sued in any United States
District Court [28 U.S.C. § 1391(d)]
- Challenging Improper Venue
- [28 U.S.C. § 1406(a)]
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- A forum selection clause is presumptively valid and should not be set
aside unless the opposing party shows that it is invalid for such
reasons as:
- fraud or overreaching,
- that enforcement would contravene a strong public policy of the forum
in which the action is brought,
- or that enforcement would be unreasonable and unjust.
- The party seeking to avoid the enforcement of a forum selection clause
bears a heavy burden of proof.
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- Forum selection clauses are prima facie valid when included in a freely
negotiated private international agreement. The United States Supreme Court has
identified three exceptions to the enforceability of a facially-valid
forum selection clause:
- If the selected forum is so gravely difficult and inconvenient that the
complaining party will for all practical purposes be deprived of his
day in court;
- If the clause was a product of fraud, undue influence, or overweening
bargaining power; and
- If enforcement would contravene a strong public policy of the forum in
which suit is brought, whether declared by statute or by judicial
decision.
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- Forum non conveniens is an equitable doctrine invoking the discretionary
power of a court to decline to exercise the jurisdiction it has over a
transitory cause of action when it believes that the action may be more
appropriately and justly tried elsewhere.
- “When a court upon motion of a party or its own motion finds that in the
interest of substantial justice an action should be heard in a forum
outside this state, the court shall stay or dismiss the action in whole
or in part on any conditions that may be just.” [California Code Civ. Proc. § 410.30(a)]
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- In assessing motions to dismiss based on forum non conveniens, courts
must consider the following:
- A court first determines whether the alternate forum is a suitable
place for trial.
- If it is, the next step is to consider the private interests of the
litigants and the interests of the public in retaining the action for
trial in California.
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- No one factor determines the outcome of a forum non conveniens motion.
- The trial court will carefully balance all relevant factors.
- The trial court will decide which party will be more inconvenienced.
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- Prior to balancing the private and public interest factors, the court
must first make a threshold finding that the alternate forum is a
suitable place for trial.
- What is a suitable alternative forum depends not on the factors relevant
to the convenience of the parties and the interests of the public, but
on whether an action may be commenced in the alternative jurisdiction
and a valid judgment obtained there against the defendant.
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- To prove that the alternative forum is suitable, a defendant need only
show that:
- (1) the forum would have jurisdiction over the case, and
- (2) no statute of limitations bars the claims from being decided on
their merits.
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- The private interest factors relate to the convenience of the parties
and potential witnesses. Such
factors include:
- (1) the ease of access to sources of proof;
- (2) the cost of obtaining friendly witnesses;
- (3) the availability of compulsory process for attendance of unwilling
witnesses; and
- (4) other factors that make a trial and enforceability of an ensuing
judgment easy, expeditious and relatively inexpensive.
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- Courts will also consider the public interest factors, such as:
- avoidance of overburdening local courts with congested calendars;
- protecting the interests of potential jurors so that they are not
called upon to decide cases in which the local community has little
concern; and
- weighing the competing interests of California and the alternate
jurisdiction.
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- Substantive Law
- The Court may apply foreign law for substantive issues
- The parties will have to brief the Judge on foreign law
- The relevant provisions under the applicable law may benefit one side
more than the other
- If jury trial, Special Jury Instructions on foreign law
- Careful drafting in order to adequately educate the jury
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- Statute of Limitations
- Under California conflicts of law principles, the statute of
limitations is a procedural law governed by the law of forum, i.e.,
California limitations statute apply to causes of action accrued
outside of the state.
- Thus, an action is barred if the California limitations statute has
run, even though the action may be maintained in a foreign country
- Also, if the statute of limitations in the foreign country is less than
California’s, then the California statute still applies
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- Consider whether a California state or federal court judgment will be
enforceable in other countries, particularly the country of the
defendant.
- You should consult with a foreign lawyer from the country or countries
at issue.
- Alternatively, if you end up suing the foreign defendant in another
country, will a resulting foreign judgment be enforceable in the United
States or elsewhere?
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- For example, foreign money judgments may be enforced in California if
they meet the requirements of the California Uniform Foreign
Money-Judgments Recognition Act [Code Civ. Proc. §§ 1713, et seq.].
- The purpose of the Uniform Act is to create greater recognition of the
state’s judgments in foreign nations by informing the foreign nations of
particular situations in which their judgments would definitely be
recognized (encouraging reciprocity).
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- Under California law, a foreign judgment will be deemed conclusive and
enforced in California unless an exception to conclusiveness
exists. The limited exceptions to
conclusiveness include:
- (1) The judgment was rendered
under a system which does not provide impartial tribunals or procedures
compatible with the requirements of due process of law;
- (2) The foreign court did not
have personal jurisdiction over the defendant; or
- (3) The foreign court did not
have personal jurisdiction over the subject matter.
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- Alternatively, an international arbitration award is usually grounded in
the national legal order of the place of arbitration.
- It is not recognized per se worldwide; it needs first recognition by the
state where enforcement is sought (“Exequatur”).
- Rules of recognition are contained:
- In the 1958 New York Convention on the Recognition and Enforcement of
Arbitral Awards (more than 160 member states!);
- Sometimes in further international treaties; and
- Otherwise in the local legal orders (which are increasingly similar as
more and more are based on Art. 34 of the UNCITRAL Model Law on
International Arbitration).
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- Jeffery J. Daar, Partner
- Daar & Newman,
- A Professional Law Corporation
- 865 South Figueroa Street, Suite 2300
- Los Angeles, California 90017-2565
- Telephone: 213/892-0999
- Facsimile: 213/892-1066
- Email: jdaar@daarnewman.com
- Website: www.daarnewman.com
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- Malcolm S. McNeil, Partner
- Fox Rothschild LLP
- 1800 Century Park East, Suite 300
- Los Angeles, California 90067
- Telephone: 310/598-4173
- Facsimile: 310/556-9828
- Email: mmcneil@foxrothschild.com
- Website: www.foxrothschild.com
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Notes
