The role of the reciprocity requirement in the harmonization of standards for the recognition and enforcement of foreign judgments
par Beligh Elbalti
Faculté des sciences juridiques, politiques et sociales de Tunis - Mastère en Common Law 2008
There is no doubt that the world tends toward more interaction between its different components. This interaction is embodied in the phenomenon of globalization which can be defined as the emerging system of private exchanges structured through economic relationships1(*). In effect, fuelled by the revolutions in the technologies of transportation and telecommunications, globalization shrunk the entire world into a physically smaller entity. As a result, the level of international trade and the movement of people and goods from one country to another have significantly increased over the last few decades; «and the prognosis is that these trends will continue to expand»2(*). As a direct consequence of the interaction between different components of the world, the need to harmonize the different legal, social and cultural systems emerged. This need is increasing as much as interaction between global communities is increasing.
Thus, harmonization is a core concept in this era of the global growing economy. It refers to the search for common rules which can eliminate differences and create minimum requirements or standards. Harmonization, therefore, focuses on the means of attaining substantive ends3(*) which can lead to the coordination of different policies. In other words, harmonization means the adoption of an agreed set of rules or principles that two or more countries would apply in their reciprocal relationship. Unlike unification, which contemplates the substitution of two or more legal systems with one single system, harmonization is only approximation of rule or coordination of policies4(*) by eliminating major differences and creating minimum standards5(*).
The international community seems to take into consideration the need of the harmonization of their respective systems in order to enhance international trade and provide predictability and harmony. As a result, efforts to establish a harmonized legal framework have already started. Indeed, international community has succeeded in standardizing law on different issues6(*), and nowadays numerous treaties exist to regulate different areas of law7(*). However, efforts seem to be addressed to the harmonization of substantive law governing both civil and commercial matters as well as matters related to family law8(*) at the detriment of procedural law which continues to be handled by national standards.
With this respect, the harmonization of national laws has a specific importance when it comes to the question of international litigations. In effect, with the growth of international trade and movement of people and goods which has witnessed a parallel development in the number of civil and commercial suits involving foreign defendants9(*), international litigations do not necessarily come to an end when one party succeeds in obtaining a favourable judgment10(*). This is basically due to the differences among countries and to the common principle that foreign judgments have no effect outside the country where they were rendered.
With this respect, the recognition and enforcement of foreign judgments were considered as effective tools which facilitate the movements of judgments from one country to another. Recognition and enforcement of foreign judgments refer to the effect that a foreign judgment can have when taken abroad. Note that even though the concepts of recognition and enforcement are related and sometimes used interchangeably, they have distinct meanings11(*). Recognition of foreign judgments means that matters which have already been decided by a foreign court should be treated as conclusive. As a result, recognition of foreign judgments precludes relitigation of the claims anew on the ground that they have been previously litigated abroad. Enforcement, on the other hand, means the order to a court to use coercive powers in order to compel the judgment debtor to satisfy a judgment rendered abroad12(*). As such, recognition can be understood as a first step towards enforcement.
Considered as «a central tool of trade integration»13(*), the recognition and enforcement practices provide international traders with legal assurance to protect their legal rights. The unsatisfied party may make tremendous efforts to either relitigate the case again or to avoid the effect of foreign judgments and that by moving his/her assets from one country to another (knowing that foreign judgments do not have any effect by their own outside the country where it was rendered). With this respect, one commentator wrote «Traders seek the security provided by the enforcement of legal rights and the provision of an adequate remedy. Accordingly, without secure means by which that remedy may be given effect, exporters may undervalue the gains from trade. Consequently, they may fail to take advantage of trading opportunities that would otherwise be socially beneficial, taking into account both the gains for individual traders and the benefits that would flow to third parties. At the same time, the inability of importers to vindicate their legal rights through the effective enforcement of judgments would also distort incentives for trade, leading exporters not to appreciate fully the costs of their activities and encouraging them to exploit trading opportunities that would be better left unrealized»14(*).
Although it is agreed that a universal recognition and enforcement of foreign judgments is beneficial to enhance international trade and free movement of poeple and goods, the status quo of foreign judgments recognition and enforcement is described as far from being satisfactory15(*). In fact, each country determines its own standards according to which foreign judgments would have effect within its territory. Countries define their own conception of harmonization by the adoption of national standards which will be applicable in the field of the recognition and enforcement of foreign judgments. As a matter of fact, foreign judgments are frequently refused effect when taken abroad.
The refusal to grant effect to a foreign judgment has always been justified by sovereignty prerogatives. «Sovereignty can be defined as the ultimate overseer or supreme authority in a state. In a state sovereignty is vested in the institution, person, or body to impose law on everyone else and to alter any pre-existing law»16(*). Sovereigns have the supreme public power i.e. the right and the capacity to impose its authority in the last instance17(*). On the other hand, it is unacceptable, for foreign sovereign, to allow any foreign governmental act to have effect within the limits of its territory because this permission is perceived as a threat to the sovereign's supreme dominion18(*). Consequently, the effectivelessness of foreign judgments is due to the fact that the judgments themselves are the result of the judicial power of the state, which is the «very core of a country's judicial sovereignty»19(*).
A sovereign has the «power to hale before its court any individual who could be found within its borders»20(*) and renders a judgment against that individual. Thus, judgments are tinged with the sovereign expression of power and authority and as such it will be executed. Following the same line of arguments, «judgments [are] seen as governmental acts whose compulsory effect [is] limited to the sovereign's territory»21(*). It is clear that this conception is in contradiction with the notion of interaction. Judgments, which can be «an important gateway for this interaction in the legal international context»22(*), would eventually be disregarded on the basis of national sovereignty.
Obviously such conception has a very negative impact on the judicial protection of persons involved in international civil or commercial relations and creates obstacles to the circulation of judgments. Accordingly, the non-movement of judgments hampers international credit and commerce23(*), and retrying authoritatively decided cases violates the fundamental tenets of judicial economy24(*). Consequently, a legal structure to ensure the circulation of foreign judgments across the borders of different countries cannot be ignored25(*) and is somehow required 26(*).
Nevertheless, although efforts to harmonize national laws were concluded in other fields of law, attempts to define international standards on recognition and enforcement practices - i.e. to create a convention «which would be joined by many countries...and would cover the broad range of foreign judgments»27(*) - have failed. This can be explained by the fact that «each country has tendency to protect itself against the intrusion of foreign judgments, to the prejudice of creditors whose favour the judgments lie»28(*). In addition, each state has it own conception of what constitutes standards for the recognition and enforcement of foreign judgments. According to one scholar, most of the possible obstacles that foreign judgments have to face up are historical relics rooted in the notion of sovereignty29(*) and which states continue to hold dear. Even the conception of what is considered a good administration of justice varies from one country to another and as a result approaches to the recognition and enforcement of foreign judgments vary from one state to another.
Between the needs of national prerogatives of sovereignty and the international trade and the free movement of persons and goods exigencies of liberal recognition and enforcement of foreign judgments, the concept of reciprocity «assumes a peculiar importance»30(*). One scholar wrote that «the importance of the principle becomes more conspicuous in international legal arena where cooperation between sovereign states is inevitably necessary and where, accordingly a sovereign should respect decision-making powers of other states in order to avoid their unfavorable treatment of its own acts»31(*).
The problem with the notion of reciprocity is that there is no definition that can absorb and account for all its aspects. The notion of reciprocity is a vague concept which escapes from any tentative rigid definition. This vagueness is due to fact that this notion does not only underlie most legal relationships but also covers and encompasses all the aspects of the human existence and activities.
Yet, reciprocity can be identified through its characteristics since it requires a returning like behaviour32(*). It can be active when it does not demand any direct return to an antecedent action and merely imposes a certain repayment of obligation in the future from the receiving side33(*). Reciprocity can be applied in reverse when emphases are placed on simultaneous exchange of strictly equivalent benefits and/or obligations34(*). To put it in other words, reciprocity, regardless of its operation, means the fundamental rule by which two or more parties maintain the balance of treatment by means of granting the same or equivalent rights and benefits and/or undertaking obligations to each other35(*).
In the field of the recognition and enforcement of foreign judgments, reciprocity can have both characteristics. It can be applied as the consent of a state to give extraterritorial effect to foreign judgments taking into account common convenience and mutual necessities; or it can be applied in reverse when one state refuses to give effect to judgments coming from a foreign state if that state refuses in its turn to grant effect to the other state's judgments36(*). In this context, reciprocity can be categorized into three types of reciprocities. It can be either diplomatic and it takes the form of international agreements. It can be legislative and refers to reciprocity established by the legislative acts and laws. Finally, reciprocity can be factual, and refers to the judicial and administrative practices37(*).
Reciprocity has a very specific importance when applied in the field of the recognition and enforcement of foreign judgments. This importance is reflected by the substantial number of pages written on this subject up to the present. This is due to the fact that utility of the reciprocity in the field of recognition and enforcement of foreign judgments has always been subject to many questions and considerations. The hot debate that engages the proponents and opponents of the inclusion of the reciprocity requirement in the landscape of the recognition and enforcement of foreign judgments is far from being settled.
On the one hand, the notion of reciprocity has been hardly criticized. This is due to its negative impact on litigants and international trade. Even those who are with the existence of such notion in the field of the recognition and enforcement of foreign judgments, agree that the notion of reciprocity «does nothing to insure fairness between parties to a particular dispute...[ But it] can require that a perfectly valid foreign judgment between individual be thrown out-that individual justice not be done- in order to promote national interest» 38(*). The last loosers are litigants who will be punished for political stances taken by their governments or the state that rendered the judgment39(*). Reciprocity is also criticized because the states which employ it to pursue an interest of safeguarding the abstract interest of the dignity of the state through private dispute resolution. Accordingly, a certain number of judgments as well as judgment creditors can suffer long delays or even encounter the non-recognition of their judgments in the name of reciprocity.
On the other hand, reciprocity is basically applied as a device to protect sovereignty and ensure the recognition and enforcement of foreign judgments. It can be also used as incentives for foreign countries to enter into agreements. One scholar affirms that «in fact, it is not the reciprocity requirement, but rather the application of the requirement which proved to be a burden to the parties and an obstacle to international law»40(*).
Through reciprocity, independent countries can achieve both goals, namely, protect national sovereignty and satisfy the exigencies of globalization. Reciprocity protects national sovereignty because it will give the right to state to accept the limitation of its authority when the foreign sovereign does the same thing. It satisfies the exigencies of international trade because once reciprocity is established, it would draw commitment from foreign states to recognize and enforce judgments rendered in the courts of the reciprocating state. With this respect, reciprocity can play as a connecting point between different legal systems since it is based on the idea of concessions.
Accordingly, reciprocity may lead to the reception of foreign judgments recognition and enforcement standards. It may allow the addition of foreign judgments recognition and enforcement standards to it national counterparts. In other words, in the occasion of checking the regularity of a foreign judgment, the enforcing court can subject the foreign judgments to their national standards of recognition and enforcement as a matter of reciprocity41(*).
The question of reciprocity has become more interesting since international community is started to consider the reciprocity with same characteristics but with different goals and that despite the continuous critics to the notion and the general consensus of the decline of its application42(*). The new breadth of the reciprocity is the result of work undertaken by the American Law Institute (ALI) which decided to include the concept of reciprocity on the occasion of drafting a proposed federal statute on the recognition and enforcement of foreign judgments. Reasons for drafting such a statute will be discussed later. However, it is important to mention that reciprocity, as conceived by the ALI, is no longer linked to the notion of sovereignty, but would have the mere purpose of ensuring the recognition and enforcement of foreign judgments Reciprocity focuses on creating a common vision of appropriate processes for resolving international disputes. It has the purpose of making foreign countries accepting American standards and as a result eliminating hurdles that face the recognition and enforcement of American judgments aborad.
The issue is attractive because reciprocity, which seems to be at odds with the notion of harmonization, was chosen as a solution which may lead to cooperation. The notion of reciprocity focuses on purely national interest whereas harmonization aims on the contrary to find commons for the best interest of all parties. One may wonder whether the general interest of harmonization of standards for the recognition and enforcement of foreign judgments can be achieved through a purely and «selfish» notion of reciprocity which only emphasises on purely private interests of one country at the expense of differences between foreign countries.
On the other hand, one can advance at least one common feature between reciprocity and harmonization. Both, actually, require mutual interaction. Reciprocity needs a returning like behaviour; harmonization needs cooperation between two or more countries which will adopt reciprocally common rules in order to eliminate differences. This can be illustrated through the act of shaking hands which implies both reciprocity and cooperation. Reciprocity, as such has been advanced an efficient tool to secure trustworthy methods of cooperation among states43(*); a cooperation which requires a minimum of harmonization between different legal systems.
Following the same line of arguments, the ultimate purpose underlying the present work will revolve around the aforementioned controversy of reciprocity in attempt to provide answers and clarifications to the subsequent query: What role can the reciprocity play for the harmonization of standards for the recognition and enforcement of foreign judgments?
In order to be able to answer this question, a distinction should be drawn between the traditional role of the reciprocity requirement and between its proposed role presented by the ALI. Where the traditional role of reciprocity, emphasises on sovereignty prerogatives, the proposed role seems to ignore such prerogative and focuses only on securing national judgments having effects abroad.
Therefore, the present paper is organized as follows: The first part will mainly deal with the traditional conception of reciprocity, i.e. reciprocity used as a device to protect sovereignty. Part two will deal the reasons of the resurrection of the notion reciprocity and address its new proposed role. Therefore, it is necessary to address the traditional role of the reciprocity in a first art (Part I) before addressing and assessing its proposed role in a second part (Part II).
* 1. «Globalization can be understood as both descriptive and normative concept. As its most general, globalization is the term used to describe the communication, interaction, migration, and intercourse between autonomous communities. At its most specific, globalization is the term used to describe particular forms of interaction prevalent in any particular historical epoch. As a normative concept, globalization is the name that is given to a particular ideology of transnational interaction among and between members of different political communities»; See Larry Catá Backer, Harmonizing Law in an Era of Globalization - Convergence, Divergence and Resistance, Carolina Academic Press, 2007, at preface xiii. Available at www.cap-press.com
* 3. Larry Catá Backer, Harmonizing Law in an Era of Globalization - Convergence, Divergence and Resistance, Carolina Academic Press, 2007, at preface xiii
* 4. George A. Zaphiriou, Harmonization of Private Rules between Civil and Common Law Jurisdiction, the American Journal of Comparative Law, Vol.38, Supplement. U.S. Law in an Era of Democratization, 1990, p. 71
* 7. Paul B. Stephan, Futility of Unification and Harmonization in International Commercial Law, University of Virginia School of Law, Legal Studies Working Papers Series, Working Paper No. 99-10, 1999, available at http://papers.ssrn.com. «The effort's successes include, citing only the most prominent examples, the Vienna Convention on the International Sale of Goods, the Brussels Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, the Warsaw Convention on the Unification of Certain Rules Relating to International Transportation by Air, the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, the Hague Convention on the Taking Evidence Abroad in Civil or Commercial Matters, and the International Chamber of Commerce's International Rules for the Interpretation of Trade Terms (Incoterms) and Uniform Customs and Practice for Documentary Credits (UCP)».
* 8. For example, the Hague Convention on the Civil Aspects of International Child Abduction of October 25, 1980, the Hague Convention on Protection of Children and Cooperation in Respect of Intercountry Adoption of May 29, 1993 etc...
* 9. Volker Behr, Enforcement of United StateStates Money Judgments in Germany, Journal of Law and Commerce, spring 1994, www.westlawinternational.com, See also, Ronald A. Brand, Enforcement of Foreign Money-Judgments in the United States: In Search of Uniformity and International Acceptance , 67 Notre Dame L. Rev. 253, 255 (1991), and Joachim Zekoll, The Enforceability of American Money Judgments Abroad: A Landmark Decision by the German Federal Court of Justice , 30 Colum. J. Transnat'l L. 641, 641 (1992).
* 10. J-G Castel, Canadian Conflict of Laws- Fourth Edition, Butterworths, 2000, p. 269
* 11. Robert B. von Mehren and Michael E. Patterson, Recognition and Enforcement of Foreign-Country Judgments in the United States, Law and Policy in International Business , Vol. 6:37, 1974.
* 12. Gary B. Born, International Civil Litigation in US Courts-Third Edition, 1996, p. 937
* 15. Friedrich K. Juenger, The recognition of Money Judgments in Civil and Commercial Matters, Selected Essays on the Conflict of Law, 2002, p.284
* 16. J. Wilson, What is Sovereignty?, Available at http://www.rightsandwrong.com.au
* 17. Alain de Benoist, What is Sovereignty?,Article translated by Julia Kostova from «Qu'est-ce que la souveraineté? in éléments,No. 96 (November 1999), pp. 24-35 available at http://www.alaindebenoist.com
* 18. Susan L. Stevens, Commanding International Judicial Respect : Reciprocity and the Recognition and Enforcement of Foreign Judgments, 26 Hastings International & Comparative Law Review, 2002 - 2003 p. 118 at www.heinonline.com and www.westlaw.com.
* 19. Dou Shaowu & Liu Qian, Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters available at www.civillaw.com.cn
* 20. Burnham v. Superior Court of California, County of Marin, 495 US 604, 110 SCt 2105 (US Supreme Court)
* 21. Friedrich K. Juenger, The recognition of Money Judgments in Civil and Commercial Matters, Selected Essays on the Conflict of Law, 2002, p.286
* 23. Quoted in CHEATHAM, DOWLING, GOODRICH & GRISWOLD, CASES AND MATERIALS ON CONFLICT OF LAWS 272, 274 (1936)
* 24. Friedrich K. Juenger, The recognition of Money Judgments in Civil and Commercial Matters, Selected Essays on the Conflict of Law, 2002, p.284.
* 25. Ali Mezghani, Commentaires du Code de Droit International Privé, Tunis, C.P.U, 1999, p. 182
* 26. Peter Nygh, The Preliminary Draft Hague Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters, International Conflict of Laws for the Third Millennium - Essays in Honor of Friedrich K. Juenger, Edited by Patrick J. Brochers and Joachim Zekoll, 2000, p.266
* 27. Olga Vorobeva, Reciprocity in Recognition and Enforcement of Foreign Judgments in Russia and the United StateStates, Russia in the International Context: PIL, Cultural Heritage, Intellectual Property, Harmonization Law, 2004. Berliner Wessenchaft-Verlag Gmbtt, p. 242.
* 28. J-G Castel, Introduction to Conflict of Laws - Fourth Edition, Butterworths, 2002, p. 103
* 29. Friedrich K. Juenger, The recognition of Money Judgments in Civil and Commercial Matters, Selected Essays on the Conflict of Law, 2002, p.284
* 31. Young-Joon Mok, The Principle in the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Award of 1958, CASE W. RES. J. INT'L L, Vol.21:123, 1989, p.124
* 33. Akiko Yanai, Reciprocity in Trade Liberalization, APEC Study Center Institute of Developing Economies, Working Paper Series 00/01 - No. 2, 2001, p. 2
* 34. Id, p. 3
* 35. Id, p. 1.
* 36. Young-Joon Mok, The Principle in the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Award of 1958, CASE W. RES. J. INT'L L, Vol.21:123, 1989, p.124
* 37. Imed Bejaoui, La Règle De Réciprocité Dans Le Code Tunisien de Droit International Privé, Mémoire Pour l'Obtention du Mastère en Droit des Affaires, 2005-2006, p. 6
* 38. Louisa B. Childs, Shaky Foundations: Criticism of Reciprocity and the Distinction Between Public and Private International Law, International Law and Politics, Vol. 38:221, 2006, p. 224
* 39. Brandon B. Danford, The Enforcement Of Foreign Money Judgments in the Unites States and Europe: How Can We Achieve a Comprehensive Treaty?, The Review of Litigation, 2004, p. 419.
* 41. Ali Mezghani, Droit International Privé: Etats Nouveaux et Relations Privées Internationales, Tunis, CERES-CERP, Tunis, 1999, p. 407-408
* 42. Some scholars have predicted the disappearance of the notion from the landscape of the recognition and enforcement practices. Professor Juenger wrote that «reciprocity no longer enjoys the popularity it did...Increasingly, courts and legislatures reject this impediment». See Friedrich K. Juenger, The recognition of Money Judgments in Civil and Commercial Matters, Selected Essays on the Conflict of Law, 2002, p.315
* 43. Young-Joon Mok, The Principle in the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Award of 1958, CASE W. RES. J. INT'L L, Vol.21:123, 1989, p.124