Supreme Court of the United States 170A Federal Civil Procedure

REPUBLIC OF The PHILIPPINES, et al., Petitioners, 170AXI Dismissal

v. 170AXI(B) Involuntary Dismissal
Jerry S. PIMENTEL, Temporary Administrator of the Estate of Mariano J. Pimentel, 170AXI(B)2 Grounds in General
Deceased, et al. 170Ak1744 Parties, Defects as to
No. 06-1204. 170Ak1747 k. Nonjoinder in General. Most Cited Cases
Decision whether to dismiss case for nonjoinder of a person who should be joined if
Argued March 17, 2008. feasible must be based on factors varying with the different cases, some such
Decided June 12, 2008. factors being substantive, some procedural, some compelling by themselves, and
some subject to balancing against opposing interests. Fed.Rules Civ.Proc.Rule 19,
Background: Holder of assets transferred to Panamanian company by then- 28 U.S.C.A.
President of Republic of the Philippines brought interpleader action, seeking to
resolve conflicting claims to assets. Following remand, 309 F.3d 1143, the United [3] Interpleader 222 2
States District Court for the District of Hawaiji, Manuel L. Real, J., awarded funds to
class of human rights victims. Appeal was taken. The United States Court of 222 Interpleader
Appeals for the Ninth Circuit, 464 F.3d 885, affirmed. Certiorari was granted. 222I Right to Interpleader
222k2 k. Existence of Other Remedy. Most Cited Cases
Holding: The United States Supreme Court, Justice Kennedy, held that action
could not proceed without Republic of the Philippines and good-government Interpleader 222 19
commission created by the Republic as parties.
222 Interpleader
Reversed and remanded. 222II Proceedings and Relief
222k19 k. Parties. Most Cited Cases
Justice Stevens filed opinion concurring in part and dissenting in part.
Interpleader 222 30
Justice Souter filed opinion concurring in part and dissenting in part.
222 Interpleader
West Headnotes 222II Proceedings and Relief
222k30 k. Dismissal Before Hearing. Most Cited Cases
[1] Federal Civil Procedure 170A 1747 Interpleader action brought by holder of assets transferred to Panamanian company
by then-President of Republic of the Philippines could not proceed without
170A Federal Civil Procedure Republic of the Philippines and good-government commission created by the
170AXI Dismissal Republic as parties; giving full effect to sovereign immunity of Republic and
170AXI(B) Involuntary Dismissal commission promoted comity and dignity interests, no alternative forms of relief
170AXI(B)2 Grounds in General were available, going forward without Republic and commission would not further
170Ak1744 Parties, Defects as to public interest in settling dispute as a whole since Republic and commission would
170Ak1747 k. Nonjoinder in General. Most Cited Cases not be bound by judgment where they were not parties, and dismissal of action on
ground of nonjoinder would provide asset holder with defense against piecemeal
Federal Civil Procedure 170A 1824 litigation and inconsistent judgments. Fed.Rules Civ.Proc.Rule 19(b), 28 U.S.C.A.

170A Federal Civil Procedure [4] Federal Civil Procedure 170A 201
170AXI Dismissal
170AXI(B) Involuntary Dismissal 170A Federal Civil Procedure
170AXI(B)5 Proceedings 170AII Parties
170Ak1824 k. Dismissal on Court's Own Motion. Most Cited Cases 170AII(E) Necessary Joinder
A court with proper jurisdiction may consider sua sponte the absence of a required 170AII(E)1 In General
person and dismiss for failure to join. Fed.Rules Civ.Proc.Rule 19(b), 28 U.S.C.A. 170Ak201 k. In General. Most Cited Cases
Under the joinder rule, in determining whether a judgment rendered without the
[2] Federal Civil Procedure 170A 1747 absent party would be adequate, adequacy refers to the public stake in settling
disputes by wholes, whenever possible. Fed.Rules Civ.Proc.Rule 19(b), 28
E. ACT OF STATE DOCTRINE/JURISDICTION OVER THE SUBJECT MATTER Page 1 of 102 CONFLICT OF LAWS 3D 2/08-09
U.S.C.A.
*2181 Syllabus FN*
FN* The syllabus constitutes no part of the opinion of the Court but has
been prepared by the Reporter of Decisions for the convenience of the
reader. See United States v. Detroit Timber & Lumber Co., 200 U.S. 321,
337, 26 S.Ct. 282, 50 L.Ed. 499.
A class action by and for human rights victims ( Pimentel class) of Ferdinand
Marcos, while he was President of the Republic of the Philippines (Republic), led
to a nearly $2 billion judgment in a United States District Court. The Pimentel class
then sought to attach the assets of Arelma, S.A. (Arelma), a company incorporated
by Marcos, held by a New York broker (Merrill Lynch). The Republic and a
Philippine commission (Commission) established to recover property wrongfully
taken by Marcos are also attempting to recover this and other Marcos property. The
Philippine National Banc (PNB) holds some of the disputed assets in escrow,
awaiting the outcome of pending litigation in the Sandiganbayan, a Philippine court
determining whether Marcos' property should be forfeited to the Republic. Facing
claims from various Marcos creditors, including the Pimentel class, Merrill Lynch
filed this interpleader action under 28 U.S.C. § 1335, naming, among the
defendants, the Republic, the Commission, Arelma, PNB (all petitioners here), and
the Pimentel class (respondents here). The Republic and the Commission asserted
sovereign immunity under the Foreign Sovereign Immunities Act of 1976, and
moved to dismiss pursuant to Federal Rule of Civil Procedure 19(b), arguing that
the action could not proceed without them. Arelma and PNB also sought a Rule
19(b) dismissal. The District Court refused, but the Ninth Circuit reversed, holding
that the Republic and the Commission are entitled to sovereign immunity and are
required parties under Rule 19(a), and it entered a stay pending the Sandiganbayan
litigation's outcome. Finding that that litigation could not determine entitlement to
Arelma's assets, the District Court vacated the stay and ultimately awarded the
assets to the Pimentel class. The Ninth Circuit affirmed, holding that dismissal was
not warranted under Rule 19(b) because, though the Republic and the Commission
were required parties, their claim had so *2182 little likelihood of success on the
merits that the action could proceed without them. The court found it unnecessary to
consider whether prejudice to those entities might be lessened by a judgment or
interim decree in the interpleader action, found the entities' failure to obtain a
judgment in the Sandiganbayan an equitable consideration counseling against
dismissing the interpleader suit, and found that allowing the interpleader case to
proceed would serve the Pimentel class' interests.
Held:
1. Because Arelma and PNB also seek review of the Ninth Circuit's decision, this
Court need not rule on the question whether the Republic and the Commission,
having been dismissed from the suit, had the right to seek review of the decision
that the suit could proceed in their absence. As a general matter any party may
move to dismiss an action under Rule 19(b). Arelma and PNB have not lost
standing to have the judgment vacated in its entirety on procedural grounds simply
because they did not appeal, or petition for certiorari on, the underlying merits ruling
denying them the interpleaded assets. Pp. 2187 - 2188.
E. ACT OF STATE DOCTRINE/JURISDICTION OVER THE SUBJECT MATTER Page 2 of 102
2. Rule 19 requires dismissal of the interpleader action. Pp. 2188 - 2194.
(a) Under Rule 19(a), nonjoinder even of a required person does not always result
in dismissal. When joinder is not feasible, the question whether an action should
proceed turns on nonexclusive considerations in Rule 19(b), which asks whether “in
equity and good conscience, the action should proceed among the existing parties
or should be dismissed.” The joinder issue can be complex, and the case-specific
determinations involve multiple factors, some “substantive, some procedural, some
compelling by themselves, and some subject to balancing against opposing
interests,” Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U.S. 102,
119, 88 S.Ct. 733, 19 L.Ed.2d 936. Pp. 2188 - 2189.
(b) Here, Rule 19(a)'s application is not contested: The Republic and the
Commission are required entities. And this Court need not decide the proper
standard of review for Rule 19(b) decisions, because the Ninth Circuit's errors of law
require reversal. Pp. 2188 - 2194.
(1) The first factor directs the court to consider, in determining whether the action
may proceed, the prejudice to absent entities and present parties in the event
judgment is rendered without joinder. Rule 19(b)(1). The Ninth Circuit gave
insufficient weight to the sovereign status of the Republic and the Commission in
considering whether they would be prejudiced if the case proceeded. Giving full
effect to sovereign immunity promotes the comity and dignity interests that
contributed to the development of the immunity doctrine. See, e.g., Verlinden B.V.
v. Central Bank of Nigeria, 461 U.S. 480, 486, 103 S.Ct. 1962, 76 L.Ed.2d 81.
These interests are concrete here. The entities' claims arise from historically and
politically significant events for the Republic and its people, and the entities have a
unique interest in resolving matters related to Arelma's assets. A foreign state has a
comity interest in using its courts for a dispute if it has a right to do so. Its dignity is
not enhanced if other nations bypass its courts without right or good cause. A more
specific affront could result if property the Republic and the Commission claim is
seized by a foreign court decree. This Court has not considered the precise
question presented, but authorities involving the intersection of joinder and the
United States' governmental immunity, see, e.g., Mine Safety Appliances Co. v.
Forrestal, 326 U.S. 371, 373-375, 66 S.Ct. 219, 90 L.Ed. 140, instruct that where
sovereign immunity is asserted, and the *2183 sovereign's claims are not frivolous,
dismissal must be ordered where there is a potential for injury to the absent
sovereign's interests. The claims of the Republic and the Commission were not
frivolous, and the Ninth Circuit thus erred in ruling on their merits. The privilege of
sovereign immunity from suit is much diminished if an important and consequential
ruling affecting the sovereign's substantial interest is determined, or at least
assumed, by a federal court in its absence and over its objection. The Pimentel
class' interest in recovering its damages is not discounted, but important comity
concerns are implicated by assertion of foreign sovereign immunity. The error is not
that the courts below gave too much weight to the Pimentel class' interests, but that
they did not accord proper weight to the compelling sovereign immunity claim. Pp.
2189 - 2192.
(2) The second factor is the extent to which any prejudice could be lessened or
avoided by relief or measures alternative to dismissal, Rule 19(b)(2), but no
CONFLICT OF LAWS 3D 2/08-09
alternative remedies or forms of relief have been proposed or appear to be
available. As to the third factor-whether a judgment rendered without the absent
party would be adequate, Rule 19(b)(3)-“adequacy” refers not to satisfaction of the
Pimentel class' claims, but to the “public stake in settling disputes by wholes,
whenever possible,” Provident Bank, supra, at 111, 88 S.Ct. 733. Going forward
with the action in the absence of the Republic and the Commission would not
further this public interest because they could not be bound by a judgment to which
they were not parties. As to the fourth factor-whether the plaintiff would have an
adequate remedy if the action were dismissed for nonjoinder, Rule 19(b)(4)-the
Ninth Circuit made much of the tort victims' lack of an alternative forum. But Merrill
Lynch, not the Pimentel class, is the plaintiff as the stakeholder in the interpleader
action. See 28 U.S.C. § 1335(a). The Pimentel class' interests are not irrelevant to
Rule 19(b)'s equitable balance, but the Rule's other provisions are the relevant ones
to consult. A dismissal on the ground of nonjoinder will not provide Merrill Lynch
with a judgment determining entitlement to the assets so it could be done with the
matter, but it likely would give Merrill Lynch an effective defense against piecemeal
litigation by various claimants and inconsistent, conflicting judgments. Any prejudice
to Merrill Lynch is outweighed by prejudice to the absent entities invoking sovereign
immunity. In the usual course, the Ninth Circuit's failure to give sufficient weight to
the likely prejudice to the Republic and the Commission would warrant reversal and
remand for further determinations, but here, that error plus this Court's analysis
under Rule 19(b)'s additional provisions require the action's dismissal. Pp. 2192 -
2194.
464 F.3d 885, reversed and remanded.
KENNEDY, J., delivered the opinion of the Court, in which ROBERTS, C.J., and
SCALIA, THOMAS, GINSBURG, BREYER, and ALITO, JJ., joined, in which
SOUTER, J., joined as to all but Parts IV-B and V, and in which STEVENS, J.,
joined as to Part II. STEVENS, J., and SOUTER, J., filed opinions concurring in part
and dissenting in part.
Charles A. Rothfeld, for petitioners.
Edwin S. Kneedler for the United States as amicus curiae, by special leave of the
Court, supporting the petitioners.
Robert A. Swift, for respondents.
Stephen V. Bomse, Counsel of Record, Joshua E. Rosenkranz, Rachel M. Jones,
Adam J. Gromfin, Heller Ehrman LLP, *2184 San Francisco, CA, for Petitioners
Republic of the Philippines and PCGG, Kenneth S. Geller, Charles A. Rothfeld,
David M. Gossett, Elizabeth G. Oyer, Brian D. Netter, Mayer Brown LLP,
Washington, DC, for Petitioners Philippine National Bank and Arelma, Inc.
Mariano J. Pimentel, Robert A. Swift, Counsel of Record, Craig W. Hillwig, Kohn,
Swift, & Graf, P.C., Philadelphia, PA, Sherry P. Broder, Honolulu, HI, Jon M. Van
Dyke, Honolulu, HI, for Respondent Mariano J. Pimentel and the Class of Human
Rights Victims.For U.S. Supreme Court Briefs, see:2008 WL 177561
(Pet.Brief)2008 WL 467887 (Resp.Brief)2008 WL 659543 (Reply.Brief)
Justice KENNEDY delivered the opinion of the Court.
This case turns on the interpretation and proper application of Rule 19 of the
Federal Rules of Civil Procedure and requires us to address the Rule's operation in
the context of foreign sovereign immunity.
E. ACT OF STATE DOCTRINE/JURISDICTION OVER THE SUBJECT MATTER Page 3 of 102
This interpleader action was commenced to determine the ownership of property
allegedly stolen by Ferdinand Marcos when he was the President of the Republic
of the Philippines. Two entities named in the suit invoked sovereign immunity.
They are the Republic of the Philippines and the Philippine Presidential
Commission on Good Governance, referred to in turn as the Republic and the
Commission. They were dismissed, but the interpleader action proceeded to
judgment over their objection. Together with two parties who remained in the suit,
the Republic and the Commission now insist it was error to allow the litigation to
proceed. Under Rule 19, they contend, the action should have been dismissed once
it became clear they could not be joined as parties without their consent.
The United States Court of Appeals for the Ninth Circuit, agreeing with the District
Court, held the action could proceed without the Republic and the Commission as
parties. Among the reasons the Court of Appeals gave was that the absent,
sovereign entities would not prevail on their claims. We conclude the Court of
Appeals gave insufficient weight to the foreign sovereign status of the Republic and
the Commission, and that the court further erred in reaching and discounting the
merits of their claims.
I
A
When the opinion of the Court of Appeals is consulted, the reader will find its
quotations from Rule 19 do not accord with its text as set out here; for after the case
was in the Court of Appeals and before it came here, the text of the Rule changed.
The Rules Committee advised the changes were stylistic only, see Advisory
Committee's Notes on 2007 Amendment to Fed. Rule Civ. Proc. 19, 28 U.S.C. A., p.
168 (2008); and we agree. These are the three relevant stylistic changes. First, the
word “required” replaced the word “necessary” in subparagraph (a). Second, the
1966 Rule set out factors in longer clauses and the 2007 Rule sets out the factors
affecting joinder in separate lettered headings. Third, the word “indispensable,”
which had remained as a remnant of the pre-1966 Rule, is altogether deleted from
the current text. Though the word “indispensable” had a lesser place in the 1966
Rule, it still had the latent potential to mislead.
As the substance and operation of the Rule both pre- and post-2007 are
unchanged, we will refer to the present, revised*2185 version. The pre-2007 version
is printed in the Appendix of this opinion. The current Rule states, in relevant part,
as follows:
“Rule 19. Required Joinder of Parties.
“(a) Persons Required to Be Joined if Feasible.
“(1) Required Party. A person who is subject to service of process and whose
joinder will not deprive the court of subject-matter jurisdiction must be joined as a
party if:
“(A) in that person's absence, the court cannot accord complete relief among
CONFLICT OF LAWS 3D 2/08-09
 existing parties; or
“(B) that person claims an interest relating to the subject of the action and is so
situated that disposing of the action in the person's absence may:
“(i) as a practical matter impair or impede the person's ability to protect the
interest; or
“(ii) leave an existing party subject to a substantial risk of incurring double,
multiple, or otherwise inconsistent obligations because of the interest.
“(2) Joinder by Court Order. If a person has not been joined as required, the
court must order that the person be made a party. A person who refuses to join
as a plaintiff may be made either a defendant or, in a proper case, an involuntary
plaintiff.
“(3) Venue. If a joined party objects to venue and the joinder would make venue
improper, the court must dismiss that party.
“(b) When Joinder Is Not Feasible. If a person who is required to be joined if
feasible cannot be joined, the court must determine whether, in equity and good
conscience, the action should proceed among the existing parties or should be
dismissed. The factors for the court to consider include:
“(1) the extent to which a judgment rendered in the person's absence might
prejudice that person or the existing parties;
“(2) the extent to which any prejudice could be lessened or avoided by:
“(A) protective provisions in the judgment;
“(B) shaping the relief; or
“(C) other measures;
“(3) whether a judgment rendered in the person's absence would be adequate;
and
“(4) whether the plaintiff would have an adequate remedy if the action were
dismissed for nonjoinder.” Fed. Rules Civ. Proc. 19(a)-(b).
See also Rule 19(c) (imposing pleading requirements); Rule 19(d) (creating
exception for class actions).
B Litigation consolidated the various human rights complaints against Marcos in that
In 1972, Ferdinand Marcos, then President of the Republic, incorporated Arelma,
S.A. (Arelma), under Panamanian law. Around the same time, Arelma opened a
brokerage account with Merrill Lynch, Pierce, Fenner & Smith Inc. (Merrill Lynch) in
New York, in which it deposited $2 million. As of the year 2000, the account had
grown to approximately $35 million.
E. ACT OF STATE DOCTRINE/JURISDICTION OVER THE SUBJECT MATTER Page 4 of 102
Alleged crimes and misfeasance by Marcos during his presidency became the
subject of worldwide attention and protest. A class action by and on behalf of some
9,539 of his human rights victims was filed against Marcos and his estate, among
others. The class action was tried in the United States District Court for the District
of Hawaii and resulted in a nearly $2 billion judgment for the class. See *2186Hilao
v. Estate of Marcos, 103 F.3d 767 (C.A.9 1996). We refer to that litigation as the
Pimentel case and to its class members as the Pimentel class. In a related action,
the Estate of Roger Roxas and Golden Budha [sic] Corporation (the Roxas
claimants) claim a right to execute against the assets to satisfy their own judgment
against Marcos' widow, Imelda Marcos. See Roxas v. Marcos, 89 Hawai‘i 91, 113-
115, 969 P.2d 1209, 1231-1233 (1998).
The Pimentel class claims a right to enforce its judgment by attaching the Arelma
assets held by Merrill Lynch. The Republic and the Commission claim a right to the
assets under a 1955 Philippine law providing that property derived from the misuse
of public office is forfeited to the Republic from the moment of misappropriation. See
An Act Declaring Forfeiture in Favor of the State Any Property Found To Have Been
Unlawfully Acquired by Any Public Officer or Employee and Providing for the
Proceedings Therefor, Rep. Act No. 1379, 51:9 O.G. 4457 (June 18, 1955).
After Marcos fled the Philippines in 1986, the Commission was created to recover
any property he wrongfully took. Almost immediately the Commission asked the
Swiss Government for assistance in recovering assets-including shares in Arelma-
that Marcos had moved to Switzerland. In compliance the Swiss Government froze
certain assets and, in 1990, that freeze was upheld by the Swiss Federal Supreme
Court. In 1991, the Commission asked the Sandiganbayan, a Philippine court of
special jurisdiction over corruption cases, to declare forfeited to the Republic any
property Marcos had obtained through misuse of his office. That litigation is still
pending in the Sandiganbayan.
The Swiss assets were transferred to an escrow account set up by the Commission
at the Philippine National Banc (PNB), pending the Sandiganbayan's decision as to
their rightful owner. The Republic and the Commission requested that Merrill Lynch
follow the same course and transfer the Arelma assets to an escrow account at
PNB. Merrill Lynch did not do so. Facing claims from various Marcos creditors,
including the Pimentel class, Merrill Lynch instead filed an interpleader action under
28 U.S.C. § 1335. The named defendants in the interpleader action were, among
others, the Republic and the Commission, Arelma, PNB, and the Pimentel class
(the respondents here).
The Pimentel case had been tried as a class action before Judge Manuel Real of
the United States District Court for the Central District of California, who was sitting
by designation in the District of Hawaii after the Judicial Panel on Multidistrict
court. See Hilao, supra, at 771. Judge Real directed Merrill Lynch to file the
interpleader action in the District of Hawaii, and he presided over the matter.
After being named as defendants in the interpleader action, the Republic and the
Commission asserted sovereign immunity under the Foreign Sovereign Immunities
Act of 1976 (FSIA), 28 U.S.C. § 1604. They moved to dismiss pursuant to Rule
CONFLICT OF LAWS 3D 2/08-09
19(b), based on the premise that the action could not proceed without them. Arelma
and PNB also moved to dismiss pursuant to Rule 19(b). Without addressing
whether they were entitled to sovereign immunity, Judge Real initially rejected the
request by the Republic and the Commission to dismiss the interpleader action.
They appealed, and the Court of Appeals reversed. It held the Republic and the
Commission are entitled to sovereign immunity and that under Rule 19(a) they are
required parties (or “necessary” parties under the old terminology). See *2187In re
Republic of the Philippines, 309 F.3d 1143, 1149-1152 (C.A.9 2002). The Court of
Appeals entered a stay pending the outcome of the litigation in the Sandiganbayan
over the Marcos assets. See id., at 1152-1153.
After concluding that the pending litigation in the Sandiganbayan could not
determine entitlement to the Arelma assets, Judge Real vacated the stay, allowed
the action to proceed, and awarded the assets to the Pimentel class. A week later,
in the case initiated before the Sandiganbayan in 1991, the Republic asked that
court to declare the Arelma assets forfeited, arguing the matter was ripe for
decision. The Sandiganbayan has not yet ruled.
In the interpleader case the Republic, the Commission, Arelma, and PNB appealed
the District Court's judgment in favor of the Pimentel claimants. This time the Court
of Appeals affirmed. See Merrill Lynch, Pierce, Fenner & Smith v. ENC Corp., 464
F.3d 885 (C.A.9 2006). Dismissal of the interpleader suit, it held, was not
warranted under Rule 19(b) because, though the Republic and the Commission
were required (“necessary”) parties under Rule 19(a), their claim had so little
likelihood of success on the merits that the interpleader action could proceed
without them. One of the reasons the court gave was that any action commenced
by the Republic and the Commission to recover the assets would be barred by New
York's 6-year statute of limitations for claims involving the misappropriation of public
property. See N.Y. Civ. Prac. Law Ann. § 213 (West Supp.2008). The court thus
found it unnecessary to consider whether any prejudice to the Republic and the
Commission might be lessened by some form of judgment or interim decree in the
interpleader action. The court also considered the failure of the Republic and the
Commission to obtain a judgment in the Sandiganbayan-despite the Arelma share
certificates having been located and held in escrow at the PNB since 1997-1998-to
be an equitable consideration counseling against dismissal of the interpleader suit.
The court further found it relevant that allowing the interpleader case to proceed
would serve the interests of the Pimentel class, which, at this point, likely has no
other available forum in which to enforce its judgment against property belonging to
Marcos.
This Court granted certiorari. See 552 U.S. ----, 128 S.Ct. 705, 169 L.Ed.2d 552
(2007).
II
We begin with the question we asked the parties to address when we granted
certiorari: Whether the Republic and the Commission, having been dismissed from
the interpleader action based on their successful assertion of sovereign immunity,
had the right to appeal the District Court's determination under Rule 19 that the
action could proceed in their absence; and whether they have the right to seek this
Court's review of the Court of Appeals' judgment affirming the District Court. See
E. ACT OF STATE DOCTRINE/JURISDICTION OVER THE SUBJECT MATTER
ibid.
Respondents contend that the Republic and the Commission were not proper
parties in the Court of Appeals when it reviewed the District Court's judgment
allowing the action to proceed without them; and, respondents continue, the
Republic and the Commission are not proper parties in the instant proceeding
before us. See Brief for Respondent Pimentel 21.
[1] Without implying that respondents are correct in saying the Republic and the
Commission could neither appeal nor become parties here, we conclude we need
not rule on this point. Other parties before us, Arelma and PNB, also seek review of
the Court of Appeals' decision affirming the District Court. They, too, moved to
*2188 dismiss the action under Rule 19(b), appealed from the denial of their motion,
and are petitioners before this Court. As a general matter any party may move to
dismiss an action under Rule 19(b). A court with proper jurisdiction may also
consider sua sponte the absence of a required person and dismiss for failure to join.
See, e.g., Minnesota v. Northern Securities Co., 184 U.S. 199, 235, 22 S.Ct. 308,
46 L.Ed. 499 (1902); see also Provident Tradesmens Bank & Trust Co. v.
Patterson, 390 U.S. 102, 111, 88 S.Ct. 733, 19 L.Ed.2d 936 (1968).
Respondents argue, however, that Arelma and PNB have no standing to raise
before this Court the question whether the action may proceed in the absence of the
Republic and the Commission. Arelma and PNB lost on the merits of their
underlying claims to the interpleaded assets in both the District Court and the Court
of Appeals. By failing to petition for certiorari on that merits ruling, respondents
contend, Arelma and PNB abandoned any entitlement to the interpleaded assets
and therefore lack a concrete stake in the outcome of further proceedings. We
disagree. Dismissal of the action under Rule 19(b) would benefit Arelma and PNB
by vacating the judgment denying them the interpleaded assets. A party that seeks
to have a judgment vacated in its entirety on procedural grounds does not lose
standing simply because the party does not petition for certiorari on the substance
of the order.
III
We turn to the question whether the interpleader action could proceed in the District
Court without the Republic and the Commission as parties.
Subdivision (a) of Rule 19 states the principles that determine when persons or
entities must be joined in a suit. The Rule instructs that nonjoinder even of a
required person does not always result in dismissal. Subdivision (a) opens by noting
that it addresses joinder “if Feasible.” Where joinder is not feasible, the question
whether the action should proceed turns on the factors outlined in subdivision (b).
The considerations set forth in subdivision (b) are nonexclusive, as made clear by
the introductory statement that “[t]he factors for the court to consider include.” Fed.
Rule Civ. Proc. 19(b). The general direction is whether “in equity and good
conscience, the action should proceed among the existing parties or should be
dismissed.” Ibid. The design of the Rule, then, indicates that the determination
whether to proceed will turn upon factors that are case specific, which is consistent
with a Rule based on equitable considerations. This is also consistent with the fact
that the determination of who may, or must, be parties to a suit has consequences
Page 5 of 102 CONFLICT OF LAWS 3D 2/08-09
for the persons and entities affected by the judgment; for the judicial system and its
interest in the integrity of its processes and the respect accorded to its decrees; and
for society and its concern for the fair and prompt resolution of disputes. See,
e.g., Illinois Brick Co. v. Illinois, 431 U.S. 720, 737-739, 97 S.Ct. 2061, 52 L.Ed.2d
707 (1977). For these reasons, the issue of joinder can be complex, and
determinations are case specific. See, e.g., Provident Bank, supra, at 118-119, 88
S.Ct. 733.
Under the earlier Rules the term “indispensable party” might have implied a certain
rigidity that would be in tension with this case-specific approach. The word
“indispensable” had an unforgiving connotation that did not fit easily with a system
that permits actions to proceed even when some persons who otherwise should be
parties to the action cannot be joined. As the Court noted in Provident Bank, the use
of “indispensable” in Rule 19 created *2189 the “verbal anomaly” of an
“indispensable person who turns out to be dispensable after all.” 390 U.S., at 117,
n. 12, 88 S.Ct. 733. Though the text has changed, the new Rule 19 has the same
design and, to some extent, the same tension. Required persons may turn out not
to be required for the action to proceed after all.
[2] In all events it is clear that multiple factors must bear on the decision whether to
proceed without a required person. This decision “must be based on factors varying
with the different cases, some such factors being substantive, some procedural,
some compelling by themselves, and some subject to balancing against opposing
interests.” Id., at 119, 88 S.Ct. 733.
IV
[3] We turn to Rule 19 as it relates to this case. The application of subdivision (a) of
Rule 19 is not contested. The Republic and the Commission are required entities
because “[w]ithout [them] as parties in this interpleader action, their interests in the
subject matter are not protected.” In re Republic of Philippines, 309 F.3d, at 1152;
see Fed. Rule Civ. Proc. 19(a)(1)(B)(i). All parties appear to concede this. The
disagreement instead centers around the application of subdivision (b), which
addresses whether the action may proceed without the Republic and the
Commission, given that the Rule requires them to be parties.
We have not addressed the standard of review for Rule 19(b) decisions. The case-
specific inquiry that must be followed in applying the standards set forth in
subdivision (b), including the direction to consider whether “in equity and good
conscience” the case should proceed, implies some degree of deference to the
district court. In this case, however, we find implicit in the District Court's rulings,
and explicit in the opinion of the Court of Appeals, errors of law that require
reversal. Whatever the appropriate standard of review, a point we need not decide,
the judgment could not stand. Cf. Koon v. United States, 518 U.S. 81, 99-100, 116
S.Ct. 2035, 135 L.Ed.2d 392 (1996) (a court “by definition abuses its discretion
when it makes an error of law”).
The Court of Appeals erred in not giving the necessary weight to the absent entities'
assertion of sovereign immunity. The court in effect decided the merits of the
Republic and the Commission's claims to the Arelma assets. Once it was
recognized that those claims were not frivolous, it was error for the Court of Appeals
E. ACT OF STATE DOCTRINE/JURISDICTION OVER THE SUBJECT MATTER Page 6 of 102
to address them on their merits when the required entities had been granted
sovereign immunity. The court's consideration of the merits was itself an
infringement on foreign sovereign immunity; and, in any event, its analysis was
flawed. We discuss these errors first in the context of how they affected the Court of
Appeals' analysis under the first factor of Rule 19(b). We then explain that the
outcome suggested by the first factor is confirmed by our analysis under the other
provisions of Rule 19(b). The action may not proceed.
A
As to the first Rule 19(b) factor-the extent to which a judgment rendered in the
person's absence might prejudice that person or the existing parties, Fed. Rule Civ.
Proc. 19(b)(1)-the judgment of the Court of Appeals is incorrect.
In considering whether the Republic and the Commission would be prejudiced if the
action were to proceed in their absence, the Court of Appeals gave insufficient
weight to their sovereign status. The doctrine of foreign sovereign immunity has
been recognized since early in the history of our Nation. It is premised upon the
“perfect equality and absolute independence*2190 of sovereigns, and th[e] common
interest impelling them to mutual intercourse.” Schooner Exchange v. McFaddon,
7 Cranch 116, 137, 3 L.Ed. 287 (1812). The Court has observed that the doctrine is
designed to “give foreign states and their instrumentalities some protection from the
inconvenience of suit,” Dole Food Co. v. Patrickson, 538 U.S. 468, 479, 123 S.Ct.
1655, 155 L.Ed.2d 643 (2003).
The privilege is codified by federal statute. FSIA, 28 U.S.C. §§ 1330, 1602-1611,
provides that “a foreign state shall be immune from the jurisdiction of the courts of
the United States and of the States except as provided in sections 1605 to 1607,”
absent existing international agreements to the contrary. § 1604; see Verlinden B.V.
v. Central Bank of Nigeria, 461 U.S. 480, 486-489, 103 S.Ct. 1962, 76 L.Ed.2d 81
(1983) (explaining the history of the doctrine's codification). Exceptions to the
general principle of foreign sovereign immunity are contained in §§ 1605-1607 of
the statute. They are inapplicable here, or at least the parties do not invoke them.
Immunity in this case, then, is uncontested; and pursuant to the Court of Appeals'
earlier ruling on the issue, the District Court dismissed the Republic and the
Commission from the action on this ground.
The District Court and the Court of Appeals failed to give full effect to sovereign
immunity when they held the action could proceed without the Republic and the
Commission. Giving full effect to sovereign immunity promotes the comity interests
that have contributed to the development of the immunity doctrine. See, e.g., id., at
486, 103 S.Ct. 1962 (“[F]oreign sovereign immunity is a matter of grace and
comity”); National City Bank of N.Y. v. Republic of China, 348 U.S. 356, 362, and
n. 7, 75 S.Ct. 423, 99 L.Ed. 389 (1955) (foreign sovereign immunity derives from
“standards of public morality, fair dealing, reciprocal self-interest, and respect for the
‘power and dignity’ of the foreign sovereign” (quoting Schooner Exchange, supra, at
136-137, 143-144)).
Comity and dignity interests take concrete form in this case. The claims of the
Republic and the Commission arise from events of historical and political
significance for the Republic and its people. The Republic and the Commission
CONFLICT OF LAWS 3D 2/08-09
have a unique interest in resolving the ownership of or claims to the Arelma assets
and in determining if, and how, the assets should be used to compensate those
persons who suffered grievous injury under Marcos. There is a comity interest in
allowing a foreign state to use its own courts for a dispute if it has a right to do so.
The dignity of a foreign state is not enhanced if other nations bypass its courts
without right or good cause. Then, too, there is the more specific affront that could
result to the Republic and the Commission if property they claim is seized by the
decree of a foreign court. Cf. Republic of Mexico v. Hoffman, 324 U.S. 30, 35-36, 65
S.Ct. 530, 89 L.Ed. 729 (1945) (pre-FSIA, common-law doctrine dictated that courts
defer to executive determination of immunity because “[t]he judicial seizure” of the
property of a friendly state may be regarded as “an affront to its dignity and may ...
affect our relations with it”).
Though this Court has not considered a case posing the precise question presented
here, there are some authorities involving the intersection of joinder and the
governmental immunity of the United States. See, e.g., Mine Safety Appliances Co.
v. Forrestal, 326 U.S. 371, 373-375, 66 S.Ct. 219, 90 L.Ed. 140 (1945) (dismissing
an action where the Under Secretary of the Navy was sued in his official capacity,
because the Government was a required entity that could not be joined when it
*2191 withheld consent to be sued); Minnesota v. United States, 305 U.S. 382,
386-388, 59 S.Ct. 292, 83 L.Ed. 235 (1939) (dismissing the action for nonjoinder of
a required entity where the United States was the owner of the land in question but
had not consented to suit). The analysis of the joinder issue in those cases was
somewhat perfunctory, but the holdings were clear: A case may not proceed when a
required-entity sovereign is not amenable to suit. These cases instruct us that
where sovereign immunity is asserted, and the claims of the sovereign are not
frivolous, dismissal of the action must be ordered where there is a potential for
injury to the interests of the absent sovereign.
The Court of Appeals accordingly erred in undertaking to rule on the merits of the
Republic and the Commission's claims. There may be cases where the person who
is not joined asserts a claim that is frivolous. In that instance a court may have
leeway under both Rule 19(a)(1), defining required parties, and Rule 19(b),
addressing when a suit may go forward nonetheless, to disregard the frivolous
claim. Here, the claims of the absent entities are not frivolous; and the Court of
Appeals should not have proceeded on the premise that those claims would be
determined against the sovereign entities that asserted immunity.
The Court of Appeals determined that the claims of the Republic and the
Commission as to the assets would not succeed because a suit would be time
barred in New York. This is not necessarily so. If the Sandiganbayan rules that the
Republic owns the assets or stock of Arelma because Marcos did not own them and
the property was forfeited to the Republic under Philippine law, then New York
misappropriation rules might not be the applicable law. For instance, the Republic
and the Commission, standing in for Arelma based upon the Sandiganbayan's
judgment, might not pursue a misappropriation of public property suit, as the Court
of Appeals assumed they would. They might instead, or in the alternative, file suit
for breach of contract against Merrill Lynch. They would argue the statute of
limitations would start to run if and when Merrill Lynch refused to hand over the
assets. See N.Y. Civ. Prac. Law Ann. § 213 (West Supp.2008); Ely-Cruikshank
Co. v. Bank of Montreal, 81 N.Y.2d 399, 402, 599 N.Y.S.2d 501, 615 N.E.2d 985,
E. ACT OF STATE DOCTRINE/JURISDICTION OVER THE SUBJECT MATTER Page 7 of 102
986 (1993) (“In New York, a breach of contract cause of action accrues at the time
of the breach”). Or the Republic and the Commission might bring an action either in
state or federal court to enforce the Sandiganbayan's judgment. See 1 Restatement
(Third) of Foreign Relations Law of the United States § 482, Comment a (1986)
(jurisdiction of foreign court rendering judgment is presumed); id., at Comment d
(providing exceptions not relevant here); see also 28 U.S.C. § 2467(c) (providing for
enforcement of foreign forfeiture judgments in certain circumstances). Merrill Lynch
makes arguments why these actions would not succeed, see Brief for Merrill Lynch
as Amicus Curiae 26-27, to which the Republic, the Commission, and the United
States respond, see Reply Brief for Petitioners 14-18; Brief for United States as
Amicus Curiae 24-28. We need not seek to predict the outcomes. It suffices that the
claims would not be frivolous.
As these comments indicate, Rule 19 cannot be applied in a vacuum, and it may
require some preliminary assessment of the merits of certain claims. For example,
the Rule directs a court, in determining who is a required person, to consider
whether complete relief can be afforded in their absence. See Fed. Rule Civ. Proc.
19(a)(1)(A). Likewise, in the Rule 19(b) inquiry, a court must examine, to some
extent, the claims presented and the interests*2192 likely to be asserted both by the
joined parties and the absent entities or persons. Here, however, it was improper to
issue a definitive holding regarding a nonfrivolous, substantive claim made by an
absent, required entity that was entitled by its sovereign status to immunity from
suit. That privilege is much diminished if an important and consequential ruling
affecting the sovereign's substantial interest is determined, or at least assumed, by
a federal court in the sovereign's absence and over its objection.
As explained above, the decision to proceed in the absence of the Republic and the
Commission ignored the substantial prejudice those entities likely would incur. This
most directly implicates Rule 19(b)'s first factor, which directs consideration of
prejudice both to absent persons and those who are parties. We have discussed the
absent entities. As to existing parties, we do not discount the Pimentel class'
interest in recovering damages it was awarded pursuant to a judgment.
Furthermore, combating public corruption is a significant international policy. The
policy is manifested in treaties providing for international cooperation in recovering
forfeited assets. See, e.g., United Nations Convention Against Corruption, G. & A.
Res. 5814, chs. IV and V, U.N. Doc. A/RES/58/4, pp. 22, 32 (Dec. 11, 2003)
(reprinted in 43 I.L.M. 37 (2004)); Treaty on Mutual Legal Assistance in Criminal
Matters Art. 16, Nov. 13, 1994, S. Treaty Doc. No. 104-18 (1995). This policy does
support the interest of the Pimentel class in recovering damages awarded to it. But
it also underscores the important comity concerns implicated by the Republic and
the Commission in asserting foreign sovereign immunity. The error is not that the
District Court and the Court of Appeals gave too much weight to the interest of the
Pimentel class, but that it did not accord proper weight to the compelling claim of
sovereign immunity.
Based on these considerations we conclude the District Court and the Court of
Appeals gave insufficient weight to the likely prejudice to the Republic and the
Commission should the interpleader proceed in their absence.
B
CONFLICT OF LAWS 3D 2/08-09
As to the second Rule 19(b) factor-the extent to which any prejudice could be
lessened or avoided by relief or measures alternative to dismissal, Fed. Rule Civ.
Proc. 19(b)(2)-there is no substantial argument to allow the action to proceed. No
alternative remedies or forms of relief have been proposed to us or appear to be
available. See 7 C. Wright, A. Miller, & M. Kane, Federal Practice and Procedure §
1608, pp. 106-110 (3d ed.2001) (collecting cases using alternative forms of relief,
including the granting of money damages rather than specific performance, the use
of declaratory judgment, and the direction that payment be withheld pending suits
against the absent party). If the Marcos estate did not own the assets, or if the
Republic owns them now, the claim of the Pimentel class likely fails; and in all
events, if there are equally valid but competing claims, that too would require
adjudication in a case where the Republic and the Commission are parties. See
State Farm Fire & Casualty Co. v. Tashire, 386 U.S. 523, 534, and n. 16, 87 S.Ct.
1199, 18 L.Ed.2d 270 (1967); Russell v. Clark's Executors, 7 Cranch 69, 98-99, 3
L.Ed. 271 (1812) (Marshall, C. J.); Wichita & Affiliated Tribes of Okla. v. Hodel, 788
F.2d 765, 774 (C.A.D.C.1986) (“Conflicting claims by beneficiaries to a common
trust present a textbook example of a case where one party may be severely
prejudiced by a decision in his absence” (citing *2193 Williams v. Bankhead, 19
Wall. 563, 570-571, 22 L.Ed. 184 (1874))).
C more parties for one claim.
[4] As to the third Rule 19(b) factor-whether a judgment rendered without the absent
party would be adequate, Fed. Rule Civ. Proc. 19(b)(3)-the Court of Appeals
understood “adequacy” to refer to satisfaction of the Pimentel class' claims. But
adequacy refers to the “public stake in settling disputes by wholes, whenever
possible.” Provident Bank, 390 U.S., at 111, 88 S.Ct. 733. This “social interest in
the efficient administration of justice and the avoidance of multiple litigation” is an
interest that has “traditionally been thought to support compulsory joinder of absent
and potentially adverse claimants.” Illinois Brick Co., 431 U.S., at 737-738, 97
S.Ct. 2061. Going forward with the action without the Republic and the
Commission would not further the public interest in settling the dispute as a whole
because the Republic and the Commission would not be bound by the judgment in
an action where they were not parties.
D this case, however, that error and our further analysis under the additional
As to the fourth Rule 19(b) factor-whether the plaintiff would have an adequate
remedy if the action were dismissed for nonjoinder, Fed. Rule Civ. Proc. 19(b)(4)-
the Court of Appeals made much of what it considered the tort victims' lack of an
alternative forum should this action be dismissed. This seems to assume the
plaintiff in this interpleader action was the Pimentel class. It is Merrill Lynch,
however, that has the statutory status of plaintiff as the stakeholder in the
interpleader action.
It is true that, in an interpleader action, the stakeholder is often neutral as to the
outcome, while other parties press claims in the manner of a plaintiff. That is
insufficient, though, to overcome the statement in the interpleader statute that the
stakeholder is the plaintiff. See 28 U.S.C. § 1335(a) (conditioning jurisdiction in part
upon whether “the plaintiff has deposited such money or property” at issue with the
district court or has “given bond payable to the clerk of the court in such amount and
E. ACT OF STATE DOCTRINE/JURISDICTION OVER THE SUBJECT MATTER Page 8 of 102
with such surety as the court or judge may deem proper”). We do not ignore that, in
context, the Pimentel class (and indeed all interpleader claimants) are to some
extent comparable to the plaintiffs in noninterpleader cases. Their interests are not
irrelevant to the Rule 19(b) equitable balance; but the other provisions of the Rule
are the relevant ones to consult.
Merrill Lynch, as the stakeholder, makes the point that if the action is dismissed it
loses the benefit of a judgment allowing it to disburse the assets and be done with
the matter. Dismissal of the action, it urges, leaves it without an adequate remedy,
for it “could potentially be forced ... to defend lawsuits by the various claimants in
different jurisdictions, possibly leading to inconsistent judgments.” Brief for Merrill
Lynch as Amicus Curiae 14. A dismissal of the action on the ground of nonjoinder,
however, will protect Merrill Lynch in some respects. That disposition will not
provide Merrill Lynch with a judgment determining the party entitled to the assets,
but it likely would provide Merrill Lynch with an effective defense against piecemeal
litigation and inconsistent, conflicting judgments. As matters presently stand, in any
later suit against it Merrill Lynch may seek to join the Republic and the Commission
and have the action dismissed under Rule 19(b) should they again assert sovereign
immunity. Dismissal for nonjoinder to some extent will serve the purpose of
interpleader, which is to prevent a stakeholder from *2194 having to pay two or
Any prejudice to Merrill Lynch in this regard is outweighed by prejudice to the
absent entities invoking sovereign immunity. Dismissal under Rule 19(b) will mean,
in some instances, that plaintiffs will be left without a forum for definitive resolution
of their claims. But that result is contemplated under the doctrine of foreign
sovereign immunity. See, e.g., Verlinden, 461 U.S., at 497, 103 S.Ct. 1962 (“[I]f a
court determines that none of the exceptions to sovereign immunity applies, the
plaintiff will be barred from raising his claim in any court in the United States”).
V
The Court of Appeals' failure to give sufficient weight to the likely prejudice to the
Republic and the Commission should the interpleader proceed in their absence
would, in the usual course, warrant reversal and remand for further proceedings. In
provisions of Rule 19(b) lead us to conclude the action must be dismissed. This
leaves the Pimentel class, which has waited for years now to be compensated for
grievous wrongs, with no immediate way to recover on its judgment against Marcos.
And it leaves Merrill Lynch, the stakeholder, without a judgment.
The balance of equities may change in due course. One relevant change may occur
if it appears that the Sandiganbayan cannot or will not issue its ruling within a
reasonable period of time. Other changes could result when and if there is a ruling.
If the Sandiganbayan rules that the Republic and the Commission have no right to
the assets, their claims in some later interpleader suit would be less substantial than
they are now. If the ruling is that the Republic and the Commission own the assets,
then they may seek to enforce a judgment in our courts; or consent to become
parties in an interpleader suit, where their claims could be considered; or file in
some other forum if they can obtain jurisdiction over the relevant persons. We do
note that if Merrill Lynch, or other parties, elect to commence further litigation in light
CONFLICT OF LAWS 3D 2/08-09
of changed circumstances, it would not be necessary to file the new action in the
District Court where this action arose, provided venue and jurisdictional
requirements are satisfied elsewhere. The present action, however, may not
proceed.
***
The judgment of the Court of Appeals for the Ninth Circuit is reversed, and the case
is remanded with instructions to order the District Court to dismiss the interpleader
action.
It is so ordered.
APPENDIX
The Court of Appeals issued its decision before the 2007 Amendments to Rule
19(b) became effective. See Merrill Lynch, Pierce, Fenner & Smith v. ENC Corp.,
464 F.3d 885, 891 (C.A.9 2006). The text of the Rule before those changes were
adopted is as follows:
“Rule 19. Joinder of Persons Needed for Just Adjudication
“(a) Persons to be Joined if Feasible. A person who is subject to service of
process and whose joinder will not deprive the court of jurisdiction over the
subject matter of the action shall be joined as a party in the action if (1) in the
person's absence complete relief cannot be accorded among those already
parties, or (2) the person claims an interest relating to the subject of the action
and is so situated that the disposition*2195 of the action in the person's absence
may (i) as a practical matter impair or impede the person's ability to protect that
interest or (ii) leave any of the persons already parties subject to a substantial risk
of incurring double, multiple, or otherwise inconsistent obligations by reason of
the claimed interest. If the person has not been so joined, the court shall order
that the person be made a party. If the person should join as a plaintiff but refuses
to do so, the person may be made a defendant, or, in a proper case, an
involuntary plaintiff. If the joined party objects to venue and joinder of that party
would render the venue of the action improper, that party shall be dismissed from
the action.
“(b) Determination by Court Whenever Joinder not Feasible. If a person
as described in subdivision (a)(1)-(2) hereof cannot be made a party, the court
shall determine whether in equity and good conscience the action should proceed
among the parties before it, or should be dismissed, the absent person being thus
regarded as indispensable. The factors to be considered by the court include:
first, to what extent a judgment rendered in the person's absence might be
prejudicial to the person or those already parties; second, the extent to which, by
protective provisions in the judgment, by the shaping of relief, or other measures,
the prejudice can be lessened or avoided; third, whether a judgment rendered in
the person's absence will be adequate; fourth, whether the plaintiff will have an
adequate remedy if the action is dismissed for nonjoinder.
“(c) Pleading Reasons for Nonjoinder. A pleading asserting a claim for relief
E. ACT OF STATE DOCTRINE/JURISDICTION OVER THE SUBJECT MATTER Page 9 of 102
shall state the names, if known to the pleader, of any persons as prescribed in
subdivision (a)(1)-(2) hereof who are not joined, and the reasons why they are not
joined.
“(d) Exception of Class Actions. This rule is subject to the provisions of Rule
23.”
Justice STEVENS, concurring in part and dissenting in part.
While I join Part II of the Court's opinion holding that we have jurisdiction to review
the Court of Appeals' decision and agree that we should not affirm the Court of
Appeals' judgment on the merits of its analysis under Rule 19 of the Federal Rules
of Civil Procedure, I believe the appropriate disposition of this case is to reverse and
remand for further proceedings. The District Court and the Ninth Circuit erred by
concluding that the New York statute of limitations provides a virtually insuperable
obstacle to petitioners' recovery of the Arelma, S. A., assets, and I therefore agree
that this Court should reverse. I would not, however, give near-dispositive effect to
the Republic of the Philippines (Republic) and the Philippine Presidential
Commission on Good Governance's (Commission) status as sovereign entities, as
the Court does in ordering outright dismissal of the case.
In my judgment, the Court of Appeals should either order the District Judge to stay
further proceedings pending a reasonably prompt decision of the Sandiganbayan or
order the case reassigned to a different District Judge to conduct further
proceedings. There is, of course, a risk of unfairness in conducting such
proceedings without the participation of petitioners. But it is a risk that they can
avoid by waiving their sovereign immunity, and the record provides a basis for
believing that they would do so if the case proceeded before a different judge.
*2196 The Republic did not invoke its sovereign immunity until after the District
Court denied its motion seeking dismissal or transfer for improper venue, dismissal
on act of state grounds, or recusal of the District Judge. App. 9; id., at 2-3 (docket
entries). In support of that motion they advanced a factual basis for suspecting that
the District Judge's impartiality could be questioned. Memorandum of Law in
Support of the Motions to Dismiss, Transfer or Stay, and For Recusal 23-28 in Civ.
No. CV00-595MLR (D.Haw.). These facts demonstrate that the District Judge would
likely “have substantial difficulty in putting out of his or her mind previously-
expressed views.” California v. Montrose Chemical Corp. of California, 104 F.3d
1507, 1521 (C.A.9 1997) (providing the standard for when the Ninth Circuit will
reassign a case; internal quotation marks omitted).
It appears, for example, that the District Judge summoned an attorney representing
Merrill Lynch to a meeting in chambers in Los Angeles on September 11, 2000,
after learning that the Republic and the Commission sought to obtain the Arelma
funds from Merrill Lynch. During these proceedings, the District Judge directed
Merrill Lynch to file an interpleader action before him in the District of Hawaii and to
deposit the Arelma funds with the court, despite the attorney's argument that New
York would likely be the more appropriate forum. See ante, at 2186 - 2187; Tr. 6
(Sept. 11, 2000). Merrill Lynch filed the interpleader on September 14, 2000, and
the District Judge sealed the file, making it difficult for other parties to determine the
status of the proceedings. See Affidavit of Richard A. Martin in Support of the
Motions to Dismiss, Transfer, or Stay Submitted by the Republic of the Philippines
CONFLICT OF LAWS 3D 2/08-09
and the Presidential Commission on Good Government in Civ. No. CV00-595MLR
(D.Haw.), ¶ 6-7, 11. These actions bespeak a level of personal involvement and
desire to control the Marcos proceedings that create at least a colorable basis for
the Republic and the Commission's concern about the District Judge's impartiality.
Furthermore, following the Republic and the Commission's motion to dismiss the
action on sovereign immunity grounds, the District Judge decided that they were not
“real parties in interest.” See In re Republic of Philippines, 309 F.3d 1143, 1148
(C.A.9 2002). The Ninth Circuit reversed and directed the District Judge to enter a
stay, id., at 1153; the District Court did so, but vacated the stay within months.
While the District Court's decision to do so was not without some basis, it
presumably increased concern about the possibility that the District Judge would not
fairly consider the Republic's position on the merits.
Upon reassignment, the question whether to dismiss the case, to stay the
proceedings, or to require the Republic to choose between asserting its sovereign
immunity and defending on the merits would be open. The District Judge might wish
to hold a hearing to determine whether the Republic and the Commission have a
substantial argument that the Republic owned the disputed assets when they were
conveyed to Arelma in 1972. While the Court assumes that the Republic's interest in
the Arelma assets is “not frivolous,” ante, at 2191, on this record, it is not clear
whether the Republic has a sufficient claim to those assets to preclude their
recovery by judgment creditors of Marcos. The Republic's claim to disputed assets
may be meritless for reasons unrelated to the potential statute of limitations.
Further, in conducting the balancing inquiry mandated by Rule 19, as interpreted by
Justice Harlan's opinion for the Court in *2197Provident Tradesmens Bank & Trust
Co. v. Patterson, 390 U.S. 102, 88 S.Ct. 733, 19 L.Ed.2d 936 (1968) , I would
conclude that several facts specific to this case suggest that the Republic and the
Commission's sovereign interests should be given less weight than in the ordinary
case. First, in all events, the Republic and the Commission must take affirmative
steps in United States courts (or possibly invoke the assistance of the Attorney
General to do so, see Brief for United States as Amicus Curiae 27) at some point in
order to recover the assets held in the United States. Thus, the sovereign interest
implicated here is not of the same magnitude as when a sovereign faces liability;
the Republic's interest is in choosing the most convenient venue and time for the
suit to proceed.
Second, in the past two decades, the Republic has participated in other
proceedings involving Marcos' assets in our courts without interposing any
objection. Indeed, in 1987 it filed an amicus brief with the Ninth Circuit in the
underlying consolidated class action that led to the entry of respondents' judgment
against Marcos; in that brief the Republic urged the Ninth Circuit to reverse the
District Judge's dismissal of two of the cases (later consolidated) under the act of
state doctrine and “to allow the Plaintiffs in those two cases to present their
evidence of gross human rights violations against Ferdinand Marcos and to pursue
justice in U.S. District Court.” App. A to Brief for Respondent Pimentel RA-1.
This was the Republic's position notwithstanding the fact that any recovery would
come from a judgment against Marcos' assets-assets that the Republic and the
Commission now claim to have owned in full from the moment Marcos acquired
E. ACT OF STATE DOCTRINE/JURISDICTION OVER THE SUBJECT MATTER Page 10 of 102
them. See, e.g., Brief for Republic in Nos. 04-16401, 04-16503, and 04-
16538(CA9), p. 9 (“Under Philippine law, assets resulting from the misuse of public
office, bribery, corruption, and other such crimes by public officials are forfeit to the
Republic from the moment such assets are generated”); Pet. for Republic in No.
0141 (Sandiganbayon) (filed 1991) (seeking forfeiture of a large number of Marcos
assets). Even if the Republic believed that Marcos might have some personal
assets that were not ill gotten, under the Republic's theory that amount could not
possibly have approached the judgment respondents received. Either the Republic
was encouraging futile and purely symbolic litigation, or the Republic believed that
other creditors would have access to at least a portion of Marcos' vast assets.
In sum, I am persuaded that the Court's judgment today represents a more
“inflexible approach” than the Rule contemplates. Provident, 390 U.S., at 107, 88
S.Ct. 733. All parties have an interest in the prompt resolution of the disposition of
the Arelma assets. A remand would allow a new judge to handle the matter in an
expeditious fashion rather than requiring a brand new proceeding. The Court
suggests that Merrill Lynch may file in another District Court-presumably in New
York-if it seeks to commence further litigation. See ante, at 2194. While this solution
would put the matter before another District Judge, it requires the initiation of a new
proceeding that may unnecessarily delay the final resolution.
Accordingly, I respectfully dissent.
Justice SOUTER, concurring in part and dissenting in part.
I join all but Parts IV-B and V of the Court's opinion. I differ as to relief because a
conclusion of the matter pending before the Sandiganbayan may simplify the issues
raised in this case and render one disposition or another more clearly correct. I
would therefore vacate the *2198 judgment and remand for a stay of proceedings
for a reasonable time to await a decree of the Philippine court. If it should appear
later that no such decree can be expected, the Court of Appeals could decide on
the next step in light of the Court's opinion. For reasons given by Justice STEVENS,
I would order that any further proceedings in the District Court be held before a
judge fresh to the case.
U.S.,2008.
Republic of Philippines v. Pimentel
128 S.Ct. 2180, 171 L.Ed.2d 131, 76 USLW 4445, 08 Cal. Daily Op. Serv. 7122,
2008 Daily Journal D.A.R. 8720, 21 Fla. L. Weekly Fed. S 316
END OF DOCUMENT
CONFLICT OF LAWS 3D 2/08-09
 Court of Appeals of New York. state may enforce a right under the law of the foreign state, unless the public policy
LOUCKS et al. of their own state forbids.
v.
STANDARD OIL CO. OF NEW YORK. Damages 115 87(1)
July 12, 1918.
115 Damages
Appeal from Supreme Court, Appellate Division, Fourth Department. 115V Exemplary Damages
115k87 Nature and Theory of Damages Additional to Compensation
Action by Fannie F. Loucks and James M. Rutledge, as joint administrators of 115k87(1) k. In General. Most Cited Cases
Everett A. Loucks, deceased, against the Standard Oil Company of New York. Public policy does not prohibit exemplary damages.
From a judgment of the Appellate Division ( 172 App. Div. 227, 159 N. Y. Supp.
282), reversing an order of the Special Term ( 92 Misc. Rep. 475, 156 N. Y. Supp. Death 117 35
7) and granting defendant's motion for judgment on the pleadings, plaintiffs appeal.
Reversed, and order of the Special Term affirmed. 117 Death
117III Actions for Causing Death
A. Lee Olmsted, of Syracuse, for appellants. Lyman M. Bass, of Buffalo, for 117III(B) Jurisdiction
respondent. 117k34 Jurisdiction of Cause of Action
117k35 k. Actions Under Laws of Other State or Foreign Country.
Collin, J., dissenting in part. Most Cited Cases
Since Rev.Laws Mass. c. 171, § 2, as amended by St. Mass. 1907, c. 375,
West Headnotes providing a penalty for tortious death, is not penal within the rules of private
international law, its primary purpose being reparation to the one aggrieved by the
Constitutional Law 92 2450 tort, the rights accruing under such statute may be enforced in the courts of New
York.
92 Constitutional Law
92XX Separation of Powers Death 117 35
92XX(C) Judicial Powers and Functions
92XX(C)1 In General 117 Death
92k2450 k. Nature and Scope in General. Most Cited Cases 117III Actions for Causing Death
(Formerly 92k67) 117III(B) Jurisdiction
Although the sovereign in its discretion may refuse its aid to a right created by 117k34 Jurisdiction of Cause of Action
foreign statute, the courts of the state have no such power. 117k35 k. Actions Under Laws of Other State or Foreign Country.
Most Cited Cases
Courts 106 8 Public policy of New York does not forbid the enforcement in that state of Rev.Laws
Mass. c. 171, § 2, as amended by St. Mass.1907, c. 375, providing a penalty
106 Courts recoverable for the tortious death of a person in Massachusetts.
106I Nature, Extent, and Exercise of Jurisdiction in General
106k3 Jurisdiction of Cause of Action Penalties 295 1
106k8 k. Actions Under Laws of Other State. Most Cited Cases
A tort committed in one state creates a right of action which may be sued upon in 295 Penalties
another, unless public policy forbids. 295I Nature and Grounds, and Extent of Liability
295k1 k. Nature and Scope as Punishment. Most Cited Cases
Courts 106 8 Public policy does not prohibit civil penalties.

106 Courts Statutes 361 174

106I Nature, Extent, and Exercise of Jurisdiction in General
106k3 Jurisdiction of Cause of Action 361 Statutes
106k8 k. Actions Under Laws of Other State. Most Cited Cases 361VI Construction and Operation
Notwithstanding one state may have no law concerning a similar right or remedy to 361VI(A) General Rules of Construction
that conferred by the law of another, where the tort occurs, the courts of the first 361k174 k. In General. Most Cited Cases
H. CASES INVOLVING THE INTERNET Page 11 of 102 CONFLICT OF LAWS 3D 2/08-09
A statute of one state is not law in another, though it gives rise to an obligation
which, if transitory, follows the person, and may be enforced wherever the person
can be found.
Statutes 361 241(2)
361 Statutes
361VI Construction and Operation
361VI(B) Particular Classes of Statutes
361k241 Penal Statutes
361k241(2) k. Nature and Subject-Matter of Statute. Most Cited
Cases
A statute is penal, within the rules of private international law, when it awards a
penalty to the state or a public officer in its behalf, or to a member of the public
suing in the interest of the whole community to redress a public wrong.
**198 *101 CARDOZO, J.
The action is brought to recover damages for injuries resulting in death. The
plaintiffs are the administrators of the estate of Everett A. Loucks. Their intestate,
while traveling on a highway in the state of *102 Massachusetts, was run down and
killed through the negligence of the defendant's servants then engaged in its
business. He left a wife and two children, residents of New York. A statute of
Massachusetts (R. L. c. 171, § 2, as amended by L. 1907, c. 375) provides that:
‘If a person or corporation by his or its negligence, or by the negligence of his or its
agents or servants while engaged in his or its business, causes the death of a
person who is in the exercise of due care, and not in his or its employment or
service, he or it shall be liable in damages in the sum of not less than $500, nor
more than $10,000, to be assessed with reference to the degree of his or its
culpability, or * * * that of his or its * * * servants, to be recovered in an action of tort
commenced within two years after the injury which caused the death, by the
executor or administrator of the deceased, one-half thereof to the use of the widow
and one-half to the use of the children of the deceased, or, if there are no children,
the whole to the use of the widow, or, if there is no widow, the whole to the use of
the next of kin.’
The question is whether a right of action under that statute may be enforced in our
courts.
1. ‘The courts of no country execute the penal laws of another.’The Antelope, 10
Wheat. 66, 123, 6 L. Ed. 268.The defendant invokes that principle as applicable
here. Penal in one sense the statute indisputably is. The damages are not limited to
compensation; they are proportioned to the offender's guilt. A minimum recovery of
$500 is allowed in every case. But the question is not whether the statute is penal in
some sense. The question is whether it is penal within the rules of private
international law. A statute penal in that sense is one that awards a penalty to the
state, or to a public officer in its behalf, or to a member of the public, suing in the
interest of the whole community to redress a public wrong. Huntington v. Attrill, 146
U. S. 657, 668, 13 Sup. Ct. 224, 36 L. Ed. 1123; Huntington *103 v. Attrill, [1903] A.
C. 150, 156; Brady v. Daly, 175 U. S. 148, 154, 157, 20 Sup. Ct. 62, 44 L. Ed. 109;
H. CASES INVOLVING THE INTERNET
Raulin v. Fischer, [1911] 2 K. B. 93; Dicey, Conflict of Laws, p. 209. The purpose
must be, not reparation to one aggrieved, but vindication of the public justice.
Huntington v. Attrill, 146 U. S. 668, 13 Sup. Ct. 224, 36 L. Ed. 1123;Brady v. Daly,
supra.The Massachusetts statute has been classified in some jurisdictions as penal,
and in others as remedial. Connecticut, Rhode Island, and Vermont put it in the first
category. **199Cristilly v. Warner, 87 Conn. 461, 88 Atl. 711, 51 L. R. A. (N. S.)
415; Gardner v. N. Y. & N. E. Ry. Co., 17 R. I. 790, 24 Atl. 831; O'Reilly v. N. Y. &
N. E. Ry. Co., 16 R. I. 388, 17 Atl. 171, 906, 19 Atl. 244,5 L. R. A. 364, 6 L. R. A.
719; Adams v. Fitchburg R. R. Co., 67 Vt. 76, 30 Atl. 687, 48 Am. St. Rep. 800.See
also Raisor v. C. & A. Ry. Co., 215 Ill. 47, 74 N. E. 69, 106 Am. St. Rep. 153, 2 Ann.
Cas. 802.New Hampshire and some of the federal courts put it in the second. Hill v.
B. & M. R. R. Co., 77 N. H. 151, 89 Atl. 482, Cas. 1914C, 714, where the subject is
fully considered; B. & M. R. R. Co. v. Hurd, 108 Fed. 116, 47 C. C. A. 615, 56 L. R.
A. 193; Malloy v. Am. Hide & Leather Co. (C. C.) 148 Fed. 482.See also Whitlow v.
Nashville R. R. Co., 114 Tenn. 344, 84 S. W. 618, 68 L. R. A. 503.The courts of
Massachusetts have said that the question is still an open one. Boott Mills v. B. &
M. R. R. Co., 218 Mass. 582, 592, 106 N. E. 680.No matter how they may have
characterized the act as penal, they have not meant to hold that it is penal for every
purpose. 218 Mass. 592, 106 N. E. 680.Even without that reservation by them, the
essential purpose of the statute would be a question for our courts. Huntington v.
Attrill, 146 U. S. 683, 13 Sup. Ct. 224, 36 L. Ed. 1123; [1903] A. C. 155; Hill v. B. &
M. R. R. Co., supra.
We think the better reason is with those cases which hold that the statute is not
penal in the international sense. On that branch of the controversy, indeed, there is
no division of opinion among us. It is true that the offender is punished, but the
purpose of the punishment is reparation to those aggrieved by his offense. Com. v.
B. & A. R. R. Co., 121 Mass. 36, 37; Com. v. Eastern R. R. Co., 5 Gray (Mass.)
473, 474.The common law did not give a cause of action to surviving relatives.
*104Insurance Co. v. Brame, 95 U. S. 754, 757, 24 L. Ed. 580; Dennick v. R. R.
Co., 103 U. S. 11, 26 L. Ed. 439; The Harrisburg, 119 U. S. 199, 7 Sup. Ct. 140, 30
L. Ed. 358; Admiralty Commissioners v. S. S. Amerika, [1917] A. C. 38. In the light
of modern legislation, its rule is an anachronism. Nearly everywhere, the principle is
now embodied in statute that the next of kin are wronged by the killing of their
kinsman. The family becomes a legal unit, invested with rights of its own, invested
with an interest in the continued life of its members, much as it was in primitive law.
Maine, Ancient Law, pp. 121, 122, 178; 1 Pollock & Maitland, History of English
Law, p. 24; Holmes, the Common Law, p. 342. The damages may be compensatory
or punitive according to the statutory scheme. See 8 Ruling Case Law, title Death, §
120, where statutes are collated. In either case the plaintiffs have a grievance
above and beyond any that belongs to them as members of the body politic. They
sue to redress an outrage peculiar to themselves.
We cannot fail to see in the history of the Massachusetts statutes a developing
expression of this policy and purpose. The statutes have their distant beginnings in
the criminal law. To some extent the vestiges of criminal forms survive. But the old
forms have been filled with a new content. The purpose which informs and vitalizes
them is the protection of the survivors. They are moods and phases, the particular
and varying expression, of a tendency in legislation as general as the common law.
They are not to be viewed in isolation, apart from the stream of events. At first, the
remedy was given only when the wrongdoer was a common carrier. St. 1840, c. 80.
Page 12 of 102 CONFLICT OF LAWS 3D 2/08-09
That statute goes back to 1840, antedating Lord Campbell's Act in England. St. 9 &
10 Vict. c. 93 (1846). The remedy was by indictment and fine, the fine being
payable to the widow and next of kin. If there were no survivors of the prescribed
class, there could be no indictment. *105Com. v. B. & A. R. R. Co., 121 Mass.
36.The reason was that even then the dominant purpose was reparation to the
family. But later an alternative remedy by civil action at the suit of the executor or
administrator became available even against carriers. Hudson v. L. & B. R. R., 185
Mass. 515, 516, 71 N. E. 66; Grella v. Lewis Wharf Co., 211 Mass. 54, 58, 97 N. E.
745, Ann. Cas. 1913A, 1136.Then other statutes gave a civil remedy against other
wrongdoers, and a civil remedy exclusively. Some statutes were confined to cases
where the defendant was the employer of the decedent. St. 1887, c. 270; R. L. c.
106, § 73; Smith v. Thomson-Houston El. Co., 188 Mass. 371, 74 N. E. 664.Finally
there came one which gave a remedy against all persons who had not otherwise
been made liable. T. L. c. 171, § 2. That is the statute sued on. The remedy is civil;
it is an action of tort.
Through all this legislation there runs a common purpose. Boott Mills v. B. & M. R.
R. Co., supra, 218 Mass. 586, 106 N. E. 680; Brown v. Thayer, 212 Mass. 392, 99
N. E. 237.It is penal in one element and one only; the damages are punitive. The
courts of Massachusetts do not give punitive damages even for malicious torts
except by force of statute. Bott Mills v. B. & M. R. R. Co., supra, 218 Mass. 588, 106
N. E. 680; Ellis v. Brockton Pub. Co., 198 Mass. 538, 84 N. E. 1018, 126 Am. St.
Rep. 454, 15 Ann. Cas. 83.That may have led them to emphasize unduly the penal
element in such recoveries. But the punishment of the wrongdoer is not designed as
atonement for a crime; it is solace to the individual who has suffered a private
wrong. This is seen in many tokens. The employer may be innocent himself. Smart
money will still be due in proportion to his servant's negligence. That is a distribution
of burdens more characteristic of torts than crimes. But even more significant is the
distribution of benefits. All the statutes are in pari material. All or none are **200
penal in the international sense. Boott Mills Co. v. B. & M. R. R. Co., supra. Under
all, liability is conditioned upon the existence of a widow or of next of kin. Under
some, *106 there must be proof also that the next of kin were dependent on the
decedent's wages for support. R. L. c. 106, § 73. That restriction brings the
dominant purpose into clear relief as reparation to those aggrieved. Other purposes
may be served at the same time. It is easy to cite dicta that seem to give them
prominence. McCarthy v. Ward Lumber Co., 219 Mass. 566, 107 N. E. 439; Hudson
v. L. & B. R. R., 185 Mass. 510, 71 N. E. 66; Mulhall v. Fallon, 176 Mass. 266, 269,
57 N. E. 386, 54 L. R. A. 934, 79 Am. St. Rep. 309.They are dicta only. Nor are all
the dicta on one side. Brown v. Thayer, 212 Mass. 392, 398, 99 N. E. 237; Upson v.
B. & M. R. R. Co., 211 Mass. 446, 98 N. E. 32; Grella v. Lewis Wharf Co., 211
Mass. 54, 58, 97 N. E. 745, Ann. Cas. 1913A, 1136.There are cross-currents and
eddies in the stream. We follow the main course. The executor or administrator who
sues under this statute is not the champion of the peace and order and public
justice of the commonwealth of Massachusetts. He is the representative of the
outraged family. He vindicates a private right.
2. Another question remains. Even though the statute is not penal, it differs from
our own. We must determine whether the difference is a sufficient reason for
declining jurisdiction. A tort committed in one state creates a right of action that may
be sued upon in another unless public policy forbids. That is the generally accepted
rule in the United States. Huntington v. Attrill, 146 U. S. 657, 670, 13 Sup. Ct. 224,
H. CASES INVOLVING THE INTERNET Page 13 of 102
36 L. Ed. 1123; Stewart v. B. & O. R. R. Co., 168 U. S. 445, 18 Sup. Ct. 105, 42 L.
Ed. 537; N. Pac. R. R. Co. v. Babcock, 154 U. S. 190, 14 Sup. Ct. 978, 38 L. Ed.
958; A., T. & St. fé Ry. Co. v. Sowers, 213 U. S. 55, 67, 68, 29 Sup. Ct. 397, 53 L.
Ed. 695; Cuba R. R. Co. v. Crosby, 222 U. S. 473, 478, 479, 32 Sup. Ct. 132, 56 L.
Ed. 274, 38 L. R. A. (N. S.) 40; Howarth v. Lombard, 175 Mass. 570, 56 N. E.
888, 49 L. R. A. 301; Walsh v. B. & M. R. R., 201 Mass. 527, 530, 88 N. E. 12.It is
not the rule in every jurisdiction where the common law prevails. In England it has
been held that the foreign tort must be also one by English law (The Halley, L. R. 2
P. C. 193, 204; Phillips v. Eyre, L. R. 6 Q. B. 1, 28; Carr v. Fracis Times & Co.,
[1902] A. C. 176, 182; *107 Dicey, Conflict of Laws, p. 645; 6 Halsbury, Laws of
England, p. 248), which then becomes the source and measure of the resulting
cause of action (Machado v. Fontes, [1897] 2 Q. B. 231; Beale, Conflict of Laws, §
163). That is certainly not the rule with us. But there are some decisions in death
cases which suggest a compromise. They say that jurisdiction will be refused unless
the statutes of the two states are substantially the same. That is an approach to the
English rule. But then they say that, if substantial correspondence exists, it is the
right of action under the foreign statute, and not the statute of the forum, which our
courts will enforce. To that extent there is a departure from the English rule. There
is little doubt about the wisdom of the departure. What is subject to criticism, is the
approach. The question is whether the enforcement of a right of action for tort under
the statutes of another state is to be conditioned upon the existence of a kindred
statute here. Support for the restriction is supposed to be found in four cases in this
court: McDonald v. Mallory, 77 N. Y. 546, 33 Am. Rep. 664; Leonard v. Columbia
Steam Navigation Co., 84 N. Y. 48, 38 Am. Rep. 491; Wooden v. Western N. Y. &
P. R. R. Co., 126 N. Y. 10, 26 N. E. 1050,13 L. R. A. 458, 22 Am. St. Rep. 803; and
Kiefer v. Grand Trunk R. Co., 12 App. Div. 28, 42 N. Y. Supp. 171,affirmed on
opinion below 153 n. y. 688, 48 N. E. 1105.
McDonald v. Mallory is altogether irrelevant. In that case, death occurred upon the
high seas. The ship hailed from this state, was registered in one of our ports, and
was owned by one of our citizens. She was, therefore, constructively part of our
territory. For that reason, our law governed, and the action was sustained. Rapallo,
J., in the course of his opinion, said that the laws of New York have no operation in
foreign jurisdictions, and that, where the wrong is suffered elsewhere, ‘no action
therefor can be maintained here, at least without proof of the existence of a similar
statute in the place where the wrong was committed.’That statement was accurate
as applied *108 to the case that was then at hand. There must be a similar statute,
i. e., a statute giving a cause of action for death, in the place where death is caused.
‘Locus regit actum.’ It is quite another thing to say that, if there is a foreign statute, it
must be duplicated here.
In Leonard v. Columbia Steam Navigation Co., supra, the death occurred in
Connecticut, where there was a statute similar to our own. The court held that the
action would lie. It was unnecessary to determine whether there would have been
another result if the statute had been different. Judge Rapallo's statement of the rule
in McDonald v. Mallory was quoted as if it sustained a requirement of
correspondence. That was obviously a misapprehension of its meaning. There was
a citation of some English cases. Madrazo v. Willes, 3 B. 3 Ald. 353; Melan v. Duke
de Fitz-James, 1 B. & P. 138; Mostyn v. Fabrigas, 1 Cowp. 161. They have little
bearing on the subject.
CONFLICT OF LAWS 3D 2/08-09
In Wooden v. Western N. Y. & P. R. R. Co., supra, the death occurred in
Pennsylvania. The case was heard upon demurrer to the complaint. Counsel on
each side assumed that the statutes must be substantially similar.
**201 The argument was confined to the question whether they were similar. Not
unnaturally the court proceeded upon the same assumption. McDonald v. Mallory
and Leonard v. Columbia Steam Navigation Co., supra, were the only cases cited.
The court found substantial similarity between the statutes except in respect of the
measure of recovery. The Pennsylvania statute did not limit the damages. Our
statute then prescribed a maximum of $5,000. The difference was thought to affect
the remedy rather than the right. We said that the right created by the foreign
statute would be enforced, but subject to the restriction in amount which expressed
the local policy. There was some suggestion that if the defendant were a
nonresident, the restriction would not *109 apply. The suggestion sounds like an
echo of the theory of the statute personal, a body of national law which the citizen
carries about with him. Beale, Conflict of Laws, §§ 54, 55; Am. Banana Co. v.
United Fruit Co., 213 U. S. 347, 356, 29 Sup. Ct. 511, 53 L. Ed. 826, 16 Ann. Cas.
1047.That is a theory which has yielded generally in this country to the principles of
the territorial system and the doctrine of vested rights. Beale, supra, §§ 70, 73. But
we do not need to go into distinctions between residents and nonresidents. Even in
its application to residents, the ruling in the Wooden Case expresses a conception
of our public policy which is not to be extended. The Supreme Court of the United
States has held under like conditions that the foreign law governs not only the
definition of the tort, but also the assessment of the damages. Northern Pac. R. R.
Co. v. Babcock, 154 U. S. 190, 14 Sup. Ct. 978, 38 L. Ed. 958; Slater v. Mexican
Nat. R. R. Co., 194 U. S. 120, 126, 24 Sup. Ct. 581, 48 L. Ed. 900.An amendment
to the Constitution has abrogated the limitation upon the amount of the recovery,
and established the public policy of the state on a new and broader basis.Const. art.
1, § 18. In these circumstances, the authority of the Wooden Case does not extend
beyond the specific point decided.
In Kiefer v. Grand Trunk Ry. Co., supra, the death occurred in Canada. Canada has
a statute similar to our own. The chief variance is in the award of interest. Limiting
the ruling in the Wooden Case, we held that interest had relation to the substance of
the right, and must be governed by the foreign statute.
Those are the only decisions of this court which tend to support the rule of similarity.
The rule itself has no more stable foundation than a misapprehended dictum in
McDonald v. Mallory.This was pointed out by Bischoff, J., in Boyle v. Southern R.
Co., 36 Misc. Rep. 289, 291, 73 N. Y. Supp. 465, and recently by Veeder, J., in
Lauria v. Du Pont (D. C.) 241 Fed. 687.See, *110 also, Nelson v. Chesapeake & D.
R. R. Co., 88 Va. 971, 975, 976, 14 S. E. 838, 15 L. R. A. 583, reviewing many
cases. No case has yet arisen in which the statutes were so dissimilar that
acceptance or rejection of the rule was necessary to a decision. The time has come
to re-examine its foundations.
A foreign statute is not law in this state, but it gives rise to an obligation, which, if
transitory, ‘follows the person and may be enforced wherever the person may be
found.’Slater v. Mex. Nat. R. R. Co., supra;Lauria v. Du Pont, supra; Cuba R. R. Co.
v. Crosby, 222 U. S. 473, 478, 32 Sup. Ct. 132, 56 L. Ed. 274, 38 L. R. A. (N. S.)
40.‘No law can exist as such except the law of the land; but * * * it is a principle of
H. CASES INVOLVING THE INTERNET Page 14 of 102
every civilized law that vested rights shall be protected.’Beale, supra, § 51. The
plaintiff owns something, and we help him to get it. Howarth v. Lombard, 175 Mass.
570, 56 N. E. 888, 49 L. R. A. 301; Walsh v. B. & M. R. R., 201 Mass. 527, 88 N. E.
12; Walsh v. N. Y., etc., R. R. 160 Mass. 571, 36 N. E. 584, 39 Am. St. Rep. 514;
Beale, Conflict of Laws, §§ 51, 73. We do this unless some sound reason of public
policy makes it unwise for us to lend our aid. ‘The law of the forum is material only
as setting a limit of policy beyond which such obligations will not be enforced there.’
Cuba R. R. Co. v. Crosby, supra, 222 U. S. 478, 32 Sup. Ct. 132, 56 L. Ed. 274, 38
L. R. A. (N. S.) 40.Sometimes we refuse to act where all the parties are
nonresidents. Burdick v. Freeman, 120 N. Y. 420, 24 N. E. 949; English v. N. Y., N.
H. & H. R. R. Co., 161 App. Div. 831, 146 N. Y. Supp. 963.That restriction need not
detain us; in this case all are residents. If did is to be withheld here, it must be
because the cause of action in its nature offends our sense of justice or menaces
the public welfare. A., T. & St. F. Ry. Co. v. Sowers, 213 U. S. 55, 67, 68, 29 Sup.
Ct. 397, 53 L. Ed. 695; Stewart v. Balt. & O. R. R. Co., 168 U. S. 445, 18 Sup. Ct.
105, 42 L. Ed. 537; Zeikus v. Florida E. C. Ry. Co., 153 App. Div. 345, 350, 138 N.
Y. Supp. 478.
Our own scheme of legislation may be different. We may even have no legislation
on the subject. That is not enough to show that public policy forbids us to enforce
the foreign right. A right of action is property. If a foreign statute gives *111 the right,
the mere fact that we do not give a like right is no reason for refusing to help the
plaintiff in getting what belongs to him. We are not so provincial as to say that every
solution of a problem is wrong because we deal with it otherwise at home. Similarity
of legislation has indeed this importance; its presence shows beyond question that
the foreign statute does not offend the local policy. But its absence does not prove
the contrary. It is not to be exalted into an indispensable condition. The misleading
word ‘comity’ has been responsible for much of the trouble. It **202 has been fertile
in suggesting a discretion unregulated by general principles. Beale, Conflict of
Laws, § 71.
The sovereign in its discretion may refuse its aid to the foreign right. St. Louis, I. M.
& So. Ry. Co. v. Taylor, 210 U. S. 281, 28 Sup. Ct. 616, 52 L. Ed. 1061; Dougherty
v. Am. McKenna Process Co., 255 Ill. 369, 99 N. E. 619, L. R. A. 1915F, 955, Ann.
Cas. 1913D, 568.From this it has been an easy step to the conclusion that a like
freedom of choice has been confided to the courts. But that, of course, is a false
view. Cuba R. R. Co. v. Crosby, supra, 222 U. S. 478, 32 Sup. Ct. 132, 56 L. Ed.
274, 38 L. R. A. (N. S.) 40.The courts are not free to refuse to enforce a foreign right
at the pleasure of the judges, to suit the individual notion of expediency or fairness.
They do not close their doors, unless help would violate some fundamental principle
of justice, some prevalent conception of good morals, some deep-rooted tradition of
the common weal.
This test applied, there is nothing in the Massachusetts statute that outrages the
public policy of New York. We have a statute which gives a civil remedy where
death is caused in our own state. We have though it so important that we have now
imbedded it in the Constitution. Const. art. 1, § 18. The fundamental policy is that
there shall be some atonement for the wrong. Through the defendant's negligence,
a resident of New York has been killed in Massachusetts. He has left a widow and
children, who are also residents. The *112 law of Massachusetts gives them a
recompense for his death. It cannot be that public policy forbids our courts to help in
CONFLICT OF LAWS 3D 2/08-09
collecting what belongs to them. We cannot give them the same judgment that our HISCOCK, C. J., and CUDDEBACK, POUND, CRANE, and ANDREWS, JJ.,
law would give if the wrong had been done here. Very likely we cannot give them as concur. COLLIN, J., dissents from decision of second question in opinion of
much. But that is no reason for refusing to give them what we can. We shall not CARDOZO, J., but otherwise concurs.
make things better by sending them to another state, where the defendant may not Judgment reversed, etc. should be reversed, and the order of the Special Term
be found, and where suit may be impossible. Nor is there anything to shock our affirmed. with costs in the Appellate Division and in this court.
sense of justice in the possibility of a punitive recovery. The penalty is not
extravagant. It conveys no hint of arbitrary confiscation. Standard Oil Co. of Ind. v. HISCOCK, C. J., and CUDDEBACK, POUND, CRANE, and ANDREWS, JJ.,
Missouri, 224 U. S. 270, 286, 32 Sup. Ct. 406, 56 L. Ed. 760, Ann. Cas. 1913D, concur. COLLIN, J., dissents from decision of second question in opinion of
936.It varies between moderate limits according to the defendant's guilt. We shall CARDOZO, J., but otherwise concurs.
not feel the pricks of conscience, if the offender pays the survivors in proportion to Judgment reversed, etc.
the measure of his offense.
N.Y. 1918
We have no public policy that prohibits exemplary damages or civil penalties. We Loucks v. Standard Oil Co. of New York
give them for many wrongs. To exclude all penal actions would be to wipe out the 224 N.Y. 99, 120 N.E. 198
distinction between the penalties of public justice and the remedies of private law.
Finally, there are no difficulties of procedure that stand in the way. We have a END OF DOCUMENT
statute authroizing the triers of the facts, when statutory penalties are sued for, to fit
the award to the offense. Code Civ. Proc. § 1898. The case is not one where
special remedies established by the foreign law are incapable of adequate
enforcement except in the home tribunals. Marshall v. Sherman, 148 N. Y. 9, 42 N.
E. 419,34 L. R. A. 757, 51 Am. St. Rep. 654; Howarth v. Angle, 162 N. Y. 179, 181,
189, 56 N. E. 489, 47 L. R. A. 725; Slater v. Mex. Nat. R. R. Co., supra.

We hold, then, that public policy does not prohibit the assumption of jurisdiction by
our courts and that this being so, mere differences of remedy do not count. For
many years the courts have been feeling their way in the enforcement of these
statutes. A civil remedy for another's death was something strange and new, and
*113 it did not find at once the fitting niche, the proper category, in the legal
scheme. We need not be surprised, therefore, if some of the things said, as
distinguished from those decided, must be rejected to-day. But the truth, of course,
is that there is nothing sui generis about these death statutes in their relation to the
general body of private international law. We must apply the same rules that are
applicable to other torts; and the tendency of those rules to-day is toward a larger
comity, if we must cling to the traditional term. Walsh v. B. & M. R. R., 201 Mass.
527, 533, 88 N. E. 12.The fundamental public policy is perceived to be that rights
lawfully vested shall be everywhere maintained. At least, that is so among the
states of the Union. Walsh v. N. Y. & N. E. R. R. Co., 160 Mass. 571, 573, 36 N. E.
584, 39 Am. St. Rep. 514;Walsh v. B. & M. R. R., supra; Beach, Uniform Interstate
Enforcement of Vested Rights, 27 Yale Law Journal, 656.There is a growing
conviction that only exceptional circumstances should lead one of the states to
refuse to enforce a right acquired in another. The evidences of this tendency are
many. One typical instance will suffice. For many years Massachusetts closed her
courts to actions of this order based on foreign statutes. Richardson v. N. Y. C. R.
R., 98 Mass. 85.She has opened them now, and overruled her earlier decisions.
Hanlon v. Leyland & Co., Ltd., 223 Mass. 438, 111 N. E. 907, L. R. A. 1917A,
34;Walsh v. B. & M. R. R., supra.The test of similarity has been abandoned there. If
it has ever been accepted here, we think it should be abandoned now.

The judgment of the Appellate Division should be reversed, and the order of the
Special Term affirmed, with costs in the Appellate Division and in this court.

H. CASES INVOLVING THE INTERNET Page 15 of 102 CONFLICT OF LAWS 3D 2/08-09

 *139 Godard and Another v. Gray and Another
Queen's Bench Division
QBD
Blackburn, Mellor and Hannen, JJ.
1870 Dec. 10
Foreign Judgment, Action on--How far Foreign Judgment examinable in English
Court--Mistake of English Law apparent on Proceedings--Laches of Party in Foreign
Court.
It is no bar to an action, on a judgment in personam of a foreign court having
jurisdiction over the parties and cause, that the foreign tribunal has put a
construction erroneous, according to English law, on an English contract.
Declaration on a judgment of a French court having jurisdiction in the matter. Plea
setting out the judgment, from which it appeared that the suit was for the breach by
the shipowner of a charterparty made in England, in which was a clause: "Penalty
for the non-performance of this agreement, estimated amount of freight;" and that
the court had treated this clause (contrary to the English law), as fixing the amount
of damages recoverable, and had given judgment accordingly for the amount of
freight. The proceedings shewed that both parties had appeared and been heard
before the judgment was pronounced, but no objection was taken by the defendant
to the mode of assessing the damages:--
Held, by Blackburn and Mellor, JJ., that the defendant could not set up, as an
excuse for not paying money awarded by a judgment of a foreign tribunal having
jurisdiction over him and the cause, that the judgment proceeded on a mistake as to
the English law, which was really a question of fact; and that it made no difference
that the mistake appeared on the face of the proceedings.
By Hannen, J., that the French court could only be informed of foreign law by
evidence; and the defendant, having neglected to bring the English law to the
knowledge of the French court, could not impeach the judgment given against him
on the ground of error as to that law.
DECLARATION that, on the 17th of April, 1867, in a suit between the plaintiffs and
defendants in a French court, viz., the Civil Tribunal of First Instance, at Savenay,
having jurisdiction in that behalf, the plaintiffs obtained judgment against the
defendants for 17,812 francs, being 712l. 10s. in English money; and afterwards on
appeal by the defendants, according to the law of France, to the Imperial Court of
Rennes, having jurisdiction in that behalf, the Court reduced the judgment, and
gave judgment for the plaintiffs for 8,921 francs, being 356l. 17s. 6d. in English
money, which judgment is still in force and unsatisfied.
Pleas, 2: That the following is the record and tenor of the judgment and
proceedings in the Court of Civil Tribunal of First Instance, and the proceedings in
that court, and the judgment of the Imperial Court. [The plea set out the judgments,
H. CASES INVOLVING THE INTERNET Page 16 of 102
&c., in the *140 original French, and then gave a translation at length; the following
is an abstract of the judgment.] The Civil Tribunal of First Instance sitting at
Savenay, &c., delivered the following judgment at its public sitting on the 17th of
April, 1867:--Between Messrs. Charles Godard and Benjamin Coquard [the now
plaintiffs], merchants, residing at St. Nazaire, plaintiffs, and Messrs. Gray Brothers
[the now defendants], merchants, residing at Sunderland, England, defendants.
Facts: The defendants, on the 12th and 16th of September, 1865, chartered to the
plaintiffs the steamer Como for the conveyance of coal from Cardiff to St. Nazaire.
After the first voyage the owners were to inform the freighters if they were willing to
continue the charter for a year; and if they were not willing, the freighters reserved
to themselves the right to require that the vessel should make two more voyages on
the same conditions. This stipulation was for the purpose of securing supplies of
coal to the plaintiffs' manufactory of patent fuel [briquettes de charbon]. In spite of
the most urgent demands of the plaintiffs, the defendants did not place the Como at
the disposal of the plaintiffs until the 12th of December, 1865. On the 15th of
December she entered the port of St. Nazaire, and on the 20th she was discharged,
and her freight settled. The owners having given notice that they did not intend to
charter their vessel for a year, the plaintiffs required that she should make two more
voyages on their account from Cardiff to St. Nazaire as agreed. Notwithstanding this
express declaration, the Como, by order of the defendants, left on the 30th of
December with a cargo of flour for Liverpool, and was thence chartered to Portugal.
This non-performance of the agreement, and the delay in the first voyage, caused
so great a loss and disturbance in the plaintiffs' business that they were driven to
demand reparation. The defendants not having satisfied their just demands, the
plaintiffs caused the defendants to be served with a summons on the 25th of
January, 1866, to appear before the Civil Court of Savenay, judging in a commercial
matter, to hear sentence by an executory judgment, by proceedings without
security, and by arrest of the body [pour s'entendre condamner par jugement
exécutoire par provisions sans caution et par corps], to pay to the plaintiffs by way
of damages 50,000 francs for the injury caused to them by the non-performance of
the agreements in the charter of *141 the Como, and for the delay from the 12th of
September to the 12th of December, 1865, in the first voyage.
The defendants not appearing, judgment, on the 22nd of February, 1866, was
given against them by default for the 50,000 francs. The defendants applied to have
the judgment set aside, and took exception to the competency of the Court. The
Court overruled the exception; and the case was heard on the merits on the 17th of
April, 1867, both parties being present by their attorneys and counsel. The Court,
after hearing both sides, pronounced judgment, finding that the delay on the first
voyage was not, under the circumstances proved, owing to the defendants' default,
and that there were grounds for declaring that the plaintiffs' action was not
maintainable on this head [il y a lieu de les déclarer non recevables de ce chef dans
leur action]. On the second point, the Court found that the defendants had wilfully
refused to allow the Como to proceed on the two other voyages; and the judgment
proceeded: "Considérant qu'il y a done eu de leur part une violation évidente du
contrat qui les rend passibles de dommages intérêts: Considérant, quant au chiffre
de ces dommages intérêts, qu'en présence de la clause pénale contenue à la
charte-partie, le tribunal n'a point à rechercher le préjudice réel éprouvé par Godard
et Coquard, et à examiner si la demande de 50,000 francs, au quel ils l'evaluent, est
justifiée: Considérant en effet que la charte-partie contient une clause ainsi conçue,
'l'amende pour inexécution à ce présent contrat est estimée au montant total du fret'
CONFLICT OF LAWS 3D 2/08-09
[FN1]: Considérant que Godard et Coquard, ayant été privé deux voyages, c'est
done une somme égale au fret de ces deux voyages à laquelle ils ont droit; qu'en
prenant pour base la somme payee pour le fret du voyage qui a été effectué et qui
s'élève, ainsi qu'il en a été justifié, au chiffre de 8,921, c'est done une indemnité
total de 17,812 [FN2] que les frères Gray doivent être condamnées à leur payer ..."
FN1 It will be observed that these are not the exact words of the clause: see post, p.
143.
FN2 This is the sum given in words, but it ought to have been 17,842.
"Par ces motifs statuant en matière commerciale et en premier ressort, Le Tribunal
reçoit les frères Gray opposants en la forme au jugement par défaut, du 22 Fèvrier,
1866; au fond rèduit à 17,812 *142 francs la condemnation en dommages intérêts
prononcée contre eux par le dit jugement," &c.
The judgment of the Imperial Court of Rennes, described as a final decree [arrêt
définitif] of the 25th of August, 1867, recited, that the defendants appealed against
the judgment of the civil tribunal of Savenay of the 17th of April, 1866, and prayed
the Court to discharge the appellants from all the sentences pronounced against
them. Further [subsidiarement], to reduce the damages to the amount of a single
freight, that is to say, to 8921 francs, &c. The respondents [the plaintiffs], who also
incidentally appealed, prayed the Court to declare that there were grounds for
awarding them damages for the three months delay in the first voyage, and to
award them damages accordingly; and to confirm the judgment appealed against,
&c. The judgment then recited the facts and the judgment of the Court below, and
that the following were the points of law to be decided: 1. Shall it be decided, as a
matter of principle, that no damages can be claimed from the appellants on account
of the chartering of the Como, and that they should be released from all the
condemnations pronounced against them? 2. Shall it be declared, in any case, that
the damages to which the respondents would be entitled cannot, by the terms of the
penal clause, exceed the amount of a single freight? 3. Shall it be declared, in the
cross-appeal, that the respondents are entitled to the damages claimed for the
delay on the first voyage? &c. The judgment then proceeded, after hearing the
allegations and arguments of the advocates of either party, and having duly
deliberated according to law:--
"Considérant que la charte-partie, contractée entre Gray et Godard et Coquard,
fixait l'indemnité à laquelle chacune des parties aurait droit pour inexécution de la
convention par la faute de l'autre: Que cette indemnité, qualifiée d'amende dans le
texte anglais, était de 8921 francs: Que moyennant paiement de cette indemnité
chacune des parties avait le droit de rompre la convention; mais que l'inexécution
du contrat et par suite sa rupture étant un fait unique, il ne pouvait y avoir lieu à
autant d'indemnités que de manquements partiels dans le cours de l'affrêtement, ou
à une indemnité pour la rupture et à dommages intérêts pour les griefs particuliers
que chacune des parties pourrait imputer à *143 l'autre: Qu'en un mot, quelsque
fussent les griefs d'une partie (à moins de cas sortant des provisions sous l'empire
desquelles on avait traité), elle n'avait droit à rien, tant qu'elle ne justifiait pas que
l'inexécution des clauses du contrat par la partie adverse était de nature à motiver
la rupture et l'allocation à son profit des dommages intérêts réglés par la
convention: Que du reste, l'indemnité de 8921 francs a été suffisante pour réparer
le préjudice résultant de la non-livraison des deux cargaisons de charbons que le
H. CASES INVOLVING THE INTERNET Page 17 of 102
Como eut été tenu de transporter de Cardiff à Saint Nazaire: Adoptant au surplus
les motifs des premiers juges sur le retard du navire à prendre la première
cargaison: La Cour, corrigeantet reformant, dit que les dommages intérêts à payer
par Gray frères à Godard et Coquard seront réduits à 8921 francs; et condamne
Gray frères à leur payer cette somme avec les intérêts de droit à partir de la
demande. Déclare mal fondé l'appel incident de Godard et Coquard, les en déboute
ainsi que de leur offre de preuve," &c.
The plea then set out the charterparty, which was dated Sunderland the 12th of
September, London the 16th of September, 1865, and was between the
defendants, owners of the steamship Como, and S. Bregeon [agent of the plaintiffs],
that the ship being tight, &c., shall with all convenient speed proceed to Cardiff, and
take a full cargo of coals, which the merchants undertake to provide, and proceed to
St. Nazaire. ... "Penalty for non-performance of this agreement estimated amount of
freight. This charter to be in force for one voyage, with option to owners of twelve
months, commencing on the day she is delivered in Cardiff. ... The owners are to
declare, on the completion of the first voyage whether they will retain this charter for
the twelve months; and in case they decline to do so, the charterer reserves to
himself the right of retaining the boat for two more voyages on same conditions."
The plea, after setting out the charterparty, proceeded: "And the defendants further
say, that the charterparty was made in England, and that defendants and Bregeon,
in the charter mentioned, then were and still are British subjects, and domiciled and
resident in England; and that the said judgments are erroneous, and ought to have
been pronounced in favour of defendants, and that the same ought to have been
pronounced and *144 given according to the law of England and not of France; and
that by the law of England, plaintiffs had no right to maintain any action or suit
against defendants for any breach of the charterparty; and that there does not
appear to have been, and was not, any breach of the charterparty entitling plaintiffs
to have judgments pronounced in their favour in the said suit or on the said appeal.
Demurrer and joinder [FN3]
FN3 There were also two replications and demurrers thereto; but the arguments
and judgments proceeded on the plea only.
May 6. J. Brown, Q.C., (with him, Murphy) for the plaintiffs. The plea raises no
defence. It appears from the French judgments that the plaintiffs sued the
defendants for a breach of a charterparty by delay in sending the vessel on her first
voyage under the charterparty, and also by not complying with the plaintiffs'
demand, that she should go two more voyages on their account. In the first
instance, judgment was given against the defendants by default for 50,000 francs;
but, on the hearing, the Court of First Instance decided that the delay in the first
voyage was not by the defendants' default, and as to the other breach, the Court
gave judgment for the plaintiffs, and relying on the clause, "penalty for the breach of
this agreement estimated amount of freight," awarded the estimated amount of
freight on two voyages. On appeal to the Imperial Court, the defendants prayed for
a reversal of the judgment, or that the damages might be reduced to the amount of
freight of one voyage. And this latter was the view that the Court adopted; The
defendants are therefore clearly estopped from now setting up that this judgment
was erroneous. It was the view of the law which they themselves propounded to the
CONFLICT OF LAWS 3D 2/08-09
French court.
Matter which is ground for writ of error cannot be pleaded in bar to an action on a
judgment: Dick v. Tolhausen; [FN4] Horsy v. Daniel; [FN5] Snook v. Mattock; [FN6]
Bradley v. Eyre; [FN7]1 Roll. Abr. 604, l. 20; [cited in Vin. Abr. Debt (X.) pl. 3, and
Com. Dig. Pleader (2 W. 39)]; Com. Dig. Error, D. Matter which might have been
*145 pleaded by way of defence in the foreign court cannot be set up as a defence
to an action on a foreign judgment: Vanquelin v. Bouard. [FN8] The objection here
set up amounts to saying the judgment is erroneous on the merits, and that is not
an admissible defence: De Cosse Brissac v. Rathbone [FN9]; Bank of Australasia v.
Nias [FN10]; Scott v. Pilkington [FN11]; Notes to Doe v. Oliver. [FN12] Had there
been a perverse disregard of the English law apparent on the proceedings, possibly
there would have been a defence: see Novelli v. Rossi [FN13]; Simpson v. Fogo
[FN14]; Castrique v. Imrie [FN15]; and the law is so laid down in the Notes to Doe v.
Oliver. [FN16]
FN4 4 H. & N. 695.
FN5 2 Lev. 161.
FN6 5 A. & E. 239.
FN7 11 M. & W. 432, 451.
FN8 15 C. B. (N.S.) 341, 368; 33 L. J. (C.P.) 78, 84.
FN9 6 H. & N. 301; 30 L. J. (Ex.) 238.
FN10 16 Q. B. 717, 737; 20 L. J. (Q.B.) 284, 292.
FN11 2 B. & S. 11; 31 L. J. (Q.B.) 81.
FN12 2 Sm. L. C. 6th ed. p. 732.
FN13 2 B. & Ad. 757.
FN14 1 John. & H. 18; 29 L. J. (Ch.) 657; 1 Hem. & M. 195; 32 L. J. (Ch.) 249.
FN15 8 C. B. (N.S.) 405, 419; 30 L. J. (C.P.) 177, 184.
FN16 2 Sm. L. C. 6th ed. at p. 726.
[BLACKBURN, J. In the original notes by Mr. Smith [see 2nd ed. p. 448], there is
no such qualification.]
There is no authority for the proposition that a judgment, appearing on the face of
the proceedings to be founded on a mistake of English law, can be questioned.
Foreign law is a fact, and must be proved like any other fact: Story's Conflict of
Laws [§§ 637-8, note, citing Trasher v. Everhart [FN17], and Lord Mansfield in
Mostyn v. Fabrigas [FN18]: "The way of knowing foreign laws is by admitting them
to be proved as facts."] The defendants therefore having omitted to bring evidence
H. CASES INVOLVING THE INTERNET
of the English law before the French court, cannot now set up as a defence what
they have omitted to avail themselves of in the French court.
FN17 3 Gill & John. (U. S. Rep.) 234, 242.
FN18 Cowp. at p. 174.
Shield (Manisty, Q.C., with him), for the defendants. The question is, is the Court
constrained by considerations of comity to give effect to a foreign judgment without
any examination into the grounds of it? As to this, Story in his Conflict of Laws, §
598, says: "As to judgments in personam. And here a distinction is commonly taken
between suits brought by a party to enforce a foreign judgment, and suits brought
against a party who *146 sets up a foreign judgment in bar of the suit by way of
defence. In the former case it is often urged, that no sovereign is bound jure
gentium to execute any foreign judgment within his dominions; and, therefore, if
execution of it is sought in his dominions, he is at liberty to examine into the merits
of the judgment, and to refuse to give effect to it, if upon such examination it should
appear unjust and unfounded. He acts in executing it upon the principles of comity;
and has therefore a right to prescribe the terms and limits of that comity." Story then
points out that it is otherwise when a foreign judgment of a competent tribunal is set
up as a defence to an action, for it is then res judicata; and he proceeds to shew
that this distinction has been frequently recognized; and he cites (§ 599) from the
judgment of Eyre, C.J., in Phillips v. Hunter [FN19]: "If we had the means we could
not examine a judgment of a Court in a foreign state brought before us in this
manner." [That is, by the defendant as a bar]. "It is in one way only that the
sentence of a judgment of the court of a foreign state is examinable in our courts,
and that is when the party, who claims the benefit of it, applies to our courts to
enforce it. When it is thus voluntarily submitted to our jurisdiction, we treat it, not as
obligatory to the extent to which it would be obligatory, perhaps, in the country in
which it was pronounced, nor as obligatory to the extent to which by our law
sentences and judgments are obligatory; not as conclusive, but as matter in pais; as
a consideration primâ facie sufficient to raise a promise. We examine it as we do all
other considerations or promises; and for that purpose we receive evidence of what
the law of the foreign state is, and whether the judgment is warranted by law." In
Reimers v. Druce [FN20], the Master of the Rolls held that a foreign judgment was
impeachable for error apparent on the face of it; and the reasons attached to a
foreign judgment are part of the record for this purpose.
FN19 2 H. Bl. at p. 410.
FN20 23 Beav. 145, 154; 26 L. J. (Ch.) 196, 200.
J. Brown, Q.C., in reply. No answer has been attempted to the proposition that the
defendants are estopped by their conduct in the French court from now saying there
has been a mistake in the English law.
Cur. adv. vult.
*147 Dec. 10. The following judgments were delivered:--The judgment of
Blackburn and Mellor, JJ., was delivered by
Page 18 of 102 CONFLICT OF LAWS 3D 2/08-09
BLACKBURN, J.
In this case the Plaintiffs declare on a judgment of a French tribunal, averred to
have jurisdiction in that behalf.
The question arises on a demurrer to the second plea, which sets out the whole
proceedings in the French court. By these it appears that the plaintiffs, who are
Frenchmen, sued the defendants, who are Englishmen, on a charterparty made at
Sunderland, which charterparty contained the following clause, "Penalty for non-
performance of this agreement, estimated amount of freight." The French court
below, treating this clause as fixing the amount of liquidated damages, gave
judgment against the defendants for the amount of freight on two voyages. On
appeal, the superior court reduced the amount to the estimated freight of one
voyage, giving as their reason that the charterparty itself "fixait l'indemnité à laquelle
chacune des parties aurait droit pour inexécution de la convention par la faute de
l'autre; que moyennant paiement de cette indemnité chacune des parties avait le
droit de rompre la convention," and the tribunal proceeds to observe that the
amount thus decreed was after all more than sufficient to cover all the plaintiffs'
loss.
All parties in France seem to have taken it for granted that the words in the
charterparty were to be understood in their natural sense; but the English law is
accurately expressed in Abbott on Shipping, part 3, c. 1, s. 6, 5th ed., p. 170, and
had that passage been brought to the notice of the French tribunal, it would have
known that in an English charterparty, as is there stated, "Such a clause is not the
absolute limit of damages on either side; the party may, if he thinks fit, ground his
action upon the other clauses or covenants, and may, in such action, recover
damages beyond the amount of the penalty, if in justice they shall be found to
exceed it. On the other hand, if the party sue on such a penal clause, he cannot, in
effect, recover more than the damage actually sustained." But it was not brought to
the notice of the French tribunal that according to the interpretation put by the
English law on such a contract, a penal clause of this sort was in fact idle and
inoperative. If it had been, they would, probably, have interpreted the English *148
contract made in England according to the English construction. No blame can be
imputed to foreign lawyers for not conjecturing that the clause was merely a brutum
fulmen. The fault, if any, was in the defendants, for not properly instructing their
French counsel on this point.
Still the fact remains that we can see on the face of the proceedings that the
foreign tribunal has made a mistake on the construction of an English contract,
which is a question of English law; and that, in consequence of that mistake,
judgment has been given for an amount probably greater than, or, at all events,
different from that for which it would have been given if the tribunal had been
correctly informed what construction the English contract bore according to English
law.
The question raised by the plea is, whether this is a bar to the action brought in
England to enforce that judgment, and we are all of opinion that it is not, and that
the plaintiff is entitled to judgment.
The following are the reasons of my Brother Mellor and myself. My Brother
H. CASES INVOLVING THE INTERNET
Hannen, though agreeing in the result, qualifies his assent to these reasons to
some extent, which he will state for himself.
It is not an admitted principle of the law of nations that a state is bound to enforce
within its territories the judgment of a foreign tribunal. Several of the continental
nations (including France) do not enforce the judgments of other countries, unless
where there are reciprocal treaties to that effect. But in England and in those states
which are governed by the common law, such judgments are enforced, not by virtue
of any treaty, nor by virtue of any statute, but upon a principle very well stated by
Parke, B., in Williams v. Jones [FN21]:
FN21 13 M. & W. at p. 633.
"Where a court of competent jurisdiction has adjudicated a certain sum to be due
from one person to another, a legal obligation arises to pay that sum, on which an
action of debt to enforce the judgment may be maintained. It is in this way that the
judgments of foreign and colonial courts are supported and enforced." And taking
this as the principle, it seems to follow that anything which negatives the existence
of that legal obligation, or excuses the defendant from the performance *149 of it,
must form a good defence to the action. It must be open, therefore, to the defendant
to shew that the Court which pronounced the judgment had not jurisdiction to
pronounce it, either because they exceeded the jurisdiction given to them by the
foreign law, or because he, the defendant, was not subject to that jurisdiction; and
so far the foreign judgment must be examinable. Probably the defendant may shew
that the judgment was obtained by the fraud of the plaintiff, for that would shew that
the defendant was excused from the performance of an obligation thus obtained;
and it may be that where the foreign Court has knowingly and perversely
disregarded the rights given to an English subject by English law, that forms a valid
excuse for disregarding the obligation thus imposed on him; but we prefer to imitate
the caution of the present Lord Chancellor, in Castrique v. Imrie [FN22], and to
leave those questions to be decided when they arise, only observing that in the
present case, as in that, "the whole of the facts appear to have been inquired into by
the French Courts, judicially, honestly, and with the intention to arrive at the right
conclusion, and having heard the facts as stated before them they came to a
conclusion which justified them in France in deciding as they did decide."
FN22 Law Rep. 4 H. L. at p. 445.
There are a great many dicta and opinions of very eminent lawyers, tending to
establish that the defendant in an action on a foreign judgment is at liberty to shew
that the judgment was founded on a mistake, and that the judgment is so far
examinable. In Houlditch v. Donegall [FN23], Lord Brougham goes so far as to say:
The language of the opinions on one side has been so strong, that we are not
warranted in calling it merely the inclination of our lawyers; it is their decision that in
this country a foreign judgment is only primâ facie, not conclusive evidence of a
debt." But there certainly is no case decided on such a principle; and the opinions
on the other side of the question are at least as strong as those to which Lord
Brougham refers.
FN23 2 Cl. & F. at p. 477.
Page 19 of 102 CONFLICT OF LAWS 3D 2/08-09
 Indeed it is difficult to understand how the common course of pleading is consistent
with any notion that the judgment was only evidence. If that were so, every count on
a foreign judgment must be demurrable on that ground. The mode of pleading
shews *150 that the judgment was considered, not as merely primâ facie evidence
of that cause of action for which the judgment was given, but as in itself giving rise,
at least primâ facie, to a legal obligation to obey that judgment and pay the sum
adjudged. This may seem a technical mode of dealing with the question; but in truth
it goes to the root of the matter. For if the judgment were merely considered as
evidence of the original cause of action, it must be open to meet it by any counter
evidence negativing the existence of that original cause of action.
If, on the other hand, there is a primâ facie obligation to obey the judgment of a
tribunal having jurisdiction over the party and the cause, and to pay the sum
decreed, the question would be, whether it was open to the unsuccessful party to try
the cause over again in a court, not sitting as a court of appeal from that which gave
the judgment. It is quite clear this could not be done where the action is brought on
the judgment of an English tribunal; and, on principle, it seems the same rule should
apply, where it is brought on that of a foreign tribunal. But we think it unnecessary to
discuss this point, as the decisions of the Court of Queen's Bench in Bank of
Australasia v. Nias [FN24], of the Court of Common Pleas in Bank of Australasia v.
Harding [FN25], and of the Court of Exchequer in De Cosse Brissac v. Rathbone
[FN26], seem to us to leave it no longer open to contend, unless in a court of error,
that a foreign judgment can be impeached on the ground that it was erroneous on
the merits; or to set up as a defence to an action on it, that the tribunal mistook
either the facts or the law.
FN24 16 Q. B. 717; 20 L. J. (C.P.) 284.
FN25 9 C. B. 661; 19 L. J. (C.P.) 345.
FN26 6 H. & N. 301; 30 L. J. (Ex.) 238.
But there still remains a question which has never, so far as we know, been
expressly decided in any court.
It is broadly laid down, by the very learned author of Smith's Leading Cases, in the
original note to Doe v. Oliver [FN27], that "it is clear that if the judgment appear on
the face of the proceedings to be founded on a mistaken notion of the English law,"
it would not be conclusive. For this he cites Novelli v. Rossi [FN28], which does not
decide that point, and no other authority; but the great *151 learning and general
accuracy of the writer makes his unsupported opinion an authority of weight; and
accordingly it has been treated with respect. In Scott v. Pilkington [FN29], the Court
expressly declined to give any opinion on the point not then raised before them. But
we cannot find that it has been acted upon; and it is worthy of note that the present
very learned editors of Smith's Leading Cases have very materially qualified his
position, and state it thus, if the judgment "be founded on an incorrect view of the
English law, knowingly or perversely acted on;" [FN30] the doctrine thus qualified
does not apply to the present case, and there is, therefore, no need to inquire how
far it is accurate.
FN27 2 Sm. L. C. 2nd ed. at p. 448.
H. CASES INVOLVING THE INTERNET Page 20 of 102
FN28 2 B. & Ad. 757.
FN29 2 B. & S. at p. 42; 31 L. J. (Q.B.) at p. 89.
FN30 See 2 Sm. L. C. 5th & 6th edd. by Maude and Chitty, at pp. 683 & 726
respectively.
But the doctrine as laid down by Mr. Smith does apply here; and we must express
an opinion on it, and we think it cannot be supported, and that the defendant can no
more set up as an excuse, relieving him from the duty of paying the amount
awarded by the judgment of a foreign tribunal having jurisdiction over him and the
cause, that the judgment proceeded on a mistake as to English law, than he could
set up as an excuse that there had been a mistake as to the law of some third
country incidentally involved, or as to any other question of fact.
It can make no difference that the mistake appears on the face of the proceedings.
That, no doubt, greatly facilitates the proof of the mistake; but if the principle be to
inquire whether the defendant is relieved from a primâ facie duty to obey the
judgment, he must be equally relieved, whether the mistake appears on the face of
the proceedings or is to be proved by extraneous evidence. Nor can there be any
difference between a mistake made by the foreign tribunal as to English law, and
any other mistake. No doubt the English Court can, without arrogance, say that
where there is a difference of opinion as to English law, the opinion of the English
tribunal is probably right; but how would it be if the question had arisen as to the law
of some of the numerous portions of the British dominions where the law is not that
of England? The French tribunal, if incidentally inquiring into the law of Mauritius,
where French law prevails, would be *152 more likely to be right than the English
Court; if inquiring into the law of Scotland it would seem that there was about an
equal chance as to which took the right view. If it was sought to enforce the foreign
judgment in Scotland, the chances as to which Court was right would be altered.
Yet it surely cannot be said that a judgment shewn to have proceeded on a
mistaken view of Scotch law could be enforced in England and not in Scotland, and
that one proceeding on a mistaken view of English law could be enforced in
Scotland but not in England.
If, indeed, foreign judgments were enforced by our Courts out of politeness and
courtesy to the tribunals of other countries, one could understand its being said that
though our Courts would not be so rude as to inquire whether the foreign Court had
made a mistake, or to allow the defendant to assert that it had, yet that if the foreign
Court itself admitted its blunder they would not then act: but it is quite contrary to
every analogy to suppose that an English Court of law exercises any discretion of
this sort. We enforce a legal obligation, and we admit any defence which shews that
there is no legal obligation or a legal excuse for not fulfilling it; but in no case that
we know of is it ever said that a defence shall be admitted if it is easily proved, and
rejected if it would give the Court much trouble to investigate it. Yet on what other
principle can we admit as a defence that there is a mistake of English law apparent
on the face of the proceedings, and reject a defence that there is a mistake of
Spanish or even Scotch law apparent in the proceedings, or that there was a
mistake of English law not apparent on the proceedings, but which the defendant
avers that he can shew did exist.
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The whole law was much considered and discussed in Castrique v. Imrie [FN31],
where the French tribunal had made a mistake as to the English law, and under that
mistake had decreed the sale of the defendant's ship. The decision of the House of
Lords was, that the defendant's title derived under that sale was good,
notwithstanding that mistake: Lord Colonsay pithily saying, "It appears to me that
we cannot enter into an inquiry as to whether the French Courts proceeded
correctly, either as to their own course of procedure or their own law, nor whether
under the circumstances they *153 took the proper means of satisfying themselves
with respect to the view they took of the English law. Nor can we inquire whether
they were right in their views of the English law. The question is, whether under the
circumstances of the case, dealing with it fairly, the original tribunal did proceed
against the ship, and did order the sale of the ship."
FN31 Law Rep. 4 H. L. 414, 448.
The question in Castrique v. Imrie [FN32] was as to the effect on the property of a
judgment ordering a ship, locally situate in France, to be sold, and therefore was not
the same as the question in this case as to what effect is to be given to a judgment
against the person. But at least the decision in Castrique v. Imrie [FN33] establishes
this, that a mistake as to English law on the part of a foreign tribunal does not
operate in all cases so as to prevent the courts of this country from giving effect to
the judgment.
FN32 Law Rep. 4 H. L. 414.
FN33 Law Rep. 4 H. L. 414.
In the course of the arguments in that case the point now under consideration was
raised. In the opinion I delivered at the bar of the House [FN34], the cases which
are commonly referred to as authorities for the opinion expressed by Mr. Smith in
his note to Doe v. Oliver [FN35], are referred to. We have nothing to add to what is
there said. And in the case of Novelli v. Rossi [FN36], it will be found on perusing
the judgment of Lord Tenterden that it does not contain one word in support of the
doctrine for which it is cited. We think that case was rightly decided for the reasons
given in Castrique v. Imrie [FN37]; but at all events it does not bear out Mr. Smith's
position.
FN34 Law Rep. 4 H. L. at pp. 434-435.
FN35 2 Sm. L. C. 2nd ed. at p. 448.
FN36 2 B. & Ad. 757.
FN37 Law Rep. 4 H. L. at p. 435.
For these reasons we have come to the conclusion that judgment should be given
for the plaintiffs.
HANNEN, J.
H. CASES INVOLVING THE INTERNET Page 21 of 102
I agree that our judgment should be for the plaintiffs in this case, but as I do not
entirely concur in the reasoning by which my Brothers Blackburn and Mellor have
arrived at that conclusion, I desire shortly to explain the ground on which my
judgment is founded.
I think that the authorities oblige us (not sitting in a court of error) to hold that the
defendants, by appearing in the suit in *154 France, submitted to the jurisdiction of
the French tribunal, and thereby created a primâ facie duty on their part to obey its
decision; but I do not think that any authority binds us, nor am I prepared to decide
that a defendant, not guilty of any laches, against whom a foreign judgment in
personam has been given, is precluded from impeaching it on the ground that it
appears on the face of the proceedings to be based on an incorrect view of the
English law, even though there may be no evidence that the foreign Court,
knowingly or perversely, refused to recognize that law.
I do not, however, enter at length upon the consideration of this question, because I
have arrived at the conclusion that the defendants in this case were guilty of laches.
It does not appear upon the face of the proceedings, nor at all, that the French
Court was informed of what the English law was. It was the duty of the defendants
to bring to the knowledge of the French Court the provision of the English law on
which they now for the first time rely, and having failed to do so, they must submit to
the consequences of their own negligence. The French Courts, like our own, can
only be informed of foreign law by appropriate evidence, and the party who fails to
produce it cannot afterwards impeach the judgment obtained against him on
account of an error into which the foreign Court has fallen presumably in
consequence of his own default. Suitors in our own courts, in similar circumstances,
must suffer a like penalty for their negligence. A defendant who has omitted to
produce evidence which was procurable at the trial of a cause cannot have a
rehearing on that account; and in an action on a judgment of one of our own Courts,
we do not permit the defendant to plead any facts which might have been pleaded
in the original action. These instances offer analogies by which I think the present
case is governed, and on this ground I am of opinion that the defendants are
precluded from impeaching the decision of the French tribunal, and that our
judgment should be for the plaintiffs.
Judgment for the plaintiffs [FN38].
FN38 See the next case.
Representation
Attorneys for plaintiffs: Abrahams & Roffey.
Attorney for defendants: Hickin.
(c) Incorporated Council of Law Reporting For England & Wales
END OF DOCUMENT
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 Supreme Court of the United States.
HILTON et al.
v.
GUYOT et al. (two cases).
Nos. 130 and 34.
June 3, 1895.
In Error to and Appeal from the Circuit Court of the United States for the Southern
District of New Yrok.
**139 *114 The first of these two cases was an action at law, brought December 18,
1885, in the circuit court of the United States for the Southern district of New York,
by Gustave Bertin Guyot, as official liquidator of the firm of Charles Fortin & Co.,
and by the surviving members of that firm, all aliens and citizens of the republic of
France, against Henry Hilton and William Libbey, citizens of the United States and
of the state of New York, and trading as copartners, in the cities of New York and
Paris, and elsewhere, under the firm name of A. T. Stewart & Co. The action was
upon a judgment recovered in a French court at Paris, in the republic of France, by
the firm of Charles Fortin & Co., all of whose members were French citizens,
against Hilton & Libbey, trading as copartners, as aforesaid, and citizens of the
United States and of the state of New York.
The complaint alleged that in 1886, and since, during the time of all the transactions
included in the judgment sued on, Hilton and Libbey, **140 as successors to
Alexander T. Stewart and Libbey, under the firm name of A. T. Stewart & Co.,
carried on a general business as merchants in the cities of New York and Paris, and
elsewhere, and maintained a regular store and place of business at Paris; that
during the same time Charles Fortin & Co. carried on the manufacture and sale of
gloves at Paris, and the two firms had there large dealings in that business, and
controversies arose in the adjustment of accounts between them.
The complaint further alleged that between March 1, 1879, and December 1, 1882,
five suits were brought by Fortin & Co. against Stewart & Co. for sums alleged to be
due, and three suits by Stewart & Co. against Fortin & Co., in the tribunal of
commerce of the department of the Seine, a judicial tribunal or court, organized and
existing under the laws of France, sitting at Paris, and having jurisdiction of suits
and controversies between merchants or traders growing *115 out of commercial
dealings between them; that Stewart & Co. appeared by their authorized attorneys
in all those suits; and that, after full hearing before an arbitrator appointed by that
court, and before the court itself, and after all the suits had been consolidated by the
court, final judgment was rendered on January 20, 1883, that Fortin & Co. recover
of Stewart & Co. various sums, arising out of the dealings between them, amounting
to 660,847 francs, with interest, and dismissed part of Fortin & Co.'s claim.
The complaint further alleged that appeals were taken by both parties from that
judgment to the court of appeals of Paris, Third section, an appellate court of
record, organized and existing under the laws of the republic of France, and having
jurisdiction of appeals from the final judgments of the tribunal of commerce of the
department of the Seine, where the amount in dispute exceeded the sum of 1,500
francs; and that the said court of appeal, by a final judgment, rendered March 19,
H. CASES INVOLVING THE INTERNET Page 22 of 102
1884, and remaining of record in the office of its clerk at Paris, after hearing the
several parties by their counsel, and upon full consideration of the merits, dismissed
the appeal of the defendants, confirmed the judgment of the lower court in favor of
the plaintiffs, and ordered, upon the plaintiffs' appeal, that they recover the
additional sum of 152,528 francs, with 182,849 francs for interest on all the claims
allowed, and 12,559 francs for costs and expenses.
The complaint further alleged that Guyot had been duly appointed by the tribunal of
commerce of the department of the Seine official liquidator of the firm of Forth &
Co., with full powers, according to law and commercial usage, for the verification
and realization of its property, both real and personal, and to collect and cause to be
executed the judgments aforesaid.
The complaint further alleged that the judgment of the court of appeals of Paris, and
the judgment of the tribunal of commerce, as modified by the judgment of the
appellate court, still remain in full force and effect; ‘that the said courts respectively
had jurisdiction of the subject-matter of the controversies so submitted to them, and
of the parties, the *116 said defendants having intervened, by their attorneys and
counsel, and applied for affirmative relief in both courts; that the plaintiffs have
hitherto been unable to collect the said judgments or any part thereof, by reason of
the absence of the said defendants, they having given up their business in Paris
prior to the recovery of the said judgment on appeal, and having left no property
within the jurisdiction of the republic of France out of which the said judgments
might be made;’ and that there are still justly due and owing from the defendants to
the plaintiffs upon those said judgments certain sums, specified in the complaint,
and amounting in all to 1,008,783 francs in the currency of the republic of France,
equivalent to $195,122.47.
The defendants, in their answer, set forth in detail the original contracts and
transactions in France between the parties, and the subsequent dealings between
them, modifying those contracts, and alleged that the plaintiffs had no just claim
against the defendants, but that, no the contrary, the defendants, upon a just
settlement of the accounts, were entitled to recover large sums from the plaintiffs.
The answer admitted the proceedings and judgments in the French courts, and that
the defendants gave up their business in France before the judgment on appeal,
and had no property within the jurisdiction of France out of which that judgment
could be collected.
The answer further alleged that the tribunal of commerce of the department of the
Seine was a tribunal whose judges were merchants, ship captains, stockbrokers,
and persons engaged in commercial pursuits, and of which Charles Fortin had been
a member until shortly before the commencement of the litigation.
The answer further alleged that, in the original suits brought against the defendants
by Fortin & Co., the citations were left at their storehouse in Paris; that they were
then residents and citizens of the state of New York, and neither of them at that
time, or within four years before, had been within, or resident or domiciled within,
the jurisdiction of that tribunal, or owed any allegiance to France; but that *117 they
were the owners of property situated in that country, which would by the law of
France have been liable to seizure if they did not appear in that tribunal; and that
CONFLICT OF LAWS 3D 2/08-09
they unwillingly, and solely for the purpose of protecting that property, authorized
and caused an agent to appear for them in those proceedings; and that the suits
brought by them against Fortin & Co. were brought for the same purpose, and in
order to make a proper defense, and to establish counterclaims arising out of the
transactions between the parties, and to compel the production and inspection of
For tin**141 & Co.'s books, and that they sought no other affirmative relief in that
tribunal.
The answer further alleged that pending that litigation the defendants discovered
gross frauds in the accounts of Fourtin & Co., that the arbitrator and the tribunal
declined to compel Fortin & Co. to produce their books and papers for inspection,
and that, if they had been produced, the judgment would not have been obtained
against the defendants.
The answer further alleged that, without any fault or negligence on the part of the
defendants, there was not a full and fair trial of the controversies before the
arbitrator, in that no witness was sworn or affirmed; in that Charles Fortin was
permitted to make, and did make, statements not under oath, containing many
falsehoods; in that the privilege of cross-examination of Fortin and other persons,
who made statements before the arbitrator, was denied to the defendants; and in
that extracts from printed newspapers, the knowledge of which was not brought
home to the defendants, and letters and other communications in writing between
Fortin & Co. and third persons, to which the defendants were neither privy nor party,
were received by the arbitrator; that without such improper evidence the judgment
would not have been obtained; and that the arbitrator was deceived and misled by
the false and fraudulent accounts introduced by Fortin & Co., and by the hearsay
testimony given, without the solemnity of an oath, and without cross-examination,
and by the fraudulent suppression of the books and papers.
The answer further alleged that Fortin & Co. made up their statements and
accounts falsely and fraudulently, and with *118 intent to deceive the defendants
and the arbitrator and the said courts of France, and those courts were deceived
and misled thereby; that, owing to the fraudulent suppression of the books and
papers of Fortin & Co. upon the trial, and the false statements of Fortin regarding
matters involved in the controversy, the arbitrator and the courts of France ‘were
deceived and misled in regard to the merits of the controversies pending before
them, and wrongfully decided against said Stewart & Co., as hereinbefore stated;
that said judgment, hereinbefore mentioned, isfraudulent, and based upon false and
fraudulent accounts and statements, and is errorneous in fact and in law, and is
void; that the trial hereinbefore mentioned was not conducted according to the
usages and practice of the common law, and the allegations and proofs given by
said Fortin & Co., upon which said judgment is founded, would not be competent or
admissible in any court or tribunal of the United States, in any suit between the
same parties, involving the same subject-matter, and it is contrary to natural justice
and public policy that the said judgment should be enforced against a citizen of the
United States; and that, if there had been a full and fair trial upon the merits of the
controversies so pending before said tribunals, no judgment would have been
obtained against said Stewart & Co.
‘Defendants, further answering, allege that it is contrary to natural justice that the
judgment hereinbefore mentioned should be enforced without an examination of the
H. CASES INVOLVING THE INTERNET Page 23 of 102
merits thereof; that by the laws of the republic of France, to wit, article 181 [121] of
the royal ordinance of June 15, 1629, it is provided namely: ‘Judgments rendered,
contracts or obligations recognized, in foreign kingdoms and sovereignties, for any
cause whatever, shall give rise to no lien or execution in our kingdom. Thus the
contracts shall stand for simple promises, and, notwithstanding such judgments, our
subjects against whom they have been rendered may contest their rights anew
before our own judges.’
‘And it is further provided by the laws of France, by article 546 of the Code de
Procedure Civile, as follows: ‘Judgments rendered by foreign tribunals shall be
capable of execution*119 in France, only in the manner and in the cases set forth
by articles 2123 and 2128 of the Civil Code.’
‘And it is further provided by the laws of France, by article 2128 [2123] of the Code
de Procedure Civile [Civil Code]: ‘A lien cannot, in like manner, arise from
judgments rendered in any foreign country, save only as they have been declared in
force by a French tribunal, without prejudice, however, to provisions to the contrary,
contained in public laws and treaties.’[And by article 2128 of that Code: ‘Contracts
entered into in a foreign country cannot give a lien upon property in France, if there
are no provisions contrary to this principle in public laws or in treaties.’]
‘That the construction given to said statutes by the judicial tribunals of France is
such that no comity is displayed towards the judgments of tribunals of foreign
countries against the citizens of France, when sued upon in said courts of France,
and the merits of the controversies upon which the said judgments are based are
examined anew, unless a treaty to the contrary effect exists between the said
republic of France and the country in which such judgment is obtained. That no
treaty exists between the said republic of France and the United States, by the
terms or effect of which the judgments of either country are prevented from being
examined anew upon the merits, when sued upon in the courts of the country other
than that in which it is obtained. That the tribunals of the republic of France give no
force and effect, within the jurisdiction of the said country, to the duly rendered
judgments of courts of competent jurisdiction of the United States against citizens of
France, after proper personal service of the process of said courts is made thereon
in this country.’
**142 The answer further set up, by way of counterclaim, and in detail, various
matters arising out of the dealings between the parties, and alleged that none of the
plaintiffs had since 1881 been residents of the state of New York, or within the
jurisdiction of that state, but the defendants were, and always had been, residents
of that state.
The answer concluded by demanding that the plaintiffs' *120 complaint be
dismissed, and that the defendants have judgment against them upon the
counterclaims, amounting to $102,942.91.
The plaintiffs filed a replication to so much of the answer as made counterclaims,
denying its allegations, and setting up in bar thereof the judgment sued on.
The defendants, on June 22, 1888, filed a bill in equity against the plaintiffs, setting
forth the same matters as in their answer to the action at law, and praying for a
CONFLICT OF LAWS 3D 2/08-09
discovery, and for an injunction against the prosecution of the action. To that bill a
plea was filed, setting up the French judgments, and upon a hearing the bill was
dismissed. 42 Fed. 249. From the decree dismissing the bill an appeal was taken,
which is the second case now before this court.
The action at law afterwards came on for trial by a jury, and the plaintiffs put in the
records of the proceedings and judgments in the French courts, and evidence that
the jurisdiction of those courts was as alleged in the complaint, and that the practice
followed, and the method of examining the witnesses, were according to the French
law; and also proved the title of Guyot as liquidator.
It was admitted by both parties that for several years prior to 1876 the firm of
Alexander T. Stewart & Co., composed of Stewart and Libbey, conducted their
business as merchants in the city of New York, with branches in other cities of
America and Europe; that both partners were citizens and residents of the city and
state of New York during the entire period mentioned in the complaint; and that in
April, 1876, Stewart died, and Hilton and Libbey formed a partnership to continue
the business under the same firm name, and became the owners of all the property
and rights of the old firm.
The defendants made numerous offers of evidence in support of all the specific
allegations of fact in their answer, including the allegations as to the law and comity
of France. The plaintiffs, in their brief filed in this court, admitted that most of these
offers ‘where offers to prove matters in support of the defenses and counterclaims
set up by the defendants in the cases tried before the French courts, and which, or
most *121 of which, would have been relevant and competent if the plaintiffs in error
are not concluded by the result of those litigations, and have now the right to try
those issues, either on the ground that the French judgments are only prima facie
evidence of the correctness of those judgments, or on the ground that the case is
within the exception of a judgment obtained by fraud.’
The defendants, in order to show that they should not be concluded by having
appeared and litigated in the suits brought against them by the plaintiffs in the
French courts, offered to prove that they were residents and citizens of the state of
New York, and neither of them had been, within four years prior to the
commencement of those suits, domiciled or resident within the jurisdiction of those
courts; that they had a purchasing agent and a storehouse in Paris, but only as a
means or facility to aid in the transaction of their principal business, which was in
New York, and they were never otherwise engaged in business in France; that
neither of them owed allegiance to France, but they were the owners of property
there, which would, according to the laws of France, have been liable to seizure if
they had not appeared to answer in those suits; that they unwillingly, and solely for
the purpose of protecting their property within the jurisdiction of the French tribunal,
authorized an agent to appear, and he did appear in the proceedings before it; and
that their motion to compel an inspection of the plaintiffs' books, as well as the suits
brought by the defendants in France, were necessary by way of defense or
counterclaim to the suits there brought by the plaintiffs against them.
Among the matters which the defendants alleged and offered to prove in order to
show that the French judgments were procured by fraud were that Fortin & Co., with
intent to deceive and defraud the defendants, and the arbitrator and the courts of
H. CASES INVOLVING THE INTERNET Page 24 of 102
France, entered in their books, and presented to the defendants, and to the French
courts, accounts bearing upon the transactions in controversy which were false and
fraudulent, and contained excessive and fraudulent charges against the defendants
in various particulars, specified; that the *122 defendants made due application to
the tribunal of commerce to compel Fortin & Co. to allow their account books and
letter books to be inspected by the defendants, and the application was opposed by
Fortin & Co., and denied by the tribunal; that the discovery and inspection of those
books were necessary to determine the truth of the controversies between the
parties; that before the tribunal of commerce Charles Fortin was permitted to and
did give in evidence statements not under oath, relating to the merits of the
controversies there pending, and falsely represented that a certain written contract,
made in 1873, between Stewart & Co. and Fortin & Co., concerning their dealings,
was not intended by the parties to be operative according to its terms; and in
support of that false representation made statements as to admissions by Stewart in
a private conversation with him; and that the defendants could not deny those
statements, because Stewart was dead, and they were not protected from the effect
of Fortin's **143 statements by the privilege of cross-examining him under oath; and
that the French judgments were based upon false and fraudulent accounts
presented and statements made by Fortin & Co. before the tribunal of commerce
during the trial before it.
The records of the judgments of the French courts, put in evidence by the plaintiffs,
showed that all the matters now relied on to show fraud were contested in and
considered by those courts.
The plaintiffs objected to all the evidence offered by the defendants, on the grounds
that the matters offered to be proved were irrelevant, immaterial, and incompetent;
that in respect to them the defendants were concluded by the judgment sued on
and given in evidence; and that none of those matters, if proved, would be a
defense to this action upon that judgment.
The court declined to admit any of the evidence so offered by the defendants, and
directed a verdict for the plaintiffs in the sum of $277,775.44, being the amount of
the French judgment and interest. The defendants, having duly excepted to the
rulings and direction of the court, sued out a writ of error.
*123 The writ of error in the action at law and the appeal in the suit in equity were
argued together in this court in January, 1894, and, by direction of the court, were
reargued in April, 1894.
Mr. Chief Justice Fuller, Mr. Justice Harlan, Mr. Justice Brewer, and Mr. Justice
Jackson dissenting.
FOREIGN JUDGMENT-CONCLUSIVENESS.
1. Where there has been opportunity for a full and fair trial before a foreign court of
competent jurisdiction, conduction the trial on regular proceedings, after due citation
of voluntary appearance of the defendant, and under a system of jurisprudence
likely to secure an impartial administration of justice between the citizens of that
country and those of other countries, and there is nothing to show either prejudice in
the court, or in the system of laws under which it was sitting, or fraud in procuring
the judgment, or any other special reason why the comity of the United States
should not allow it full effect, the merits of the case should not, in an action brought
CONFLICT OF LAWS 3D 2/08-09
in this country on the judgment, be tried afresh, as on a new trial or an appeal, upon
the mere assertion of a party that the judgment was erroneous in law or in fact.
FOREIGN JUDGMENT-CONCLUSIVENESS.
2. Where the defendants in a judgment recovered in France, though citizens and
residents of new York state, and having their principal place of business in the city
of New York, had a storehouse and an agent in Paris, and were accustomed to
purchase large quantities of goods there, evidence that their sole object in
appearing and carrying on the litigation in the French court was to prevent property
in their storehouse at Paris, belonging to them, and within the jurisdiction, but not in
the custody, of the French court, from being taken in satisfaction of any judgment
recovered against them, does not show that such court did not acquire jurisdiction
of their persons.
FOREIGN JUDGMENT-CONCLUSIVENESS.
3. A foreign judgment cannot be impeached because one of the plaintiffs was
permitted to testify without being put under oath, and was not subjected to cross
examination, or because documents were admitted with which defendants had no
connection, and which would not be admissible in the United States, if the practice
followed and the method of examining witnesses were according to the law of the
foreign country.
FOREIGN JUDGMENT-CONCLUSIVENESS.
4. In an action on a foreign judgment rendered for the price of goods sold, a
contention that part of the plaintiffs' claim is affected by one of the contracts
between the parties having been made in violation of the United, States revenue
law, requiring goods to be invoiced at their actual value, cannot be sustained, in the
absence of any distinct offer to prove that the invoice value of any of the goods sold
by the plaintiffs to the defendants was agreed between them to be, or was in fact,
lower than the actual market value of the goods.
FOREIGN JUDGMENT-CONCLUSIVENESS.
5. When an action is brought in a court of this country by a citizen of a foreign
country against one of our own citizens, to recover a sum of money adjudged by a
court of that country to be due from the defendant to the plaintiff, and the foreign
judgment appears to have been rendered by a competent court, having jurisdiction
of the cause and of the parties, and upon due allegations and proofs, and
opportunity to defend against them, and its proceedings are according to the course
of a civilized jurisprudence, and are stated in a clear and formal record, the
judgment is prima facie evidence, at least, of the truth of the matter adjudged; and it
should be held conclusive upon the merits tried in the foreign court, unless some
special ground is shown for impeaching the judgment, as by showing that it was
affected by fraud or prejudice, or that, by the principles of international law, and by
the comity of our own country, it should not be given full credit and effect.
FOREIGN JUDGMENT-CONCLUSIVENESS.
6. Judgments rendered in France, or in any other foreign country, by the laws of
which judgments rendered in the United States are reviewable upon the merits, are
not entitled to full credit and conclusive effect when sued upon in the United States,
but are primafacie evidence only of the justice of the plaintiff's claim.
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Elihu Root and James C. Carter, for plaintiffs.
Wm. G. Choate, for defendants.
*162 Mr. Justice GRAY, after stating the case, delivered the opinion of the court.
These two cases-the one at law and the other in equity-of Hilton v. Guyot, and the
case of Ritchie v. McMullen, 16 Sup. Ct. 171, which has been under advisement at
the same time, present important questions relating to the force and effect of foreign
judgments, not hitherto adjudicated by this court, which have been argued *163 with
great learning and ability, and which require for their satisfactory determination a full
consideration of the authorities. To avoid confusion in indicating the parties, it will be
convenient first to take the case at law of Hilton v. Guyot.
International law, in its widest and most comprehensive sense,-including not only
questions of right between nations, governed by what has been appropriately called
the ‘law of nations,’ but also questions arising under what is usually called ‘private
international law,’ or the ‘conflict of laws,’ and concerning the rights of persons
within the territory and dominion of one nation, by reason of acts, private or public,
done within the dominions of another nation,-is part of our law, and must be
ascertained and administered by the courts of justice as often as such questions are
presented in litigation between man and man, duly submitted to their determination.
The most certain guide, no doubt, for the decision of such questions is a treaty or a
statute of this country. But when, as is the case here, there is no written law upon
the subject, the duty still rests upon the judicial tribunals of ascertaining and
declaring what the law is, whenever it becomes necessary to do so, in order to
determine the rights of parties to suits regularly broght before them. In doing this,
the courts must obtain such aid as they can from judicial decisions, from the works
of jurists and commentators, and from the acts and usages of civilized nations.
Fremont v. U. S., 17 How. 542, 557; The Scotia, 14 Wall. 170, 188; Respublica v.
De Longchamps, 1 Dall. 111, 116; Moultrie v. Hunt, 23 N. Y. 394, 396.
No law has any effect, of its own force, beyond the limits of the sovereignty from
which its authority is derived. The extent to which the law of one nation, as put in
force within its territory, whether by executive order, by legislative act, or by judicial
decree, shall be allowed to operate within the dominion of another nation, depends
upon what our greatest jurists have been content to call ‘the comity of nations.’
Although the phrase has been often criticised, no satisfactory substitute has been
suggested.
‘Comity,’ in the legal sense, is neither a matter of absolute *164 obligation, on the
one hand, nor of mere courtesy and good will, upon the other. But it is the
recognition which one nation allows within its territory to the legislative, executive or
judicial acts of another nation, having due regard both to international duty and
convenience, and to the rights of its own citizens, or of other persons who are under
the protection of its laws.
Mr. Justice Story, in his Commentaries on the Conflict of Laws, treating of the
question in what department of the government of any state, in the absence of any
clear declaration of the sovereign will, resides the authority to determine how far the
laws of a foreign state shall have effect, and observing that this differs in different
states, according to the organization of the departments of the government of each,
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says: ‘In England and America the courts of justice have hitherto exercised the
same authority in the most ample manner, and the legislatures have in no instance
(it is believed) in either country interfered to provide any positive regulations. The
common law of both countries has been expanded to meet the exigencies of the
times as they have arisen, and, so far as the practice, of nations, or the ‘jus gentium
privatum,’ has been supposed to furnish any general principle, it has been followed
out.'Story, Confl. Laws, §§ 23, 24.
Afterwards, speaking of the difficulty of applying the positive rules laid down by the
Continental jurists, he says that ‘there is, indeed, great truth’ in these remarks of Mr.
Justice Porter, speaking for the supreme **144 court of Louisiana: ‘They have
attempted to go too far, to define and fix that which cannot, in the nature of things,
be defined and fixed. They seem to have forgotten that they wrote on a question
which touched the comity of nations, and that that comity is, and ever must be,
uncertain; that it must necessarily depend on a variety of circumstances which
cannot be reduced to any certain rule; that no nation will suffer the laws of another
to interfere with her own to the injury of her citizens; that whether they do or not
must depend on the condition of the country in which the foreign law is sought to be
enforced, the particular nature of her legislation, her policy, and the character *165
of her institutions; that in the conflict of laws it must often be a matter of doubt which
should prevail; and that, whenever a doubt does exist, the court which decides will
prefer the laws of its own country to that of the stranger.’Story, Confl. Laws, § 28;
Saul v. His Creditors (1827) 5 Mart. (N. S.) 569, 596.
Again, Mr. Justice Story says: ‘It has been thought by some jurists that the term
‘comity’ is not sufficiently expressive of the obligation of nations to give effect to
foreign laws when they are not prejudicial to their own rights and interests. And it
has been suggested that the doctrine rests on a deeper foundation; that it is not so
much a matter of comity or courtesy, as a matter of paramount moral duty. Now,
assuming that such a moral duty does exist, it is clearly one of imperfect obligation,
like that of beneficence, humanity, and charity. Every nation must be the final judge
for itself, not only of the nature and extent of the duty, but of the occasions on which
its exercise may be justly demanded.'And, after further discussion of the matter, be
concludes: ‘There is, then, not only no impropriety in the use of the phrase ‘comity
of nations,’ but it is the most appropriate phrase to express the true foundation and
extent of the obligation of the laws of one nation within the territories of
another.'Story, Confl. Laws, §§ 33-38.
Chief Justice Taney, likewise, speaking for this court, while Mr. Justice Story was a
member of it, and largely adopting his words, said: ‘It is needless to enumerate here
the instances in which, by the general practice of civilized countries, the laws of the
one will, by the comity of nations, be recognized and executed in another, where the
rights of individuals are concerned.’‘The comity thus extended to other nations is no
impeachment of sovereignty. It is the voluntary act of the nation by which it is
offered, and is inadmissible when contrary to its policy, or prejudicial to its interests.
But it contributes so largely to promote justice between individuals, and to produce
a friendly intercourse between the sovereignties to which they belong, that courts of
justice have continually acted upon it as a part of the voluntary law of nations.’‘It is
not the comity of the courts, but the comity *166 of the nation, which is administered
and ascertained in the same way, and guided by the same reasoning, by which all
other principles of municipal law are ascertained and guided.’ Bank v. Earle (1839)
H. CASES INVOLVING THE INTERNET Page 26 of 102
13 Pet. 519, 589; Story, Confl. Laws, § 38.
Mr. Wheaton says: ‘All the effect which foreign laws can have in the territory of a
state depends absolutely on the express or tacit consent of that state.’‘The express
consent of a state to the application of foreign laws within its territory is given by
acts passed by its legislative authority, or by treaties concluded with other states. Its
tacit consent is manifested by the decisions of its judicial and administrative
authorities, as well as by the writings of its publicists. There is no obligation
recognized by legislators, public authorities, and publicists to regard foreign laws;
but their application is admitted only from considerations of utility and the mutual
convenience of states,-‘ex comitate, ob reciprocam utilitatem.”Wheat. Int. Law (8th
Ed.) §§ 78, 79.‘No sovereign is bound, unless by special compact, to execute within
his dominions a judgment rendered by the tribunals of another state; and, if
execution be sought by suit upon the judgment or otherwise, the tribunal in which
the suit is brought, or from which execution is sought, is, on principle, at liberty to
examine into the merits of such judgment, and to give effect to it or not, as may be
found just and equitable. The general comity, utility, and convenience of nations
have, however, established a usage among most civilized states, by which the final
judgments of foreign courts of competent jurisdiction are reciprocally carried into
execution, under certain regulations and restrictions, which differ in different
countries.’Id. § 147.
Chancellor Kent says: ‘The effect to be given to foreign judgments is altogether a
matter of comity in cases where it is not regulated by treaty.’2 Kent, Comm. (6th
Ed.) 120.
In order to appreciate the weight of the various authorities cited at the bar, it is
important to distinguish different kinds of judgments. Every foreign judgment, of
whatever nature, in order to be entitled to any effect, must have been rendered *167
by a court having jurisdiction of the cause, and upon regular proceedings, and due
notice. In alluding to different kinds of judgments, therefore, such jurisdiction,
proceedings, and notice will be assumed. It will also be assumed that they are
untainted by fraud, the effect of which will be considered later.
A judgment in rem, adjudicating the title to a ship or other movable property within
the custody of the court, is treated as valid everywhere. As said by Chief Justice
Marshall: ‘The sentence of a competent court, proceeding in rem, is conclusive with
respect to the thing itself, and operates as an **145 absolute change of the
property. By such sentence the right of the former owner is lost, and a complete title
given to the person who claims under the decree. No court of co-ordinate
jurisdiction can examine the sentence. The question, therefore, respecting its
conformity to general or municipal law can never arise, for no co-ordinate tribunal is
capable of making the inquiry.’ Williams v. Armroyd, 7 Cranch, 423, 432. The most
common illustrations of this are decrees of courts of admiralty and prize, which
proceed upon principles of international law. Croudson v. Leonard, 4 Cranch,
434;Williams v. Armroyd, above cited; Ludlow v. Dale, 1 Johns. Cas. 16. But the
same rule applies to judgments in rem under municipal law. Hudson v. Guestier, 4
Cranch, 293; Ennis v. Smith, 14 How. 400, 430; Wisconsin v. Pelican Ins. Co., 127
U. S. 265, 291, 8 Sup. Ct. 1370; Scott v. McNeal, 154 U. S. 34, 46, 14 Sup. Ct.
1108; Castrique v. Imrie, L. R. 4 H. L. 414; Monroe v. Douglas, 4 Sandf. Ch. 126.
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A judgment affecting the status of persons, such as a decree confirming or
dissolving a marriage, is recognized as valid in every country, unless contrary to the
policy of its own law. Cottington's Case, 2 Swanst. 326, note; Roach v. Garvan, 1
Ves. Sr. 157; Harvey v. Farnie, 8 App. Cas. 43; Cheely v. Clayton, 110 U. S. 701, 4
Sup. Ct. 328. It was of a foreign sentence of divorce that Lord Chancellor
Nottingham, in the house of lords, in 1678, in Cottington's Case, above cited, said:
‘It is against the law of nations not to give credit to the judgments and sentences of
foreign countries till they be reversed by the law, *168 and according to the form, of
those countries wherein they were given; for what right hath one kingdom to reverse
the judgment of another? And how can we refuse to let a sentence take place till it
be reversed? And what confusion would follow in Christendom, if they should serve
us so abroad, and give no credit to our sentences!’
Other judgments, not strictly in rem, under which a person has been compelled to
pay money, are so far conclusive that the justice of the payment cannot be
impeached in another country, so as to compel him to pay it again. For instance, a
judgment in foreign attachment is conclusive, as between the parties, of the right to
the property or money attached. Story, Confl.Laws (2d Ed.) § 592a. And if, on the
dissolution of a partnership, one partner promises to indemnify the other against the
debts of the partnership, a judgment for such a debt, under which the latter has
been compelled to pay it, is conclusive evidence of the debt in a suit by him to
recover the amount upon the promise of indemnity. It was of such a judgment, and
in such a suit, that Lord Nottingham said: ‘Let the plaintiff receive back so much of
the money brought into court as may be adequate to the sum paid on the sentence
for custom, the justice whereof is not examinable here.’Gold v. Canham (1679) 2
Swanst. 325, 1 Ch. Cas. 311. See, also, Tarleton v. Tarleton, 4 Maule & S. 20;
Konitzky v. Meyer, 49 N. Y. 571.
Other foreign judgments which have been held conclusive of the matter adjudged
were judgments discharging obligations contracted in the foreign country between
citizens or residents thereof. Story, Confl. Laws, §§ 330-341; May v. Breed, 7 Cush.
15. Such was the case cited at the bar of Burroughs (or Burrows) v. Jamineau (or
Jemino), Moseley, 1, 2 Strange, 733, 2 Eq. Cas. Abr. p. 525, pl. 7, 12 Vin. Abr. p.
87, pl. 9 Sel. Cas. Ch. 69, and 1 Dickens, 48.
In that case bills of exchange drawn in London were negotiated, indorsed, and
accepted at Leghorn, in Italy, by the law of which an acceptance became void if the
drawer failed without leaving effects in the acceptor's hands. The acceptor,
accordingly, having received advices that the drawer had failed *169 before the
acceptances, brought a suit at Leghorn against the last indorsees, to be discharged
of his acceptances, paid the money into court, and obtained a sentence there, by
which the acceptances were vacated as against those indorsees, and all the
indorsers and negotiators of the bills, and the money deposited was returned to him.
Being afterwards sued at law in England by subsequent holders of the bills, he
applied to the court of chancery, and obtained a perpetual injunction. Lord
Chancellor King, as reported by Strange, ‘was clearly of opinion that this cause was
to be determined according to the local laws of the place where the bill was
negotiated, and, the plaintiff's acceptance of the bill having been vacated and
declared void by a court of competent jurisdiction, he thought that sentence was
conclusive, and bound the court of chancery here’; as reported in Viner, that ‘the
court at Leghorn had jurisdiction of the thing and of the persons'; and, as reported
H. CASES INVOLVING THE INTERNET Page 27 of 102
by Mosely, that, though ‘the last indorsees had the sole property of the bills, and
were therefore made the only parties to the suit at Leghorn, yet the sentence made
the acceptance void against the now defendants and all others.’It is doubtful, at the
least, whether such a sentence was entitled to the effect given to it by Lord
Chancellor King. See Novelli v. Rossi, 2 Barn. & Adol. 757; Castrique v. Imrie, L. R.
4 H. L. 414, 435; 2 Smith, Lead. Cas. (2d Ed.) 450.
The remark of Lord Hardwicke, arguendo, as chief justice, in Boucher v. Lawson
(1734) that ‘the reason gone upon by Lord Chancellor King, in the case of
Burroughs v. Jamineau, was certainly right, that where any court, whether foreign or
domestic, that has the proper jurisdiction of the cases, makes a determination, it is
conclusive to all other courts,’ evidently had reference, as the context shows, to
judgments of a **146 court having jurisdiction of the thing, and did not touch the
effect of an executory judgment for a debt. Cas. t. Hardw. 85, 89, Cunn. 144, 148.
In former times, foreign decrees in admiralty in personam were executed, even by
imprisonment of the defendant, by the court of admiralty in England, upon letters
rogatory from the foreign sovereign, without a new suit. Its right to *170 do so was
recognized by the court of king's bench in 1607 in a case of habeas corpus, cited by
the plaintiffs, and reported as follows: ‘If a man of Frizeland sues an Englishman in
Frizeland before the governor there, and there recovers against him a certain sum,
upon which the Englishman, not having sufficient to satisfy it, comes into England,
upon which the governor sends his letters missive into England, omnes magistratus
infra regnum Angliae rogans, to make execution of the said judgment, the judge of
the admiralty may execute this judgment by imprisonment of the party, and he shall
not be delivered by the common law; for this is by the law of nations that the justice
of one nation should be aiding to the justice of another nation, and for one to
execute the judgment of the other, and the law of England takes notice of this law,
and the judge of the admiralty is the proper magistrate for this purpose, for he only
hath the execution of the civil law within the realm. Weir's Case (Pasch. Term) 5
Jac. B. R. (resolved upon a habeas corpus, and remanded).’ 1 Rolle, Abr. p. 530, pl.
12; 6 Vin. Abr. p. 512, pl. 12. But the only question there raised or decided was of
the power of the English court of admiralty, and not of the conclusiveness of the
foreign sentence, and in later times the mode of enforcing a foreign decree in
admiralty is by a new libel. See The City of Mecca, 5 Prob. Div. 28, 6 Prob. Div.
106.
The extraterritorial effect of judgments in personam, at law, or in equity may differ,
according to the parties to the cause. A judgment of that kind between two citizens
or residents of the country, and thereby subject to the jurisdiction in which it is
rendered, may be held conclusive as between them everywhere. So, if a foreigner
invokes the jurisdiction by bringing an action against a citizen, both may be held
bound by a judgment in favor of either; and if a citizen sues a foreigner, and
judgment is rendered in favor of the latter, both may be held equally bound. Ricardo
v. Garcias, 12 Clark & F. 368; The Griefswald, Swab. 430, 435; Barber v. Lamb, 8
C. B. (N. S.) 95; Lea v. Deakin, 11 Biss. 23, Fed. Cas. No. 8,154.
The effect to which a judgment, purely executory, rendered *171 in favor of a citizen
or resident of the country, in a suit there brought by him against a foreigner, may be
entitled in an action thereon against the latter in his own country, as is the case now
before us, presents a more difficult question, upon which there has been some
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diversity of opinion.
Early in the last century it was settled in England that a foreign judgment on a debt
was considered, not like a judgment of a domestic court of record, as a record or a
specialty, a lawful consideration for which was conclusively presumed, but as a
simple contract only.
This clearly appears in Dupleix v. De Roven (1705), where one of two merchants in
France recovered a judgment there against the other for a sum of money, which,
not being paid, he brought a suit in chancery in England for a discovery of assets
and satisfaction of the debt, and the defendant pleaded the statute of limitations of
six years, and prevailed; Lord Keeper Cowper saying: ‘Although the plaintiff
obtained a judgment or sentence in France, yet here the debt must be considered
as a debt by simple contract. The plaintiff can maintain no action here but an
indebitatus assumpsit or an insimul computassent, so that the statute of limitations
is pleadable in this case.’2 Vern. 540.
Several opinions of Lord Hardwicke define and illustrate the effect of foreign
judgments, when sued on or pleaded in England.
In Otway v. Ramsay (1736), in the king's bench, Lord Hardwicke treated it as worthy
of consideration ‘what credit is to be given by one court to the courts of another
nation, proceeding both by the same rules of law,’ and said: ‘It is very desirable, in
such case, that the judgment given in one kingdom should be considered as res
judicata in another.’But it was held that debt would not lie in Ireland upon an English
judgment, because ‘Ireland must be considered as a provincial kingdom, part of the
dominions of the crown of England, but no part of the realm,’ and an action of debt
on a judgment was local. 4 Barn. & C. 414-416, note, 14 Vin. Abr. p. 569, pl. 5, 2
Strange, 1090.
A decision of Lord Hardwicke as chancellor was mentioned *172 in Walker v. Witter
(1778) 1 Doug. 1, 6, by Lord Mansfield, who said: ‘He recollected a case of a
decree on the chancery side in one of the courts of great sessions in Wales, from
which there was an appeal to the house of lords, and the decree affirmed there.
Afterwards, a bill was filed in the court of chancery, on the foundation of the decree
so affirmed, and Lord Hardwicke thought himself entitled to examine into the justice
of the decision of the house of lords, because the original decree was in the court of
Wales, whose decisions were clearly liable to be examined.’ And in Galbraith v.
Neville (1789) 1 Doug. 6, note, Mr. Justice Buller said: ‘I have often heard Lord
Mansfield repeat what was said by Lord Hardwicke in the case alluded to from
Wales, and the ground of his lordship's opinion was this: When you call for my
assistance to carry into effect the decision of some other tribunal, you shall not have
it, if it appears that you are in the wrong; **147 and it was on that account that he
said he would examine into the propriety of the decree.’The case before Lord
Hardwicke mentioned by Lord Mansfield would appear (notwithstanding the doubt of
its authenticity expressed by Lord Kenyon in Galbraith v. Neville) to have been a
suit to recover a legacy, briefly reported, with references to Lord Hardwicke's note
book, and to the original record, as Morgan v. Morgan (1737-38) West. Ch. 181,
597, 1 Atk. 53, 408.
In Gage v. Bulkeley (1744), briefly reported in 3 Atk. 215, cited by the plaintiffs, a
H. CASES INVOLVING THE INTERNET Page 28 of 102
plea of a foreign sentence in a commissary court in France was overruled by Lord
Hardwicke, saying: ‘It is the most proper case to stand for an answer, with liberty to
except, that I ever met with.’His reasons are fully stated in two other reports of the
case. According to one of them, at the opening of the argument he said: ‘Can a
sentence or judgment pronounced by a foreign jurisdiction be pleaded in this
kingdom to a demand for the same thing in any court of justice here? I always
thought it could not, because every sentence, having its authority from the
sovereign in whose dominions it is given, cannot bind the jurisdiction of foreign
courts, who own not the same authority, *173 and have a different sovereign, and
are only bound by judicial sentence given under the same soverign power by which
they themselves act.’‘But though a foreign sentence cannot be used by way of plea
in the courts here, yet it may be taken advantage of in the way of evidence.’‘You
cannot in this kingdom maintain debt upon judgment obtained for money in a foreign
jurisdiction, but you may on assumpsit in nature of debt, upon a simple contract,
and give the judgment in evidence, and have a verdict; so that the distinction seems
to be, where such foreign sentence is used as a plea to bind the courts here as a
judgment, and when it is made use of in evidence as binding the justice of the case
only.’And afterwards, in giving his decision, he said: ‘The first question is whether
the subject-matter of the plea is good. The second is whether it is well pleaded. The
first question depends upon this: Whether the sentence or judgment of a foreign
court can be used by way of plea in a court of justice in England; and no authority,
either at law or in equity, has been produced to show that it may be pleaded, and
therefore I shall be very cautious how I establish such a precedent.’‘It is true such
sentence is an evidence which may affect the right of this demand, when the cause
comes to be heard; but, if it is no plea in a court of law to bind their jurisdiction, I do
not see why it should be so here.’Ridg. t. Hardw. 263, 264, 270, 273. A similar
report of his judgment is in 2 Ves. Sr. (Belt's Supp.) 409, 410.
In Roach v. Garvan (1748), where an infant ward of the court of chancery had been
married in France, by her guardian, to his son, before a French court, and the son
‘petitioned for a decree for cohabitation with his wife, and to have some money out
of the bank,’ Lord Hardwicke said, as to the validity of the marriage: ‘It has been
argued to be valid, from being established by the sentence of a court in France
having proper jurisdiction; and it is true that, if so, it is conclusive, whether in a
foreign court or not, from the law of nations in such cases; otherwise, the rights of
mankind would be very precarious and uncertain. But the question is whether this is
a proper sentence, in a proper cause, and between proper *174 parties, of which it
is impossible to judge without looking further into the proceedings; this being rather
the execution of the sentence than the sentence itself.’And, after observing upon
the competency of the French tribunal, and pointing out that restitution of conjugal
rights was within the jurisdiction of the ecclesiastical court, and not of the court of
chancery, he added: ‘Much less will I order any money out of the bank to be given
him.’1 Ves. Sr. 157, 159. He thus clearly recognized the difference between
admitting the effect of a foreign judgment as adjudicating the status of persons, and
executing a foreign judgment by enforcing a claim for money.
These decisions of Lord Hardwicke demonstrate that in his opinion, whenever the
question was of giving effect to a foreign judgment for money, in a suit in England
between the parties, it did not have the weight of a domestic judgment, and could
not be considered as a bar, or as conclusive, but only as evidence of the same
weight as a simple contract, and the propriety and justice of the judgment might be
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examined.
In Sinclair v. Fraser (1771) the appellant, having as attorney in Jamaica made large
advances for his constituent in Scotland, and having been superseded in office,
brought an action before the supreme court of Jamaica, and, after appearance,
obtained judgment against him, and afterwards brought an action against him in
Scotland upon that judgment. The court of sessions betermined that the plaintiff was
bound to prove before it the ground, nature, and extent of the demand on which the
judgment in Jamaica was obtained, and therefore gave judgment against him. But
the house of lords (in which, as remarked by one reporter, Lord Mansfield was then
the presiding spirit, acting in concert with or for the lord chancellor in disposing of
the Scotch appeals) ‘ordered and declared that the judgment of the supreme court
of Jamaica ought to be received as evidence prima facie of the debt, and that it lies
upon the defendant to impeach the justice thereof, or to show the same to have
been irregularly obtained’; and therefore reversed the judgment of the court of
sessions. 2 Paton, 253, 6 Mor. Dict. 4542, and 1 Doug. 5, note.
*175 Accordingly, in Crawford v. Witten (1773) **148 a declaration in assumpsit, in
an action in England upon a judgment recovered in the mayor's court of Calcutta, in
Bengal, without showing the cause of action there, was held good on demurrer.
Lord Mansfield considered the case perfectly clear. Mr. Justice Aston, according to
one report, said: ‘The declaration is sufficient. We are not to suppose it an unlawful
debt;’ and, according to another report: ‘They admitted the assumpsit by their
demurrer. When an action comes properly before any court, it must be determined
by the laws which govern the country in which the action accrued.’And Mr. Justice
Ashurst said: ‘I have often known assumpsit brought on judgments in foreign courts.
The judgment is a sufficient consideration to support the implied promise.’Loft, 154;
s. c., nom. Crawford v. Whittal, 1 Doug. 4, note.
In Walker v. Witter (1778) an action of debt was brought in England upon a
judgment recovered in Jamacia. The defendant pleaded nil debet and nul tiel
record. Judgment was given for the plaintiff, Lord Mansfield saying: ‘The plea of nul
tiel record was improper. Though the plaintiffs had called the judgment a record,
yet, by the additional words in the declaration, it was clear they did not mean that
sort of record to which implicit faith is given by the courts of Westminster hall. They
had not misled the court nor the defendant, for they spoke of it as a court of record
in Jamaica. The question was brought to a narrow point, for it was admitted on the
part of the defendant that indebitatus assumpsit would have lain, and on the part of
the plaintiff that the judgment was only prima facie evidence of the debt. That being
so, the judgment was not a specialty, but the debt only a simple contract debt, for
assumpsit will not lie on a specialty. The difficulty in the case had arisen from not
fixing accurately what a court of record is in the eye of the law. That description is
confined properly to certain courts in England, and their judgments cannot be
controverted. Foreign courts, and courts in England not of record, have not that
privilege, nor the courts in Wales, etc. But the doctrine in the case of Sinclair v.
Fraser was unquestionable. Foreign judgments are *176 a ground of action
everywhere, but they are examinable.’Justices Willes, Ashurst, and Buller
concurred; the two latter saying that wherever indebitatus assumpsit will lie, debt
will also lie. 1 Doug. 1, 5, 6.
In Herbert v. Cook (1782), again, in an action of debt upon a judgment of an inferior
H. CASES INVOLVING THE INTERNET Page 29 of 102
English court, not a court of record, Lord Mansfield said that it was ‘like a foreign
judgment, and not conclusive evidence of the debt.’Willes, 36, note.
In Galbraith v. Neville (1789), upon a motion for a new trial after verdict for the
plaintiff, in an action of debt on a judgment of the supreme court of Jamaica, Lord
Kenyon expressed ‘very serious doubts concerning the doctrine laid down in Walker
v. Witter, that foreign judgments are not binding on the parties here.’But Mr. Justice
Buller said: ‘The doctrine which was laid down in Sinclair v. Fraser has always been
considered as the true line ever since; namely, that the foreign judgment shall be
prima facie evidence of the debt, and conclusive till it be impeached by the other
party.’‘As to actions of this sort, see how far the court could go, if what was said in
Walker v. Witter were departed from. It was there held that the foreign judgment
was only to be taken to be right prima facie; that is, we will allow the same force to a
foreign judgment that we do to those of our own courts not of record. But if the
matter were carried further, we should give them more credit; we should give them
equal force with those of courts of record here. Now a foreign judgment has never
been considered as a record. It cannot be declared on as such and a plea of nul tiel
record, in such a case, is a mere nullity. How, then, can it have the same obligatory
force? In short, the result is this: that it is prima facie evidence of the justice of the
demand in an action of assumpsit, having no more credit than is given to every
species of written agreement, viz. that it shall be considered as good till it is
impeached.’ 1 Doug. 6, note. And the court afterwards unanimously refused the
new trial, because, ‘without entering into the question how far a foreign judgment
was impeachable, it was at all events clear that it was prima facie evidence of the
debt; and they were of opinion *177 that no evidence had been adduced to impeach
this.’5 East, 475, note.
In Messin v. Massareene (1791) the plaintiff, having obtained a judgment against
the defendants in a French court, brought an action of assumpsit upon it in England,
and, the defendants having suffered a default, moved for a reference to a master,
and for a final judgment on his report, without executing a writ of inquiry. The motion
was denied, Lord Kenyon saying: ‘This is an attempt to carry the rule further than
has yet been done, and, as there is no instance of the kind, I am not disposed to
make a precedent for it;’ and Mr. Justice Buller saying: ‘Though debt will lie here on
a foreign judgment, the defendant may go into the consideration of it.’4 Term R.
493.
In Bayley v. Edwards (1792) the judicial committee of the privy council, upon appeal
from Jamaica, held that a suit in equity pending in England was not a good plea in
bar to a subsequent bill in Jamaica for the same matter; and Lord Camden said: ‘In
Gage v. Bulkeley [evidently referring to the full report in Ridgeway, above quoted,
which had been cited by counsel] Lord Hardwicke's reasons go a great way to show
the true effect of foreign sentences in this country, and **149 all the cases show that
foreign sentences are not conclusive bars here, but only evidence of the demand.’3
Swanst. 703, 708, 710.
In Phillips v. Hunter (1795) the house of lords, in accordance with the opinion of the
majority of the judges consulted, and against that of Chief Justice Eyre, decided that
a creditor of an English bankrupt, who had obtained payment of his debt by foreign
attachment in Pennsylvania, was liable to an action for the money by the assignees
in bankruptcy in England. But it was agreed, on all hands, that the judgment in
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Pennsylvania and payment under it were conclusive as between the garnishee and
the plaintiff in that suit, and the distinction between the effect of a foreign judgment
which vests title, and of one which only declares that a certain sum of money is due,
was clearly stated by Chief Justice Eyre, as follows:
*178 ‘This judgment against the garnishee in the court of Pennsylvania was
recovered properly or improperly. If, notwithstanding the bankruptcy, the debt
remained liable to an attachment according to the laws of that country, the judgment
was proper; if, according to the laws of that country, the property in the debt was
divested out of the bankrupt debtor, and vested in his assignees, the judgment was
improper. But this was a question to be decided, in the cause instituted in
Pennsylvania, by the courts of that country, and not by us. We cannot examine their
judgment, and, if we could, we have not the means of doing it in this case. It is not
stated upon this record, nor can we take notice, what the law of Pennsylvania is
upon this subject. If we had the means, we could not examine a judgment of a court
in a foreign state, brought before us in this manner.
‘It is in one way only that the sentence or judgment of a court of a foreign state is
examinable in our courts, and that is when the party who claims the benefit of it
applies to our courts to enforce it. When it is thus voluntarily submitted to our
jurisdiction, we treat it, not as obligatory to the extent to which it would be obligatory,
perhaps, in the country in which it was pronounced, nor as obligatory to the extent
to which, by our law, sentences and judgments are obligatory, not as conclusive,
but as matter in pais, as consideration prima facie sufficient to raise a promise. We
examine it as we do all other considerations or promises, and for that purpose we
receive evidence of what the law of the foreign state is, and whether the judgment is
warranted by that law.’2 H. Bl. 402, 409, 410.
In Wright v. Simpson (1802) Lord Chancellor Eldon said: ‘Natural law requires the
courts of this country to give credit to those of another for the inclination and power
to do justice, but not if that presumption is proved to be ill founded in that
transaction which is the subject of it; and if it appears in evidence that persons suing
under similar circumstances neither had met, nor could meet, with justice, that fact
cannot be immaterial as an answer to the presumption.’6 Ves. 714, 730.
*179 Under Lord Ellenborough, the distinction between a suit on a foreign judgment
in favor of the plaintiff against the defendant, and a suit to recover money which the
plaintiff had been compelled to pay under a judgment abroad, was clearly
maintained.
In Buchanan v. Rucker (1808), in assumpsit upon a judgment rendered in the Island
of Tobago, the defendant pleaded non assumpsit, and prevailed, because it
appeared that he was not a resident of the island, and was neither personally
served with process nor came in to defend, and the only notice was, according to
the practice of the court, by nailing up a copy of the declaration at the courthouse
door. It was argued that ‘the presumption was in favor of a foreign judgment, as well
as of a judgment obtained in one of the courts of this country’; to which Lord
Ellenborough answered: ‘That may be so, if the judgment appears, on the face of it,
consistent with reason and justice; but it is contrary to the first principles of reason
and justice that, either in civil or criminal proceedings, a man should be condemned
before he is heard.’‘There might be such glaring injustice on the face of a foreign
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judgment, or it might have a vice rendering it so ludicrous, that it could not raise an
assumpsit, and, if submitted to the jurisdiction of the courts of this country, could not
be enforced.’1 Camp. 63, 66, 67. A motion for a new trial was denied. 9 East, 192.
And see Sadler v. Robins (1808) 1 Camp. 253, 256.
In Hall v. Odber (1809), in assumpsit upon a judgment obtained in Canada, with
other counts on the original debt, Lord Ellenborough and Justices Grose, Le Blanc,
and Bayley agreed that a foreign judgment was not to be considered as having the
same force as a domestic judgment, but only that of a simple contract between the
parties, and did not merge the original cause of action, but was only evidence of the
debt; and therefore assumpsit would lie, either upon the judgment or upon the
original cause of action. 11 East, 118.
In Tarleton v. Tarleton (1815), on the other hand, the action was brought upon a
covenant of indemnity in an agreement for dissolution of a partnership to recover a
sum which the *180 plaintiff had been compelled to pay under a decision in a suit
between the parties in the Island of Grenada. Such was the case of which Lord
Ellenborough, affirming his own ruling at the trial, said: ‘I thought that I did not sit at
nisi prius to try a writ of error in this case upon the proceedings in the court abroad.
The defendant had notice of the proceedings, and should have appeared, and
made his defense.**150 The plaintiff, by this neglect, has been obliged to pay the
money in order to avoid a sequestration.’The distinction was clearly brought out by
Mr. Justice Bayley, who said: ‘As between the parties to the suit, the justice of it
might be again litigated; but as against a stranger it cannot.’4 Maule & S. 20, 22, 23.
In Harris v. Saunders (1825), Chief Justice Abbott (afterwards Lord Tenterden) and
his associates, upon the authority of Otway v. Ramsay, above cited, held that, even
since the Act of Union of 39 & 40 Geo. III. c. 67, assumpsit would lie in England
upon a judgment recovered in Ireland, because such a judgment could not be
considered a specialty debt in England. 4 Barn. & C. 411, 6 Dowl. & R. 471.
The English cases above referred to have been stated with the more particularity
and detail, because they directly bear upon the question, what was the English law,
being then our own law, before the Declaration of Independence? They
demonstrate that by that law, as generally understood, and as declared by
Hardwicke, Mansfield, Buller, Camden, Eyre, and Ellenborough, and doubted by
Kenyon only, a judgment recovered in a foreign country for a sum of money, when
sued upon in England, was only prima facie evidence of the demand, and subject to
be examined and impeached. The law of England since it has become to us a
foreign country will be considered afterwards.
The law upon this subject as understood in the United States at the time of their
separation from the mother country was clearly set forth by Chief Justice Parsons,
speaking for the supreme judicial court of Massachusetts, in 1813, and by Mr.
Justice Story in his Commentaries on the Constitution of the United States,
published in 1833. Both those *181 eminent jurists declared that by the law of
England the general rule was that foreign judgments were only prima facie evidence
of the matter which they purported to decide; and that by the common law, before
the American Revolution, all the courts of the several colonies and states were
deemed foreign to each other, and consequently judgments rendered by any one of
them were considered as foreign judgments, and their merits re-examinable in
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another colony, not only as to the jurisdiction of the court which pronounced them,
but also as to the merits of the controversy, to the extent to which they were
understood to be re-examinable in England. And they noted that, in order to remove
that inconvenience, statutes had been passed in Massachusetts, and in some of the
other colonies, by which judgments rendered by a court of competent jurisdiction in
a neighboring colony could not be impeached. Bissell v. Briggs, 9 Mass. 462, 464,
465; St. Mass. 1773-74, c. 16; 5 Prov. Laws, 323, 369; Story, Const. (1st Ed.) §§
1301, 1302; Id.(4th Ed.) §§ 1306, 1307.
It was because of that condition of the law, as between the American colonies and
states, that the United States, at the very beginning of their existence as a nation,
ordained that full faith and credit should be given to the judgments of one of the
states of the Union in the courts of another of those states.
By the articles of confederation of 1777 (article 4, § 3), ‘full faith and credit shall be
given, in each of these states, to the records, acts and judicial proceedings of the
courts and magistrates of every other state.’1 Stat. 4. By the constitution of the
United States (article 4, § 1), ‘full faith and credit shall be given in each state to the
public acts, records and judicial proceedings of every other state; and the congress
may by general laws prescribe the manner in which such acts, records and
proceedings shall be proved, and the effect thereof.’And the first congress of the
United States under the constitution, after prescribing the manner in which the
records and judicial proceedings of the courts of any state should be authenticated
and proved, enacted that ‘the said records and judicial proceedings authenticated
as aforesaid, shall have *182 such faith and credit given to them in every court
within the United States, as they have by law or usage in the courts of the state
from whence the said records are or shall be taken.’Act May 26, 1790, c. 11 (1 Stat.
122); Rev. St. § 905.
The effect of these provisions of the constitution and laws of the United States was
at first a subject of diverse opinions, not only in the courts of the several states, but
also in the circuit courts of the United States; Mr. Justice Cushing, Mr. Justice
Wilson, and Mr. Justice Washington holding that judgments of the courts of a state
had the same effect throughout the Union as within that state; but Chief Justice
Marshall (if accurately reported) being of opinion that they were not entitled to
conclusive effect, and that their consideration might be impeached.Armstrong v.
Carson (1794) 2 Dall. 302, Fed. Cas. No. 543; Green v. Sarmiento (1811) 3 Wash.
C. C. 17, 21, Pet. C. C. 74, 78, and Fed. Cas. No. 5,760; Peck v. Williamson
(reported as in November, 1813, apparently a mistake for 1812), 1 Car. Law Repos.
53.
The decisions of this court have clearly recognized that judgments of a foreign state
are prima facie evidence only, and that, but for these constitutional and legislative
provisions, judgments of a state of the Union, when sued upon in another state,
would have no greater effect.
In Croudson v. Leonard (1808), in which this court held that the sentence of a
foreign court of admiralty in rem, condemning a vessel for breach of blockade, was
conclusive evidence of that fact in an action on a policy of insurance, Mr. Justice
Washington, after speaking of the conclusiveness of domestic **151 judgments
generally, said: ‘The judgment of a foreign court is equally conclusive, except in the
H. CASES INVOLVING THE INTERNET Page 31 of 102
single instance where the party claiming the benefit of it applies to the courts in
England to enforce it, in which case only the judgment is prima facie evidence. But it
is to be remarked that in such a case the judgment is no more conclusive as to the
right it establishes than as to the fact it decides.’ 4 Cranch, 434, 442.
In Mills v. Duryee (1813), in which it was established that by virtue of the
constitution and laws of the United States the judgment of a court of one of the
states was conclusive *183 evidence, in every court within the United States, of the
matter adjudged, and therefore nul tiel record, and not nil debet, was a proper plea
to an action brought in a court of the United States in the District of Columbia upon
a judgment recovered in a court of the state of New York, this court, speaking by
Mr. Justice Story, said: ‘The pleadings in an action are governed by the dignity of
the instrument on which it is founded. If it be a record conclusive, between the
parties, it cannot be denied but by the plea of nul tiel record; and when congress
gave the effect of a record to the judgment it gave all the collateral
consequences.’‘Were the construction contended for by the plaintiff in error to
prevail, that judgments of the state courts ought to be considered prima facie
evidence only, this clause in the constitution would be utterly unimportant and
illusory. The common law would give such judgments precisely the same effect.’ 7
Cranch, 481, 484, 485.
In Hampton v. McConnell (1818) the point decided in Mills v. Duryee was again
adjudged, without further discussion, in an opinion delivered by Chief Justice
Marshall. 3 Wheat. 234.
The obiter dictum of Mr. Justice Livingston in Hopkins v. Lee (1821) 6 Wheat. 109,
114, repeated by Mr. Justice Daniel in Pennington v. Gibson (1853) 16 How. 65, 78,
as to the general effect of foreign judgments, has no important bearing upon the
case before us.
In McElmoyle v. Cohen (1839), Mr. Justice Wayne, discussing the effect of the act
of congress of 1790, said that ‘the adjudications of the English courts have now
established the rule to be that foreign judgments are prima facie evidence of the
right and matter they purport to decide.’ 13 Pet. 312, 325.
In D'Arcy v. Ketchum (1850), in which this court held that the provisions of the
constitution and laws of the United States gave no effect in one state to judgments
rendered in another state by a court having no jurisdiction of the cause or of the
parties, Mr. Justice Catron said: ‘In construing the act of 1790, the law as it stood
when the act was passed *184 must enter into that construction; so that the existing
defect in the old law may be seen, and its remedy by the act of congress
comprehended. Now, it was most reasonable, on general principles of comity and
justice, that among states and their citizens, united as ours are, judgments rendered
in one should bind citizens of other states, where defendants had been served with
process, or voluntarily made defense. As these judgments, however, were only
prima facie evidence, and subject to be inquired into by plea, when sued on in
another state, congress saw proper to remedy the evil, and to provide that such
inquiry and double defense should not be allowed. To this extent, it is declared in
the case of Mills v. Duryee, congress has gone in altering the old rule.’ 11 How.
165, 175, 176.
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In Christmas v. Russell (1866), in which this court decided that, because of the
constitution and laws, of the United States, a judgment of a court of one state of the
Union, when sued upon in a court of another, could not be shown to have been
procured by fraud, Mr. Justice Clifford, in delivering the opinion, after stating that
under the rules of the common law a domestic judgment, rendered in a court of
competent jurisdiction, could not be collaterally impeached or called in question,
said: ‘Common-law rules placed foreign judgments upon a different footing, and
those rules remain, as a general remark, unchanged to the present time. Under
these rules, a foreign judgment was prima facie evidence of the debt, and it was
open to examination, not only to show that the court in which it was rendered had
no jurisdiction of the subject-matter, but also to show that the judgment was
fraudulently obtained.’ 5 Wall. 290, 304.
In Bischoff v. Wethered (1869), in an action on an English judgment, rendered
without notice to the defendant, other than by service on him in this country, this
court, speaking by Mr. Justice Bradley, held that the proceeding in England ‘was
wholly without jurisdiction of the person, and whatever validity it may have in
England, by virtue of statute law, against property of the defendant there situate, it
can have no validity here, even of a prima facie character.’ 9 Wall. 812, 814.
*185 In Hanley v. Donoghue (1885) 116 U. S. 1, 4, 6 Sup. Ct. 242, and in Wisconsin
v. Pelican Ins. Co. (1888) 127 U. S. 265, 292, 8 Sup. Ct. 1370, it was said that
judgments recovered in one state of the Union, when proved in the courts of
another, differed from judgments recovered in a foreign country in no other respect
than in not being re-examinable on their merits, nor impeachable for fraud in
obtaining them, if rendered by a court having jurisdiction of the cause and of the
parties.
But neither in those cases nor in any other has this court hitherto been called upon
to determine how far foreign judgments may be re-examined upon their merits, or
be impeached for fraud in obtaining them.
In the courts of the several states it was long recognized and assumed as
undoubted and indisputable that by our law, as by the law of England, foreign
judgments for debts were not conclusive, but only prima facie evidence **152 of the
matter adjudged. Some of the cases are collected in the margin. FN1
FN1 Bartlet v. Knight (1805) 1 Mass. 401, 405; Buttrick v. Allen (1811) 8
Mass. 273; Bissell v. Briggs (1813) 9 Mass. 462, 464; Hall v. Williams
(1828) 6 Pick. 232, 238; Gleason v. Dodd (1842) 4 Metc. (Mass.) 333,
336; Wood v. Gamble (1853) 11 Cush. 8; McKim v. Odom (1835) 12 Me.
94, 96; Bank v. Butman (1848) 29 Me. 19, 21;Bryant v. Ela (1815) Smith
(N. H.) 396, 404; Thurber v. Blackbourne (1818) 1 N. H. 242; Robinson v.
Prescott (1828) 4 N. H. 450; Taylor v. Barron (1855) 10 Fost. (N. H.) 78,
95; King v. Van Gilder (1791) 1 D. Chip. 59; Rathbone v. Terry (1837) 1 R.
I. 73, 76; Aldrich v. Kinney (1822) 4 Conn. 380, 382; Hitchcock v. Aicken
(1803) 1 Caines, 460; Smith v. Lewis (1808) 3 Johns. 157, 159; Taylor v.
Bryden (1811) 8 Johns. 173; Andrews v. Montgomery (1821) 19 Johns.
162, 165; Starbuck v. Murray (1830) 5 Wend. 148, 155; Benton v. Burgot
(1823) 10 Serg. & R. 240-242; Barney v. Patterson (1824) 6 Har. & J. 182,
202, 203; Taylor v. Phelps (1827) 1 Har. & G. 492, 503;Rogers v. Coleman
H. CASES INVOLVING THE INTERNET Page 32 of 102
(1808) Hardin. 422, 423; Williams v. Preston (1830) 3 J. J. Marsh. 600,
601.
In the leading case of Bissell v. Briggs, above cited, Chief Justice Parsons said: ‘A
foreign judgment may be produced here by a party to it, either to justify himself by
the execution of that judgment in the country in which it was rendered, or to obtain
the execution of it from our courts.’‘If the foreign court rendering the judgment had
jurisdiction of the cause, yet the courts here will not execute the judgment, without
first *186 allowing an inquiry into its merits. The judgment of a foreign court,
therefore, is by our laws considered only as presumptive evidence of a debt, or as
prima facie evidence of a sufficient consideration of a promise, where such court
had jurisdiction of the cause; and, if an action of debt be sued on any such
judgment, nil debts is the general issue; or, if it be made the consideration of a
promise, the general issue is non assumpsit. On these issues the defendant may
impeach the justice of the judgment, by evidence relative to that point. On these
issues the defendant may also, by proper evidence, prove that the judgment was
rendered by a foreign court, which had no jurisdiction; and, if his evidence be
sufficient for this purpose, he has no occasion to impeach the justice of the
judgment.’ 9 Mass. 463, 464.
In a less known case, decided in 1815, but not published until 1879, the reasons for
this view were forcibly stated by Chief Justice Jeremiah Smith, speaking for the
supreme court of New Hampshire, as follows:
‘The respect which is due to judgments, sentences, and decrees of courts in a
foreign state, by the law of nations, seems to be the same which is due to those of
our own courts. Hence the decree of an admiralty court abroad is equally conclusive
with decrees of our admiralty courts. Indeed, both courts proceed by the same rule,
are governed by the same law,-the maritime law of nations (Coll. Jurid. 100), which
is the universal law of nations, except where treaties alter it.
‘The same comity is not extended to judgments or decrees which may be founded
on the municipal laws of the state in which they are pronounced. Independent states
do not choose to adopt such decisions without examination. These laws and
regulations may be unjust, partial to citizens, and against foreigners. They may
operate injustice to our citizens, whom we are bound to protect. They may be, and
the decisions of courts founded on them, just cause of complaint against the
supreme power of the state where rendered. To adopt them is not merely saying
that the courts have decided correctly on the law, but it is approbating the law itself.
Wherever, then, the court may have proceeded on municipal *187 law, the rule is
that the judgments are not conclusive evidence of debt, but prima facie evidence
only. The proceedings have not the conclusive quality which is annexed to the
records or proceedings of our own courts, where we approve both of the rule and of
the judges who interpret and apply it. A foreign judgment may be impeached.
Defendant may show that it is unjust, or that it was irregularly or unduly obtained.
Doug. 5, note.’Bryant v. Ela, Smith (N. H.) 396, 404.
From this review of the authorities, it clearly appears that, at the time of the
separation of this country from England, the general rule was fully established that
foreign judgments in personam were prima facie evidence only, and not conclusive
of the merits of the controversy between the parties. But the extent and limits of the
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application of that rule do not appear to have been much discussed, or defined with
any approach to exactness, in England or America, until the matter was taken up by
Chancellor Kent and by Mr. Justice Story.
In Taylor v. Bryden (1811), an action of assumpsit, brought in the supreme court of
the state of New York, on a judgment obtained in the state of Maryland against the
defendant, as indorser of a bill of exchange, and which was treated as a foreign
judgment, so far as concerned its effect in New York (the decision of this court to
the contrary in Mills v. Duryee, 7 Cranch, 481, not having yet been made), Chief
Justice Kent said: ‘The judgment in Maryland is presumptive evidence of a just
demand; and it was incumbent upon the defendant, if he would obstruct the
execution of the judgment here, to show, by positive proof, that it was irregularly or
unduly obtained.’‘To try over again, as of course, every matter of fact which had
been duly decided by a competent tribunal, would be disregarding the comity which
we justly owe to the courts of other states, and would be carrying the doctrine of re-
examination to an oppressive extent. It would be the same as granting a new trial in
every case, and upon every question of fact. Suppose a recovery in another state,
or in any foreign court, in an action for a *188 tort, as for an assault and battery,
false imprisonment, slander, etc., and the defendant was duly summoned and
appeared, and made his **153 defense, and the trial was conducted orderly and
properly, according to the rules of a civilized jurisprudence, is every such case to be
tried again here on the merits? I much doubt whether the rule can ever go to this
length. The general language of the books is that the defendant must impeach the
judgment by showing affirmatively that it was unjust by being irregularly or unfairly
procured.’But the case was decided upon the ground that the defendant had done
no more than raise a doubt of the correctness of the judgment sued on. 8 Johns.
173, 177, 178.
Chancellor Kent, afterwards, treating of the same subject in the first edition of his
Commentaries (1827), put the right to impeach a foreign judgment somewhat more
broadly, saying: ‘No sovereign is obliged to execute, within his dominion, a
sentence rendered out of it; and, if execution be sought by a suit upon the judgment
or otherwise, he is at liberty, in his courts of justice, to examine into the merits of
such judgment [for the effect to be given to foreign judgments is altogether a matter
of comity, in cases where it is not regulated by treaty]. In the former case [of a suit
to enforce a foreign judgment] the rule is that the foreign judgment is to be received,
in the first instance, as prima facie evidence of the debt; and it lies on the defendant
to impeach the justice of it, or to show that it was irregularly and unduly obtained.
This was the principle declared and settled by the house of lords in 1771, in the
case of Sinclair v. Fraser, upon an appeal from the court of session in Scotland.’In
the second edition (1832) he inserted the passages above printed in brackets; and
in a note to the fourth edition (1840), after citing recent conflicting opinions in Great
Britain, and referring to Mr. Justice Story's reasoning in his Commentaries on the
Conflict of Laws (section 607) in favor of the conclusiveness of foreign judgments,
he added: ‘And that is certainly the more convenient and the safest rule, and the
most consistent with sound principle, except in cases in which the court which
pronounced the judgment has not due jurisdiction of the case, or of the *189
defendant, or the proceeding was in fraud, or founded in palpable mistake or
irregularity, or bad by the law of the rei judicatae; and in all such cases the justice of
the judgment ought to be impeached.’2 Kent, Comm. (1st Ed.) 102; Id.(later Eds.)
120.
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Mr. Justice Story, in his Commentaries on the Conflict of Laws, first published in
1834, after reviewing many English authorities, said: ‘The present inclination of the
English courts seems to be to sustain the conclusiveness of foreign judgments,’-to
which, in the second edition, in 1841, he added: ‘Although, certainly, there yet
remains no inconsiderable diversity of opinion among the learned judges of the
different tribunals.’Section 606.
He then proceeded to state his own view of the subject, on principle, saying: ‘It is,
indeed, very difficult to perceive what could be done if a different doctrine were
maintainable to the full extent of opening all the evidence and merits of the cause
anew on a suit upon the foreign judgment. Some of the witnesses may be since
dead; some of the vouchers may be lost or destroyed. The merits of the cause, as
formerly before the court upon the whole evidence, may have been decidedly in
favor of the judgment; upon a partial possession of the original evidence, they may
now appear otherwise. Suppose a case purely sounding in damages, such as an
action for an assault, for slander, for conversion of property, for a malicious
prosecution, or for a criminal conversation; is the defendant to be at liberty to retry
the whole merits, and to make out, if he can, a new case upon new evidence? Or is
the court to review the former decision, like a court of appeal, upon the old
evidence? In a case of covenant, or of debt, or of a breach of contract, are all the
circumstances to be re-examined anew? If they are, by what laws and rules of
evidence and principles of justice is the validity of the original judgment to be tried?
Is the court to open the judgment, and to proceed ex aequo et bono? Or is it to
administer strict law, and stand to the doctrines of the local administration of
justice? Is it to act upon the rules of evidence acknowledged in its own
jurisprudence, or upon those of the foreign jurisprudence? These and many more
questions might be put to *190 show the intrinsic difficulties of the subject. Indeed,
the rule that the judgment is to be prima facie evidence for the plaintiff would be a
mere delusion if the defendant might still question it by opening all or any of the
original merits on his side; for, under such circumstances, it would be equivalent to
granting a new trial. It is easy to understand that the defendant may be at liberty to
impeach the original justice of the judgment by showing that the court had no
jurisdiction, or that he never had any notice of the suit, or that it was procured by
fraud, or that upon its face it is founded in mistake, or that it is irregular and bad by
the local law, fori rei judicatae. To such an extent the doctrine is intelligible and
practicable. Beyond this, the right to impugn the judgment is in legal effect the right
to retry the merits of the original cause at large, and to put the defendant upon
proving those merits.’Section 607.
He then observed: ‘The general doctrine maintained in the American courts in
relation to foreign judgments certainly is that they are prima facie evidence, but that
they are impeachable. But how far and to what extent this doctrine is to be carried
does not seem to be definitely settled. It has been declared that the jurisdiction of
the court, and its power over the parties and the things in controversy, may be
inquired into; and that the judgment may be impeached for **154 fraud. Beyond this
no definite lines have as yet been drawn.’Section 608.
After stating the effect of the constitution of the United States, and referring to the
opinions of some foreign jurists, and to the law of France, which allows the merits of
foreign judgments to be examined, Mr. Justice Story concluded his treatment of the
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subject as follows: ‘It is difficult to ascertain what the prevailing rule is in regard to
foreign judgments in some of the other nations of continental Europe,-whether they
are deemed conclusive evidence, or only prima facie evidence. Holland seems at all
times, upon the general principle of reciprocity, to have given great weight to foreign
judgments and in many cases, if not in all cases, to have given to them a weight
equal to that given to domestic judgments, wherever the like rule of reciprocity with
regard to Dutch *191 judgments has been adopted by the foreign country whose
judgment is brought under review. This is certainly a very reasonable rule, and may
perhaps hereafter work itself firmly into the structure of international
jurisprudence.’Section 618.
In Bradstreet v. Insurance Co. (1839), in the circuit court of the United States for the
district of Massachusetts, Mr. Justice Story said: ‘If a civilized nation seeks to have
the sentences of its own courts held of any validity elsewhere, they ought to have a
just regard to the rights and usages of other civilized nations, and the principles of
public and national law in the administration of justice.’ 3 Sumn. 600, 608, 609,
Fed. Cas. No. 1,793.
In Burnham v. Webster (1845), in an action of assumpsit upon a promissory note,
brought in the circuit court of the United States for the district of Maine, the
defendant pleaded a former judgment in the province of New Brunswick in his favor
in an action there brought by the plaintiff. The plaintiff replied that the note was
withdrawn from that suit, by consent of parties and leave of the court, before verdict
and judgment; and the defendant demurred to the replication. Judge Ware, in
overruling the demurrer, said: ‘Whatever difference of opinion there may be as to
the binding force of foreign judgments, all agree that they are not entitled to the
same authority as the judgments of domestic courts of general jurisdiction. They are
but evidence of what they purport to decide, and liable to be controlled by counter
evidence, and do not, like domestic judgments, import absolute verity, and remain
incontrovertible and conclusive until reversed.’And he added that, if the question
stood entirely clear from authority, he should be of opinion that the plaintiff could not
be allowed to deny the validity of the proceedings of a court whose authority he had
invoked. 2 Ware, 236, 239, 241, Fed. Cas. No. 2,178.
At a subsequent trial of that case before a jury (1846; 1 Woodb. & M. 172, Fed.
Cas. No. 2,179), the defendant proved the judgment in New Brunswick. The plaintiff
then offered to prove the facts stated in his replication, and that any entry on the
record of the judgment in New Brunswick concerning this note was therefore by
mistake or inadventure. This evidence was *192 excluded, and a verdict taken for
the plaintiff, subject to the opinion of the court. Mr. Justice Woodbury, in granting a
new trial, delivered a thoughtful and discriminating opinion upon the effect of foreign
judgments, from which the following passages are taken:
‘They do, like domestic ones, operate conclusively, ex proprio vigore, within the
governments in which they are rendered, but not elsewhere. When offered and
considered elsewhere, they are, ex comitate, treated with respect, according to the
nature of the judgment, and the character of the tribunal which rendered it, and the
reciprocal mode, if any, in which that government treats our judgments, and
according to the party offering it, whether having sought or assented to it voluntarily
or not, so as to give it in some degree the force of a contract, and hence to be
respected elsewhere by analogy according to the lex loci contractus. With these
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views I would go to the whole extent of the cases decided by Lords Mansfield and
Buller; and where the foreign judgment is not in rem, as it is in admiralty, having the
subject-matter before the court, and acting on that rather than the parties, I would
consider it only prima facie evidence as between the parties to it.’ 1 Woodb. & M.
175, Fed. Cas. No. 2,179.
‘By returning to that rule, we are enabled to give parties, at times, most needed and
most substantial relief, such as in judgments abroad against them without notice, or
without a hearing on the merits, or by accident or mistake of facts, as here, or on
rules of evidence and rules of law they never assented to, being foreigners and their
contracts made elsewhere, but happening to be traveling through a foreign
jurisdiction, and being compelled in invitum to litigate there.’ 1 Woodb. & M. 177,
Fed. Cas. No. 2,179.
‘Nor would I permit the prima facie force of the foreign judgment to go far if the court
was one of a barbarous or semibarbarous government, and acting on no
established principles of civilized jurisprudence, and not resorted to willingly by both
parties, or both not inhabitants and citizens of the country. Nor can much comity be
asked for the judgments of another nation, which, like France, pays no respect to
those of other countries, except, as before remarked, on the principle of the parties
belonging there or assenting to a trial there.’ 1 Woodb. & M. 179, Fed. Cas. No.
2,179.
*193 ‘On the other hand, by considering a judgment abroad as only prima facie
valid, I would not allow the plaintiff abroad, who had sought it there, to avoid it,
unless for **155 accident or mistake, as here, because, in other respects, having
been sought there by him voluntarily, it does not lie in his mouth to complain of it.
Nor would I in any case permit the whole merits of the judgment recovered abroad
to be put in evidence as a matter of course; but, being prima facie correct, the party
impugning it, and desiring a hearing of its merits, must show first, specifically, some
objection to the judgment's reaching the merits, and tending to prove they had not
been acted on; or [as?] by showing there was no jurisdiction in the court, or no
notice, or some accident or mistake, or fraud, which prevented a full defense, and
has entered into the judgment; or that the court either did not decide at all on the
merits, or was a tribunal not acting in conformity to any set of legal principles, and
was not willingly recognized by the party as suitable for adjudicating on the merits.
After matters like these are proved, I can see no danger, but rather great safety, in
the administration of justice, in permitting, to every party before us, at least one fair
opportunity to have the merits of his case fully considered, and one fair adjudication
upon them, before he is estopped forever.’ 1 Woodb. & M. 180, Fed. Cas. No.
2,179.
In De Brimont v. Penniman (1873), in the circuit court of the United States for the
Southern district of New York, Judge Woodruff said: ‘The principle on which foreign
judgments receive any recognition from our courts is one of comity. It does not
require, but rather forbids, it where such a recognition works a direct violation of the
policy of our laws, and does violence to what we deem the rights of our
citizens.’And he declined to maintain an action against a citizen of the United
States, whose daughter had been married in France to a French citizen, upon a
decree of a French court requiring the defendant, then resident in France, and duly
served with process there, to pay an annuity to his son-in-law. 10 Blatchf. 436, 441,
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Fed. Cas. No. 3,715.
Mr. Justice Story and Chancellor Kent, as appears by the passages above quoted
from their Commentaries, concurred in *194 the opinion that, in a suit upon a foreign
judgment, the whole merits of the case could not, as matter of course, be re-
examined anew, but that the defendant was at liberty to impeach the judgment, not
only by showing that the court had no jurisdiction of the case or of the defendant,
but also by showing that it was procured by fraud, or was founded on clear mistake
or irregularity, or was bad by the law of the place where it was rendered. Story,
Confl. Laws, § 607; 2 Kent, Comm. (6th Ed.) 120.
The word ‘mistake’ was evidently used by Story and Kent, in this connection, not in
its wider meaning of error in judgment, whether upon the law or upon the facts, but
in the stricter sense of misapprehension or oversight, and as equivalent to what, in
Burnham v. Webster, before cited, Mr. Justice Woodbury spoke of as ‘some
objection to the judgment's reaching the merits, and tending to prove that they had
not been acted on,’ ‘some accident or mistake,’ or ‘that the court did not decide at
all on the merits.’ 1 Woodb. & M. 180, Fed. Cas. No. 2,179.
The suggestion that a foreign judgment might be impeached for error in law of the
country in which it was rendered is hardly consistent with the statement of Chief
Justice Marshall, when, speaking of the disposition of this court to adopt the
construction given to the laws of a state by its own courts, he said: ‘This course is
founded on the principle, supposed to be universally recognized, that the judicial
department of every government, where such department exists, is the appropriate
organ for construing the legislative acts of that government. Thus, no court in the
universe which professed to be governed by principle would, we presume,
undertake to say that the courts of Great Britain or of France or of any other nation
had misunderstood their own statutes, and therefore erect itself into a tribunal which
should correct such misunderstanding. We receive the construction given by the
courts of the nation as the true sense of the law, and feel ourselves no more at
liberty to depart from that construction than to depart from the words of the statute.’
Elmendorf v. Taylor (1825) 10 Wheat. 152, 159, 160.
In recent times, foreign judgments rendered within the dominions *195 of the
English crown, and under the law of England, after a trial on the merits, and no want
of jurisdiction and no fraud or mistake being shown or offered to be shown, have
been treated as conclusive by the highest courts of New York, Maine, and Illinois.
Lazier v. Westcott (1862) 26 N. Y. 146, 150; Dunstan v. Higgins (1893) 138 N. Y.
70, 74, 33 N. E. 729; Rankin v. Goddard (1866) 54 Me. 28; Id. (1868) 55 Me.
389; Baker v. Palmer (1876) 83 Ill. 568. In two early cases in Ohio it was said that
foreign judgments were conclusive, unless shown to have been obtained by fraud.
Bank v. Harding (1832) 5 Ohio, 545, 547; Anderson v. Anderson (1837) 8 Ohio,
108, 110. But in a later case in that state it was said that they were only prima facie
evidence of indebtedness. Pelton v. Platner (1844) 13 Ohio, 209, 217. In Jones v.
Jamison (1860) 15 La. Ann. 35, the decision was only that, by virtue of the statutes
of Louisiana, a foreign judgment merged the original cause of action as against the
plaintiff.
The result of the modern decisions in England, after much diversity, not to say
vacillation, of opinion, does not greatly differ (so far as concerns the aspects in
H. CASES INVOLVING THE INTERNET Page 35 of 102
which the English courts have been called upon to consider the subject) from the
conclusions of Chancellor Kent and of Justices Story and Woodbury.
**156 At one time it was held that, in an action brought in England upon a judgment
obtained by the plaintiff in a foreign country, the judgment must be assumed to be
according to the law of that country, unless the contrary was clearly proved;
manifestly implying that proof on that point was competent. Becquet v. MacCarthy
(1831) 2 Barn. & Adol. 951, 957; Alivon v. Furnival (1834) 1 Cromp., M. & R. 277,
293, 4 Tyrw. 751, 768.
Lord Brougham, in the house of lords, as well as Chief Justice Tindal and Chief
Justice Wilde (afterwards Lord Chancellor Truro) and their associates, in the
common bench, considered it to be well settled that an Irish or colonial judgment or
a foreign judgment was not, like a judgment of a domestic court of record,
conclusive evidence, but only, like a *196 simple contract, prima facie evidence of a
debt. Houlditch v. Donegal (1834) 8 Bligh, N. R. 301, 342, 346, 2 Clark & F. 470,
476-479; Don v. Lippmann (1837) 5 Clark & F. 1, 20-22; Smith v. Nicolls (1839) 7
Scott, 147, 166-170, 5 Bing. N. C. 208, 220-224, 7 Dowl. 282;Bank v. Harding
(1850) 9 C. B. 661, 686, 687.
On the other hand, Vice Chancellor Shadwell, upon an imperfect review of the early
cases, expressed the opinion that a foreign judgment was conclusive. Martin v.
Nicolls (1830) 3 Sim. 458.
Like opinions were expressed by Lord Denman, speaking for the court of queen's
bench, and by Vice Chancellor Wigram, in cases of Irish or colonial judgments,
which were subject to direct appellate review in England. Ferguson v. Mahon (1839)
11 Adol. & E. 179, 183, 3 Perry & D. 143, 146; Henderson v. Henderson (1844) 6 Q.
B. 288, 298, 299; Henderson v. Henderson (1843) 3 Hare, 100, 118.
In Bank v. Nias (1851), in an action upon an Australian judgment, pleas that the
original promises were not made, and that those promises, if made, were obtained
by fraud, were held bad on demurrer. Lord Campbell, in delivering judgment,
referred to Story on the Conflict of Laws, and adopted substantially his course of
reasoning in section 607, above quoted, with regard to foreign judgments. But he
distinctly put the decision upon the ground that the defendant might have appealed
to the judicial committee of the privy council, and thus have procured a review of the
colonial judgment; and he took the precaution to say: ‘How far it would be permitted
to a defendant to impeach the competency or the integrity of a foreign court from
which there was no appeal, it is unnecessary here to inquire.’16 Q. B. 717, 734-737.
The English courts, however, have since treated that decision as establishing that a
judgment of any competent foreign court could not, in an action upon it, be
questioned, either because that court had mistaken its own law, or because it had
come to an erroneous conclusion upon the facts. De Cosse Brissac v. Rathbone
(1861) 6 Hurl. & N. 301; Scott v. Pilkington*197 (1862) 2 Best & S. 11, 41, 42;
Vanquelin v. Bouard (1863) 15 C. B. (N. S.) 341, 368; Castrique v. Imrie (1870) L.
R. 4 H. L. 414, 429, 430; Godard v. Gray (1870) L. R. 6 Q. B. 139, 150; Ochsenbein
v. Papelier (1873) 8 Ch. App. 695, 701. In Meyer v. Ralli (1876) a judgment in rem,
rendered by a French court of competent jurisdiction, was held to be re-examinable
upon the merits, solely because it was admitted by the parties, in the special case
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upon which the cause was submitted to the English court, to be manifestly
erroneous in regard to the law of France. 1 C. P. Div. 358.
In view of the recent decisions in England, it is somewhat remarkable that, by the
Indian Code of Civil Procedure of 1877, ‘no foreign judgment [which is defined as a
judgment of ‘a civil tribunal beyond the limits of British India, and not having
authority in British India, nor established by the governor general in council’] shall
operate as a bar to a suit in British India,'‘if it appears on the face of the proceeding
to be founded on an incorrect view of international law,’ or ‘if it is, in the opinion of
the court before which it is produced, contrary to natural justice.’Pig. Judgm. (2d
Ed.) 380, 381.
It was formerly understood in England that a foreign judgment was not conclusive if
it appeared upon its face to be founded on a mistake or disregard of English law.
Arnott v. Redfern (1825-26) 2 Car. & P. 88, 3 Bing. 353, and 11 Moore, C. P. 209;
Novelli v. Rossi (1831) 2 Barn. & Adol. 757; 3 Burge, Col. Laws, 1065; 2 Smith's
Lead. Cas. (2d Ed.) 448; Reimers v. Druce (1856) 23 Beav. 145.
In Simpson v. Fogo (1860) 1 Johns. & H. 18, and Id.(1862) 1 Hem. & M. 195, Vice
Chancellor Wood (afterwards Lord Hatherley) refused to give effect to a judgment in
personam of a court in Louisiana, which had declined to recognize the title of a
mortgagee of an English ship under the English law. In delivering judgment upon
demurrer, he said: ‘The state of Louisiana may deal as it pleases with foreign law;
but, if it asks courts of this country to respect its law, it must be on a footing of
paying a like respect to ours. Any comity between the courts of two nations holding
such *198 opposite doctrines as to the authority of the lex loci is impossible. While
the courts of Louisiana refuse to recognize a title acquired here, which is valid
according to our law, and hand over to their own citizens property so acquired, they
cannot at the same time expect us to defer to a rule of their law which we are no
more bound to respect than a law that any title of foreigners should be disregarded
in favor of citizens of Louisiana. The answer to such a demand must be that a
country which pays so little regard to our laws as to set aside a paramount title
acquired here must not expect at our hands any greater regard for the title so
acquired by the citizens of that country.’1 Johns. & H. 28, 29. And, upon motion for
a decree, he elaborated the same view, beginning by saying: ‘Whether **157 this
judgment does so err or not against the recognized principles of what has been
commonly called the comity of nations, by refusing to regard the law of the country
where the title to the ship was acquired, is one of the points which I have to
consider;’ and concluding that it was ‘so contrary to law, and to what is required by
the comity of nations,’ that he must disregard it. 1 Hem. & M. 222-247. See, also,
Credit Co. v. Hunter (1867) L. R. 4 Eq. 62, 68; Id.(1868) 3 Ch. App. 479, 484.
In Scott v. Pilkington (1862) Chief Justice Cockburn treated it as an open question
whether a judgment recovered in New York for a debt could be impeached on the
ground that the record showed that the foreign court ought to have decided the case
according to English law, and had either disregarded the comity of nations by
refusing to apply the English law, or erred in its view of English law. 2 Best & S. 11,
42. In Castrique v. Imrie (1870) the French judgment which was adjudged not to be
impeachable for error in law, French or English, was, as the house of lords
construed it, a judgment in rem, under which the ship to which the plaintiff in
England claimed title had been sold. L. R. 4 H. L. 414. In Godard v. Gray (1870)
H. CASES INVOLVING THE INTERNET Page 36 of 102
shortly afterwards, in which the court of queen's bench held that a judgment in
personam of a French court could not be impeached because it had put *199 a
construction erroneous, according to English law, upon an English contract, the
decision was put by Justices Blackburn and Mellor upon the ground that it did not
appear that the foreign court had ‘knowingly and perversely disregarded the rights
given by the English law,’ and by Justice Hannen solely upon the ground that the
defendant did not appear to have brought the English law to the knowledge of the
foreign court. L. R. 6 Q. B. 139, 149, 154. In Messina v. Petrococchino (1872), Sir
Robert Phillimore, delivering judgment in the privy council, said: ‘A foreign judgment
of a competent court may, indeed, be impeached if it carries on the face of it a
manifest error.’L. R. 4 P. C. 144, 157.
The result of the English decisions, therefore, would seem to be that a foreign
judgment in personam may be impeached for a manifest and willful disregard of the
law of England.
Lord Abinger, Baron Parke, and Baron Alderson were wont to say that the judgment
of a foreign court of competent jurisdiction for a sum certain created a duty or legal
obligation to pay that sum; or, in Baron Parke's words, that the principle on which
the judgments of foreign and colonial courts are supported and enforced was ‘that,
where a court of competent jurisdiction has adjudicated a certain sum to be due
from one person to another, a legal obligation arises to pay that sum, on which an
action of debt to enforce the judgment may be maintained.’Russell v. Smyth (1842)
9 Mees. & W. 810, 818, 819; Williams v. Jones (1845) 13 Mees. & W. 628, 633,
634.
But this was said in explaining why, by the technical rules of pleading, an action of
assumpsit or of debt would lie upon a foreign judgment, and had no reference to the
question how far such a judgment was conclusive of the matter adjudged. At
common law, an action of debt would lie on a debt appearing by a record or by any
other specialty, such as a contract under seal, and would also lie for a definite sum
of money due by simple contract. Assumpsit would not lie upon a record or other
specialty; but would lie upon any other contract, whether expressed by the party or
implied by law. In an action upon a record, or upon a contract under seal, a lawful
consideration was conclusively presumed to exist, and could not be denied; *200
but in an action, whether in debt or in assumpsit, upon a simple contract, express or
implied, the consideration was open to inquiry. A foreign judgment was not
considered, like a judgment of a domestic court of record, as a record or specialty.
The form of action, therefore, upon a foreign judgment, was not in debt, grounded
upon a record or a specialty, but was either in debt, as for a definite sum of money
due by simple contract, or in assumpsit upon such a contract. A foreign judgment,
being a security of no higher nature than the original cause of action, did not merge
that cause of action. The plaintiff might sue, either on the judgment or on the
original cause of action; and in either form of suit the foreign judgment was only
evidence of a liability equivalent to a simple contract, and was therefore liable to be
controlled by such competent evidence as the nature of the case admitted. See
cases already cited, especially Walker v. Witter, 1 Doug. 1; Phillips v. Hunter, 2 H.
Bl. 402, 410; Bissell v. Briggs, 9 Mass. 463, 464; Mills v. Duryee, 7 Cranch, 481,
485; D'Arcy v. Ketchum, 11 How. 165, 176; Hall v. Odber, 11 East, 118; Smith v.
Nicolls, 7 Scott, 147, 5 Bing. N. C. 208. See, also, Grant v. Easton, 13 Q. B. Div.
302, 303; Lyman v. Brown, 2 Curt. 559, Fed. Cas. No. 8,627.
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Mr. Justice Blackburn, indeed, in determining how far a foreign judgment could be
impeached, either for error in law, or for want of jurisdiction, expressed the opinion
that the effect of such a judgment did not depend upon what he termed ‘that which
is loosely called ‘comity,” but upon the saying of Baron Parke, above quoted; and
consequently ‘that anything which negatives the existence of that legal obligation, or
excuses the defendant from the performance of it, must form a good defense to the
action.’Godard v. Gray (1870) L. R. 6 Q. B. 139, 148, 149; Schibsby v. Westenholz,
Id. 155, 159. And his example has been followed by some other English judges:
Fry, J., in Rousillon v. Rousillon (1880) 14 Ch. Div. 351, 370; North, J., in Nouvion v.
Freeman (1887) 35 Ch. Div. 704, 714, 715; Cotton and Lindley, L. JJ., in Nouvion v.
Freeman (1887) 37 Ch. Div. 244, 250, 256.
**158 *201 But the theory that a foreign judgment imposes or creates a duty or
obligation is a remnant of the ancient fiction, assumed by Blackstone, saying that
‘upon showing the judgment once obtained still in full force, and yet unsatisfied, the
law immediately implies that by the original contract of society the defendant hath
contracted a debt, and is bound to pay it.’3 Bl. Comm. 160. That fiction which
embraced judgments upon default or for torts cannot convert a transaction wanting
the assent of parties into one which necessarily implies it. Louisiana v. Mayor, etc.,
of City of New Orleans, 109 U. S. 285, 288, 3 Sup. Ct. 211. While the theory in
question may help to explain rules of pleading which originated while the fiction was
believed in, it is hardly a sufficient guide at the present day in dealing with questions
of international law, public or private, and of the comity of our own country, and of
foreign nations. It might be safer to adopt the maxim applied to foreign judgments
by Chief Justice Weston, speaking for the supreme judicial court of Maine,
‘Judicium redditur in invitum,’ or, as given by Lord Coke, ‘In praesumptione legis
judicium redditur in invitum.’ Jordan v. Robinson (1838) 15 Me. 167, 168; Co. Litt.
248b.
In Russell v. Smyth, above cited, Baron Parke took the precaution of adding: ‘Nor
need we say how far the judgment of a court of competent jurisdiction, in the
absence of fraud, is conclusive upon the parties.’9 Mees. & W. 819. He could hardly
have contemplated erecting a rule of local procedure into a canon of private
international law, and a substitute for ‘the comity of nations,’ on which, in an earlier
case, he had himself relied as the ground for enforcing in England a right created by
a law of a foreign country. Alivon v. Furnival, 1 Cromp., M. & R. 277, 296, 4 Tyrw.
751, 771.
In Abouloff v. Oppenheimer (1882) Lord Coleridge and Lord Justice Brett carefully
avoided adopting the theory of a legal obligation to pay a foreign judgment as the
test in determining how far such a judgment might be impeached. 10 Q. B. Div. 295,
300, 305. In Hawksford v. Giffard (1886), in the privy council, on appeal from the
royal court of Jersey, Lord Herschell said: ‘This action is brought upon an English
judgment, which, until a judgment was obtained in Jersey, was in *202 that country
no more than evidence of a debt.’12 App. Cas. 122, 126. In Nouvion v. Freeman
(1889), in the house of lords, Lord Herschell, while he referred to the reliance
placed by counsel on the saying of Baron Parke, did not treat a foreign judgment as
creating or imposing a new obligation, but only as declaring and establishing that a
debt or obligation existed. His words were: ‘The principle upon which I think our
enforcement of foreign judgments must proceed is this: that in a court of competent
H. CASES INVOLVING THE INTERNET Page 37 of 102
jurisdiction, where according to its established procedure, the whole merits of the
case were open, at all events, to the parties, however much they may have failed to
take advantage of them, or may have waived any of their rights, a final adjudication
has been given that a debt or obligation exists which cannot thereafter in that court
be disputed, and can only be questioned in an appeal to a higher tribunal. In such a
case, it may well be said that, giving credit to the courts of another country, we are
prepared to take the fact that such adjudication has been made as establishing the
existence of the debt or obligation.’And Lord Bramwell said: ‘How can it be said that
there is a legal obligation on the part of a man to pay a debt who has a right to say,
‘I owe none, and no judgment has established against me that I do?’I cannot
see.'The foreign judgment in that case was allowed no force, for want of finally
establishing the existence of a debt. 15 App. Cas. 1, 9, 10, 14.
In view of all the authorities upon the subject, and of the trend of judicial opinion in
this country and in England, following the lead of Kent and Story, we are satisfied
that where there has been opportunity for a full and fair trial abroad before a court of
competent jurisdiction, conducting the trial upon regular proceedings, after due
citation or voluntary appearance of the defendant, and under a system of
jurisprudence likely to secure an impartial administration of justice between the
citizens of its own country and those of other countries, and there is nothing to show
either prejudice in the court, or in the system of laws under which it was sitting, or
fraud in procuring the judgment, or any other special reason why the comity of this
nation should not allow it full effect, *203 the merits of the case should not, in an
action brought in this country upon the judgment, be tried afresh, as on a new trial
or an appeal, upon the mere assertion of the party that the judgment was erroneous
in law or in fact. The defendants, therefore, cannot be permitted, upon that general
ground, to contest the validity or the effect of the judgment sued on.
But they have sought to impeach that judgment upon several other grounds, which
require separate consideration.
It is objected that the appearance and litigation of the defendants in the French
tribunals were not voluntary, but by legal compulsion, and, therefore, that the
French courts never acquired such jurisdiction over the defendants that they should
be held bound by the judgment.
Upon the question what should be considered such a voluntary appearance, as to
amount to a submission to the jurisdiction of a foreign court, there has been some
difference of opinion in England.
In Navigation Co. v. Guillou (1843), in an action at law to recover damages to the
plaintiffs' ship by a collision with the defendant's ship through the negligence of the
master and crew of the latter, the defendant **159 pleaded a judgment by which a
French court, in a suit brought by him, and after the plaintiffs had been cited, had
appeared, and had asserted fault on this defendant's part, had adjudged that it was
the ship of these plaintiffs, and not that of this defendant, which was in fault. It was
not shown or suggested that the ship of these plaintiffs was in the custody or
possession of the French court. Yet Baron Parke, delivering a considered judgment
of the court of exchequer (Lord Abinger and Barons Alderson and Rolfe concurring),
expressed a decided opinion that the pleas were bad in substance, for these
reasons: ‘They do not state that the plaintiffs were French subjects, or resident or
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even present in France, when the suit began, so as to be bound, by reason of
allegiance or domicile or temporary presence, by a decision of a French court, and
they did not select the tribunal and sue as plaintiffs, in any of which cases the
determination might have possibly bound them. They were mere strangers, who put
forward the negligence *204 of the defendant as an answer, in an adverse suit in a
foreign country, whose laws they were under no obligation to obey.’11 Mees. & W.
877, 894, 13 Law J. Exch. 168, 176.
But it is now settled in England that while an appearance by the defendant in a court
of a foreign country, for the purpose of protecting his property already in the
possession of that court, may not be deemed a voluntary appearance, yet an
appearance solely for the purpose of protecting other property in that country from
seizure is considered as a voluntary appearance. De Cosse Brissac v. Rathbone
(1861) 6 Hurl. & N. 301, 30 Law J. Exch. 238; Schibsby v. Westenholz (1870) L. R.
6 Q. B. 155, 162; Voinet v. Barrett (1885) Cab. & El. 554, 54 Law J. Q. B. 521, and
55 Law J. Q. B. 39.
The present case is not one of a person traveling through or casually found in a
foreign country. The defendants, although they were not citizens or residents of
France, but were citizens and residents of the state of New York, and their principal
place of business was in the city of New York, yet had a storehouse and an agent in
Paris, and were accustomed to purchase large quantities of goods there, although
they did not make sales in France. Under such circumstances, evidence that their
sole object in appearing and carrying on the litigation in the French courts was to
prevent property in their storehouse at Paris, belonging to them, and within the
jurisdiction, but not in the custody, of those courts, from being taken in satisfaction
of any judgment that might be recovered against them, would not, according to our
law, show that those courts did not acquire jurisdiction of the persons of the
defendants.
It is next objected that in those courts one of the plaintiffs was permitted to testify
not under oath, and was not subjected to cross-examination by the opposite party,
and that the defendants were therefore deprived of safeguards which are by our law
considered essential to secure honesty and to detect fraud in a witness; and also
that documents and papers were admitted in evidence, with which the defendants
had no connection, *205 and which would not be admissible under our own system
of jurisprudence. But it having been shown by the plaintiffs, and hardly denied by
the defendants, that the practice followed and the method of examining witnesses
were according to the laws of France, we are not prepared to hold that the fact that
the procedure in these respects differed from that of our own courts is, of itself, a
sufficient ground for impeaching the foreign judgment.
It is also contended that a part of the plaintiffs' claim is affected by one of the
contracts between the parties having been made in violation of the revenue laws of
the United States, requiring goods to be invoiced at their actual market value. Rev.
St. § 2854. It may be assumed that, as the courts of a country will not enforce
contracts made abroad in evasion or fraud of its own laws, so they will not enforce a
foreign judgment upon such a contract. Armstrong v. Toler, 11 Wheat. 258; De
Brimont v. Penniman, 10 Blatchf. 436, Fed. Cas. No. 3,715; Lang v. Holbrook,
Crabbe, 179, Fed. Cas. No. 8,057; Story, Confl. Laws, §§ 244, 246; Whart. Confl.
Laws, § 656. But as this point does not affect the whole claim in this case, it is
H. CASES INVOLVING THE INTERNET Page 38 of 102
sufficient, for present purposes, to say that there does not appear to have been any
distinct offer to prove that the invoice value of any of the goods sold by the plaintiffs
to the defendants was agreed between them to be, or was, in fact, lower than the
actual market value of the goods.
It must, however, always be kept in mind that it is the paramount duty of the court
before which any suit is brought to see to it that the parties have had a fair and
impartial trial, before a final decision is rendered against either party.
When an action is brought in a court of this country, by a citizen of a foreign country
against one of our own citizens, to recover a sum of money adjudged by a court of
that country to be due from the defendant to the plaintiff, and the foreign judgment
appears to have been rendered by a competent court, having jurisdiction of the
cause and of the parties, and upon due allegations and proofs, and opportunity to
defend against them, and its proceedings are according to the course of a civilized
jurisprudence, and are stated in a clear and formal *206 record, the judgment is
prima facie evidence, at least, of the truth of the matter adjudged; and it should be
held conclusive upon the merits tried in the foreign court, unless some special
ground is shown for impeaching the judgment, as by showing that it was affected by
fraud or prejudice, or that **160 by the principles of international law, and by the
comity of our own country, it should not be given full credit and effect.
There is no doubt that both in this country, as appears by the authorities already
cited, and in England, a foreign judgment may be impeached for fraud.
Shortly before the Declaration of Independence, the house of lords, upon the trial of
the Duchess of Kingston for bigamy, put to the judges the question whether-
assuming a sentence of the ecclesiastical court against a marriage, in a suit for
jactitation of marriage, to be conclusive evidence so as to prevent the counsel for
the crown from proving the marriage upon an indictment for polygame-‘the counsel
for the crown may be admitted to avoid the effect of such sentence by proving the
same to have been obtained by fraud or collusion.’ Chief Justice De Grey, delivering
the opinion of the judges, which was adopted by the house of lords, answering this
question in the affirmative, said: ‘But if it was a direct and decisive sentence upon
the point, and, as it stands, to be admitted as conclusive evidence upon the court,
and not to be impeached from within, yet, like all other acts of the highest judicial
authority, it is impeachable from without. Although it is not permitted to show that
the court was mistaken, it may be shown that they were misled. Fraud is an intrinsic
collateral act, which vitiates the most solemn proceedings of courts of justice. Lord
Coke says it avoids all judicial acts, ecclesiastical or temporal.’20 How. State Tr.
537, 543, note, 2 Smith, Lead. Cas. 573.
All the subsequent English authorities concur in holding that any foreign judgment,
whether in rem or in personam may be impeached upon the ground that it was
fraudulently obtained. White v. Hall (1806) 12 Ves. 321, 324; Bowles v. Orr(1835) 1
Younge & O. Exch. 464, 473; Price v. Dewhurst (1837) 8 Sim. 279, 302-305; Don v.
Lippmann (1837) 5 Clark & F. *207 1, 20; Bank v. Nias (1851) 16 Q. B. 717, 735;
Reimers v. Druce (1856) 23 Beav. 145, 150; Castrique v. Imrie (1870) L. R. 4 H. L.
414, 445, 446; Godard v. Gray (1870) L. R. 6. Q. B. 139, 149; Messina v.
Petrococchino (1872) L. R. 4 P. C. 144, 157; Ochsenbein v. Papelier (1873) 8 Ch.
App. 695.
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Under what circumstances this may be done does not appear to have ever been the
subject of judicial investigation in this country.
It has often, indeed, been declared by this court that the fraud which entitles a party
to impeach the judgment of one of our own tribunals must be fraud extrinsic to the
matter tried in the cause, and not merely consist in false and fraudulent documents
or testimony submitted to that tribunal, and the truth of which was contested before
it and passed upon by it. U. S. v. Throckmorton, 98 U. S. 61, 65, 66; Vance v.
Burbank, 101 U. S. 514, 519; Steel v. Refining Co., 106 U. S. 447, 453, 1 Sup. Ct.
389;Moffat v. U. S., 115 U. S. 24, 32, 5 Sup. Ct. 10; U. S. v. Minor, 114 U. S. 233,
242, 5 Sup. Ct. 836. And in one English case, where a ship had been sold under a
foreign judgment, the like restiction upon impeaching that judgment for fraud was
suggested; but the decision was finally put upon the ground that the judicial sale
passed the title to the ship. Cammell v. Sewell (1858-60) 3 Hurl. & N. 617, 646, 5
Hurl. & N. 728, 729, 742.
But it is now established in England, by well-considered and strongly-reasoned
decisions of the court of appeal, that foreign judgments may be impeached, if
procured by false and fraudulent representations and testimony of the plaintiff, even
if the same question of fraud was presented to and decided by the foreign court.
In Abouloff v. Oppenheimer (1882) the plaintiff had recovered a judgment at Tiflis, in
Russia, ordering the defendants to return certain goods, or to pay their value. The
defendants appealed to a higher Russian court, which confirmed the judgment, and
ordered the defendants to pay, besides the sum awarded below, an additional sum
for costs and expenses. In an action in the English high court of *208 justice upon
those judgments, the defendants pleaded that they were obtained by the gross
fraud of the plaintiff, in fraudulently representing to the Russian courts that the
goods in question were not in her possession when the suit was commenced, and
when the judgment was given, and during the whole time the suit was pending; and
by fraudulently concealing from those courts the fact that those goods, as the fact
was, and as she well knew, were in her actual possession. A demurrer to this plea
was overruled, and judgment entered for the defendants. And that judgment was
affirmed in the court of appeal by Lord Chief Justice Coleridge, Lord Justice
Baggallay, and Lord Justice Brett, all of whom delivered concurring opinions, the
grounds of which sufficiently appear in the opinion delivered by Lord Justice Brett
(since Lord Esher, M. R.), who said: ‘With regard to an action brought upon a
foreign judgment, the whole doctrine as to fraud is English, and is to be applied in
an action purely English. I am prepared to hold, according to the judgment of the
house of lords adopting the proposition laid down by De Grey, C. J., that if the
judgment upon which the action is brought was procured from the foreign court by
the successful fraud of the party who is seeking to enforce it, the action in the
English court will not lie. This proposition is absolute, and without any limitation,
and, as the lord chief justice has pointed out, is founded on the doctrine that no
party in an English court shall be able to take advantage of his own wrongful act, or,
as it may be stated in other language, that no obligation can be enforced in an
English court of justice which has been procured by the fraud of the person relying
upon it as an obligation.’‘I will assume that in the suit in the Russian courts the
plaintiff's fraud was alleged **161 by the defendants, and that they gave evidence in
support of the charge. I will assume, even, that the defendants gave the very same
H. CASES INVOLVING THE INTERNET Page 39 of 102
evidence which they propose to adduce in this action. Nevertheless, the defendants
will not be debarred at the trial of this action from making the same charge of fraud
and from adducing the same evidence in support of it; and if the high court of justice
is satisfied that the allegations of the defendants are true, and *209 that the fraud
was committed, the defendants will be entitled to succeed in the present action. It
has been contended that the same issue ought not to be tried in an English court
which was tried in the Russian courts, but I agree that the question whether the
Russian courts were deceived never could be an issue in the action tried before
them.’‘In the present case, we have had to consider the question fully; and,
according to the best opinion which I can form, fraud committed by a party to a suit,
for the purpose of deceiving a foreign court, is a defense to an action in this country,
founded upon the judgment of that foreign court. It seems to me that, if we were to
accede to the argument for the plaintiff, the result would be that a plausible deceiver
would succeed, whereas a deceiver who is not plausible would fail. I cannot think
that plausible fraud ought to be upheld in any court of justice in England. I accept
the whole doctrine, without any limitation, that whenever a foreign judgment has
been obtained by the fraud of the party relying upon it, it cannot be maintained in
the courts of this country; and, further, that nothing ought to persuade an English
court to enforce a judgment against one party, which has been obtained by the
fraud of the other party to the suit in the foreign court.’10 Q. B. Div. 295, 305-308.
The same view was affirmed and acted on in the same court by Lords Justices
Lindley and Bowen in Vadala v. Lawes (1890) 25 Q. B. Div. 310, 317-320, and by
Lord Esher and Lord Justice Lopes in Crozat v. Brogden [1894] 2 Q. B. 30, 34, 35.
In the case at bar the defendants offered to prove, in much detail, that the plaintiffs
presented to the French court of first instance and to the arbitrator appointed by that
court, and upon whose report its judgment was largely based, false and fraudulent
statements and accounts against the defendants, by which the arbitrator and the
French courts were deceived and misled, and their judgments were based upon
such false and fraudulent statements and accounts. This offer, if satisfactorily
proved, would, according to the decisions of the English court of appeal in Abouloff
v. Oppenheimer, Vadala v. Lawes, and Crozat v. Brogden, above cited, *210 be a
sufficient ground for impeaching the foreign judgment, and examining into the merits
of the original claim.
But whether those decisions can be followed in regard to foreign judgments,
consistently with our own decisions as to impeaching domestic judgments for fraud,
it is unnecessary in this case to determine, because there is a distinct and
independent ground upon which we are satisfied that the comity of our nation does
not require us to give conclusive effect to the judgments of the courts of France; and
that ground is the want of reciprocity, on the part of France, as to the effect to be
given to the judgments of this and other foreign countries.
In France, the royal ordinance of June 15, 1629 (article 121), provided as follows:
‘Judgments rendered, contracts or obligations recognized, in foreign kingdoms and
sovereignties, for any cause whatever, shall have no lien or execution in our
kingdom. Thus the contracts shall stand for simple promises; and, notwithstanding
the judgments, our subjects against whom they have been rendered may contest
their rights anew before our judges.’Touillier, Droit Civil, lib. 3, tit. 3, c. 6, § 3, No.
77.
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By the French Code of Civil Procedure (article 546), ‘judgments rendered by foreign
tribunals, and acts acknowledged before foreign officers, shall not be capable of
execution in France, except in the manner and in the cases provided by articles
2123 and 2128 of the Civil Code,’ which are as follows: By article 2123, ‘a lien
cannot arise from judgments rendered in a foreign country, except so far as they
have been declared executory by a French tribunal; without prejudice to provisions
to the contrary which may exist in public laws and treaties.’By article 2128,
‘contracts entered into in a foreign country cannot give a lien upon property in
France, if there are no provisions contrary to this principle in public laws or in
treaties.’Touillier, ubi supra, No. 84.
The defendants, in their answer, cited the above provisions of the statutes of
France, and alleged, and at the trial offered to prove, that by the construction given
to *211 these statutes by the judicial tribunals of France, when the judgments of
tribunals of foreign countries against the citizens of France are sued upon in the
courts of France, the merits of the controversies upon which those judgments are
based are examined anew, unless a treaty to the contrary effect exists between the
republic of France and the country in which such judgment is obtained (which is not
the case between the republic of France and the United States), and that the
tribunals of the republic of France give no force and effect, within the jurisdiction of
that country, to the judgments duly rendered by courts of competent jurisdiction of
the United States against citizens of France after proper personal service of the
process of those courts has been made thereon in this country. We are of opinion
that this evidence should have been admitted.
In Odwin v. Forbes (1817) President Henry, in the court of Demerara, which was
governed by the Dutch law, and was, as he remarked, ‘a tribunal foreign to and
independent of that of England,’ sustained a plea of an English certificate in
bankruptcy, upon these grounds: ‘It is **162 a principle of their law, and laid down
particularly in the ordinances of Amsterdam,’‘that the same law shall be exercised
towards foreigners in Amsterdam as is exercised with respect to citizens of that
state in other countries; and upon this principle of reciprocity, which is not confined
to the city of Amsterdam, but pervades the Dutch laws, they have always given
effect to the laws of that country which has exercised the same comity and
indulgence in admitting theirs;’‘that the Dutch bankrupt laws proceed on the same
principles as those of the English; that the English tribunals give effect to the Dutch
bankrupt laws; and that, on the principle of reciprocity and mutual comity, the Dutch
tribunals, according to their own ordinances, are bound to give effect to the English
bankrupt laws when duly proved, unless there is any express law or ordinance
prohibiting their admission.’And his judgment was affirmed in the privy council on
appeal. Case of Odwin v. Forbes, pp. 89, 159-161, 173-176; Id.(1817) Buck, 57, 64.
*212 President Henry, at page 76 of his Treatise on Foreign Law, published as a
preface to his report of that case, said: ‘This comity, in giving effect to the judgments
of other tribunals, is generally exercised by states under the same sovereign, on the
ground that he is the fountain of justice in each, though of independent jurisdiction;
and it has also been exercised in different states of Europe with respect to foreign
judgments, particularly in the Dutch states, who are accustomed by the principle of
reciprocity to give effect in their territories to the judgments of foreign states, which
show the same comity to theirs; but the tribunals of France and England have never
H. CASES INVOLVING THE INTERNET Page 40 of 102
exercised this comity to the degree that those of Holland have, but always required
a fresh action to be brought, in which the foreign judgment may be given in
evidence. As this is a matter of positive law and internal policy in each state, no
opinion need be given. Besides, it is a mere question of comity, and perhaps it
might be neither politic nor prudent, in two such great states, to give indiscriminate
effect to the judgment of each other's tribunals, however the practice might be
proper or convenient in federal states, or those under the same sovereign.’
It was that statement which appears to have called forth the observations of Mr.
Justice Story, already cited: ‘Holland seems at all times, upon the general principle
of reciprocity, to have given great weight to foreign judgments; and in many cases, if
not in all cases, to have given to them a weight equal to that given to domestic
judgments, wherever the like rule of reciprocity with regard to Dutch judgments has
been adopted by the foreign country whose judgment is brought under review. This
is certainly a very reasonable rule, and may, perhaps, hereafter work itself firmly
into the structure of international jurisprudence.’Story, Confl. Laws, § 618.
This rule, though never either affirmed or denied by express adjudication in England
or America, has been indicated, more or less distinctly, in several of the authorities
already cited.
Lord Hardwicke threw out a suggestion that the credit to be given by one court to
the judgment of a foreign court *213 might well be affected by ‘their proceeding both
by the same rules of law.’Otway v. Ramsay, 4 Barn. & C. 414-416, note.
Lord Eldon, after saying that ‘natural law’ (evidently intending the law of nations)
‘requires the courts of this country to give credit to those of another for the
inclination and power to do justice,’ added that, ‘if it appears in evidence that
persons suing under similar circumstances neither had met nor could meet with
justice, that fact cannot be immaterial as an answer to the presumption.’Wright v.
Simpson, 6 Ves. 714, 730.
Lord Brougham, presiding as lord chancellor in the house of lords, said: ‘The law, in
the course of procedure abroad, sometimes differs so mainly from ours in the
principles upon which it is bottomed that it would seem a strong thing to hold that
our courts were bound conclusively to give execution to the sentence of foreign
courts, when, for aught we know, there is not any one of those things which are
reckoned the elements or the corner stones of the due administration of justice
present to the procedure in these foreign courts.’Houlditch v. Donegal, 8 Bligh, N. R.
301, 338.
Chief Justice Smith, of New Hampshire, in giving reasons why foreign judgments or
decrees, founded on the municipal laws of the state in which they are pronounced,
are not conclusive evidence of debt, but prima facie evidence only, said: ‘These
laws and regulations may be unjust, partial to citizens, and against foreigners; they
may operate injustice to our citizens, whom we are bound to protect; they may be,
and the decisions of courts founded on them, just cause of complaint against the
supreme power of the state where rendered. To adopt them is not merely saying
that the courts have decided correctly on the law, but it is approbating the law
itself.’Bryant v. Ela, Smith (N. H.) 396, 404.
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Mr. Justice Story said: ‘If a civilized nation seeks to have the sentences of its own
courts of any validity elsewhere, they ought to have a just regard to the rights and
usages of other civilized nations, and the principles of public and national law in the
administration of justice.’ Bradstreet v. Insurance Co., 3 Sumn. 600, 608, Fed. Cas.
No. 1,793.
*214 Mr. Justice Woodbury said that judgments in personam, rendered under a
foreign government, ‘are, ex comitate, treated with respect, according to the nature
of the judgment and the character of the tribunal which rendered it, and the
reciprocal mode, if any, in which that government treats our judgments'; and added,
‘nor can much comity be asked for the judgments of another nation which, like
France, pays no respect to those **163 of other countries.’ Burnham v. Webster, 1
Woodb. & M. 172, 175, 179, Fed. Cas. No. 2,179.
Mr. Justice Cooley said: ‘True comity is equality. We should demand nothing more
and concede nothing less.’ McEwan v. Zimmer, 38 Mich. 765, 769.
Mr. Wheaton said: ‘There is no obligation, recognized by legislators, public
authorities, and publicists, to regard foreign laws; but their application is admitted
only from considerations of utility and the mutual convenience of states (ex
comitate, ob reciprocam utilitatem).’‘The general comity, utility, and convenience of
nations have, however, established a usage among most civilized states, by which
the final judgments of foreign courts of competent jurisdiction are reciprocally
carried into execution.’Wheat. Int. Law (8th Ed.) §§ 79, 147.
Since Story, Kent, and Wheaton wrote their commentaries, many books and essays
have been published upon the subject of the effect to be allowed by the courts of
one country to the judgments of another, with references to the statutes and
decisions in various countries. Among the principal ones are Foelix, Droit
International Pirve (4th Ed., by Demangeat, 1866) lib. 2, tits. 7, 8; Moreau, Effets
Internationaux des Jugements (1884); Pig. Judgm. (2d Ed., 1884); Constant, De
I'Execution des Jugements Etrangers (2d Ed., 1890), giving the text of the articles of
most of the modern codes upon the subject, and of French treaties with Italian,
German, and Swiss states; and numerous papers in Clunet's Journal de Droit
International Prive, established in 1874, and continued to the present time. For the
reasons stated at the outset of this opinion, we have not thought it important to state
the conflicting theories of continental commentators *215 and essayists as to what
each may think the law ought to be, but have referred to their works only for
evidence of authoritative declarations, legislative or judicial, of what the law is.
By the law of France, settled by a series of uniform decisions of the court of
cassation, the highest judicial tribunal, for more than half a century, no foreign
judgment can be rendered executory in France without a review of the judgment au
fond (to the bottom), including the whole merits of the cause of action on which the
judgment rests. Pard. Droit Commer. § 1488; Bard, Precis de Droit International
(1883) Nos. 234-239; Story, Confl. Laws, §§ 615-617; Pig. Judgm. 452; Westl. Priv.
Int. Law (3d Ed., 1890) 350.
A leading case was decided by the court of cassation on April 19, 1819, and was as
follows: A contract of partnership was made between Holker, a French merchant,
and Parker, a citizen of the United States. Afterwards, and before the partnership
H. CASES INVOLVING THE INTERNET Page 41 of 102
accounts were settled, Parker came to France, and Holker sued him in the tribunal
of commerce of Paris. Parker excepted on the ground that he was a foreigner, not
domiciled in France, and obtained a judgment, affirmed on appeal, remitting the
matter to the American courts (obtint son renvoi devant les tribunaux Americains).
Holker then sued Parker in the circuit court of the United States for the district of
Massachusetts, and in 1814 obtained a judgment there ordering Parker to pay him
$529,949. One branch of the controversy had been brought before this court in
1813. Holker v. Parker, 7 Cranch, 436. Holker, not being able to obtain execution of
that judgment in America, because Parker had no property there and continued to
reside in Paris, obtained from a French judge an order declaring the judgment
executory. Upon Parker's application to nullify the proceeding, the royal court of
Paris, reversing the judgment of a lower court, set aside that order, assigning these
reasons: ‘Considering that judgments rendered by foreign courts have neither effect
nor authority in France; that this rule is doubtless more particularly applicable *216
in favor of Frenchmen, to whom the king and his officers owe a special protection,
but that the principle is absolute, and may be invoked by all persons, without
distinction, being founded on the independence of states; that the ordinance of
1629, in the beginning of its article 121, lays down the principle in its generality
when it says that judgments rendered in foreign kingdoms and sovereignties, for
any cause whatever, shall have no execution in the kingdom of France, and that the
Civil Code, art. 2123, gives to this principle the same latitude when it declares that a
lien cannot result from judgments rendered in a foreign country, except so far as
they have been declared executory by a French tribunal, (which is not a matter of
mere form, like the granting in past times of a pareatis from one department to
another for judgments rendered within the kingdom, but which assumes, on the part
of the French tribunals, a cognizance of the cause, and a full examination of the
justice of the judgment presented for execution, as reason demands, and that this
has always been practiced in France, according to the testimony of our ancient
authorities); that there may result from this an inconvenience, where the debtor, as
is asserted to have happened in the present case, removes his property and his
person to France, while keeping his domicile in his native country; that it is for the
creditor to be watchful, but that no consideration can impair a principle on which
rests the sovereignty of governments, and which, whatever be the case, must
preserve its whole force.’The court therefore adjudged that, before the tribunal of
first instance, Holker should state the grounds of his action, to be contested by
Parker, and to be determined by the court upon cognizance of the whole cause.
That judgment was confirmed, upon deliberate consideration, by the court of
cassation, for the reasons that **164 the ordinance of 1629 enacted, in absolute
terms and without exception, that foreign judgments should not have execution in
France; that it was only by the Civil Code and the Code of Civil Procedure that the
French tribunals had been authorized to declare them executory; that, therefore, the
ordinance of 1629 had no application; that the articles of the Codes *217 referred to
did not authorize the courts to declare judgments rendered in a foreign country
executory in France without examination; that such an authorization would be as
contrary to the institution of the courts as would be the award or the refusal of
execution arbitrarily and at will, would impeach the right of sovereignty of the French
government, and was not in the intention of the legislature; and that the Codes
made no distinction between different judgments rendered in a foreign country, and
permitted the judges to declare them all executory, and therefore those judgments,
whether against a Frenchman or against a foreigner, were subject to examination
on the merits.Holker v. Parker, Merlin, Questions do Droit, Jugement, § 14, No. 2.
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The court of cassation has ever since constantly affirmed the same view. Moreau,
No. 106, note, citing many decisions; Clunet, 1882, p. 166. In Clunet, 1894, p. 913,
note, it is said to be ‘settled by judicial decisions (il est de jurisprudence) that the
French courts are bound, in the absence of special diplomatic treaties, to proceed to
the revision on the whole merits (au fond) of foreign judgments, execution of which
is demanded of them’; citing, among other cases, a decision of the court of
cassation on February 2, 1892, by which it was expressly held to result from the
articles of the Codes above cited ‘that judgments rendered in favor of a foreigner
against a Frenchman, by a foreign court, are subject, when execution of them is
demanded in France, to the revision of the French tribunals which have the right
and the duty to examine them, both as to the form and as to the merits.’Sirey, 1892,
1, 201.
In Belgium the Code of Civil Procedure of 1876 provides that, if a treaty on the basis
of reciprocity be in existence between Belgium and the country in which the foreign
judgment has been given, the examination of the judgment in the Belgian courts
shall bear only upon the questions whether it ‘contains nothing contrary to public
order, to the principles of the Belgian public order’; whether, by the law of the
country in which it was rendered, it has the force of res judicata; whether the copy is
duly authenticated; whether the *218 defendant's rights have been duly respected;
and whether the foreign court is not the only competent court, by reason of the
nationality of the plaintiff. Where, as is the case between Belgium and France, there
is no such treaty, the Belgian court of cassation holds that the foreign judgment may
be re-examined upon the merits. Constant, 111, 116; Moreau, No. 189; Clunet,
1887, p. 217; Id. 1888, p. 837; Pig. Judgm. 439. And in a very recent case the civil
tribunal of Brussels held that, ‘considering that the right of revision is an emanation
of the right of sovereignty; that it proceeds from the imperium, and that as such it is
within the domain of public law; that from that principle it manifestly follows that, if
the legislature does not recognize executory force in foreign judgments where there
exists no treaty upon the basis of reciprocity, it cannot belong to the parties to
substitute their will for that of the legislature, by arrogating to themselves the power
of delegating to the foreign judge a portion of sovereignty.’Clunet, 1894, pp. 164,
165.
In Holland the effect given to foreign judgments has always depended upon
reciprocity, but whether by reason of Dutch ordinances only, or of general principles
of jurisprudence, does not clearly appear. Odwin v. Forbes, and Hen. For. Law,
above cited; Story, Confl. Laws, § 618; Foelix, No. 397, note; Clunet, 1879, p. 369;
1 Ferg. Int. Law, 85; Constant, 171; Moreau, No. 213.
In Denmark the courts appear to require reciprocity to be shown before they will
execute a foreign judgment. Foelix, Nos. 328, 345; Clunet, 1891, p. 987; Westl.
Priv. Int. ubi supra. In Norway the courts re-examine the merits of all foreign
judgments, even of those of Sweden. Foelix, No. 401; Pig. Judgm. 504, 505; Clunet,
1892, p. 296. In Sweden the principle of reciprocity has prevailed from very ancient
times. The courts give no effect to foreign judgments, unless upon that principle;
and it is doubtful whether they will even then, unless reciprocity is secured by treaty
with the country in which the judgment was rendered. Foelix, No. 400; Olivecrona,
in Clunet, 1880, p. 83; Constant, 191; Moreau, No. 222; Pig. Judgm. 503; Westl.
Priv. Int. ubi supra.
H. CASES INVOLVING THE INTERNET Page 42 of 102
*219 In the empire of Germany, as formerly in the states which now form part of that
empire, the judgments of those states are mutually executed, and the principle of
reciprocity prevails as to the judgments of other countries. Foelix, Nos. 328, 331,
333-341; Moreau, Nos. 178, 179; Vierhaus, in Pig. Judgm. 460-474; Westl. Priv. Int.
ubi supra. By the German Code of 1877, ‘compulsory execution of the judgment of
a foreign court cannot take place, unless its admissibility has been declared by a
judgment of exequatur’; ‘the judgment of exequatur is to be rendered without
examining whether the decision is conformable to law’; but it is not to be granted ‘if
reciprocity is not guaranteed.’ Constant, 79-81; Pig. Judgm. 466. The reichsgericht,
or imperial court, in a case reported in full in Pig. Judgm., has held that an English
judgment cannot be executed in Germany, because, the court said, the German
courts, by the Code, when **165 they execute foreign judgments at all, are ‘bound
to the unqualified recognition of the legal validity of the judgments of foreign courts,’
and ‘it is therefore an essential requirement of reciprocity that the law of the foreign
state should recognize in an equal degree the legal validity of the judgments of
German courts, which are to be enforced by its courts, and that an examination of
their legality, both as regards the material justice of the decision as to matters of
fact or law, and with respect to matters of procedure, should neither be required as
a condition of their execution, by the court ex officio, nor be allowed by the
admission of pleas which might lead to it.’Pig. Judgm. 470, 471. See, also, Clunet,
1882, p. 35; Id. 1883, p. 246;Id. 1884, p. 600.
In Switzerland, by the federal constitution, civil judgments in one canton are
ekecutory throughout the republic. As to foreign judgments, there is no federal law,
each canton having its own law upon the subject. But civil judgments in one canton
are executory other cantons, foreign judgments are executed according to the rule
of reciprocity only. Constant, 193-204; Pig. Judgm. 505-516; Clunet, 1887, p. 762;
Westl. Priv. Int. ubi supra. The law upon this subject has been clearly stated by
Brocher, president of the court of cassation of Geneva, and professor of law in the
university there. In his Nouveau *220 Traite de Droit International Prive (1876) §
174, treating of the question whether ‘it might not be convenient that states should
execute, without reviewing their merits, judgments rendered on the territory of each
of them respectively,’ he says: ‘It would certainly be advantageous for the parties
interested to avoid the delays, the conflicts, the differences of opinion, and the
expenses resulting from the necessity of obtaining a new judgment in each locality
where they should seek execution. There might thence arise, for each sovereignty,
a juridical or moral obligation to lend a strong hand to foreign judgments. But would
not such an advantage be counterbalanced, and often surpassed, by the dangers
that might arise from that mode of proceeding? There is here, we believe, a
question of reciprocal appreciation and confidence. One must, at the outset, inquire
whether the administration of the foreign judiciary, whose judgments it is sought to
execute without verifying their merits, presents sufficient guaranties. If the propriety
of such an execution be admitted, there is ground for making it the object of
diplomatic treaties. That form alone can guaranty the realization of a proper
reciprocity. It furnishes, moreover, to each state, the means of acting upon the
judicial organization and procedure of other states.’In an article in the Journal, after
a review of the Swiss decisions, he recognizes and asserts that ‘it comes within the
competency of each canton to do what seems to it proper in such matters.’Clunet,
1879, pp. 88, 94. And in a later treatise he says: ‘We cannot admit that the
recognition of a state as sovereign ought necessarily to have as a consequence the
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obligation of respecting and executing the judicial decisions rendered by its
tribunals. In strict right, the authority of such acts does not extend beyond the
frontier. Each sovereignty possesses in particular, and more or less in private, the
territory subject to its power. No other can exercise there an act of its authority. This
territorial independence finds itself, in principle, directly included in the very act by
which one nation recognizes a foreign state as a sovereign; but there cannot result
therefrom a promise to adopt, and to cause to be executed upon the national
territory, judgments rendered by *221 the officials of the foreign state, whoever they
may be. That would be an abdication of its own sovereignty; and would bind it in
such sort as to make it an accomplice in acts often injurious, and in some cases
even criminal. Such obligations suppose a reciprocal confidence. They are not
undertaken, moreover, except upon certain conditions, and by means of a system of
regulations intended to prevent or to lessen the dangers which might result from
them.’3 Cours de Droit International Prive (1885) 126, 127.
In Russia, by the Code of 1864, ‘the judgments of foreign tribunals shall be
rendered executory according to the rules established by reciprocal treaties and
conventions,’ and, where no rules have been established by such treaties, are to be
‘put in execution in the empire only after authorization granted by the courts of the
empire’; and ‘in deciding upon demands of this kind the courts do not examine into
the foundation of the dispute adjudged by the foreign tribunals, but decide only
whether the judgment does not contain dispositions which are contrary to the public
order, or which are not permitted by the laws of the empire.’Constant, 183-185. Yet
a chamber of the senate of St. Petersburg, sitting as a court of cassation, and the
highest judicial tribunal of the empire in civil matters, has declined to execute a
French judgment upon the grounds that, by the settled law of Russia, ‘it is a
principle in the Russian empire that only the decisions of the authorities to whom
jurisdiction has been delegated by the sovereign power have legal value by
themselves and of full right,’ and that, ‘in all questions of international law,
reciprocity must be observed and maintained as a fundamental principle.’Adam v.
Schipoff, Clunet, 1884, pp. 45, 46, 134. And Prof. Englemann, of the Russian
University of Dorpat, in an able essay, explaining that and other Russian decisions,
takes the following view of them: ‘The execution of a treaty is not the only proof of
reciprocity.’‘It is necessary to commit the ascertainment of the existence of
reciprocity to the judicial tribunals, **166 for the same reasons for which there is
conferred upon them the right to settle all questions incident to the cause to be
adjudged. The existence of reciprocity between *222 two states ought to be proved
in the same manner as all the positive facts of the case.’‘It is true that the principle
of reciprocity is a principle not of right, but of policy, yet the basis of the principle of
all regular and real policy is also the fundamental principle of right, and the point of
departure of all legal order,-the suum cuique. This last principle comprehends right,
reciprocity, utility, and reciprocity is the application of right to policy.’‘Let this
principle be applied wherever there is the least guaranty or even a probability of
reciprocity, and the cognizance of this question be committed to the judicial
tribunals, and one will arrive at important results, which, on their side, will touch the
desired end,-international accord. But for this it is indispensable that the application
of this principle should be intrusted to judicial tribunals, accustomed to decide affairs
according to right, and not to administrative authorities, which look above all to
utility, and are accustomed to be moved by political reasons, intentions, and even
passions.’Clunet, 1884, pp. 120-122. But it would seem that no foreign judgment will
be executed in Russia unless reciprocity is secured by treaty. Clunet, 1884, pp. 46,
H. CASES INVOLVING THE INTERNET Page 43 of 102
113, 139, 140, 602.
In Poland the provisions of the Russian Code are in force; and the court of appeal of
Warsaw has decided that where there is no treaty the judgments of a foreign
country cannot be executed, because, ‘in admitting a contrary conclusion, there
would be impugned one of the cardinal principles of international relations, namely,
the principle of reciprocity, according to which each state recognizes juridical rights
and relations, originating or established in another country, only in the measure in
which the latter, in its turn, does not disregard the rights and relations existing in the
former.’Clunet, 1884, pp. 494, 495.
In Roumania it is provided by Code that ‘judicial decisions rendered in foreign
countries cannot be executed in Roumania, except in the same manner in which
Roumanian judgments are executed in the country in question, and provided they
are declared executory by competent Roumanian judges'; and this article seems to
be held to require legislative reciprocity.*223 Moreau, No. 219; Clunet, 1879, p. 351;
Id. 1885, p. 537;Id. 1891, p. 452; Pig. Judgm. 495.
In Bulgaria, by a resolution of the supreme court in 1881, ‘the Bulgarian judges
should, as a general rule, abstain from entering upon the merits of the foreign
judgment. They ought only to inquire whether the judgment submitted to then does
not contain dispositions contrary to the public order and to the Bulgarian
laws.’Constant, 129, 130; Clunet, 1886, p. 570. This resolution closely follows the
terms of the Russian Code, which, as has been seen, has not precluded applying
the principle of reciprocity.
In Austria the rule of reciprocity does not rest upon any treaty or legislative
enactment, but has been long established, by imperial decrees and judicial
decisions, upon general principles of jurisprudence. Foelix, No. 331; Constant, 100-
108; Moreau, No. 185; Weiss, Traite de Droit International (1886) 950; Clunet,
1891, p. 1003; Id. 1894, p. (1886) 980; Clunet, 1891, p. 1003; Id. 1894, p. same
principles were always followed as in Austria; and reciprocity has been made a
condition by a law of 1880. Constant, 109; Moreau, No. 186, and note; Pig. Judgm.
436; Weiss, ubi supra.
In Italy, before it was united into one kingdom, each state had its own rules. In
tuscany and in Modena, in the absence of treaty, the whole merits were reviewed.
In Parma, as by the French ordinance of 1629, the foreign judgment was subject to
fundamental revision, if against a subject of Parma. In Naples the Code and the
decisions followed those of France. In Sardinia the written laws required above all
the condition of reciprocity, and if that condition was not fulfilled the foreign
judgment was re-examinable in all respects. Fiore, Effetti Internazionali delle
Sentenze (1875) 40-44; Moreau, No. 204. In the papal states, by a decree of the
pope in 1820, ‘the exequatur shall not be granted, except so far as the judgments
rendered in the states of his holiness shall enjoy the same favor in the foreign
countries; this reciprocity is presumed, if there is no particular reason to doubt
it.’Toullier, Droit Civil, lib. 3, tit. 3, c. 6, § 3, No. 93. And see Foelix, No. 343; Westl.
Priv. Int. ubi supra. In the kingdom of Italy, *224 by the Code of Procedure of 1865,
‘executory force is given to the judgments of foreign judicial authorities by the court
of appeal in whose jurisdiction they are to be executed, by obtaining a judgment on
an exequatur in which the court examines (a) if the judgment has been pronounced
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by a competent judicial authority; (b) if it has been pronounced, the parties being
regularly cited; (c) if the parties have been legally represented or legally defaulted;
(d) if the judgment contains dispositions contrary to public order or to the internal
public law of the realm.’Constant, 157. In 1874 the court of cassation of Turin,
‘considering that in international relations is admitted the principle of reciprocity, as
that which has its foundation in the natural reason of equality of treatment, and in
default thereof opens the way to the exercise of the right of retaliation,’ and that the
French courts examine the merits of Italian judgments before allowing their
execution in France, decided that the Italian courts of appeal, when asked to
execute a French judgment, ought **167 not only to inquire into the competency of
the foreign court, but also to review the merits and the justice of the controversy.
Levi v. Pitre, in Rossi, Esecuzione delle Sentenze Straniere (1st Ed. 1875) 70,284;
and in Clunet, 1879, p. 295. Some commentators, however, while admitting that
decision to be most authoritative, have insisted that it is unsound, and opposed to
other Italian decisions, to which we have not access. Rossi, ubi supra (2d Ed. 1890)
92; Fiore, 142, 143; Clunet, 1878, p. 237; Clunet, 1879, pp. 296, 305; Pig. Judgm.
483; Constant, 161.
In the principality of Monaco, foreign judgments are not executory, except by virtue
of a special ordinance of the prince, upon a report of the advocate general.
Constant, 169; Pig. Judgm. 488.
In Spain, formerly, foreign judgments do not appear to have been executed at all.
Foelix, No. 398; Moreau, No. 197; Silvela, in Clunet, 1881, p. 20. But by the Code of
1855, revised in 1881, without change in this respect, ‘judgments pronounced in
foreign countries shall have in Spain the force that the respective treaties given
them; if there are no special treaties with the nation in which they have been
rendered, they shall *225 have the same force that is given by the laws of that
nation to Spanish executory judgments; if the judgment to be executed proceeds
from a nation by whose jurisprudence effect is not given to the judgments
pronounced by Spanish tribunals, it shall have no force in Spain’; and ‘application
for the execution of judgments pronounced in foreign countries shall be made to the
supreme tribunal of justice, which, after examining an authorized translation of the
foreign judgment, and after hearing the party against whom it is directed and the
public minister, shall decide whether it ought or ought not to be executed.’Constant,
141, 142; Pig. Judgm. 499, 500. A case in which the supreme court of Spain in
1880 ordered execution of a French judgment, after reviewing its merits, is reported
in Clunet, 1881, p. 365. In another case, in 1888, the same court, after hearing the
parties and the public minister, ordered execution of a Mexican judgment. The
public minister, in his demand for its execution, said: ‘Our law of civil procedure,
inspired, to a certain point, by the modern theories of international law, which,
recognizing among civilized nations a true community of right, and considering
mankind as a whole, in which nations occupy a position identical with that of
individuals towards society, gives authority in Spain to executory judgments
rendered by foreign tribunals, even in the absence of special treaty, provided that
those countries do not proscribe the execution there of our judgments, and under
certain conditions, which, if they limit the principle, are inspired by the wish of
protecting our sovereignty and by the supreme exigencies of justice. When nothing
appears, either for or against, as to the authority of the judgments of our courts in
the foreign country, one should not put an obstacle to the fulfillment, in our country,
of judgments emanating from other nations, especially when the question is of a
H. CASES INVOLVING THE INTERNET Page 44 of 102
country which, by its historic origin, its language, its literature, and by almost the
identity of its customs, its usages, and its social institutions, has so great a
connection with our own,-which obliges us to maintain with it the most intimate
relations of friendship and courtesy.’And he pointed out that Mexico, by its Code,
had adopted reciprocity as a fundamental principle. *226 Among the reasons
assigned by the court for ordering the Mexican judgment to be executed was that
‘there exists in Mexico no precedent of jurisprudence which refuses execution to
judgments rendered by the Spanish tribunals.’Clunet, 1891, pp. 288-292.
In Portugal, foreign judgments, whether against a Portuguese or against a foreigner,
are held to be reviewable upon the merits before granting execution thereof. Foelix,
No. 399; Clunet, 1875, pp. 54, 448; Moreau, No. 217; Constant, 176-180; Westl.
Priv. Int. ubi supra.
In Greece, by the provisions of the Code of 1834, foreign judgments, both parties to
which are foreigners, are enforced without examination of their merits; but if one of
the parties is a Greek they are not enforced, if found contradictory to the facts
proved, or if they are contrary to the prohibitive laws of Greece. Foelix, No. 396;
Constant, 151, 152; Moreau, No. 202; Saripolos, in Clunet, 1880, p. 173; Pig.
Judgm. 475.
In Egypt, under the influence of European jurisprudence, the Code of Civil
Procedure has made reciprocity a condition upon which foreign judgments are
executed. Constant, 136; Clunet, 1887, pp. 98, 228; Id. 1889, p. 322.
In Cuba and in Porto Rico, the Codes of Civil Procedure are based upon the
Spanish Code of 1855. Pig. Judgm. 435, 503. In Hayti the Code re-enacts the
provisions of the French Code. Constant, 153; Moreau, No. 203; Pig. Judgm. 460.
In Mexico the system of reciprocity has been adopted by the Code of 1884 as the
governing principle. Constant, 168; Clunet, 1891, p. 290.
The rule of reciprocity likewise appears to have generally prevailed in South
America. In Peru foreign judgments do not appear to be executed without
examining the merits, unless when reciprocity is secured by treaty. Clunet, 1879,
pp. 266, 267; Pig. Judgm. 548. In Chili there appears to have been no legislation
upon the subject; but, according to a decision of the supreme court of Santiago in
1886, ‘the Chilian tribunals should not award an exequatur, except upon decisions
in correct form, and also reserving the general principle of reciprocity.’Clunet, 1889,
p. 135; Constant, 131, *227 132. In Brazil foreign **168 judgments are not
executed, unless because of the country in which they were rendered admitting the
principle of reciprocity, or because of a placet of the government of Brazil, which
may be awarded according to the circumstances of the case. Constant, 124, and
note; Moreau, No. 192; Pig. Judgm. 543-546; Westlake, ubi supra. In the Argentine
Republic the principle of reciprocity was maintained by the courts, and was affirmed
by the Code of 1878, as a condition sine qua non of the execution of foreign
judgments, but has perhaps been modified by later legislation. Moreau, No. 218;
Palomeque, in Clunet, 1887, pp. 539-558.
It appears, therefore, that there is hardly a civilized nation on either continent which,
by its general law, allows conclusive effect to an executory foreign judgment for the
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recovery of money. In France and in a few smaller states-Norway, Portugal,
Greece, Monaco, and Hayti-the merits of the controversy are reviewed, as of
course, allowing to the foreign judgment, at the most, no more effect than of being
prima facie evidence of the justice of the claim. In the great majority of the countries
on the continent of Europe,-in Belgium, Holland, Denmark, Sweden, Germany, in
many cantons of Switzerland, in Russia and Poland, in Roumania, in Austria and
Hungary (perhaps in Italy), and in Spain,-as well as in Egypt, in Mexico, and in a
great part of South America, the judgment rendered in a foreign country is allowed
the same effect only as the courts of that country allow to the judgments of the
country in which the judgment in question is sought to be executed.
The prediction of Mr. Justice Story in section 618 of his Commentaries on the
Conflict of Laws, already cited, has thus been fulfilled, and the rule of reciprocity has
worked itself firmly into the structure of international jurisprudence.
The reasonable, if not the necessary, conclusion appears to us to be that judgments
rendered in France, or in any other foreign country, by the laws of which our own
judgments are reviewable upon the merits, are not entitled to full credit and
conclusive effect when sued upon in this country, but are prima facie evidence only
of the justice of the plaintiffs' claim.
*228 In holding such a judgment, for want of reciprocity, not to be conclusive
evidence of the merits of the claim, we do not proceed upon any theory of retaliation
upon one person by reason of injustice done to another, but upon the broad ground
that international law is founded upon mutuality and reciprocity, and that by the
principles of international law recognized in most civilized nations, and by the comity
of our own country, which it is our judicial duty to known and to declare, the
judgment is not entitled to be considered conclusive.
By our law, at the time of the adoption of the constitution, a foreign judgment was
considered as prima facie evidence, and not conclusive. There is no statute of the
United States, and no treaty of the United States with France, or with any other
nation, which has changed that law, or has made any provision upon the subject. It
is not to be supposed that, if any statute or treaty had been or should be made, it
would recognize as conclusive the judgments of any country, which did not give like
effect to our own judgments. In the absence of statute or treaty, it appears to us
equally unwarrantable to assume that the comity of the United States requires
anything more.
If we should hold this judgment to be conclusive, we should allow it an effect to
which, supposing the defendants' offers to be sustained by actual proof, it would, in
the absence of a special treaty, be entitled in hardly any other country in
Christendom, except the country in which it was rendered. If the judgment had been
rendered in this country, or in any other outside of the jurisdiction of France, the
French courts would not have executed or enforced it, except after examining into
its merits. The very judgment now sued on would be held inconclusive in almost any
other country than France. In England, and in the colonies subject to the law of
England, the fraud alleged in its procurement would be a sufficient ground for
disregarding it. In the courts of nearly every other nation, it would be subject to re-
examination, either merely because it was a foreign judgment, or because
judgments of that nation would be reexaminable in the courts of France.
H. CASES INVOLVING THE INTERNET Page 45 of 102
*229 For these reasons, in the action at law, the
Judgment is reversed, and the cause remanded to the circuit court, with directions
to set aside the verdict and to order a new trial.
For the same reasons, in the suit in equity between these parties, the foreign
judgment is not a bar, and therefore the
Decree dismissing the bill is reversed, the plea adjudged bad, and the cause
remanded to the circuit court for further proceedings not inconsistent with this
opinion.
Mr. Chief Justice FULLER, dissenting.
Plaintiffs brought their action on a judgment recovered by them against the
defendants in the courts of France, which courts had jurisdiction over person and
subject-matter, and in respect of which judgment no fraud was alleged, except in
particulars contested in and considered by the French courts. The question is
whether under these circumstances, and in the absence of a treaty or act of
congress, the judgment is re-examinable upon the merits. This question I regard as
one to be determined by the ordinary and settled rule in respect of allowing a party
who has had an opportunity to prove his case in a competent court to retry it on the
merits; and it seems to me that the doctrine **169 of res judicata applicable to
domestic judgments should be applied to foreign judgments as well, and rests on
the same general ground of public policy, that there should be an end of litigation.
This application of the doctrine is in accordance with our own jurisprudence, and it
is not necessary that we should hold it to be required by some rule of international
law. The fundamental principle concerning judgments is that disputes are finally
determined by them, and I am unable to perceive why a judgment in personam,
which is not open to question on the ground of want of jurisdiction, either intrinsically
or over the parties, or of fraud, or on any other recognized ground of impeachment,
should not be held, inter partes, though recovered abroad, conclusive on the merits.
*230 Judgments are executory while unpaid, but in this country execution is not
given upon a foreign judgment as such, it being enforced through a new judgment
obtained in an action brought for that purpose.
The principle that requires litigation to be treated as terminated by final judgment,
properly rendered, is as applicable to a judgment proceeded on in such an action as
to any other, and forbids the allowance to the judgment debtor of a retrial of the
original cause of action, as of right, in disregard of the obligation to pay arising on
the judgment, and of the rights acquired by the judgment creditor thereby.
That any other conclusion is inadmissible is forcibly illustrated by the case in hand.
Plaintiffs in error were trading copartners in Paris as well as in New York, and had a
place of business in Paris at the time of these transactions and of the
commencement of the suit against them in France. The subjects of the suit were
commercial transactions, having their origin, and partly performed, in France, under
a contract there made, and alleged to be modified by the dealings of the parties
there, and one of thej claims against them was for goods sold to them there. They
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appeared generally in the case, without protest, and by counterclaims relating to the
same general course of business, a part of them only connected with the claims
against them, became actors in the suit, and submitted to the courts their own
claims for affirmative relief, as well as the claims against them. The courts were
competent, and they took the chances of a decision in their favor. As traders in
France they were under the protection of its laws, and were bound by its laws, its
commercial usages, and its rules of procedure. The fact that they were Americans
and the opposite parties were citizens of France is immaterial, and there is no
suggestion on the record that those courts proceeded on any other ground than that
all litigants, whatever their nationality, were entitled to equal justice therein. If
plaintiffs in error had succeeded in their cross suit and recovered judgment against
defendants in error, and had sued them here on that judgment, defendants in error
would not have been permitted to say that the judgment in France was *231 not
conclusive against them. As it was, defendants in error recovered, and I think
plaintiffs in error are not entitled to try their fortune anew before the courts of this
country on the same matters voluntarily submitted by them to the decision of the
foreign tribunal. We are dealing with the judgment of a court of a civilized country,
whose laws and system of justice recognize the general rules in respect to property
and rights between man and man prevailing among all civilized peoples. Obviously,
the last persons who should be heard to complain are those who identified
themselves with the business of that country, knowing that all their transactions
there would be subject to the local laws and modes of doing business. The French
courts appear to have acted ‘judicially, honestly, and with the intention to arrive at
the right conclusion,’ and a result thus reached ought not to be disturbed.
The following view of the rule in England was expressed by Lord Herschell in
Nouvion v. Freeman, 15 App. Cas. 1, 9, quoted in the principal opinion: ‘The
principle upon which I think our enforcement of foreign judgments must proceed is
this: That in a court of competent jurisdiction, where, according to its established
procedure, the whole merits of the case were open, at all events, to the parties,
however much they may have failed to take advantage of them or may have waived
any of their rights, a final adjudication has been given that a debt or obligation
exists, which cannot thereafter in that court be disputed, and can only be
questioned in an appeal to a higher tribunal. In such a case it may well be said that,
giving credit to the court of another country, we are prepared to take the fact that
such adjudication has been made as establishing the existence of the debt or
obligation.’But in that connection the observations made by Mr. Justice Blackburn in
Godard v. Gray, L. R. 6 Q. B. 139, 148, and often referred to with approval, may
usefully again be quoted:
‘It is not an admitted principle of the law of nations that a state is bound to enforce
within its territories the judgments of a foreign tribunal. Several of the continental
nations (including France) do not enforce the judgments of other countries, *232
unless where there are reciprocal treaties to that effect. But in England, and in those
states which are governed by the common law, such judgments are enforced, not
by virtue of any treaty nor by virtue of any statute, but upon a principle very well
stated by Parke, B., in Williams v. Jones, 13 Mees. & W. 633: ‘Where a court of
competent jurisdiction had adjudicated a certain sum to be due from one person to
another, a legal obligation **170 arises to pay that sum, on which an action of debt
to enforce the judgment may be maintained. It is in this way that the judgments of
foreign and colonial courts are supported and enforced.’And taking this as the
H. CASES INVOLVING THE INTERNET Page 46 of 102
principle, it seems to follow that anything which negatives the existence of that legal
obligation, or excuses the defendant from the performance of it, must form a good
defense to the action. It must be open, therefore, to the defendant to show that the
court which pronounced the judgment had not jurisdiction to pronounce it, either
because they exceeded the jurisdiction given to them by the foreign law, or because
he, the defendant, was not subject to that jurisdiction; and so far the foreign
judgment must be examinable. Probably the defendant may show that the judgment
was obtained by the fraud of the plaintiff, for that would show that the defendant
was excused from the performance of an obligation thus obtained; and it may be
that where the foreign court has knowingly and perversely disregarded the rights
given to an English subject by English law, that forms a valid excuse for
disregarding the obligation thus imposed on him; but we prefer to imitate the caution
of the present lord chancellor in Castrique v. Imrie, L. R. 4 H. L. 445, and to leave
those questions to be decided when they arise, only observing in the present case,
as in that: ‘The whole of the facts appear to have been inquired into by the French
courts judicially, honestly, and with the intention to arrive at the right conclusion;
and, having heard the facts as stated before them, they came to a conclusion which
justified them in France in deciding as they did decide.’* * * Indeed, it is difficult to
understand how the common course of pleading is consistent with any notion that
the judgment was only evidence. If that were so, every count on a *233 foreign
judgment must be demurrable on that ground. The mode of pleading shows that the
judgment was considered, not as merely prima facie evidence of that cause of
action for which the judgment was given, but as in itself giving rise, at least prima
facie, to a legal obligation to obey that judgment, and pay the sum adjudged. This
may seem a technical mode of dealing with the question; but in truth it goes to the
root of the matter; for, if the judgment were merely considered as evidence of the
original cause of action, it must be open to meet it by any counter evidence
negativing the existence of that original cause of action. If, on the other hand, there
is a prima facie obligation to obey the judgment of a tribunal having jurisdiction over
the party and the cause, and to pay the sum decreed, the question would be
whether it was open to the unsuccessful party to try the cause over again in a court
not sitting as a court of appeal from that which gave the judgment. It is quite clear
that this could not be done where the action is brought on the judgment of an
English tribunal; and, on principle, it seems the same rule should apply where it is
brought on that of a foreign tribunal.'
In any aspect, it is difficult to see why rights acquired under foreign judgments do
not belong to the category of private rights acquired under foreign laws. Now, the
rule is universal in this country that private rights acquired under the laws of foreign
states will be respected and enforced in our courts unless contrary to the policy or
prejudicial to the interests of the state where this is sought to be done; and,
although the source of this rule may have been the comity characterizing the
intercourse between nations, it prevails to-day by its own strength, and the right to
the application of the law to which the particular transaction is subject is a juridical
right.
And, without going into the refinements of the publicists on the subject, it appears to
me that that law finds authoritative expression in the judgments of courts of
competent jurisdiction over parties and subject-matter.
It is held by the majority of the court that defendants cannot be permitted to contest
CONFLICT OF LAWS 3D 2/08-09
the validity and effect of this judgment on the general ground that it was erroneous
in law *234 or in fact, and the special grounds relied on are seriatim rejected. In
respect of the last of these-that of fraud-it is said that it is unnecessary in this case
to decide whether certain decisions cited in regard to impeaching foreign judgments
for fraud could be followed consistently with our own decisions as to impeaching
domestic judgments for that reason, ‘because there is a distinct and independent
ground upon which we are satisfied that the comity of our nation does not require us
to give conclusive effect to the judgments of the courts of France, and that ground is
the want of reciprocity on the part of France as to the effect to be given to the
judgments of this and other foreign countries.’And the conclusion is announced to
be ‘that judgments rendered in France, or in any other foreign country, by the laws
of which our own judgments are reviewable upon the merits, are not entitled to full
credit and conclusive effect when sued upon in this country, but are prima facie
evidence only of the justice of the plaintiff's claim.’In other words, that, although no
special ground exists for impeaching the original justice of a judgment, such as want
of jurisdiction or fraud, the right to retry the merits of the original cause at large,
defendant being put upon proving those merits, should be accorded in every suit on
judgments recovered in countries where our own judgments are not given full effect,
on that ground merely.

I cannot yield my assent to the proposition that, because by legislation and judicial
decision in France that effect is not there given to judgments recovered in this
country **171 which, according to our jurisprudence, we whink should be given to
judgments wherever recovered (subject, of course, to the recognized exceptions),
therefore we should pursue the same line of conduct as respects the judgments of
French tribunals. The application of the doctrine of res judicata does not rest in
discretion; and it is for the government, and not for its courts, to adopt the principle
of retorsion, if deemed under any circumstances desirable or necessary.

As the court expressly abstains from deciding whether the judgment is impeachable
on the ground of fraud, I refrain from any observations on that branch of the case.

*235 Mr. Justice HARLAN, Mr. Justice BREWER, and Mr. Justice JACKSON concur
in this dissent.
U.S. 1895
Hilton v. Guyot
159 U.S. 113, 16 S.Ct. 139, 2007 A.M.C. 2028, 40 L.Ed. 95

END OF DOCUMENT

H. CASES INVOLVING THE INTERNET Page 47 of 102 CONFLICT OF LAWS 3D 2/08-09

 Supreme Court of the United States 106 Courts
KLAXON CO. 106I Nature, Extent, and Exercise of Jurisdiction in General
v. 106k3 Jurisdiction of Cause of Action
STENTOR ELECTRIC MFG. CO., Inc. 106k8 k. Actions Under Laws of Other State. Most Cited Cases
No. 741. The state of Delaware is free to determine whether a given matter is to be governed
by law of the forum or some other law, subject only to review by the Supreme Court
Argued May 1, 2, 1941. on any federal question that may arise.
Decided June 2, 1941.
[4] Federal Courts 170B 409.1
On Writ of Certiorari to the United States Circuit Court of Appeals for the Third
Circuit. 170B Federal Courts
170BVI State Laws as Rules of Decision
Action by the Stentor Electric Manufacturing Company against the Klaxon 170BVI(C) Application to Particular Matters
Company for breach of a contract under seal. Judgment for plaintiff, 30 F.Supp. 170Bk409 Conflict of Laws
425, was affirmed by the Circuit Court of Appeals, 115 F.2d 268, and defendant 170Bk409.1 k. In General. Most Cited Cases
brings certiorari. (Formerly 170Bk409, 106k359)
Where jurisdiction of Delaware federal court was based on diversity of citizenship,
Reversed and case remanded to the Circuit Court of Appeals. the Supreme Court's views were not the decisive factor in determining the
applicable conflicts rule, and proper function of Delaware federal court was to
West Headnotes ascertain what the state law was, not what it ought to be.

[1] Federal Courts 170B 410 [5] Courts 106 8

170B Federal Courts 106 Courts

170BVI State Laws as Rules of Decision 106I Nature, Extent, and Exercise of Jurisdiction in General
170BVI(C) Application to Particular Matters 106k3 Jurisdiction of Cause of Action
170Bk409 Conflict of Laws 106k8 k. Actions Under Laws of Other State. Most Cited Cases
170Bk410 k. Particular Questions. Most Cited Cases (Formerly 106k363)
(Formerly 106k359) The Constitution does not insure unlimited extraterritorial recognition of all statutes,
Where federal court's jurisdiction of action brought in Delaware for breach of or of any statute under all circumstances. U.S.C.A. Const. art. 4, § 1.
contract executed in New York was based on diversity of citizenship, the court was
not free to determine applicability of New York interest statute in accordance with its [6] Courts 106 8
own conception of the better view of the law, but was bound to follow the conflict of
laws rules prevailing in Delaware's state courts. Civil Practice Act N.Y. § 480; 28 106 Courts
U.S.C.A. § 1961. 106I Nature, Extent, and Exercise of Jurisdiction in General
106k3 Jurisdiction of Cause of Action
[2] Federal Courts 170B 409.1 106k8 k. Actions Under Laws of Other State. Most Cited Cases
The “full faith and credit” clause would not require the state of Delaware to apply, in
170B Federal Courts connection with agreement executed in New York, the New York statute directing
170BVI State Laws as Rules of Decision that in contract actions interest be added to the principal sum, if such application
170BVI(C) Application to Particular Matters would interfere with its local policy. Civil Practice Act N.Y. § 480; U.S.C.A. Const.
170Bk409 Conflict of Laws art. 4, § 1.
170Bk409.1 k. In General. Most Cited Cases
(Formerly 170Bk409, 106k359) **1020 *488 Messrs. John Thomas Smith, of New York City, and James D.
The federal courts may not, by enforcing an independent “general law” of conflict of Carpenter, Jr., of Jersey City, N.J., for petitioner.
laws, thwart local policies pursued by a state within limits permitted by the *490 Mr. Murray C. Bernays, of New York City, for respondent.
Constitution.
*494 Mr. Justice REED delivered the opinion of the Court.
[3] Courts 106 8 The principal question in this case is whether in diversity cases the federal courts
must follow conflict of laws rules prevailing in the states in which they sit. We left

H. CASES INVOLVING THE INTERNET Page 48 of 102 CONFLICT OF LAWS 3D 2/08-09

this open in Ruhlin v. New York Life Insurance Company, 304 U.S. 202, 208, note
2, 58 S.Ct. 860, 862, 82 L.Ed. 1290.The frequent recurrence of the problem, as well
as the conflict of approach to the problem between the Third Circuit's opinion here
and that of the First Circuit in Sampson v. Channell, 110 F.2d 754, 759-762, 128
A.L.R. 394, led us to grant certiorari.
In 1918 respondent, a New York corporation, transferred its entire business to
petitioner, a Delaware corporation. Petitioner contracted to use its best efforts to
further the manufacture and sale of certain patented devices covered by the
agreement, and respondent was to have a share of petitioner's profits. The
agreement was executed**1021 in New York, the assets were transferred there,
and petitioner began performance there although later it moved its operations to
other states. Respondent was voluntarily dissolved under New York law in 1919.
Ten years later it instituted this action in the United States District Court for the
District of Delaware, alleging that petitioner had failed to perform its agreement to
use its best efforts. Jurisdiction rested on diversity of citizenship. In 1939
respondent recovered a jury verdict of $100,000, upon which judgment was
entered. Respondent then moved to correct the judgment by adding interest*495 at
the rate of six percent from June 1, 1929, the date the action had been brought. The
basis of the motion was the provision in section 480 of the New York Civil Practice
Act directing that in contract actions interest be added to the principal sum ‘whether
theretofore liquidated or unliquidated.'FN1The District Court granted the motion,
taking the view that the rights of the parties were governed by New York law and
that under New York law the addition of such interest was mandatory. 30 F.Supp.
425, 431. The Circuit Court of Appeals affirmed, 3 Cir., 115 F.2d 268, 275, and we
granted certiorari, limited to the question whether section 480 of the New York Civil
Practice Act is applicable to an action in the federal court in Delaware. 312 U.S.
674, 61 S.Ct. 734, 85 L.Ed. 1115.
FN1 Section 480, New York Civil Practice Act: ‘Interest to be included in
recovery. Where in any action, except as provided in section four hundred
eighty-a, final judgment is rendered for a sum of money awarded by a
verdict, report or decision, interest upon the total amount awarded, from
the time when the verdict was rendered or the report or decision was made
to the time of entering judgment, must be computed by the clerk, added to
the total amount awarded, and included in the amount of the judgment. In
every action wherein any sum of money shall be awarded by verdict, report
or decision upon a cause of action for the enforcement of or based upon
breach of performance of a contract, express or implied, interest shall be
recovered upon the principal sum whether theretofore liquidated or
unliquidated and shall be added to and be a part of the total sum awarded.’
The Circuit Court of Appeals was of the view that under New York law the right to
interest before verdict under section 480 went to the substance of the obligation,
and that proper construction of the contract in suit fixed New York as the place of
performance. It then concluded that section 480 was applicable to the case because
‘it is clear by what we think is undoubtedly the better view of the law that the rules
for ascertaining the measure of damages are not a matter of procedure at all, but
are *496 matters of substance which should be settled by reference to the law of the
appropriate state according to the type of case being tried in the forum. The
measure of damages for breach of a contract is determined by the law of the place
H. CASES INVOLVING THE INTERNET Page 49 of 102
of performance; Restatement, Conflict of Laws s 413.’The court referred also to
section 418 of the Restatement, which makes interest part of the damages to be
determined by the law of the place of performance. Application of the New York
statute apparently followed from the court's independent determination of the ‘better
view’ without regard to Delaware law, for no Delaware decision or statute was cited
or discussed.
[1][2][3][4] We are of opinion that the prohibition declared in Erie Railroad v.
Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487, against such
independent determinations by the federal courts extends to the field of conflict of
laws. The conflict of laws rules to be applied by the federal court in Delaware must
conform to those prevailing in Delaware's state courts.FN2 Otherwise the accident of
diversity of citizenship would constantly disturb equal administration of justice in
coordinate state and federal courts sitting side by side. See Erie Railroad v.
Tompkins, supra, 304 U.S. at 74-77, 58 S.Ct. at 820-822, 82 L.Ed. 1188, 114 A.L.R.
1487. Any other ruling would do violence **1022 to the principle of uniformity within
a state upon which the Tompkins decision is based. Whatever lack of uniformity this
may produce between federal courts in different states is attributable to our federal
system, which leaves to a state, within the limits permitted by the Constitution, the
right to pursue local policies diverging from those of its neighbors. It is not for the
federal courts to thwart such local policies by enforcing an independent ‘general
law’ of conflict of laws. Subject only to review by this Court *497 on any federal
question that may arise, Delaware is free to determine whether a given matter is to
be governed by the law of the forum or some other law. Cf. Milwaukee County v.
White Co., 296 U.S. 268, 272, 56 S.Ct. 229, 231, 80 L.Ed. 220. This Court's views
are not the decisive factor in determining the applicable conflicts rule. Cf.
Funkhouser v. J. B. Preston Co., 290 U.S. 163, 54 S.Ct. 134, 78 L.Ed. 243. And the
proper function of the Delaware federal court is to ascertain what the state law is,
not what it ought to be.
FN2 An opinion in Sampson v. Channell, 1 Cir., 110 F.2d 754, 759-762,
128 A.L.R. 394, reaches the same conclusion, as does an opinion of the
Third Circuit handed down subsequent to the case at bar, Waggaman v.
General Finance Co., 116 F.2d 254, 257. See, also, Goodrich, Conflict of
Laws, s 12.
Besides these general considerations, the traditional treatment of interest in
diversity cases brought in the federal courts points to the same conclusion. Section
966 of the Revised Statutes, 28 U.S.C. s 811, 28 U.S.C.A. s 811, relating to interest
on judgments, provides that it be calculated from the date of judgment at such rate
as is allowed by law on judgments recovered in the courts of the state in which the
court is held. In Massachusetts Benefit Association v. Miles, 137 U.S. 689, page
691, 11 S.Ct. 234, page 235, 34 L.Ed. 834, this Court held that section 966 did not
exclude the allowance of interest on verdicts as well as judgments, and the opinion
observed that ‘the courts of the state and the federal courts sitting within the state
should be in harmony upon this point’.
Looking then to the Delaware cases, petitioner relies on one group to support his
contention that the Delaware state courts would refuse to apply section 480 of the
New York Civil Practice Act, and respondent on another to prove the contrary. We
make no analysis of these Delaware decisions, but leave this for the Circuit Court of
CONFLICT OF LAWS 3D 2/08-09
Appeals when the case is remanded.

[5][6] Respondent makes the further argument that the judgment must be affirmed
because, under the full faith and credit clause of the Constitution, Art. 4, s 1, the
state courts of Delaware would be obliged to give effect to the New York statute.
The argument rests mainly on the decision of this Court in *498John Hancock
Mutual Life Insurance Company v. Yates, 299 U.S. 178, 57 S.Ct. 129, 81 L.Ed. 106,
where a New York statute was held such an integral part of a contract of insurance
that Georgia was compelled to sustain the contract under the full faith and credit
clause. Here, however, section 480 of the New York Civil Practice Act is in no way
related to the validity of the contract in suit, but merely to an incidental item of
damages, interest, with respect to which courts at the forum have commonly been
free to apply their own or some other law as they see fit. Nothing in the Constitution
ensures unlimited extraterritorial recognition of all statutes or of any statute under all
circumstances. Pacific Employers Insurance Co. v. Industrial Accident Comm., 306
U.S. 493, 59 S.Ct. 629, 83 L.Ed. 940; Kryger v. Wilson, 242 U.S. 171, 37 S.Ct. 34,
61 L.Ed. 229.The full faith and credit clause does not go so far as to compel
Delaware to apply section 480 if such application would interfere with its local
policy.

Accordingly, the judgment is reversed and the case remanded to the Circuit Court of
Appeals for decision in conformity with the law of Delaware.

Reversed and remanded.

U.S. 1941.
Klaxon Co. v. Stentor Electric Mfg. Co.
313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477, 49 U.S.P.Q. 515

END OF DOCUMENT

H. CASES INVOLVING THE INTERNET Page 50 of 102 CONFLICT OF LAWS 3D 2/08-09

 United States Court of Appeals, Seventh Circuit.
Hendrik KOSTER, a Citizen of the Netherlands, Plaintiff-Appellee,
v.
AUTOMARK INDUSTRIES, INCORPORATED, a Delaware Corporation,
Defendant-Appellant.
No. 80-1765.
Argued Dec. 11, 1980.
Decided Feb. 3, 1981.
Illinois corporation appealed from a summary judgment of the United States District
Court for the Northern District of Illinois, Eastern Division, Marvin E. Aspen, J.,
granted in favor of citizen of the Netherlands in his action to enforce a default
judgment obtained in a breach of contract action in the Netherlands. The Court of
Appeals, Harlington Wood, Jr., Circuit Judge, held that: (1) there was insufficient
contact between corporation and the Netherlands to vest that country's courts with
personal jurisdiction over corporation so as to permit enforcement in the United
States of a default judgment entered against corporation, and (2) the Dutch statute
governing service of process on defendants who reside in foreign countries
provided insufficient assurances of actual notice to comport with American due
process requirements, and thus the Dutch default judgment could not be enforced in
United States courts.
Reversed and remanded.
West Headnotes
[1] Federal Courts 170B 86
170B Federal Courts
170BII Venue
170BII(A) In General
170Bk86 k. Aliens or Alien Corporations. Most Cited Cases
Whether a court may, under American law, assert jurisdiction over a foreign
defendant company depends upon whether company purposefully avails itself of the
privilege of conducting activities within the forum state; company must pass a
threshold of minimum contacts with foreign state so that it is fair to subject it to the
jurisdiction of that state's courts.
[2] Judgment 228 830.1
228 Judgment
228XVII Foreign Judgments
228k830 Judgments of Courts of Foreign Countries
228k830.1 k. In General. Most Cited Cases
(Formerly 228k830)
Where contract between Illinois corporation and citizen of the Netherlands was
executed in Italy, involved the purchase of goods manufactured in Switzerland, and
where corporation's only contacts with the Netherlands were eight letters, and
possibly a telegram and transatlantic telephone call preliminary to meeting in Italy,
H. CASES INVOLVING THE INTERNET
there was insufficient contact between corporation and the Netherlands to vest that
country's courts with personal jurisdiction over corporation so as to permit
enforcement in the United States of a Dutch default judgment entered against the
corporation in breach of contract action.
[3] Judgment 228 830.1
228 Judgment
228XVII Foreign Judgments
228k830 Judgments of Courts of Foreign Countries
228k830.1 k. In General. Most Cited Cases
(Formerly 228k830)
Dutch statute that requires that when a foreign defendant is named in a case that
will be tried in the Netherlands, process notifying defendant must be served on the
Dutch Department of Foreign Affairs, but which contains no provision requiring the
Department to follow up by serving notice to the foreign defendant, provides
insufficient assurances of actual notice to comport with American due process
requirements, and thus Dutch default judgment entered against Illinois corporation
could not be enforced in United States courts.
*78 John C. Loring, Chicago, Ill., for defendant-appellant.
Thomas B. Cassidy, Martin, Craig, Chester & Sonnenschein, Chicago, Ill., for
plaintiff-appellee.
Before SPRECHER, BAUER and WOOD, Circuit Judges.
HARLINGTON WOOD, Jr., Circuit Judge.
This diversity case involves the appeal of defendant Automark Industries, Inc. (“
Automark”), a corporation doing business in Illinois, from the district court's
determination on motion for summary judgment in favor of plaintiff Hendrik Koster,
a citizen of the Netherlands. The district court's decision granted enforcement of a
default judgment obtained in district court in Amsterdam by Koster against
Automark in a case brought on a claimed breach of contract. Finding that
Automark did not have sufficient contact with the Netherlands to vest that country's
courts with personal jurisdiction over Automark so as to permit enforcement of the
default judgment in United States courts, we reverse.
[1] Whether a court may, under American law, assert jurisdiction over a foreign
defendant-company depends upon whether the company “purposefully avails itself
of the privilege of conducting activities within the forum State.” Shaffer v. Heitner,
433 U.S. 186, 216, 97 S.Ct. 2569, 2586, 53 L.Ed.2d 683 (1977). This means that
the company must pass a threshold of minimum contacts with the forum state so
that it is fair to subject it to the jurisdiction of that state's courts. World-Wide
Volkswagen Corp. v. Woodson, 444 U.S. 286, 292, 100 S.Ct. 559, 564, 62 L.Ed.2d
490 (1980); International Shoe v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed.
95 (1945).
[2] The parties agree that the document alleged to be Automark's contract to
purchase up to 600,000 units of Koster's valve cap gauges was executed in Milan,
Italy.[FN1] The Milan meeting between Koster and Automark followed preliminary
Page 51 of 102 CONFLICT OF LAWS 3D 2/08-09
inquiry and discussion between the two parties during a period of five months. The
discussion was carried on via mail between Koster's Amsterdam office and
Automark's Illinois address. Automark began the exchange of letters in June,
1970 with a one-sentence request for “descriptive material and prices” of Koster's
product. Automark subsequently expressed interest in marketing the tire gauges,
but stated that it needed to know the details of such important factors as Koster's
relationship with the Swiss factory that produced the gauges, Koster's present
patent rights, and his rights to worldwide distribution of the total output of the Swiss
factory. Automark expressly disclaimed willingness to negotiate and conclude a
contract through the mail.[FN2] In early*79 November, 1970, Automark's vice-
president, J. L. Bohmrich, wrote that he would like to meet with Koster in
Amsterdam or at the Swiss factory during a European trip Bohmrich planned to take
later in the month. Koster replied that he would instead be willing to meet in Milan,
and would telephone Bohmrich's Illinois office to make arrangements. As noted, the
Milan meeting resulted in execution of the document involved in this case. So far as
the record shows, Automark never ordered Koster's gauges, and Koster never
shipped any gauges.
FN1. There apparently was some disagreement before the district court as
to where this document was executed, since it bears the handwritten
words “Scope ( Koster's company) Amsterdam, Neth.” The briefs of both
parties on appeal agree that the document was executed in Milan, Italy.
The text of the handwritten document, which serves as the alleged
contract, reads as follows:
“We agree to purchase up to 600,000 pieces of Amico valve cap gauges
bulkpacked from you at $0.11 each C.I.T. N.Y. within the 12 mos. period
beginning 1/1/71.”
It is signed by Automark's vice-president. It is questionable whether the
document represents a valid contract, as it contains no corresponding
promise by Koster. In light of our disposition of this case, however, we
need not reach the question of the sufficiency of the document to satisfy
the prerequisites to a binding contract.
FN2. Automark's letter to Koster of September 22, 1970 reads in
pertinent part as follows:
Anyone who will conclude a major international marketing program by
mail is not, in our opinion, worth doing business with and we wonder why
you are so anxious to sign up anyone so long as it is done in a matter of
days.
If and when we get into a program with you, it will be because we have
met you personally and come to a meeting of the minds and because we
have subsequently committed major marketing funds and energies to an
AMICO program.
If you are interested in a “hit and miss”, “catch as catch can” program
(unfortunately these are American colloquial expressions but I do not
H. CASES INVOLVING THE INTERNET Page 52 of 102
know what to replace them with), then we have no place in your program
and you should proceed without us.
The business contacts described above are insufficient to reach the minimum level
needed to satisfy due process requirements prerequisite to enforcement of the
Dutch default judgment. A recent opinion of this court, Lakeside Bridge & Steel Co.
v. Mountain State Construction Co., 597 F.2d 596 (7th Cir. 1979), thoroughly
analyzed the due process requirements of minimum contacts in concluding that a
federal court sitting in a diversity case arising in Wisconsin did not have personal
jurisdiction of a West Virginia defendant. Whether it be Wisconsin or the
Netherlands, the standard of minimum contacts is the same. See generally
Somportex Limited v. Philadelphia Chewing Gum Corp., 453 F.2d 435, 440 (3d Cir.
1971), cert. denied 405 U.S. 1017, 92 S.Ct. 1294, 31 L.Ed.2d 479 (1972). The facts
in the Lakeside case were similar to those involved here, and if anything, presented
a more compelling case for recognizing personal jurisdiction.
In Lakeside, the defendant construction company had ordered structural assemblies
from plaintiff Lakeside, a Wisconsin company. Several letters and telephone calls
had been exchanged between the two businesses, and a contract concluded by
mail. The assemblies were delivered, and Lakeside sued when the defendant
withheld part of the purchase price. The court assumed that the defendant believed
that Lakeside would perform the contract in Wisconsin, the forum state. Focusing on
the nature and quality of the contacts between the two companies, the court
nevertheless concluded that Wisconsin could not assert jurisdiction over the West
Virginia company because the defendant's Wisconsin contacts did not show that it
“purposefully avail(ed) itself of the privilege of conducting activities within the forum
state.”597 F.2d at 603.
The document at issue in the case before us was executed in Italy and involved the
purchase of goods manufactured in Switzerland. While the document contains
language that might be construed as an agreement to pay, which payment Koster
claims was to take place in the Netherlands, such a promise even if so interpreted is
not sufficient contact to confer personal jurisdiction. Kulko v. California Superior
Court, 436 U.S. 84, 93 n.6, 98 S.Ct. 1690, 1697, n.6, 56 L.Ed.2d 132 (1978) (child-
support payments required under separation agreement to spouse living in
California insufficient contact to confer jurisdiction on that state).
In comparison to the facts in the Lakeside case, Automark's only contacts with the
Netherlands were eight letters, and possibly a telegram and a transatlantic
telephone call all preliminary to the meeting in Italy. In Lakeside, 597 F.2d at 604,
the court notes that such contacts cannot be held to satisfy jurisdictional
requirements, otherwise “(u)se of the interstate telephone and mail service to
communicate with (an out-of-state) plaintiff, if constituting contacts supporting
jurisdiction, would give jurisdiction to any state into which communications were
directed.”Such a result would make virtually every business subject to suit in any
state with which it happened to communicate in some manner. That clearly would
not satisfy the demands of due process.
Lakeside emphasizes that “the best interests of the international and state systems”
of commerce should be considered when making determinations about minimum
contacts in individual cases. 597 F.2d at 603, quoting Restatement (Second) of
CONFLICT OF LAWS 3D 2/08-09
Conflict of Laws s 37, Comment a (1971). This consideration weighs in favor of
Automark, since it “is based on the proposition that ‘(a) state should not improperly
impinge upon the interests of other states by trying in its *80 courts a case with
which it has no adequate relationship.’” 597 F.2d at 603, quoting Restatement,
supra, s 24, Comment b. The Netherlands lacks an adequate relationship to
defendant's presence and conduct to justify trial of the case in that country. The
interests of international business are better served by protecting potential
international purchasers from being unreasonably called to defend suits
commenced in foreign courts which lack jurisdiction according to our recognized
standards of due process. See 597 F.2d at 603 n.12.
Moreover, the Lakeside opinion stresses that where the nature of a defendant's
business contact in the forum state does not involve activities dangerous to persons
and property, the propriety of vesting personal jurisdiction in that state must be
considered in light of its relationship with the defendant other than that at issue in
the lawsuit. 597 F.2d at 603. The purchase and shipment of valve gauges is not a
dangerous activity. And here, there are no allegations that Automark had any
relationship with the Netherlands beyond the letters, telegram and telephone call
involved in its business contact with Koster.
On these facts, Automark did not have the minimum contacts necessary to show
that it purposefully utilized the privilege to conduct business activities in the
Netherlands sufficient to confer on that country's courts personal jurisdiction over
Automark. The district court concluded that cases decided under the Illinois long-
arm statute, Ill.Rev.Stat.Ch. 110, s 17(a), supported his finding that Automark
satisfied the requirement of minimum contacts to support the Dutch court's
jurisdiction. We disagree. We note that the Illinois courts have held that the state
long-arm statute is intended to assert jurisdiction over non-resident defendants only
“to the extent permitted by the due process clause.” Colony Press, Inc. v. Fleeman,
17 Ill.App.3d 14, 19, 308 N.E.2d 78 (1974). The Lakeside court's discussion of the
application of Wisconsin's long-arm statute to a decision on the basis of federal due
process rights is pertinent. The court noted that the Wisconsin law “was intended by
the state legislature to reach only so far as permitted by the due process clause....
In these circumstances we are interpreting the statute, not ruling on its
constitutionality, when we decide the due process question; yet we are of course
not bound by the (state courts') determination of that federal question”. 597 F.2d at
599. Likewise, in the case before us we are not bound by Illinois judicial
determinations on the requirements of due process to support personal jurisdiction.
This is especially true where we are considering the powers of a court in a
jurisdiction other than Illinois.
At any rate, the cases relied upon by the district court for its determination that the
Dutch court was vested with personal jurisdiction do not detract from our holding
here. Thus, in Colony Press, supra, the state court noted that the “essential points”
for purposes of its determination that an Ohio corporation was subject to a suit
brought in Illinois courts by an Illinois company were that the contract was accepted
in Illinois and performance thereunder was expected to occur wholly within that
state. 17 Ill.App.3d at 18, 308 N.E.2d 78. As our discussion indicates, the document
involved in this case was executed in Italy, and the goods to which it related were to
be produced in Switzerland: the Netherlands was not the situs of either activity.
H. CASES INVOLVING THE INTERNET Page 53 of 102
And the other case relied upon by the district judge, Cook Associates, Inc. v.
Colonial Broach & Machine Co., 14 Ill.App.3d 965, 304 N.E.2d 27 (1973), dealt with
a service contract involving an out-of-state company that had used the services of
an Illinois employment agency via a single telephone call. This satisfied the
requirements for minimum contacts under the circumstances of that case since “that
call was all that was necessary for defendant to achieve its (business) purpose”, i.
e., obtaining the names of prospective employees. 14 Ill.App.3d at 970, 304 N.E.2d
27. The conclusion and performance of the contract were carried out in Illinois via
that telephone call, unlike the situation before us where neither activity occurred in
the Netherlands.
*81 [3] Absent personal jurisdiction over Automark in the Dutch case that resulted
in a default judgment, the courts of this country lack jurisdiction to enforce the
foreign default judgment. The decision of the district court accordingly is reversed
and the case is remanded with directions to dismiss the complaint. [FN3]
FN3. Automark raised another issue which because of our resolution of
the case becomes a collateral matter.
Automark contends that the Dutch statute governing service of process
on defendants who reside in foreign countries provides insufficient
assurances of actual notice to comport with American due process
requirements. Absence of personal jurisdiction in the Netherlands courts
would prevent a court in this country from enforcing a judgment rendered
in the Netherlands. Hilton v. Guyot, 159 U.S. 113, 184, 202, 16 S.Ct.
139, 151, 158, 40 L.Ed. 95 (1895). The provisions of the Dutch statute
that are pertinent here require that when a foreign defendant is named in
a case that will be tried in the Netherlands, process notifying the
defendant must be served on the Dutch Department of Foreign Affairs.
The Dutch statute, as it appears in the record, contains no provision
requiring the Department to follow up by serving notice to the foreign
defendant. The issue of service is of particular significance in this case
because, although a summons apparently was mailed, Automark insists
it never received notice of the Dutch lawsuit and thus was unable to
defend its interests in the case that resulted in default.
In a somewhat analogous situation, many states in this country have
statutory provisions whereby notice of a lawsuit arising from an
automobile accident in the forum state may be served on a non-resident
defendant by delivery to the forum state's Secretary of State. Under that
procedure, due process requires an additional step. The Secretary in
turn must serve notice on the defendant through certified mail or other
means reasonably calculated to result in actual notice. Wuchter v.
Pizzutti, 276 U.S. 13, 19, 48 S.Ct. 259, 260, 72 L.Ed. 446 (1928).
The district court stated, quite correctly, that certified mail, the method
used in the case before us, generally is sufficient to fulfill due process
requirements regardless of actual notice. While this analysis is fine so
far as it goes, it ignores the Wuchter conclusion that a statutory provision
is not reasonably calculated to provide notice unless its terms relating to
the sending of notice are mandatory. Thus, in Wuchter, even though the
CONFLICT OF LAWS 3D 2/08-09
 defendant received actual notice of the lawsuit when the forum state's
Secretary in fact mailed the summons, “(n)ot having been directed by
the statute (actual notice via the Secretary's mailing) cannot, therefore,
supply constitutional validity to the statute or to service under it.” 276
U.S. at 24, 48 S.Ct. at 262. Here, there is nothing in the Dutch statute
that requires the Dutch Department of Foreign Affairs to serve process
on a foreign defendant by certified mail or any other reasonable means.
That the Department as a matter of practice may exercise its discretion
to serve process in some reasonable manner is not dispositive, since
“(t)he right of a citizen to due process of law must rest upon a basis
more substantial than favor or discretion.” Roller v. Holly, 176 U.S. 306,
409, 20 S.Ct. 410, 418, 44 L.Ed. 520 (1900). Compare Boivin v. Talcott,
102 F.Supp. 979 (N.D.Ohio 1951) (refusing to enforce Canadian default
judgment where actual notice but no mandatory form of serving process
other than discretion of Canadian court). An affidavit appended to
Koster's brief on appeal states that “Dutch law” requires that the
Department serve the summons on a defendant once it receives notice
of the lawsuit. The conclusory and vague terms of the affidavit render it
of no use in dealing with the issue of the statute's requirements, since
the affidavit does not say whether the “Dutch law” referred to is
delineated in a part of the statute not in the record, is a formal regulation
or body of case law, or is an informal matter of practice.

Under these circumstances the Dutch default judgment could not be

enforced in our courts.

C.A.Ill., 1981.
Koster v. Automark Industries, Inc.
640 F.2d 77

END OF DOCUMENT

H. CASES INVOLVING THE INTERNET Page 54 of 102 CONFLICT OF LAWS 3D 2/08-09

 Supreme Court of the United States 349BI(C) Trading and Markets
Fritz SCHERK, Petitioner, 349BI(C)7 Fraud and Manipulation
v. 349Bk60.34 k. Existence of Private Cause of Action. Most Cited
ALBERTO-CULVER COMPANY. Cases
No. 73-781. (Formerly 349Bk131, 349Bk120)
Statute respecting use of fraudulent devices in connection with sale and purchase
Argued April 29, 1974. of securities and rule promulgated thereunder create implied private cause of
Decided June 17, 1974. action. Securities Exchange Act of 1934, § 10(b), 15 U.S.C.A. § 78j(b).
Rehearing Denied, Oct. 15, 1974.
[3] 512
See 419 U.S. 885, 95 S.Ct. 157.
25T Alternative Dispute Resolution
Action was brought by American company, purchaser of European business 25TV Foreign Dispute Resolution Proceedings
entities, against German citizen, as seller of the business entities, to recover 25Tk512 k. International Arbitration Organizations. Most Cited Cases
damages and other relief based on claim that purchaser had been defrauded in (Formerly 33k3.3 Arbitration, 95k285(2))
violation of the Securities Exchange Act in connection with representations
concerning trademarks which were transferred as part of sale. The seller sought to 414
stay proceedings while parties arbitrated dispute before the International Chamber
of Commerce tribunal as provided by contract as the means of settling any and all 25T Alternative Dispute Resolution
controversies arising under agreement or for breach thereof. The United States 25TII Arbitration
District Court for the Northern District of Illinois, Eastern Division, entered order 25TII(I) Exchanges and Dealer Associations
refusing to stay arbitration and the seller appealed. The United States Court of 25Tk411 Relations Between Customer-Investors and Broker-Dealers
Appeals for the Seventh Circuit, 484 F.2d 611, affirmed, and certiorari was granted. 25Tk414 k. Performance, Breach, Enforcement, and Contest of
The United States Supreme Court, Mr. Justice Stewart, held that in the context of Agreement. Most Cited Cases
the international agreement which the purchase and sale of business represented (Formerly 33k91 Arbitration, 160k11(11.1), 160k11(11))
the arbitration clause would be enforced. Where American company purchased from German citizen European business
entities under contract which was negotiated in Europe and United States, which
Reversed and remanded. was signed and closed in Europe and which provided that any controversy arising
out of agreement or breach thereof would be referred to arbitration before the
Mr. Justice Douglas filed a dissenting opinion and Mr. Justice Brennan, Mr. Justice International Chamber of Commerce in Paris, arbitration clause would be enforced
White and Mr. Justice Marshall concurred. with respect to claims in suit by American company for damages and other relief
contending that seller's alleged fraudulent representations concerning transferred
West Headnotes trademarks violated antifraud provisions of Securities Exchange Act of 1934 and
rule promulgated thereunder. 9 U.S.C.A. §§ 1 et seq., 2, 3; Securities Exchange Act
[1] Commerce 83 80.5 of 1934, §§ 10(b), 27, 29(a), 15 U.S.C.A. §§ 78j(b), 78aa, 78cc(a); Securities Act of
1933, § 14, 15 U.S.C.A. § 77n.
83 Commerce
83II Application to Particular Subjects and Methods of Regulation [4] 251
83II(I) Civil Remedies
83k80.5 k. Arbitration. Most Cited Cases 25T Alternative Dispute Resolution
(Formerly 95k2921/2, 95k292) 25TII Arbitration
American company's purchase of European business entities under contract 25TII(F) Arbitration Proceedings
negotiated both in Europe and United States involved commerce with foreign 25Tk251 k. Mode and Course of Proceedings in General. Most Cited
nations, so that United States Arbitration Act clearly covered sale agreement Cases
providing for arbitration of disputes. 9 U.S.C.A. §§ 1 et seq., 2, 3. (Formerly 33k31 Arbitration)
Agreement to arbitrate before specified tribunal is, in effect, a specialized kind of
[2] Securities Regulation 349B 60.34 forum selection clause that posits not only situs of suit but also procedure to be
used in resolving dispute.
349B Securities Regulation
349BI Federal Regulation [5] Contracts 95 94(1)
H. CASES INVOLVING THE INTERNET Page 55 of 102 CONFLICT OF LAWS 3D 2/08-09

95 Contracts
95I Requisites and Validity
95I(E) Validity of Assent
95k94 Fraud and Misrepresentation
95k94(1) k. In General. Most Cited Cases
Contracts 95 127(4)
95 Contracts
95I Requisites and Validity
95I(F) Legality of Object and of Consideration
95k127 Ousting Jurisdiction or Limiting Powers of Court
95k127(4) k. Agreement as to Place of Bringing Suit; Forum Selection
Clauses. Most Cited Cases
Rule that forum-selection clauses of contract should be given full effect when a
freely negotiated private international agreement is unaffected by fraud does not
mean that any time a dispute arising out of transaction is based on allegation of
fraud the clause is unenforceable, but rather that an arbitration or forum-selection
clause in contract is not enforceable if inclusion of that clause in contract was the
product of fraud or coercion.
**2450 *506 SyllabusFN*
FN* The syllabus constitutes no part of the opinion of the Court but has
been prepared by the Reporter of Decisions for the convenience of the
reader. See United States v. Detroit Timber & Lumber Co., 200 U.S. 321,
337, 26 S.Ct. 282, 287, 50 L.Ed. 499.
Respondent, an American manufacturer based in Illinois, in order to expand its
overseas operations, purchased from petitioner, a German citizen, three enterprises
owned by him and organized under the laws of Germany and Liechtenstein,
together with all trademark rights of these enterprises. The sales contract, which
was negotiated in the United States, England, and Germany, signed in Austria, and
closed in Switzerland, contained express warranties by petitioner that the
trademarks were unencumbered and a clause providing that ‘any controversy or
claim (that) shall arise out of this agreement or the breach thereof’ would be
referred to arbitration before the International Chamber of Commerce in Paris,
France, and that Illinois laws would govern the agreement and its interpretation and
performance. Subsequently, after allegedly discovering that the trademarks were
subject to substantial encumbrances,**2451 respondent offered to rescind the
contract, but when petitioner refused, respondent brought suit in District Court or
damages and other relief, contending that petitioner's fraudulent representations
concerning the trademark rights violated s 10(b) of the Securities Exchange Act of
1934 and Rule 10b-5 promulgated thereunder. Petitioner moved to dismiss the
action or alternatively to stay the action pending arbitration, but the District Court
denied the motion to dismiss and, as sought by respondent, preliminarily enjoined
petitioner from proceeding with arbitration, holding, in reliance on Wilko v. Swan,
346 U.S. 427, 74 S.Ct. 182, 98 L.Ed. 168, that the arbitration clause was
unenforceable. The Court of Appeals affirmed. Held: The arbitration clause is to be
H. CASES INVOLVING THE INTERNET Page 56 of 102
respected and enforced by federal courts in accord with the explicit provisions of the
United States Arbitration Act that an arbitration agreement, such as is here involved,
‘shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law
or in equity for the revocation of any contract.’9 U.S.C. ss 1, 2.Wilko v. Swan, supra,
distinguished. Pp. 2452-2458.
(a) Since uncertainty will almost inevitably exist with respect to any contract, such
as the one in question here, with substantial *507 contacts in two or more countries,
each with its own substantive laws and conflict-of-laws rules, a contractual provision
specifying in advance the forum for litigating disputes and the law to be applied is
an almost indispensable precondition to achieving the orderliness and predictability
essential to any international business transaction. Such a provision obviates the
danger that a contract dispute might be submitted to a forum hostile to the interests
of one of the parties or unfamiliar with the problem area involved. Pp. 2455-2456.
(b) In the context of an international contract, the advantages that a security buyer
might possess in having a wide choice of American courts and venue in which to
litigate his claims of violations of the securities laws, become chimerical, since an
opposing party may by speedy resort to a foreign court block or hinder access to the
American court of the buyer's choice. Pp. 2456-2457.
(c) An agreement to arbitrate before a specified tribunal is, in effect, a specialized
kind of forum-selection clause that posits not only the situs of suit but also the
procedure to be used in resolving the dispute, and the invalidation of the arbitration
clause in this case would not only allow respondent to repudiate its solemn promise
but would, as well, reflect a ‘parochial concept that all disputes must be resolved
under our laws and in our courts.’The Bremen v. Zapata Off-Shore Co., 407 U.S. 1,
9, 92 S.Ct. 1907, 1912, 32 L.Ed.2d 513. P. 2457.
484 F.2d 611, reversed and remanded.
Robert F. Hanley, Evanston, Ill., for petitioner.
Gerald Aksen for the American Arbitration Association, as amicus curiae, by special
leave of Court.
Francis J. Higgins, Chicago, Ill., for respondent.
*508 Mr. Justice STEWART delivered the opinion of the Court.
Alberto-Culver Co., the respondent, is an American company incorporated in
Delaware with its principal office in Illinois. It manufactures and distributes toiletries
and hair products in this country and abroad. During the 1960's Alberto-Culver
decided to expand its overseas operations, and as part of this program it
approached the petitioner Fritz Scherk, a German citizen residing at the time of trial
in Switzerland. Scherk was the owner of three interrelated business entities,
organized under the laws of Germany and Liechtenstein, that were engaged in the
manufacture of toiletries and the licensing of trademarks for such toiletries. An initial
contact with Scherk was made by a representative of Alberto-Culver in Germany in
June **2452 1967, and negotiations followed at further meetings in both Europe and
the United States during 1967 and 1968. In February 1969 a contract was signed in
Vienna, Austria, which provided for the transfer of the ownership of Scherk's
enterprises to Alberto-Culver, along with all rights held by these enterprises to
trademarks in cosmetic goods. The contract contained a number of express
CONFLICT OF LAWS 3D 2/08-09
warranties whereby Scherk guaranteed the sole and unencumbered ownership of
these trademarks. In addition, the contract contained an arbitration clause providing
that ‘any controversy or claim (that) shall arise out of this agreement or the breach
thereof’ would be referred to arbitration before the International Chamber of
Commerce in Paris, France, and that ‘(t)he laws of the State of Illinois, U.S.A. shall
apply to and govern this agreement, its interpretation and performance.'FN1
FN1. The arbitration clause relating to the transfer of one of Scherk's
business entities, similar to the clauses covering the other two, reads in its
entirety as follows:
‘The parties agree that if any controversy or claim shall arise out of this
agreement or the breach thereof and either party shall request that the
matter shall be settled by arbitration, the matter shall be settled exclusively
by arbitration in accordance with the rules then obtaining of the
International Chamber of Commerce, Paris, France, by a single arbitrator,
if the parties shall agree upon one, or by one arbitrator appointed by each
party and a third arbitrator appointed by the other arbitrators. In case of
any failure of a party to make an appointment referred to above within four
weeks after notice of the controversy, such appointment shall be made by
said Chamber. All arbitration proceedings shall be held in Paris, France,
and each party agrees to comply in all respects with any award made in
any such proceeding and to the entry of a judgment in any jurisdiction
upon any award rendered in such proceeding. The laws of the State of
Illinois, U.S.A. shall apply to and govern this agreement, its interpretation
and performance.’
*509 The closing of the transaction took place in Geneva, Switzerland, in June
1969. Nearly one year later Alberto-Culver allegedly discovered that the trademark
rights purchased under the contract were subject to substantial encumbrances that
threatened to give others superior rights to the trademarks and to restrict or
preclude Alberto-Culver's use of them. Alberto-Culver thereupon tendered back to
Scherk the property that had been transferred to it and offered to rescind the
contract. Upon Scherk's refusal, Alberto-Culver commenced this action for
damages and other relief in a Federal District Court in Illinois, contending that
Scherk's fraudulent representations concerning the status of the trademark rights
constituted violations of s 10(b) of the Securities Exchange Act of 1934, 48 Stat.
891, 15 U.S.C. s 78j(b), and Rule 10b-5 promulgated thereunder, 17 CFR s
240.10b-5.
In response, Scherk filed a motion to dismiss the action for want of personal and
subject-matter jurisdiction as well as on the basis of forum non conveniens, or,
alternatively, to stay the action pending arbitration in Paris pursuant to the
agreement of the parties. Alberto-*510 Culver, in turn, opposed this motion and
sought a preliminary injunction restraining the prosecution of arbitration
proceedings.FN2 On December 2, 1971, the District Court denied Scherk's motion to
dismiss, and, on January 14, 1972, it granted a preliminary order enjoining Scherk
from proceeding with arbitration. In taking these actions the court relied entirely on
this Court's decision in Wilko v. Swan, 346 U.S. 427, 74 S.Ct. 182, 98 L.Ed. 168,
which held that an agreement to arbitrate could not preclude a buyer of a security
from seeking a judicial remedy under the Securities Act of 1933, in view of the
H. CASES INVOLVING THE INTERNET Page 57 of 102
language of s 14 of that Act, barring ‘(a)ny condition, stipulation, or provision binding
any person acquiring any security to **2453 waive compliance with any provision of
this subchapter . . ..’ 48 Stat. 84, 15 U.S.C. s 77n.FN3 The Court of Appeals for the
Seventh Circuit, with one judge dissenting, affirmed, upon what it considered the
controlling authority of the Wilko decision. 484 F.2d 611. Because of the importance
of the question presented we granted Scherk's petition for a writ of certiorari. 414
U.S. 1156, 94 S.Ct. 913, 39 L.Ed.2d 108.
FN2. Scherk had taken steps to initiate arbitration in Paris in early 1971.
He did not, however, file a formal request for arbitration with the
International Chamber of Commerce until November 9, 1971, almost five
months after the filing of Alberto-Culver's complaint in the Illinois federal
court.
FN3. The memorandum opinion of the District Court is unreported.
I
[1] The United States Arbitration Act, now 9 U.S.C. s 1 et seq., reversing centuries
of judicial hostility to arbitration agreements,FN4 was designed to allow parties to
avoid *511 ‘the costliness and delays of litigation,’ and to place arbitration
agreements ‘upon the same footing as other contracts . . ..’H.R.Rep.No.96, 68th
Cong., 1st Sess., 1, 2 (1924); see also S.Rep.No.536, 68th Cong., 1st Sess. (1924).
Accordingly the Act provides that an arbitration agreement such as is here involved
‘shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law
or in equity for the revocation of any contract.’9 U.S.C. s 2.FN5 The Act also provides
in s 3 for a stay of proceedings in a case where a court is satisfied that the issue
before it is arbitrable under the agreement, and s 4 of the Act directs a federal court
to order parties to proceed to arbitration if there has been a ‘failure, neglect, or
refusal’ of any party to honor an agreement to arbitrate.
FN4. English courts traditionally considered irrevocable arbitration
agreements as ‘ousting’ the courts of jurisdiction, and refused to enforce
such agreements for this reason. This view was adopted by American
courts as part of the common law up to the time of the adoption of the
Arbitration Act. See H.R.Rep.No. 96, 68th Cong., 1st Sess., 1, 2 (1924);
Sturges & Murphy, Some Confusing Matters Relating to Arbitration under
the United States Arbitration Act, 17 Law & Contemp.Prob. 580.
FN5.Section 2 of the Arbitration Act renders ‘valid, irrevocable, and
enforceable’ written arbitration provisions ‘in any maritime transaction or a
contract evidencing a transaction involving commerce . . .,’ as those terms
are defined in s 1. In Bernhardt v. Polygraphic Co., 350 U.S. 198, 76 S.Ct.
273, 100 L.Ed. 199, this Court held that the stay provisions of s 3 apply
only to the two kinds of contracts specified in ss 1 and 2. Since the
transaction in this case constituted ‘commerce . . . with foreign nations,’9
U.S.C. s 1, the Act clearly covers this agreement.
In Wilko v. Swan, supra, this Court acknowledged that the Act reflects a legislative
recognition of the ‘desirability of arbitration as an alternative to the complications of
litigation,’ 346 U.S., at 431, 74 S.Ct., at 185, but nonetheless declined to apply the
CONFLICT OF LAWS 3D 2/08-09
Act's provisions. That case involved an agreement between Anthony Wilko and
Hayden, Stone & Co., a large brokerage firm, under which Wilko agreed to
purchase on margin a number of shares of a corporation's common stock. Wilko
alleged that his purchase of the stock was induced by false representations*512 on
the part of the defendant concerning the value of the shares, and he brought suit for
damages under s 12(2) of the Securities Act of 1933, 15 U.S.C. s 77l. The
defendant responded that Wilko had agreed to submit all controversies arising out
of the purchase to arbitration, and that this agreement, contained in a written margin
contract between the parties, should be given full effect under the Arbitration Act.
The Court found that ‘(t)wo policies, not easily reconcilable, are involved in this
case.’ 346 U.S., at 438, 74 S.Ct., at 188. On the one hand, the Arbitration Act
stressed ‘the need for avoiding the delay and expense of litigation,’ id., at 431, 74
S.Ct., at 185, and directed that such agreements be ‘valid, irrevocable, and
enforceable’ in federal courts. On the other hand, the Securities Act of 1933 was
‘(d)esigned to protect investors' and to require ‘issuers, underwriters, and dealers to
make full and fair disclosure of the character of securities sold in interstate and
foreign commerce and to prevent fraud in their sale,’ by creating ‘a special right to
recover for **2454 misrepresentation . . ..’ 346 U.S., at 431, 74 S.Ct., at 184
(footnote omitted). In particular, the Court noted that s 14 of the Securities Act, 15
U.S.C. s 77n, provides:
‘Any condition, stipulation, or provision binding any person acquiring any security to
waive compliance with any provision of this subchapter or of the rules and
regulations of the Commission shall be void.’
The Court ruled that an agreement to arbitrate ‘is a ‘stipulation,’ and (that) the right
to select the judicial forum is the kind of ‘provision’ that cannot be waived under s 14
of the Securities Act.'FN6 346 U.S., at 434-435, 74 S.Ct., at 186.*513 Thus, Wilko's
advance agreement to arbitrate any disputes subsequently arising out of his
contract to purchase the securities was unenforceable under the terms of s 14 of
the Securities Act of 1933.
FN6. The arbitration agreement involved in Wilko was contained in a
standard form margin contract. But see the dissenting opinion of Mr.
Justice Frankfurter, 346 U.S. 427, 439, 440, 74 S.Ct. 182, 189, concluding
that the record did not show that ‘the plaintiff (Wilko) in opening an account
had no choice but to accept the arbitration stipulation . . ..’ The petitioner
here would limit the decision in Wilko to situations where the parties exhibit
a disparity of bargaining power, and contends that, since the negotiations
leading to the present contract took place over a number of years and
involved the participation on both sides of knowledgeable and
sophisticated business and legal experts, the Wilko decision should not
apply. See also the dissenting opinion of Judge Stevens of the Court of
Appeals in this case, 484 F.2d 611, 615. Because of our disposition of this
case on other grounds, we need not consider this contention.
Alberto-Culver, relying on this precedent, contends that the District Court and
Court of Appeals were correct in holding that its agreement to arbitrate disputes
arising under the contract with Scherk is similarly unenforceable in view of its
contentions that Scherk's conduct constituted violations of the Securities Exchange
H. CASES INVOLVING THE INTERNET Page 58 of 102
Act of 1934 and rules promulgated thereunder. For the reasons that follow, we
reject this contention and hold that the provisions of the Arbitration Act cannot be
ignored in this case.
[2] At the outset, a colorable argument could be made that even the semantic
reasoning of the Wilko opinion does not control the case before us. Wilko
concerned a suit brought under s 12(2) of the Securities Act of 1933, which provides
a defrauded purchaser with the ‘special right’ of a private remedy for civil liability,
346 U.S., at 431, 74 S.Ct., at 184. There is no statutory counterpart of s 12(2) in the
Securities Exchange Act of 1934, and neither s 10(b) of that Act nor Rule 10b-5
speaks of a private remedy to redress violations of the kind alleged here. While
federal case law has established that s 10(b) and Rule 10b-5 create an implied
private cause of action, see *514 6 L. Loss, Securities Regulation 3869-3873 (1969)
and cases cited therein; cf. J.I. Case Co. v. Borak, 377 U.S. 426, 84 S.Ct. 1556, 12
L.Ed.2d 423, the Act itself does not establish the ‘special right’ that the Court in
Wilko found significant. Furthermore, while both the Securities Act of 1933 and the
Securities Exchange Act of 1934 contain sections barring waiver of compliance with
any ‘provision’ of the respective Acts, FN7 certain of the ‘provisions' of the 1933 Act
that the Court held could not be waived by Wilko's agreement to arbitrate find no
counterpart in the 1934 Act. In particular, **2455 the Court in Wilko noted that the
jurisdictional provision of the 1933 Act, 15 U.S.C. s 77v, allowed a plaintiff to bring
suit ‘in any court of competent jurisdiction-federal or state-and removal from a state
court is prohibited.’ 346 U.S., at 431, 74 S.Ct., at 184. The analogous provision of
the 1934 Act, by contrast, provides for suit only in the federal district courts that
have ‘exclusive jurisdiction,’ 15 U.S.C. s 78aa, thus significantly restricting the
plaintiff's choice of forum.FN8
FN7. Section 14 of the Securities Act of 1933, 15 U.S.C. s 77n, provides
as follows:
‘Any condition, stipulation, or provision binding any person acquiring any
security to waive compliance with any provision of this subchapter or of the
rules and regulations of the Commission shall be void.’
Section 29(a) of the Securities Exchange Act of 1934, 15 U.S.C. s 78cc(a),
provides:
‘Any condition, stipulation, or provision binding any person to waive
compliance with any provision of this chapter or of any rule or regulation
thereunder, or of any rule of an exchange required thereby shall be
void.’While the two sections are not identical, the variations in their wording
seem irrelevant to the issue presented in this case.
FN8. We do not reach, or imply any opinion as to, the question whether the
acquisition of Scherk's businesses was a security transaction within the
meaning of s 10(b) of the Securities Exchange Act of 1934, and Rule 10b-
5. Although this important question was considered by the District Court
and the Court of Appeals, and although the dissenting opinion, post, p.
2458, seems to consider it controlling, the petitioner did not assign the
adverse ruling on the question as error and it was not briefed or argued in
this Court.
CONFLICT OF LAWS 3D 2/08-09

*515 [3] Accepting the premise, however, that the operative portions of the
language of the 1933 Act relied upon in Wilko are contained in the Securities
Exchange Act of 1934, the respondent's reliance on Wilko in this case ignores the
significant and, we find, crucial differences between the agreement involved in
Wilko and the one signed by the parties here. Alberto-Culver's contract to purchase
the business entities belonging to Scherk was a truly international agreement.
Alberto-Culver is an American corporation with its principal place of business and
the vast bulk of its activity in this country, while Scherk is a citizen of Germany
whose companies were organized under the laws of Germany and Liechtenstein.
The negotiations leading to the signing of the contract in Austria and to the closing
in Switzerland took place in the United States, England, and Germany, and involved
consultations with legal and trademark experts from each of those countries and
from Liechtenstein. Finally, and most significantly, the subject matter of the contract
concerned the sale of business enterprises organized under the laws of and
primarily situated in European countries, whose activities were largely, if not
entirely, directed to European markets.
Such a contract involves considerations and policies significantly different from
those found controlling in Wilko.In Wilko, quite apart from the arbitration provision,
there was no question but that the laws of the United States generally, and the
federal securities laws in particular, would govern disputes arising out of the stock-
purchase agreement. The parties, the negotiations, and the subject matter of the
contract were all *516 situated in this country, and no credible claim could have
been entertained that any international conflict-of-laws problems would arise. In this
case, by contrast, in the absence of the arbitration provision considerable
uncertainty existed at the time of the agreement, and still exists, concerning the law
applicable to the resolution of disputes arising out of the contract.FN9
FN9. Together with his motion for a stay pending arbitration, Scherk
moved that the complaint be dismissed because the federal securities laws
do not apply to this international transaction, cf. Leasco Data Processing
Equipment Corp. v. Maxwell, 468 F.2d 1326 (CA2 1972). Since only the
order granting the injunction was appealed, this contention was not
considered by the Court of Appeals and is not before this Court.
Such uncertainty will almost inevitably exist with respect to any contract touching
two or more countries, each with its own substantive laws and conflict-of-laws rules.
A contractual provision specifying in advance the forum in which disputes shall be
litigated and the law to be applied is, therefore, an almost indispensable
precondition to achievement of the orderliness and predictability essential to any
international business transaction. Furthermore, such a provision obviates the
danger that a dispute under the agreement might be submitted to a forum hostile to
the interests of one of **2456 the parties or unfamiliar with the problem area
involved.FN10
FN10. See Quigley, Accession by the United States to the United Nations
Convention on the Recognition and Enforcement of Foreign Arbitral
Awards, 70 Yale L.J. 1049, 1051 (1961). For example, while the arbitration
agreement involved here provided that the controversies arising out of the
agreement be resolved under ‘(t)he laws of the State of Illinois,’ supra, n.
H. CASES INVOLVING THE INTERNET Page 59 of 102
1, a determination of the existence and extent of fraud concerning the
trademarks would necessarily involve an understanding of foreign law on
that subject.
A parochial refusal by the courts of one country to enforce an international
arbitration agreement would not only frustrate these purposes, but would invite *517
unseemly and mutually destructive jockeying by the parties to secure tactical
litigation advantages. In the present case, for example, it is not inconceivable that if
Scherk had anticipated that Alberto-Culver would be able in this country to enjoin
resort to arbitration he might have sought an order in France or some other country
enjoining Alberto-Culver from proceeding with its litigation in the United States.
Whatever recognition the courts of this country might ultimately have granted to the
order of the foreign court, the dicey atmosphere of such a legal no-man's-land
would surely damage the fabric of international commerce and trade, and imperil
the willingness and ability of businessmen to enter into international commercial
agreements.FN11
FN11. The dissenting opinion argues that our conclusion that Wilko is
inapplicable to the situation presented in this case will vitiate the force of
that decision because parties to transactions with many more direct
contacts with this country than in the present case will nonetheless be able
to invoke the ‘talisman’ of having an ‘international contract.’ Post, at 2461.
Concededly, situations may arise where the contacts with foreign countries
are so insignificant or attenuated that the holding in Wilko would
meaningfully apply. Judicial response to such situations can and should
await future litigation in concrete cases. This case, however, provides no
basis for a judgment that only United States laws and United States courts
should determine this controversy in the face of a solemn agreement
between the parties that such controversies be resolved elsewhere. The
only contact between the United States and the transaction involved here
is the fact that Alberto-Culver is an American corporation and the
occurrence of some-but by no means the greater part-of the pre-contract
negotiations in this country. To determine that ‘American standards of
fairness,’ post, at 2461, must nonetheless govern the controversy
demeans the standards of justice elsewhere in the world, and
unnecessarily exalts the primacy of United States law over the laws of
other countries.
The exception to the clear provisions of the Arbitration Act carved out by Wilko is
simply inapposite to a case such as the one before us. In Wilko the Court reasoned
*518 that ‘(w)hen the security buyer, prior to any violation of the Securities Act,
waives his right to sue in courts, he gives up more than would a participant in other
business transactions. The security buyer has a wider choice of courts and venue.
He thus surrenders one of the advantages the Act gives him . . ..’ 346 U.S., at 435,
74 S.Ct., at 187. In the context of an international contract, however, these
advantages become chimerical since, as indicated above, an opposing party may
by speedy resort to a foreign court block or hinder access to the American court of
the purchaser's choice.FN12
FN12. The dissenting opinion raises the specter that our holding today will
leave American investors at the mercy of multinational corporations with
CONFLICT OF LAWS 3D 2/08-09
 ‘vast operations around the world . . ..’ Post, at 2464. Our decision, of
course, has no bearing on the scope of the substantive provisions of the
federal securities laws for the simple reason that the question is not
presented in this case. See n. 8, supra.
Two Terms ago in The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907,
32 L.Ed.2d 513, we rejected the doctrine that a forum-selection clause of a contract,
although voluntarily adopted by the parties, will not be respected in a suit brought in
the United States “unless the selected state would provide a more convenient forum
than the state in which suit is brought.” **2457Id., at 7, 92 S.Ct., at 1912. Rather,
we concluded that a ‘forum clause should control absent a strong showing that it
should be set aside.’ Id., at 15, 92 S.Ct., at 1916. We noted that ‘much uncertainty
and possibly great inconvenience to both parties could arise if a suit could be
maintained in any jurisdiction in which an accident might occur or if jurisdiction were
left to any place (where personal or in rem jurisdiction might be established). The
elimination of all such uncertainties by agreeing in advance on a forum acceptable
to both parties is an indispensable element in international trade, commerce, and
contracting.’ Id., at 13-14, 92 S.Ct., at 1915.
*519 [4][5] An agreement to arbitrate before a specified tribunal is, in effect, a
specialized kind of forum-selection clause that posits not only the situs of suit but
also the procedure to be used in resolving the dispute.FN13 The invalidation of such
an agreement in the case before us would not only allow the respondent to
repudiate its solemn promise but would, as well, reflect a ‘parochial concept that all
disputes must be resolved under our laws and in our courts. . . . We cannot have
trade and commerce in world markets and international waters exclusively on our
terms, governed by our laws, and resolved in our courts.’ Id., at 9, 92 S.Ct., at
1912.FN14
FN13. Under some circumstances, the designation of arbitration in a
certain place might also be viewed as implicitly selecting the law of that
place to apply to that transaction. In this case, however, ‘(t)he laws of the
State of Illinois' were explicitly made applicable by the arbitration
agreement. See n. 1, supra.
FN14. In The Bremen we noted that forum-selection clauses ‘should be
given full effect’ when ‘a freely negotiated private international agreement
(is) unaffected by fraud . . ..’ 407 U.S., at 13, 12, 92 S.Ct., at 1915, 1914.
This qualification does not mean that any time a dispute arising out of a
transaction is based upon an allegation of fraud, as in this case, the clause
is unenforceable. Rather, it means that an arbitration or forum-selection
clause in a contract is not enforceable if the inclusion of that clause in the
contract was the product of fraud or coercion. Cf. Prima Paint Corp. v.
Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270.
Although we do not decide the question, presumably the type of fraud
alleged here could be raised, under Art. V of the Convention on the
Recognition and Enforcement of Foreign Arbitral Awards, see n. 15, infra,
in challenging the enforcement of whatever arbitral award is produced
through arbitration. Article V(2)(b) of the Convention provides that a
country may refuse recognition and enforcement of an award if ‘recognition
H. CASES INVOLVING THE INTERNET Page 60 of 102
or enforcement of the award would be contrary to the public policy of that
country.’
For all these reasons we hold that the agreement of the parties in this case to
arbitrate any dispute arising out of their international commercial transaction is to be
*520 respected and enforced by the federal courts in accord with the explicit
provisions of the Arbitration Act.FN15
FN15. Our conclusion today is confirmed by international developments
and domestic legislation in the area of commercial arbitration subsequent
to the Wilko decision. On June 10, 1958, a special conference of the
United Nations Economic and Social Council adopted the Convention on
the Recognition and Enforcement of Foreign Arbitral Awards. In 1970 the
United States acceded to the treaty, (1970) 3 U.S.T. 2517, T.I.A.S. No.
6997, and Congress passed Chapter 2 of the United States Arbitration Act,
9 U.S.C. s 201 et seq., in order to implement the Convention.Section 1 of
the new chapter, 9 U.S.C. s 201, provides unequivocally that the
Convention ‘shall be enforced in United States courts in accordance with
this chapter.’
The goal of the Convention, and the principal purpose underlying American
adoption and implementation of it, was to encourage the recognition and
enforcement of commercial arbitration agreements in international
contracts and to unify the standards by which agreements to arbitrate are
observed and arbitral awards are enforced in the signatory countries. See
Convention on the Recognition and Enforcement of Foreign Arbitral
Awards, S. Exec. Doc. E, 90th Cong., 2d Sess. (1968): Quigley, Accession
by the United States to the United Nations Convention on the Recognition
and Enforcement of Foreign Arbitral Awards, 70 Yale L.J. 1049 (1961).
Article II(1) of the Convention provides:
‘Each Contracting State shall recognize an agreement in writing under
which the parties undertake to submit to arbitration all or any differences
which have arisen or which may arise between them in respect of a
defined legal relationship, whether contractual or not, concerning a subject
matter capable of settlement by arbitration.’
In their discussion of this Article, the delegates to the Convention voiced
frequent concern that courts of signatory countries in which an agreement
to arbitrate is sought to be enforced should not be permitted to decline
enforcement of such agreements on the basis of parochial views of their
desirability or in a manner that would diminish the mutually binding nature
of the agreements. See G. Haight, Convention on the Recognition and
Enforcement of Foreign Arbitral Awards: Summary Analysis of Record of
United Nations Conference, May/June 1958, pp. 24-28 (1958).
Without reaching the issue of whether the Convention, apart from the
considerations expressed in this opinion, would require of its own force
that the agreement to arbitrate be enforced in the present case, we think
that this country's adoption and ratification of the Convention and the
passage of Chapter 2 of the United States Arbitration Act provide strongly
CONFLICT OF LAWS 3D 2/08-09
 persuasive evidence of congressional policy consistent with the decision
we reach today.
**2458 Accordingly, the judgment of the Court of Appeals is *521 reversed and the
case is remanded to that court with directions to remand to the District Court for
further proceedings consistent with this opinion.
It is so ordered.
Reversed and remanded.
Mr. Justice DOUGLAS, with whom Mr. Justice BRENNAN, Mr. Justice WHITE, and
Mr. Justice MARSHALL concur, dissenting.
Respondent ( Alberto-Culver) is a publicly held corporation whose stock is traded
on the New York Stock Exchange and is a Delaware corporation, with its principal
place of business in Illinois. Petitioner ( Scherk) owned a business in Germany,
Firma Ludwig Scherk, dealing with cosmetics and toiletries. Scherk owned various
trademarks and all outstanding securities of a Liechtenstein corporation (SEV) and
of a German corporation, Lodeva. Scherk also owned various trademarks which
were licensed to manufacturers and distributors in Europe and in this country. SEV
collected the royalties on those licenses.
Alberto undertook to purchase from Scherk the entire establishment-the
trademarks and the stock of the two corporations; and later, alleging it had been
defrauded, brought this suit in the United States District Court in Illinois to rescind
the agreement and to obtain damages.
*522 The only defense material at this stage of the proceeding is a provision of the
contract providing that if any controversy or claim arises under the agreement the
parties agree it will be settled ‘exclusively’ by arbitration under the rules of the
International Chamber of Commerce, Paris, France.
The basic dispute between the parties concerned allegations that the trademarks
which were basic assets in the transaction were encumbered and that their
purchase was induced through serious instances of fraudulent representations and
omissions by Scherk and his agents within the jurisdiction of the United States. If a
question of trademarks were the only one involved, the principle of The Bremen v.
Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513, would be
controlling.
We have here, however, questions under the Securities Exchange Act of 1934,
which in s 3(a)(10) defines ‘security’ as including any ‘note, stock, treasury stock,
bond, debenture, certificate of interest or participation in any profit-sharing
agreement . . ..’15 U.S.C. s 78c(a)(10). We held in Tcherepnin v. Knight, 389 U.S.
332, 88 S.Ct. 548, 19 L.Ed.2d 564, as respects s 3(a)(10):
‘(R)emedial legislation should be construed broadly to effectuate its purposes. The
Securities Exchange Act quite clearly falls into the category of remedial legislation.
One of its central purposes is to protect investors through the requirement of full
disclosure by issuers of securities, and the definition of security in s 3(a)(10)**2459
necessarily determines the classes of investments and investors which will receive
H. CASES INVOLVING THE INTERNET Page 61 of 102
the Act's protections. Finally, we are remainded that, in searching for the meaning
and scope of the word ‘security’ in the Act, form should be disregarded for
substance and the emphasis should *523 be on economic reality.' Id., at 336, 88
S.Ct., at 553.(Footnote omitted.)
Section 10(b) of the 1934 Act makes it unlawful for any person by use of agencies
of interstate commerce or the mails ‘(t)o use or employ, in connection with the
purchase or sale of any security,’ whether or not registered on a national securities
exchange, ‘any manipulative or deceptive device or contrivance in contravention of
such rules and regulations as the Commission may prescribe.’15 U.S.C. s 78j(b).
Alberto-Culver, as noted, is not a private person but a corporation with publicly
held stock listed on the New York Stock Exchange. If it is to be believed, if in other
words the allegations made are proved, the American company has been defrauded
by the issuance of ‘securities' (promissory notes) for assets which are worthless or
of a much lower value than represented. Rule 10b-518 of the Securities and
Exchange Commission states:
‘It shall be unlawful for any person, directly or indirectly, by the use of any means or
instrumentality of interstate commerce, or of the mails or of any facilitity of any
national securities exchange,
‘(a) To employ any device, scheme, or artifice to defraud,
‘(b) To make any untrue statement of a material fact or to omit to state a material
fact necessary in order to make the statements made, in the light of the
circumstances under which they were made, not misleading, or
‘(c) To engage in any act, practice, or course of business which operates or would
operate as a fraud or deceit upon any person,
‘in connection with the purchase or sale of any security.’17 CFR s 240.10b-5.
*524 Section 29(a) of the Act provides:
‘Any condition, stipulation, or provision binding any person to waive compliance with
any provision of this chapter or of any rule or regulation thereunder, or of any rule of
an exchange required thereby shall be void.’15 U.S.C. s 78cc(a).
And s 29(b) adds that ‘(e)very contract’ made in violation of the Act ‘shall be
void.'FN1No exception is made for contracts which have an international character.
FN1.Section 29(b) reads: ‘Every contract made in violation of any provision
of this chapter or of any rule or regulation thereunder, and every contract
(including any contract for listing a security on an exchange) heretofore or
hereafter made, the performance of which involves the violation of, or the
continuance of any relationship of practice in violation of, any provision of
this chapter or any rule or regulation thereunder, shall be void (1) as
regards the rights of any person who, in violation of any such provision,
rule, or regulation, shall have made or engaged in the performance of any
such contract, and (2) as regards the rights of any person who, not being a
party to such contract, shall have acquired any right thereunder with actual
CONFLICT OF LAWS 3D 2/08-09
 knowledge of the facts by reason of which the making or performance of
such contract was in violation of any such provision, rule, or
regulation . . ..’15 U.S.C. s 78cc(b).
The Securities Act of 1933, 48 Stat. 84, 15 U.S.C. s 77n, has a like provision in its s
14:
‘Any condition, stipulation, or provision binding any person acquiring any security to
waive compliance with any provision of this subchapter or of the rules and
regulations of the Commission shall be void.’
In Wilko v. Swan, 346 U.S. 427, 74 S.Ct. 182, 98 L.Ed. 168, a customer brought suit
against a brokerage house alleging fraud in the sale of stock. A motion was made to
stay the trial until arbitration occurred under the United States Arbitration Act, 9
U.S.C. s 3, as provided in the customer's contract. The *525 Court held that an
agreement for arbitration**2460 was a ‘stipulation’ within the meaning of s 14 which
sought to ‘waive’ compliance with the Securities Act. We accordingly held that the
courts, not the arbitration tribunals, had jurisdiction over suits under that Act. The
arbitration agency, we held, was bound by other standards which were not
necessarily consistent with the 1933 Act. We said:
‘As the protective provisions of the Securities Act require the exercise of judicial
direction to fairly assure their effectiveness, it seems to us that Congress must have
intended s 14 . . . to apply to waiver of judicial trial and review.’ 346 U.S., at 437, 74
S.Ct., at 188.
Wilko was held by the Court of Appeals to control this case-and properly so.
The Court does not consider the question whether a ‘security’ is involved in this
case, saying it was not raised by petitioner. A respondent, however, has the right to
urge any argument to support the judgment in his favor (save possibly questions of
venue, see Peoria R. Co. v. United States, 263 U.S. 528, 536, 44 S.Ct. 194, 197, 68
L.Ed. 427. United States v. American Railway Express Co., 265 U.S. 425, 435-436,
and n. 11, 44 S.Ct. 560, 563-564, 68 L.Ed. 1087), even those not passed upon by
the court below and also contentions rejected below. Langnes v. Green, 282 U.S.
531, 535-539, 51 S.Ct. 243, 244-246, 75 L.Ed. 520; Walling v. General Industries
Co., 330 U.S. 545, 547 n. 5, 67 S.Ct. 883, 884, 91 L.Ed. 1088. The Court of
Appeals held that ‘securities' within the meaning of the 1934 Act were involved here,
484 F.2d 611, 615. The brief of the respondent is based on the premise that
‘securities' are involved here; and petitioner has not questioned that ruling of the
Court of Appeals.
It could perhaps be argued that Wilko does not govern because it involved a little
customer pitted against a big brokerage house, while we deal here with
sophisticated buyers and sellers: Scherk, a powerful German operator, *526 and
Alberto-Culver, an American business surrounded and protected by lawyers and
experts. But that would miss the point of the problem. The Act does not speak in
terms of ‘sophisticated’ as opposed to ‘unsophisticated’ people dealing in securities.
The rules when the giants play are the same as when the pygmies enter the market.
If there are victims here, they are not Alberto-Culver the corporation, but the
H. CASES INVOLVING THE INTERNET Page 62 of 102
thousands of investors who are the security holders in Alberto-Culver. If there is
fraud and the promissory notes are excessive, the impact is on the equity in
Alberto-Culver.
Moreover, the securities market these days is not made up of a host of small people
scrambling to get in and out of stocks or other securities. The markets are
overshadowed by huge institutional traders.FN2 The so-called ‘off-shore funds,’ of
which Scherk is a member, present perplexing problems under both the 1933 and
1934 Acts.FN3The tendency of American investors to invest indirectly as through
mutual fundsFN4 may change the character of the regulation but not its need.
FN2. See Institutional Investor Study Report of the SEC, H.R.Doc.No. 92-
64 (1971), particularly Vol. 4.
FN3. Id., Vol. 1, p. XVI; Vol. 3, p. 879 et seq.
FN4. Id., Vol. 1, p. XIX; Vol. 2, p. 215 et seq.
There has been much support for arbitration of disputes; and it may be the superior
way of settling some disagreements. If A and B were quarreling over a trade-mark
and there was an arbitration clause in the contract, the policy of Congress in
implementing the United Nations Convention on the Recognition and Enforcement
of Foreign Arbitral Awards, as it did in 9 U.S.C. s 201 et seq., would prevail. But the
Act does not substitute an arbiter for the settlement of disputes under *527 the 1933
and **2461 1934 Acts. Art. II(3) of the Convention says:
‘The court of a Contracting State, when seized of an action in a matter in respect of
which the parties have made an agreement within the meaning of this article, shall,
at the request of one of the parties, refer the parties to arbitration, unless it finds that
the said agreement is null and void, inoperative or incapable of being
performed.'FN5 (1970) 3 U.S.T. 2517, 2519, T.I.A.S. No. 6997.
FN5. The Convention also permits that arbitral awards not be recognized
and enforced when a court in the country where enforcement is sought
finds that ‘(t)he recognition or enforcement of the award would be contrary
to the public policy of that country.’Art. V(2)(b); (1970) 3 U.S.T. 2517,
2520, T.I.A.S. No. 6997. It also provides that recognition of an award may
be refused when the arbitration agreement ‘is not valid under the law to
which the parties have subjected it,’ in this case the laws of Illinois. Art.
V(1)(a). See n. 10, infra.
But s 29(a) of the 1934 Act makes agreements to arbitrate liabilities under s 10 of
the Act ‘void’ and ‘inoperative.’ Congress has specified a precise way whereby big
and small investors will be protected and the rules under which the Alberto-Culvers
of this Nation shall operate. They or their lawyers cannot waive those statutory
conditions, for our corporate giants are not principalities of power but guardians of a
host of wards unable to care for themselvs. It is these wards that the 1934 Act tries
to protect.FN6 Not a word in the Convention governing*528 awards adopts the
standards which Congress has passed to protect the investors under the 1934 Act.
It is peculiarly appropriate that we adhere to Wilko-more so even than when Wilko
was decided. Huge foreign investments are being made in our companies. It is
CONFLICT OF LAWS 3D 2/08-09
important that American standards of fairness in security dealings govern the
destinies of American investors until Congress changes these standards.
FN6. Requirements promulgated under the 1934 Act require disclosure to
security holders of corporate action which may affect them. Extensive
annual reports must be filed with the SEC including, inter alia, financial
figures, changes in the conduct of business, the acquisition or disposition
of assets, increases or decreases in outstanding securities, and even the
importance to the business of trademarks held. See 17 CFR ss 240.13a-1,
249.310; 3 CCH Fed.Sec.L.Rep. 31,101 et seq. (Form 10-K). The
Commission has proposed that corporations furnish a copy of annual
reports filed with it to any security holder who is solicited for a proxy and
requests the report. 39 Fed.Reg. 3836. Current reports must be filed with
the SEC by an issuer of securities when substantial events occur, as when
the rights evidenced by any class of securities are materially altered by the
issuance of another class of securities or when an issuer has acquired a
significant amount of assets other than in the ordinary course of business.
See 17 CFR ss 240.13a-11, 249.308; 3 CCH Fed.Sec.L.Rep. 31,001 et
seq. (Form 8-K).
The Commission, recognizing that the Form 10-K reports filed annually
with it might be excessively abstruse for security holders, see 39 Fed.Reg.
3835, has proposed that the annual reports distributed to security holders
in connection with annual meetings and solicitation of proxies provide
substantially greater amounts of meaningful information than required
presentedly. These annual reports would include a description of the
business of the issuer, a summary of operations, explanation of changes in
revenues and expenses, information on the liquidity position and the
working capital requirements of the issuer, and identification of
management and performance on the market of the issuer's securities.
See 39 id., at 3834-3838.
The Court finds it unnecessary to consider Scherk's argument that this case is
distinguishable from Wilko in that Wilko involved parties of unequal bargaining
strength. Ante, at 2454, n. 6. Instead, the Court rests its conclusion on the fact that
this was an ‘international’ agreement, with an American corporation investing in the
stock and property of foreign businesses, and speaks favorably of the certainty
which inheres when parties *529 specify an arbitral forum for resolution of
differences in ‘any contract touching two or more countries.’
This invocation of the ‘international contract’ talisman might be applied to a **2462
situation where, for example, an interest in a foreign company or mutual fund was
sold to an utterly unsophisticated American citizen, with material fraudulent
misrepresentations made in this country. The arbitration clause could appear in the
fine print of a form contract, and still be sufficient to preclude recourse to our courts,
forcing the defrauded citizen to arbitration in Paris to vindicate his rights.FN7
FN7. The Court concedes, ante, at 2456 n. 11, that there may be situations
where foreign contacts were ‘so insignificant or attenuated’ that Wilko
would apply and an American court would not enforce an arbitration
agreement in an international contract. The recognition that ‘international’
H. CASES INVOLVING THE INTERNET Page 63 of 102
contracts may in fact involve significant direct contacts with this country is
realistic and salutary. But the Court by its concession undermines
somewhat its reliance on its admonition-itself supported only by
speculation-that ‘(a) contractual provision specifying in advance the forum
in which disputes shall be litigated . . . is . . . an almost indispensable
precondition to achievement of the orderliness and predictability essential
to any international business transaction.’Uncertainty and a ‘dicey
atmosphere,’ supposedly destructive of international contracts, may persist
for many contracts. The parties to an international contract may not in fact
be bound by a ‘solemn agreement’ to arbitrate, for an American court could
find, at a much later date, sufficient contacts with this country to require the
application of Wilko.
It has been recognized that the 1934 Act, including the protections of Rule 10b-5,
applies when foreign defendants have defrauded American investors, particularly
when, as alleged here,FN8 they have profited by firtue *530 of proscribed conduct
within our boundaries. This is true even when the defendant is organized under the
laws of a foreign country, is conducting much of its activity outside the United
States, and is therefore governed largely by foreign law.FN9 The language of s 29 of
the 1934 Act does not immunize such international transactions, and the United
Nations Convention provides that a forum court in which a suit is brought need not
enforce an agreement to arbitrate which is ‘void’ and ‘inoperative’ as contrary to its
public policy.FN10 When a *531 foreign corporation**2463 undertakes fraudulent
action which subjects it to the jurisdiction of our federal securities laws, nothing
justifies the conclusion that only a diluted version of those laws protects American
investors.
FN8. The District Court for the Northern District of Illinois noted allegations
that Scherk had failed to state a material fact, the omission of which would
have been misleading, see 17 CFR s 240.10b-5(b), during crucial
negotiations in Melrose Park, Illinois, and that communications between
Alberto-Culver and Scherk's attorney concerning the validity and value of
the trademarks occurred within the territorial jurisdiction of the United
States. Finally, the District Court noted that the full economic impact of the
alleged fraud occurred within the United States.
FN9. See, e.g., Leasco Data Processing Equipment Corp. v. Maxwell, 468
F.2d 1326, 1334-1339 (CA2 1972); Travis v. Anthes Imperial Ltd., 473
F.2d 515, 523-528 (CA8 1973); SEC v. United Financial Group, Inc., 474
F.2d 354 (CA9 1973); Schoenbaum v. First-brook, 405 F.2d 200 (CA2
1968); Roth v. Fund of Funds, 279 F.Supp. 934 (SDNY), aff'd, 405 F.2d
421 (CA2 1968).
FN10. A summary of the conference proceedings which led to the adoption
of the United Nations Convention was prepared by G. W. Haight, who
served as a member of the International Chamber of Commerce
delegation to the conference. Haight, Convention on the Recognition and
Enforcement of Foreign Arbitral Awards: Summary Analysis of Record of
United Nations Conference, May/June 1958 (1958).
When Art. II(3) was being discussed, the Israeli delegate pointed out that
CONFLICT OF LAWS 3D 2/08-09
 while a court could, under the draft Convention as it then stood, refuse
enforcement of an award which was incompatible with public policy, “the
court had to refer parties to arbitration whether or not such reference was
lawful or incompatible with public policy.”Id., at 27. The German delegate
observed that this difficulty arose from the omission in Art. II(3) “of any
words which would relate the arbitral agreement to an arbitral award
capable of enforcement under the convention.”Ibid.
Haight continues:
‘When the German proposal was put to a vote, it failed to obtain a two-
thirds majority (13 to 9) and the Article was thus adopted without any
words linking agreements to the awards enforceable under the
Convention. Nor was this omission corrected in the Report of the Drafting
Committee (L. 61), although the obligation to refer parties to arbitration
was (and still is) qualified by the clause ‘unless it finds that the agreement
is null and void, inoperative or incapable of being performed.’
‘As the applicable law is not indicated, courts may under this wording be
allowed some latitude; they may find an agreement incapable of
performance if it offends the law or the public policy of the forum. Apart
from this limited opening, the Conference appeared unwilling to qualify the
broad undertaking not only to recognize but also to give effect to arbitral
agreements.’Id., at 28 (emphasis added).
Whatever ‘concern’ the delegates had that signatories to the Convention
‘not be permitted to decline enforcement of such agreements on the basis
of parochial views of their desirability,’ante, at 2457 n. 15, it would seem
that they contemplated that a court may decline to enforce an agreement
which offends its law or public policy.
The Court also attempts to treat this case as only a minor variation of The
Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d
513. In that case, however, the Court, per Mr. Chief Justice Burger
explicitly stated:
‘A contractual choice-of-forum clause should be held unenforceable if
enforcement would contravene a strong public policy of the forum in which
suit is brought, whether declared by statute or by judicial decision.’ Id., at
15, 92 S.Ct., at 1916.
That is inescapably the case here, as s 29 of the Securities Exchange Act
and Wilko v. Swan make clear. Neither s 29, nor the Convention on
international arbitration, nor The Bremen justifies abandonment of a
national public policy that securities claims be heard by a judicial forum
simply because some international elements are involved in a contract.
Section 29(a) of the 1934 Act provides that a stipulation binding one to waive
compliance with ‘any provision’ of the Act shall be void, and the Act expressly
provides that the federal district courts shall have ‘exclusive jurisdiction’ over suits
brought under the Act. *53215 U.S.C. s 78aa. The Court appears to attach some
H. CASES INVOLVING THE INTERNET Page 64 of 102
significance to the fact that the specific provisions of the 1933 Act involved in Wilko
are not duplicated in the 1934 Act, which is involved in this case. While Alberto-
Culver would not have the right to sue in either a state or federal forum as did the
plaintiff in Wilko, 346 U.S., at 431, 74 S.Ct., at 184, the Court deprives it of its right
to have its Rule 10b-5 claim heard in a federal court. We spoke at length in Wilko of
this problem, elucidating the undesirable effects of remitting a securities plaintiff to
an arbitral, rather than a judicial, forum. Here, as in Wilko, the allegations of
fraudulent misrepresentation will involve ‘subjective findings on the purpose and
knowledge’ of the defendant, questions ill-determined by arbitrators without judicial
instruction on the law. See id., at 435, 74 S.Ct., at 187. An arbitral award can be
made without explication of reasons and without development of a record, so that
the arbitrator's conception of our statutory requirement may be absolutely incorrect
yet functionally unreviewable, even when the arbitrator seeks to apply our law. We
recognized in Wilko that there is no judicial review corresponding to review of court
decisions. Id., at 436-437, 74 S.Ct., at 187-188. The extensive pretrial discovery
provided by the Federal Rules of Civil Procedure for actions in district court would
not be available. And the wide choice of venue provided by the 1934 Act, 15 U.S.C.
s 78aa, would be forfeited. See Wilko v. Swan, supra, at 431, 435, 74 S.Ct. at 186.
The loss of the proper judicial forum carries with it the loss of substantial rights.FN11
FN11. The agreement in this case provided that the ‘laws of the State of
Illinois' are applicable. Even if the arbitration court should read this clause
to require application of Rule 10b-5's standards, Alberto-Culver's victory
would be Pyrrhic. The arbitral court may improperly interpret the
substantive protections of the Rule, and if it does its error will not be
reviewable as would the error of a federal court. And the ability of Alberto-
Culver to prosecute its claim would be eviscerated by lack of discovery.
These are the policy considerations which underlay Wilko and which apply
to the instant case as well.
*533 When a defendant, as alleged here, has, through proscribed acts within our
territory, brought itself within the ken of federal securities regulation, a fact **2464
not disputed here, those laws-including the controlling principles of Wilko-apply
whether the defendant is foreign or American, and whether or not there are
transnational elements in the dealings. Those laws are rendered a chimera when
foreign corporations or funds-unlike domestic defendants-can nullify them by virtue
of arbitration clauses which send defrauded American investors to the uncertainty of
arbitration on foreign soil, or, if those investors cannot afford to arbitrate their claims
in a far-off forum, to no remedy at all.
Moreover, the international aura which the Court gives this case is ominous. We
now have many multinational corporations in vast operations around the world-
Europe, Latin America, the Middle East, and Asia.FN12The investments of many
American investors turn on dealings by these companies. Up to this day, it has been
assumed by reason of Wilko that they were all protected by our various federal
securities Acts. If these guarantees are to be removed, it should take a legislative
enactment. I would enforce our laws as they stand, unless Congress makes an
exception.
FN12. See Knickerbocker, Oligopolistic Reaction and Multinational
Enterprise (Haw.Univ.1973); J. Vaupel & J. Curhan, The World's
CONFLICT OF LAWS 3D 2/08-09
 Multinational Enterprises (Harvard Univ.1973). See generally Senate
Committee on Finance, 93d Cong., 1st Sess., Implications of Multinational
Firms for World Trade and Investment and for U.S. Trade and Labor
(Comm.Print 1973); Morgan, Controlling the Multinationals, Washington
Post, Nov. 17, 1973, p. A15; Diebold, Precarious Path of the
Multinationals, Wall Street Journal, Aug. 17, 1973, p. 6, col. 4.

*534 The virtue of certainty in international agreements may be important, but

Congress has dictated that when there are sufficient contacts for our securities laws
to apply, the policies expressed in those laws take precedence. Section 29 of the
1934 Act, which renders arbitration clauses void and inoperative, recognizes no
exception for fraudulent dealings which incidentally have some international factors.
The Convention makes provision for such national public policy in Art. II(3). Federal
jurisdiction under the 1934 Act will attach only to some international transactions,
but when it does, the protections afforded investors such as Alberto-Culver can
only be full-fledged.

U.S.Ill. 1974.
Scherk v. Alberto-Culver Co.
417 U.S. 506, 94 S.Ct. 2449, 41 L.Ed.2d 270, Fed. Sec. L. Rep. P 94,593

H. CASES INVOLVING THE INTERNET Page 65 of 102 CONFLICT OF LAWS 3D 2/08-09

 Supreme Court, New York County, New York,
IAS Part 16.
Ajitabh BACHCHAN, Plaintiff,
v.
INDIA ABROAD PUBLICATIONS INCORPORATED (Trading as India Abroad
News Service), Defendant.
April 13, 1992.
Plaintiff sought to enforce English libel judgment against New York operator of news
service by motion for summary judgment in lieu of complaint. The Supreme Court,
County of New York, Fingerhood, J., held that under statute precluding recognition
of foreign judgments which are repugnant to public policy, judgment could not be
recognized as it was imposed without safeguards for freedom of speech and press
required by the First Amendment to the United States Constitution and Article of the
New York Constitution.
Motion denied.
West Headnotes
Judgment 228 830.1
228 Judgment
228XVII Foreign Judgments
228k830 Judgments of Courts of Foreign Countries
228k830.1 k. In General. Most Cited Cases
(Formerly 228k830)
Under statute precluding recognition of foreign judgments which are repugnant to
public policy, English libel judgment against New York operator of news service
could not be recognized as it was imposed without safeguards for freedom of
speech and press required by the First Amendment to the United States
Constitution and Article of the New York Constitution. McKinney's CPLR 5304(b),
par. 4; U.S.C.A. Const.Amend. 1; McKinney's Const. Art. 1, § 8.
*228 **661 Chalos English & Brown, New York City, for plaintiff.
Lankenau Kovner & Bickford, New York City, for defendant.
*229 SHIRLEY FINGERHOOD, Justice:
Although the cases interpreting constitutional limitations on libel actions are legion,
this is apparently the first time that a New York court has been asked to apply those
limitations to bar the enforcement of a foreign judgment.
The judgment was granted in an action brought in the High Court of Justice in
London, England by an Indian national against the New York operator of a news
service which transmits reports only to a news service in India. The story held to be
defamatory was written by a reporter in London, wired by defendant to the news
service in India which sent it to newspapers there. It was reported in two Indian
newspapers copies of which were distributed in the United Kingdom.
The story was also reported in an issue of “ India Abroad,” defendant's New York
H. CASES INVOLVING THE INTERNET Page 66 of 102
newspaper. An edition of “ India Abroad” was printed and distributed in the United
Kingdom by defendant's English subsidiary, India Abroad (U.K.) and a claim based
on that distribution was asserted in the lawsuit approximately a year after its
commencement.
The wire service story transmitted by defendant on January 31, 1990 stated that
Dagens Nyjeter, a Swedish daily newspaper, (hereafter “DN”) had reported that
Swiss authorities had frozen an account belonging to plaintiff to which money was
transferred from a coded account into which commissions paid by Bofars were
deposited. Bofars is a Swedish arms company, which some time before had been
charged with paying kickbacks to obtain a large munitions contract with the Indian
government. (Exhibits J & P to Raju affidavit) Plaintiff's name had previously been
mentioned in connection with the scandal in a variety of Indian and other
publications. (Raju aff., Exhs. C-E) On February 3, 1990, defendant's wire service
transmitted plaintiff's denial that he was the holder of such a bank account or that he
or any member of his family had any connection with the Bofars contract. (Exhibit S
to Raju aff.)
Plaintiff brought an action against DN in London at the same time as it sued
India Abroad. DN settled the claim against it by paying a sum of money and issuing
an apology saying that it had been misled by **662 Indian government sources.
India Abroad did not apologize but did report DN's settlement and apology. (Exhibit
Y to Raju aff.)
The jury assessed 40,000 pounds in damages for the wire service story together
with attorney's fees against India Abroad, Inc. and its reporter, Rahul *230 Bedi. As
authorized by Section 5303 of New York's Civil Practice Law and Rules (CPLR)
plaintiff seeks to enforce that judgment by motion for summary judgment in lieu of
complaint. (A 40,000 pound judgment granted against India Abroad, U.K. for its
distribution of the English edition of “ India Abroad” is not directly at issue here.)
Entry of the judgment is opposed on the ground that it was imposed without the
safeguards for freedom of speech and the press required by the First Amendment
to the United States Constitution and Article I, Section 8 of the Constitution of the
State of New York. Defendant asks this court to reject the judgment as repugnant to
public policy, a ground for nonrecognition of foreign judgments under CPLR 5304(b)
(4).
CPLR § 5304 is comprised of two parts: section (a) which is explicitly mandatory
and precludes recognition of foreign judgments on certain constitutional grounds,
i.e. if the procedures pursuant to which a foreign judgment was rendered are not
compatible with the requirements of due process of law or when the foreign court
did not have personal jurisdiction over the defendant; and section (b) which
provides that a foreign judgment “need not be recognized if,” inter alia,“the cause of
action on which the judgment is based is repugnant to the public policy of this
state.” (Subsection 4)
It is plaintiff's position that the public policy exception to the rule that foreign
judgments are afforded comity is narrow and inapplicable here. He asserts that this
court should not reexamine the claim for which the judgment was awarded to
determine whether it would be culpable under United States precedents. Pointing to
CONFLICT OF LAWS 3D 2/08-09
CPLR 5304(b)(4)'s reference to “causes of action” rather than judgments, he argues
that libel causes of action are cognizable in New York. If that subsection is deemed
to refer to judgments as well as causes of action, plaintiff asks this court to exercise
its discretion to recognize the judgment in view of the common antecedents of the
law of Great Britain and that of the United States.
It is doubtful whether this court has discretion to enforce the judgment if the action
in which it was rendered failed to comport with the constitutional standards for
adjudicating libel claims. In his commentary on CPLR § 5304, David D. Siegel notes
that one of the grounds for nonrecognition of a foreign judgment in Section (b), a
lack of fair notice in sufficient time to enable a defendant to defend, “goes to the
roots of due process.” (Siegel, Practice Commentaries, McKinney's Cons. Laws of
N.Y., Book 7B, CPLR C5304:1, at 493.) For *231 that reason, he suggests that a
refusal to recognize a foreign country judgment for lack of fair notice may be
constitutionally mandatory, rather than, as subdivision (b) would have it,
discretionary. (7B McKinney's Consolidated Laws, Practice Commentaries
[5304:1] ) Similarly, if, as claimed by defendant, the public policy to which the
foreign judgment is repugnant is embodied in the First Amendment to the United
States Constitution or the free speech guaranty of the Constitution of this State, the
refusal to recognize the judgment should be, and it is deemed to be,
“constitutionally mandatory.” Accordingly, the libel law applied by the High Court of
Justice in London in granting judgment to plaintiff will be reviewed to ascertain
whether its provisions meet the safeguards for the press which have been
enunciated by the courts of this country.
Both parties submitted descriptions of the defamation laws of England in affidavits
and affirmations by English solicitors and barristers with copies of relevant statutes,
rules and case laws. Pursuant to CPLR § 4511 the court will take judicial notice of
the law as set forth in the affirmations of Sarosh Zaiwalla and Charles Anthony St.
John Gray, plaintiff's solicitor and barrister, and Geoffrey Robertson, Q.C., for the
defendant. The instructions given to the jury by the presiding judge at **663 the trial
of plaintiff's claim, Mr. Justice Otten, have also been considered. (Exhibits to
Handman further aff.; Exhibits to Zaiwalla aff.)
Under English law, any published statement which adversely affects a person's
reputation, or the respect in which that person is held, is prima facie defamatory.
(See Justice Otten's instructions to the jury deciding Bachchan's action.) Plaintiffs'
only burden is to establish that the words complained of refer to them, were
published by the defendant, and bear a defamatory meaning. If, as in the present
case, statements of fact are concerned, they are presumed to be false and the
defendant must plead justification for the issue of truth to be brought before the jury.
An unsuccessful defense of justification may result in the award of aggravated
damages. For, in the language of Lord Hailsham of the House of Lords in Broome
v. Cassell & Co. (1972) 1 All ER 1075 at 1081: “Quite obviously, the award must
include factors for injury.... the absence of apology, or the reaffirmation of the truth
of the matter complained of ...”
English law does not distinguish between private persons and those who are public
figures or are involved in matters of public concern. None are required to prove
falsity of the libel or fault on the part of the defendant. No plaintiff is required *232 to
prove that a media defendant intentionally or negligently disregarded proper
H. CASES INVOLVING THE INTERNET Page 67 of 102
journalistic standards in order to prevail.
The defendant has the burden of proving not only truth but also of establishing
entitlement to the qualified privilege for newspaper publications and broadcasters
provided by the 1952 Defamation Act Section 7(3) where “the matter published is ...
of public concern and... its publication ... is ... for the public benefit.” FN1
FN1. That defense is unavailable if the plaintiff requests that explanation or
contradiction be published and defendant refuses to do so. Even reports of
proceedings of a public nature-of Parliament and of the courts are
protected by privilege only “provided they are neither inaccurate nor unfair
to the plaintiff.” Duncan & Neill § 14.29, Exhibits to Gray aff. pp. 85-88.
As stated by Mr. Gray, plaintiff's barrister, “[t]he difference between the American
and English jurisdictions essentially comes down to where the burden of proof
lies....” (Gray aff. pp. 15-16)
Defendant argues that the defamation law of England fails to meet the constitutional
standards required in the United States because plaintiff, a friend of the late prime
minister of India Rajiv Ghandi and the brother and manager of a movie star and
former member of Parliament, is a public figure. In New York Times Co. v. Sullivan,
376 U.S. 254, 279-280, 84 S.Ct. 710, 726, 11 L.Ed.2d 686 (1964), the Supreme
Court of the United States ruled that in order to recover damages for defamation a
public official must prove by clear and convincing evidence that the defendant
published the allegedly defamatory statement with “ ‘actual malice’-that is, with
knowledge that it was false or with reckless disregard of whether it was false or
not.” That burden of proof was placed on public figures who sued media
defendants in Curtis Publishing Co. v. Butts, 388 U.S. 130, 87 S.Ct. 1975, 18
L.Ed.2d 1094 (1967).
However, it seems neither necessary nor appropriate to decide whether plaintiff, an
Indian national residing in England or Switzerland, is a public figure. Instead, the
procedures of the English Court will be compared to those which according to
decisions of the United States Supreme Court are constitutionally mandated for
suits by private persons complaining of press publications of public concern.
In Gertz v. Robert Welch, Inc., 418 U.S. 323, 347, 94 S.Ct. 2997, 3010, 41 L.Ed.2d
789 (1974) the Court held that a private figure could not recover damages for
defamation without showing that a media defendant was at fault, leaving the
individual States to “define for themselves the appropriate standard of liability for a
publisher or broadcaster of defamatory falsehood injurious to a private individual.”
*233 Reviewing the Supreme Court's decisions enunciating constitutional limitations
on suits for defamation, Justice O'Connor stated**664 in Philadelphia Newspapers
v. Hepps, 475 U.S. 767, 775, 106 S.Ct. 1558, 1563, 89 L.Ed.2d 783:
One can discern in these decisions two forces that may reshape the common-
law landscape to conform to the First Amendment. The first is whether the plaintiff
is a public official or figure, or is instead a private figure. The second is whether
the speech at issue is of public concern. When the speech is of public concern
and the plaintiff is a public official or public figure, the Constitution clearly requires
CONFLICT OF LAWS 3D 2/08-09
 the plaintiff to surmount a much higher barrier before recovering damages from a
media defendant than is raised by the common law. When the speech is of public
concern but the plaintiff is a private figure, as in Gertz, the Constitution still
supplants the standards of the common law, but the constitutional requirements
are, in at least some of their range, less forbidding than when the plaintiff is a
public figure and the speech is of public concern.
The issue in Hepps was the validity under the First Amendment of the common-law
presumption that a defamatory statement is false, pursuant to which the burden of
proving truth is on the defendant. Finding plaintiff to be a private figure and the
subject of the newspaper articles in issue to be of public concern, the Court held
that, “the common-law's rule on falsity-that the defendant must bear the burden of
proving truth-must ... fall here to a constitutional requirement that the plaintiff bear
the burden of showing falsity, as well as fault, before recovering damages.” (475
U.S. at 776, 106 S.Ct. at 1563)
It is obvious that defendant's publication relates to a matter of public concern. The
affidavits and documents submitted by both parties reveal that the wire service
report was related to an international scandal which touched major players in Indian
politics and was reported in India, Sweden, the United States, England and
elsewhere in the world. Consider the revelation of Mr. Zaiwalla, who had the
conduct of the action resulting in the English judgment, that it was given priority over
other defamation actions waiting to be tried because “the Indian General Election
was imminent and the Bofars affairs and the plaintiff's long-time family friendship
with Mr. Rajiv Gandhi, the former prime minister of India.... and leader of the main
opposition party.... were being used as electoral weapons in India.” (Zaiwalla aff.
pp. 4-5) Mr. Justice Otten, in his instructions, referred to the political context of the
story by suggesting to *234 the jury that it “ignore the complexities” of the Indian
politics and political parties which were the background of the news stories.
(Transcript, p. 6, Exhibit B, Handman further aff.)
Placing the burden of proving truth upon media defendants who publish speech of
public concern has been held unconstitutional because fear of liability may deter
such speech.
Because such a ‘chilling’ effect would be antithetical to the First Amendment's
protection of true speech on matters of public concern, we believe that a private-
figure plaintiff must bear the burden of showing that the speech at issue is false
before recovering damages for defamation from a media defendant. To do
otherwise could ‘only result in a deterrence of speech which the Constitution
makes free.’ (citation omitted) Philadelphia Newspapers, Inc. v. Hepps, supra at
777, 106 S.Ct. at 1564, 89 L.Ed.2d 783.
The “chilling” effect is no different where liability results from enforcement in the
United States of a foreign judgment obtained where the burden of proving truth is
upon media defendants. Accordingly, the failure of Bachchan to prove falsity in the
High Court of Justice in England makes his judgment unenforceable here.
There is, of course, another reason why enforcement of the English judgment would
violate the First Amendment: in England, plaintiff was not required to and did not
meet the “less forbidding” constitutional requirement that a private figure show that
H. CASES INVOLVING THE INTERNET Page 68 of 102
a media defendant was at fault.
New York's standard for liability in actions brought by private persons against the
press is set forth in **665Chapadeau v. Utica Observer-Dispatch, 38 N.Y.2d 196,
199, 379 N.Y.S.2d 61, 341 N.E.2d 569 (1975): “[W]here the content of the article is
arguably within the sphere of legitimate public concern, which is reasonably related
to matters warranting public exposition, the party defamed may recover; however, to
warrant such recovery he must establish, by a preponderance of the evidence, that
the publisher acted in a grossly irresponsible manner without due consideration for
the standards of information gathering and dissemination ordinarily followed by
responsible parties.”
As stated above, the English courts do not require plaintiff to prove that a press
defendant was at fault in any degree. Bachchan certainly did not establish, as
required by Chapadeau, that defendant was grossly irresponsible, a difficult task,
where defendant disseminates another's news report. See Rust Communication
Group v. 70 State St. Travel Service, 122 A.D.2d 584, 504 N.Y.S.2d 927 (4th
Dept.1986).
*235 It is true that England and the United States share many common law
principles of law. Nevertheless, a significant difference between the two jurisdictions
lies in England's lack of an equivalent to the First Amendment to the United States
Constitution. The protection to free speech and the press embodied in that
amendment would be seriously jeopardized by the entry of foreign libel judgments
granted pursuant to standards deemed appropriate in England but considered
antithetical to the protections afforded the press by the U.S. Constitution.
For the above stated reasons, the motion for summary judgment in lieu of complaint
is denied.
N.Y.Sup.,1992.
Bachchan v. India Abroad Publications Inc.
154 Misc.2d 228, 585 N.Y.S.2d 661
END OF DOCUMENT
CONFLICT OF LAWS 3D 2/08-09
 United States Court of Appeals, Second Circuit. 170AXVII(C)3 Proceedings
BRIDGEWAY CORPORATION, Plaintiff-Appellant, 170Ak2533 Motion
v. 170Ak2533.1 k. In General. Most Cited Cases
CITIBANK, doing business as Citicorp N.A., Defendant-Appellee. District courts are well advised to give clear and express notice before granting
Docket No. 99-7504. summary judgment sua sponte, even against parties who have themselves moved
for summary judgment.
Argued Nov. 24, 1999.
Decided Jan. 3, 2000. [3] Federal Courts 170B 914

Judgment creditor brought action in state court to enforce judgment rendered by the 170B Federal Courts
Supreme Court of Liberia, and judgment debtor removed the action. The United 170BVIII Courts of Appeals
States District Court for the Southern District of New York, Denny Chin, J., 45 170BVIII(K) Scope, Standards, and Extent
F.Supp.2d 276, denied judgment creditor's motion for summary judgment, and sua 170BVIII(K)6 Harmless Error
sponte granted summary judgment to judgment debtor. Judgment creditor 170Bk914 k. Judgment and Relief; Summary Judgment. Most Cited
appealed. The Court of Appeals, Calabresi, Circuit Judge, held that: (1) judgment Cases
creditor was not procedurally prejudiced by the district court's decision to grant If the district court fails to give notice before sua sponte granting summary judgment
summary judgment sua sponte to judgment debtor, albeit without prior notice to against the moving party and that party was, as a result, procedurally prejudiced,
creditor; (2) judgment debtor was not judicially estopped from raising question as to Court of Appeals must reverse, and a party is procedurally prejudiced if it is
the impartiality of Liberian courts; (3) uncontradicted documentary evidence surprised by the district court's action and that surprise results in the party's failure
established that Liberian courts during the period in question did not provide to present evidence in support of its position, but when the moving party cannot
impartial tribunals or procedures compatible with due process; and (4) State plausibly claim that, had it been given notice of the district court's consideration of
Department Country Reports concerning fairness of Liberian judicial system were summary judgment against it, it would have brought forth additional evidence, the
admissible under Rule which presumptively allows the admission of “factual findings district court's failure to give notice is harmless.
resulting from an investigation made pursuant to authority granted by law.”
[4] Federal Civil Procedure 170A 2533.1
Affirmed.
170A Federal Civil Procedure
West Headnotes 170AXVII Judgment
170AXVII(C) Summary Judgment
[1] Federal Civil Procedure 170A 2533.1 170AXVII(C)3 Proceedings
170Ak2533 Motion
170A Federal Civil Procedure 170Ak2533.1 k. In General. Most Cited Cases
170AXVII Judgment The threat of procedural prejudice from sua sponte grant of summary judgment
170AXVII(C) Summary Judgment against moving party without notice is greatly diminished if the court's sua sponte
170AXVII(C)3 Proceedings determination is based on issues identical to those raised by the moving party, and
170Ak2533 Motion the likelihood of prejudice is greatly reduced, even when summary judgment is
170Ak2533.1 k. In General. Most Cited Cases based upon issues raised by the nonmoving party, if the moving party speaks to
While it is not necessarily reversible error for a district court to grant summary those issues in the course of the district court proceedings.
judgment against the moving party without notice or opportunity to defend, the
practice is discouraged, and grants of summary judgment without notice will be [5] Federal Civil Procedure 170A 2533.1
tolerated only in the absence of some indication that the moving party might
otherwise bring forward evidence that would affect the determination, when the 170A Federal Civil Procedure
facts before the district court were fully developed so that the moving party suffered 170AXVII Judgment
no procedural prejudice. Fed.Rules Civ.Proc.Rule 56, 28 U.S.C.A. 170AXVII(C) Summary Judgment
170AXVII(C)3 Proceedings
[2] Federal Civil Procedure 170A 2533.1 170Ak2533 Motion
170Ak2533.1 k. In General. Most Cited Cases
170A Federal Civil Procedure In action to enforce foreign judgment, judgment creditor was not procedurally
170AXVII Judgment prejudiced by the district court's decision to grant summary judgment sua sponte to
170AXVII(C) Summary Judgment judgment debtor, albeit without prior notice to creditor, on ground that foreign

H. CASES INVOLVING THE INTERNET Page 69 of 102 CONFLICT OF LAWS 3D 2/08-09

country's judicial system did not provide due process; the district court's decision 228 Judgment
was based upon an issue clearly raised by the debtor in its memorandum of law in 228XVII Foreign Judgments
opposition to creditor's motion for summary judgment, creditor argued the issue in 228k830 Judgments of Courts of Foreign Countries
its reply to the memorandum, creditor repeatedly claimed to the district court that it 228k830.1 k. In General. Most Cited Cases
had introduced sufficient evidence concerning that very issue, and creditor did not, Uncontradicted documentary evidence describing the chaos within the Liberian
before the district court, raise any objections based on lack of notice, nor did it judicial system during the period when judgment was obtained, including State
subsequently seek to introduce additional evidence. Department Country Reports, established that Liberian courts during the period
from about 1992 to 1997 did not provide impartial tribunals or procedures
[6] Estoppel 156 68(4) compatible with due process, precluding enforcement of judgment in the United
States, despite affidavits of Liberian attorneys stating that the Liberian system was
156 Estoppel modeled after that of the United States, but not discussing actual practice, and
156III Equitable Estoppel conclusory affidavit that such system was structured and administered to afford
156III(B) Grounds of Estoppel impartial justice. U.S.C.A. Const.Amend. 5.
156k68 Claim or Position in Judicial Proceedings
156k68(4) k. Defense or Objection Inconsistent with Previous Claim or [10] Federal Civil Procedure 170A 2546
Position in General. Most Cited Cases
Fact that judgment debtor had voluntarily participated in litigation in foreign country's 170A Federal Civil Procedure
courts, several times as a plaintiff, did not judicially estop it from raising, in action to 170AXVII Judgment
enforce foreign judgment, question as to the impartiality of the foreign courts; prior 170AXVII(C) Summary Judgment
voluntary participation, either in defending a suit where it had been haled into court, 170AXVII(C)3 Proceedings
or in suing where jurisdiction and venue readily existed, did not constitute assertions 170Ak2542 Evidence
that the relevant courts were fair and impartial, and thus was not clearly 170Ak2546 k. Weight and Sufficiency. Most Cited Cases
contradictory to debtor's present position. Conclusory statements, conjecture, or speculation by the party resisting the motion
will not defeat summary judgment.
[7] Estoppel 156 68(2)
[11] Federal Civil Procedure 170A 2546
156 Estoppel
156III Equitable Estoppel 170A Federal Civil Procedure
156III(B) Grounds of Estoppel 170AXVII Judgment
156k68 Claim or Position in Judicial Proceedings 170AXVII(C) Summary Judgment
156k68(2) k. Claim Inconsistent with Previous Claim or Position in 170AXVII(C)3 Proceedings
General. Most Cited Cases 170Ak2542 Evidence
“Judicial estoppel” prevents a party from asserting a factual position in a legal 170Ak2546 k. Weight and Sufficiency. Most Cited Cases
proceeding that is contrary to a position previously taken by the party in a prior legal Summary judgment cannot be granted on the basis of inadmissible evidence.
proceeding. Fed.Rules Civ.Proc.Rule 56(e), 28 U.S.C.A.

[8] Estoppel 156 68(2) [12] Evidence 157 333(1)

156 Estoppel 157 Evidence

156III Equitable Estoppel 157X Documentary Evidence
156III(B) Grounds of Estoppel 157X(A) Public or Official Acts, Proceedings, Records, and Certificates
156k68 Claim or Position in Judicial Proceedings 157k333 Official Records and Reports
156k68(2) k. Claim Inconsistent with Previous Claim or Position in 157k333(1) k. In General. Most Cited Cases
General. Most Cited Cases State Department Country Reports concerning fairness of Liberian judicial system
A party invoking judicial estoppel must show that (1) the party against whom the were admissible under Rule which allows the admission of “factual findings resulting
estoppel is asserted took an inconsistent position in a prior proceeding and (2) that from an investigation made pursuant to authority granted by law, unless ...
position was adopted by the first tribunal in some manner. circumstances indicate lack of trustworthiness,” and were not excludable hearsay;
the Reports constituted factual findings and were required by federal law, and
[9] Judgment 228 830.1 though the Reports contained frank recognition of the shortcomings intrinsic in any
historical investigation, this did not amount to an admission of the lack of

H. CASES INVOLVING THE INTERNET Page 70 of 102 CONFLICT OF LAWS 3D 2/08-09

trustworthiness, and nothing in the record indicated any motive for misrepresenting When evaluating the trustworthiness of a factual report under Federal Rule of
the facts concerning Liberia's civil war or its effect on the judicial system there. Evidence which allows the admission of “factual findings resulting from an
Fed.Rules Evid.Rule 803(8)(C), 28 U.S.C.A. investigation made pursuant to authority granted by law, unless ... circumstances
indicate lack of trustworthiness,” court looks to (1): the timeliness of the
[13] Evidence 157 333(1) investigation; (2) the special skills or experience of the official; (3) whether a hearing
was held and the level at which it was conducted; and (4) possible motivation
157 Evidence problems, and with the exception of the third factor, which is not determinative by
157X Documentary Evidence itself, the rule assumes admissibility in the first instance but with ample provision for
157X(A) Public or Official Acts, Proceedings, Records, and Certificates escape if sufficient negative factors are present. Fed.Rules Evid.Rule 803(8)(C), 28
157k333 Official Records and Reports U.S.C.A.
157k333(1) k. In General. Most Cited Cases
Within Federal Rule of Evidence which allows the admission of “factual findings [16] Federal Courts 170B 898
resulting from an investigation made pursuant to authority granted by law, unless ...
circumstances indicate lack of trustworthiness,” “factual finding” includes not only 170B Federal Courts
what happened, but how it happened, why it happened, and who caused it to 170BVIII Courts of Appeals
happen, and thus Rule renders presumptively admissible not merely factual 170BVIII(K) Scope, Standards, and Extent
determinations in the narrow sense, but also conclusions or opinions that are based 170BVIII(K)6 Harmless Error
upon a factual investigation. Fed.Rules Evid.Rule 803(8)(C), 28 U.S.C.A. 170Bk896 Admission of Evidence
170Bk898 k. Cumulative Evidence; Facts Otherwise Established.
[14] Evidence 157 333(1) Most Cited Cases
Even if the district court erred in taking judicial notice of certain historical facts, this
157 Evidence did not require reversal where the facts of which the district court took judicial notice
157X Documentary Evidence were merely background history and of no moment to the ultimate determination,
157X(A) Public or Official Acts, Proceedings, Records, and Certificates which was supported by clearly admissible evidence.
157k333 Official Records and Reports
157k333(1) k. In General. Most Cited Cases *137 Michael J. Calvey, New York City (Thomas G. Amon and Mark J. Lawless, of
counsel, on the brief), for Plaintiff-Appellant.
Evidence 157 382 J. Kelley Nevling, Jr., New York City (Petra T. Tasheff, of counsel, on the brief), for
Defendant-Appellee.
157 Evidence
157X Documentary Evidence Before: LEVAL, CALABRESI, and KATZMANN, Circuit Judges.
157X(D) Production, Authentication, and Effect
157k382 k. Determination of Question of Admissibility. Most Cited Cases CALABRESI, Circuit Judge:
In order to fit within the purview of Federal Rule of Evidence which allows the Bridgeway Corp. (“ Bridgeway”), a Liberian corporation seeking to enforce a final
admission of “factual findings resulting from an investigation made pursuant to judgment rendered by the Supreme Court of Liberia, appeals from the district court's
authority granted by law, unless ... circumstances indicate lack of trustworthiness,” decision denying Bridgeway's motion for summary judgment and granting, sua
the evidence must (1) contain factual findings, and (2) be based upon an sponte, summary judgment in favor of the nonmoving party, Citibank. The district
investigation made pursuant to legal authority, and once a party has shown that a court held, first, that Citibank was not judicially estopped from challenging the
set of factual findings satisfies these minimum requirements of the Rule, the fairness of the Liberian judicial system simply because it had participated voluntarily
admissibility of such factual findings is presumed, and the burden to show a lack of in litigation in Liberia and, second, that the evidence in the record established, as a
trustworthiness then shifts to the party opposing admission. Fed.Rules Evid.Rule matter of law, that the Liberian judicial system was not “a system that ... provide[s]
803(8)(C), 28 U.S.C.A. impartial tribunals or procedures compatible with the requirements of due process.”
Bridgeway Corp. v. Citibank, 45 F.Supp.2d 276, 288 (S.D.N.Y.1999). We affirm.
[15] Evidence 157 333(1)
I. BACKGROUND
157 Evidence
A. Overview of Liberian History
157X Documentary Evidence
157X(A) Public or Official Acts, Proceedings, Records, and Certificates
This appeal derives from an action by Bridgeway to enforce a money judgment
157k333 Official Records and Reports
against Citibank entered by the Supreme Court of Liberia on July 28, 1995.
157k333(1) k. In General. Most Cited Cases
H. CASES INVOLVING THE INTERNET Page 71 of 102 CONFLICT OF LAWS 3D 2/08-09
Because the merits of this case turn on the events surrounding the Liberian civil war
during the first half of the 1990s, it is helpful to provide a brief overview of those
circumstances before proceeding to discuss the case. The following facts are drawn
from the district court's thoughtful opinion and are not traversed in the record before
us.
Liberia was founded in 1817 to resettle freed American slaves, and in 1847 it
became an independent republic. The original 1847 Constitution, amended in 1976
and again in 1986, established a government modeled on that of the United States.
Under the 1986 Constitution, for *138 example, the judicial powers of the Liberian
government are vested in a Supreme Court and such subordinate courts as the
Legislature may establish. The Supreme Court is composed of one chief justice and
four associate justices. Justices and judges are nominated by the President and
confirmed by the Senate and have life tenure unless impeached.
From 1980 to 1989, Samuel Kanyon Doe headed a Liberian government marked by
corruption and human rights abuses, as well as by rampant inflation. In 1989, a
group of dissidents seized power and, in 1990, executed Doe. Doe's death marked
the beginning of a violent seven-year civil war. By 1991, Liberia was in effect ruled
by two governments: one controlled Monrovia, the capital, while the other controlled
the remainder of the country. Following several short-lived cease fires, a formal
peace accord was signed in August 1995. After another outbreak of violence in
1996, elections were held in July 1997. In August 1997, Charles Taylor was
inaugurated and the 1986 Constitution was reinstated.
Throughout the period of civil war, Liberia's judicial system was in a state of disarray
and the provisions of the Constitution concerning the judiciary were no longer
followed. Instead, under an agreement worked out among the warring parties in
1992, the Supreme Court was reorganized, with various factions each unilaterally
appointing a specified number of justices. The U.S. State Department Country
Reports for Libiera during this period paint a bleak picture of the Liberian judiciary.
The 1994 Report observed that “corruption and incompetent handling of cases
remained a recurrent problem.” The 1996 Report stated that, “the judicial system,
already hampered by inefficiency and corruption, collapsed for six months following
the outbreak of fighting in April.”
In 1997, before elections were held, the leaders of the various factions
acknowledged that the integrity of the Supreme Court had been compromised by
factional loyalties since 1992 and agreed that the Court would have to be
reconstituted so that it might gain the legitimacy that would enable it to resolve
successfully disputes that might arise concerning the elections. The members of the
Court were therefore dismissed and new members were appointed based on the
recommendations of the Liberian National Bar Association.
B. This Case
Plaintiff-appellant Bridgeway is a Liberian corporation with its principal place of
business in Monrovia, Liberia. Defendant-appellee, Citibank, is a U.S. banking
corporation with its principal place of business in New York. For many years
Citibank maintained a branch in Monrovia, but it closed that branch in January
1992 and completely withdrew from Liberia by 1995. As required by Liberian law,
H. CASES INVOLVING THE INTERNET Page 72 of 102
Citibank, before withdrawing, formulated a plan of liquidation, which was approved
by the National Bank of Liberia. According to this plan, funds were to be remitted by
Citibank to Meridian Bank Liberia Ltd., in order to meet Citibank's obligations to
depositors. Citibank alerted its customers to its plans so that they could withrdraw
their funds. On April 21, 1995, the National Bank of Liberia indicated by letter that
Citibank had satisfactorily completed the liquidation plan and was no longer
licensed to do business in Liberia.
Bridgeway had an account at Citibank's Liberian branch with a balance of
$189,376.66. In November 1992, Bridgeway brought suit in Liberia against
Citibank, seeking a declaration that Citibank was obligated to pay Bridgeway its
balance in U.S. (rather than Liberian) dollars. In August 1993, the trial court ruled in
favor of Citibank. The court found that, under Liberian law, a person may not refuse
to accept Liberian dollars for the discharge of an obligation unless there is an
express agreement to the contrary and that Liberian law gives the Liberian dollar a
par value equal to the value of the U.S. dollar. *139 The trial court also found that
under Bridgeway's contract with Citibank, the latter had the right to decide the
currency in which a withdrawal would be paid. Bridgeway appealed to the Liberian
Supreme Court, which reversed the lower court's decision and entered judgment for
Bridgeway.
Bridgeway filed suit in New York state court to enforce the Liberian Supreme Court
judgment, and Citibank removed the case to the federal district court. When it
became apparent that Citibank was going to defend itself by challenging the
legitimacy of the Liberian judicial system, Bridgeway moved for summary
judgment-arguing that Citibank was estopped from questioning the fairness of the
Liberian judiciary. But the district court denied that motion and, sua sponte, granted
summary judgment for Citibank. Specifically, the court found that, as a matter of
law, Liberia's courts did not constitute “a system of jurisprudence likely to secure an
impartial administration of justice” and that, as a result, the Liberian judgment was
unenforceable in the United States. See Bridgeway, 45 F.Supp.2d at 287.
Bridgeway now appeals.
II. DISCUSSION
A. Sua Sponte Summary Judgment Against the Moving Party
Bridgeway argues that the district court erred in granting summary judgment
against it sua sponte without prior notice. In so acting, Bridgeway alleges, the
district court deprived Bridgeway of an adequate opportunity to develop and
present its case.
[1][2] While it is not necessarily reversible error in our Circuit for a district court to
grant summary judgment against the moving party without notice or opportunity to
defend, see Coach Leatherware Co. v. AnnTaylor, Inc., 933 F.2d 162, 167 (2d
Cir.1991) (“[The] court need not give notice of its intention to enter summary
judgment against the moving party.”), we have firmly discouraged the practice. In
Coach Leatherware Co., we made clear that grants of summary judgment without
notice will be tolerated only in the absence of “some indication that the moving party
might otherwise bring forward evidence that would affect the ... determination,”id.,
when “the facts before the district court were fully developed so that the moving
CONFLICT OF LAWS 3D 2/08-09
party suffered no procedural prejudice.” (Now Chief) Judge Winter stressed in his
concurrence that such “grants of summary judgment are rare and should be
employed only when a court is absolutely sure that no issue of material fact exists.”
Id. at 172 (Winter, J., concurring in part and dissenting in part); see also Ramsey v.
Coughlin, 94 F.3d 71, 74 (2d Cir.1996) (“Before granting summary judgment sua
sponte [without notice], the district court must assure itself that following the
procedures set out in Rule 56 [for notice and opportunity to defend] would not alter
the outcome.”). District courts are well advised to give clear and express notice
before granting summary judgment sua sponte, even against parties who have
themselves moved for summary judgment. The provision of such notice requires
relatively little time or effort, and it permits appellate courts much more readily to
determine-as they are required to do-whether “the absence of a cross motion
affected the result.” Coach Leatherware Co., 933 F.2d at 167; see also Snider
v. Melindez, 199 F.3d 108, 113 (2d Cir.1999) (“[P]roviding the adversely affected
party with notice and an opportunity to be heard plays an important role in
establishing the fairness and reliability of the order.”).
[3] If the district court fails to give notice before sua sponte granting summary
judgment and the moving party was, as a result, procedurally prejudiced, we must
reverse. Seeid.A party is procedurally prejudiced if it is surprised by the district
court's action and that surprise results in the party's failure to present evidence in
support of its position. See id. *140 If, however, the party either cannot claim to
have been surprised by the district court's action or if, notwithstanding its surprise,
the party had no additional evidence to bring, it cannot plausibly argue that it was
prejudiced by the lack of notice.
[4] “[T]he threat of procedural prejudice is greatly diminished if the court's sua
sponte determination is based on issues identical to those raised by the moving
party.” Id. In addition, the likelihood of prejudice is greatly reduced, even when
summary judgment is based upon issues raised by the nonmoving party, if the
moving party speaks to those issues in the course of the district court proceedings.
Moreover, regardless of the basis for summary judgment, [w]here it appears clearly
upon the record that all of the evidentiary materials that a party might submit in
response to a motion for summary judgment are before the court, a sua sponte
grant of summary judgment against that party may be appropriate if those materials
show that no material dispute of fact exists and that the other party is entitled to
judgment as a matter of law. Ramsey, 94 F.3d at 74. In other words, when the
moving party cannot plausibly claim that, had it been given notice of the district
court's consideration of summary judgment against it, it would have brought forth
additional evidence, the district court's failure to give notice is harmless and a
remand is futile. See First Financial Ins. Co. v. Allstate Interior Demolition Corp.,
193 F.3d 109, 115-16 (2d Cir.1999); Ramsey, 94 F.3d at 74 (“The record must,
therefore, reflect the losing party's inability to enhance the evidence supporting its
position and the winning party's entitlement to judgment.”); Coach Leatherware
Co., 933 F.2d at 167 (“Absent some indication that the moving party might
otherwise bring forward evidence that would affect the court's summary judgment
determination, failure to provide an opportunity to respond is not reversible error.”).
[5] In this case, there is nothing in the record to indicate that Bridgeway was
procedurally prejudiced by the district court's failure to give notice that it was
H. CASES INVOLVING THE INTERNET Page 73 of 102
considering a sua sponte grant of summary judgment in favor of Citibank. First, the
district court's decision was based upon an issue clearly raised by the defendant
below in its memorandum of law in opposition to Bridgeway's motion for summary
judgment. Second, Bridgeway argued in its reply to the defendant's memorandum
that the evidence it submitted was sufficient to establish that Liberian courts
constituted a “system of jurisprudence likely to secure an impartial administration of
justice.” Suppl. App. at 576. That is, the issue on which the district court based its
grant of summary judgment did not arise out of the blue but was clearly put into play
by the defendants in response to Bridgeway's motion. Moreover, Bridgeway
repeatedly claimed to the district court that it had introduced sufficient evidence
concerning that very issue. Under these circumstances, the likelihood that it was
surprised by the district court's reliance on that issue-and therefore prejudiced by
the court's failure to provide notice before granting summary judgement sua sponte
to Citibank-was virtually nil.
Bridgeway did not, before the district court, raise any objections based on lack of
notice. Nor did it subsequently seek to introduce additional evidence that might
have convinced the district court to change its position. Contrast First Financial,
193 F.3d at 116 (“[T]he lack of opportunity for [the appellant] to present evidence ...
before judgment was entered against it was highly prejudicial. Considerable
evidence supporting [the appellant's] position had come to light during the [time]
between submission of [the] motion to dismiss and the district court's decision.
Much of that evidence was eventually placed before the Court when the motions for
reconsideration were made.”). Indeed, at no point since the district court's decision
has Bridgeway identified any piece of evidence respecting the Liberian judicial
*141 system that it would have introduced had it been given notice. We therefore
conclude that Bridgeway was not procedurally prejudiced by the district court's
decision to grant summary judgment sua sponte to Citibank, albeit without prior
notice to Bridgeway, though we reemphasize that giving such notice is certainly the
preferable practice.
B. Judicial Estoppel
[6] Bridgeway next argues that because Citibank voluntarily participated in
litigation in Liberian courts, it was judicially estopped from raising any question as to
the impartiality of those courts in the instant case. Bridgeway observes that
Citibank has taken part in at least a dozen civil cases in Liberia since 1992. And in
several of those cases, Citibank appeared as a plaintiff. Having availed itself of
Liberia's courts without there raising any objections to the fairness of Liberian
justice, Citibank should now be estopped, Bridgeway argues, from calling into
question the validity of Liberian judgments. Citibank responds by arguing that its
participation in Liberian litigation did not amount to an admission of the fairness of
Liberian courts. Moreover, it argues that it could not have raised its objections to
Liberia's judicial system in Liberia, because Liberian courts routinely sanction
lawyers who question the Liberian judicial system. The district court agreed with
Citibank. See Bridgeway Corp., 45 F.Supp.2d at 284.
[7][8] Judicial estoppel “prevents a party from asserting a factual position in a legal
proceeding that is contrary to a position previously taken by [the party] in a prior
legal proceeding.” Bates v. Long Island R.R., 997 F.2d 1028, 1037 (2d Cir.1993).
In this Circuit, “[a] party invoking judicial estoppel must show that (1) the party
CONFLICT OF LAWS 3D 2/08-09
against whom the estoppel is asserted took an inconsistent position in a prior
proceeding and (2) that position was adopted by the first tribunal in some manner.”
Mitchell v. Washingtonville Cent. Sch. Dist., 190 F.3d 1, 6 (2d Cir.1999). We have
described the type of inconsistency required as a “clear inconsistency between [the
party's] present and former positions.” Maharaj v. Bankamerica Corp., 128 F.3d
94, 98 (2d Cir.1997).
In order for Bridgeway to prevail, we must conclude that voluntarily participating in
litigation in a foreign tribunal is fundamentally inconsistent with the belief that the
tribunal is unlikely to provide an impartial forum or one that comports with notions of
due process. Such a position is without merit. Defending a suit where one has been
haled into court, and suing where jurisdiction and venue readily exist do not
constitute assertions that the relevant courts are fair and impartial. Accordingly, we
do not view Citibank's voluntary participation in Liberian litigation, even as a
plaintiff, as clearly contradictory to its present position.
C. Fairness of Liberian CourtsFN1
FN1. In granting summary judgment, the district court reflexively applied
New York law. Citibank argues that federal law should apply. Because of
the similarity of the New York and federal standards concerning the
enforcement of foreign judgments, however, the district court's application
of New York law did not affect the outcome. Cf. Ackermann v. Levine,
788 F.2d 830, 842 n. 12 (2d Cir.1986) (observing that under both New
York statute and under the common law standard, judgments rendered by
a judicial system that fails to be impartial or to conform its procedures to
due process are not enforceable). We therefore express no view on
whether the district court was correct.
i. Burden
[9] The parties strenuously dispute who bears the ultimate burden of proof with
respect to the fairness of the Liberian judicial system. Although there are cases in
which the question of the burden might be significant, it does not ultimately matter
here. Accordingly, we express no opinion on it. Even if Citibank were to bear both
the burden of production and that of persuasion, it has come forward with
sufficiently powerful and uncontradicted documentary*142 evidence describing the
chaos within the Liberian judicial system during the period of interest to this case to
have met those burdens and to be entitled to judgment as a matter of law. Thus, the
U.S. State Department Country Reports presented by Citibank indicate that the
Liberian judicial system was in a state of disarray, as do, more subtly, the affidavits
by Citibank's Liberian counsel, H. Varney G. Sherman.
[10] The only evidence Bridgeway has introduced in support of its position are
three statements by Liberian attorneys: (1) an affidavit of James E. Pierre, Esq., a
member of the Liberian Bar, stating that the procedural rules of Liberia are modeled
on those of New York State courts; (2) an affidavit introduced by Citibank, in which
H. Varney G. Sherman, Citibank's Liberian counsel, states that “the Liberian
Government is patterned after the state governments of the United States of
America;” and (3) an affidavit of N. Oswald Tweh, former Vice President of the
Liberian National Bar Association, that “Liberia's judicial system was and is
H. CASES INVOLVING THE INTERNET Page 74 of 102
structured and administered to afford party-litigants therein impartial justice.” The
first statement concerns the design of the Liberian judicial system, but says nothing
about its practice during the period in question.FN2 The second, in addition to
suffering from the same defect as the first, does not even discuss the Liberian
judicial system directly. And the third is purely conclusory. See Kulak v. City of
New York, 88 F.3d 63, 71 (2d Cir.1996) (“[C]onclusory statements, conjecture, or
speculation by the party resisting the motion will not defeat summary judgment.”).
FN2. Evidence concerning the design of a judicial system might be
sufficient, in the absence of countervailing evidence. But where a party
presents evidence concerning the actual practice of a judicial system,
evidence about design is not likely to create a genuine issue of material
fact.
ii. Evidence
[11] Summary judgment cannot be granted on the basis of inadmissible evidence.
See Fed.R.Civ.P. 56(e). And Bridgeway raises many objections to the evidence
relied upon by the district court in determining that Liberia's courts were, as a matter
of law, unlikely to render impartial justice. Although the parties argue over a variety
of different pieces of evidence, in the absence of any proof supporting Bridgeway's
position, we need only consider whether Citibank adduced admissible evidence in
sufficient amount to make the district court's decision regarding the performance of
the Liberian judiciary during the civil war be supportable as well as uncontroverted.
In fact, all of the district court's conclusions concerning this issue can be derived
from just two sources: the affidavits of H. Varney G. Sherman (“Sherman affidavits”)
and the U.S. State Department Country Reports for Liberia for the years 1994-1997
(“Country Reports” or “Reports”).
Bridgeway does not object to the admissibility of the Sherman affidavits (except on
the ground that they support an argument that Bridgeway alleges Citibank is
estopped from making). Indeed, in its brief, Bridgeway cites statements derived
from these very affidavits in support of its own position. We will therefore assume
that the Sherman material was properly relied upon by the district court.FN3
FN3. Sherman's affidavits contain much of the information on the basis of
which the district court made its decision and wrote its opinion: the history
of the Liberian governmental system, the history of the civil war, and some
of the effects of the civil war on the Liberian judicial system. Although
Sherman was somewhat restrained in his description, he did indicate that
during the civil war the constitutional provisions governing the appointment
of Supreme Court justices were not followed, members of the Supreme
Court served at the “will and pleasure of the appointing powers,” and,
when elections were finally called, the parties acknowledged that
“membership on the Supreme Court had been based on factional
appointment and with factional loyalties.” Cf. Restatement (Third) of
Foreign Relations § 482 cmt. b (1987) (“Evidence that the judiciary was
dominated by the political branches of government ... would support a
conclusion that the legal system was one whose judgments are not entitled
to recognition.”). He concluded that “between July, 1990 and August, 1997,
the Supreme Court was not organized in keeping with the 1986
CONFLICT OF LAWS 3D 2/08-09
 Constitution.”
*143 [12] The district court also relied quite heavily on the Country Reports.
Bridgeway argues that these Reports constitute excludable hearsay. Citibank
replies that the Reports are admissible under Federal Rule of Evidence 803(8)(C),
which allows the admission of “factual findings resulting from an investigation made
pursuant to authority granted by law, unless the sources of information or other
circumstances indicate lack of trustworthiness.” See Fed.R.Evid. 803(8)(C).
[13] Rule 803(8)“is based upon the assumption that public officers will perform their
duties, that they lack motive to falsify, and that public inspection to which many such
records are subject will disclose inaccuracies.” 31 Michael H. Graham, Federal
Practice and Procedure § 6759, at 663-64 (Interim ed.1992). “ ‘Factual finding’
includes not only what happened, but how it happened, why it happened, and who
caused it to happen.” Id. at 689. The rule therefore renders presumptively
admissible “not merely ... factual determinations in the narrow sense, but also ...
conclusions or opinions that are based upon a factual investigation.” Gentile v.
County of Suffolk, 926 F.2d 142, 148 (2d Cir.1991).
[14] In order to fit within the purview of Rule 803(8)(C), the evidence must (1)
contain factual findings, and (2) be based upon an investigation made pursuant to
legal authority. Once a party has shown that a set of factual findings satisfies the
minimum requirements of Rule 803(8)(C), the admissibility of such factual findings
is presumed. The burden to show “a lack of trustworthiness” then shifts to the party
opposing admission. See Ariza v. City of New York, 139 F.3d 132, 134 (2d
Cir.1998).
In this case, there is little doubt that the Country Reports constitute “factual
findings.” Moreover, the Reports are certainly gathered pursuant to legal authority:
federal law requires that the State Department submit the Reports annually to
Congress, see 22 U.S.C. §§ 2151n(d), 2304(b) (1994 & Supp.1999). They are
therefore presumptively admissible.
Bridgeway attempts to rebut this presumption by arguing that the Reports are
untrustworthy, and it points to language in the State Department's description of
their preparation. The State Department says that “[w]e have given particular
attention to attaining a high standard of consistency despite the multiplicity of
sources and the obvious problems related to varying degrees of access to
information, structural differences in political and social systems, and trends in world
opinion regarding human rights practices in specific countries.” Although this
constitutes a frank recognition of the shortcomings intrinsic in any historical
investigation, it does not amount (as Bridgeway argues) to an admission of the lack
of trustworthiness required to reject the admissibility of these documents.
[15] When evaluating the trustworthiness of a factual report, we look to (a) the
timeliness of the investigation, (b) the special skills or experience of the official, (c)
whether a hearing was held and the level at which it was conducted, and (d)
possible motivation problems. SeeFed.R.Evid. 803(8)(C) advisory committee's
note. With the exception of (c), which is not determinative by itself, cf. id. ([T]he
rule ... assumes admissibility in the first instance but with ample provision for
escape if sufficient negative factors are present. (emphasis added)), nothing about
H. CASES INVOLVING THE INTERNET
the Reports calls into question their reliability with respect to these factors. The
Reports are submitted annually, and are therefore investigated in a timely manner.
They are prepared by area specialists at the State Department. And nothing in the
record or in Bridgeway's briefs indicates any motive*144 for misrepresenting the
facts concerning Liberia's civil war or its effect on the judicial system there.FN4 See
Bank Melli Iran v. Pahlavi, 58 F.3d 1406, 1411 (9th Cir.1995) (relying on Country
Reports in granting summary judgment on the issue of the fairness of Iranian
courts).
FN4. One could certainly imagine situations in which motivational problems
might plausibly be present (e.g., a country report on an avowed enemy or
a significant ally of the United States), but Bridgeway has raised no such
doubts here. Accordingly, we express no views on the admissibility of
country reports in those circumstances.
[16] In addition to its reliance on the Sherman affidavits and the Country Reports,
the district court took judicial notice of historical facts drawn from a variety of
sources. See Bridgeway, 45 F.Supp.2d at 278 n. 2. Bridgeway objects to this.
Even if we agreed with Bridgeway's objection, we would affirm the district court's
decision because the facts of which the district court took judicial notice were
merely background history and of no moment to the ultimate determination of the
fairness of Liberia's courts during the period of the civil war. The information in the
district court's opinion concerning the functioning of the Liberian courts during the
war is drawn (or could easily be drawn) entirely from the Sherman affidavits and the
Country Reports, both of which were clearly admissible.
******
Having found all of Bridgeway's contentions to be without merit, we AFFIRM the
judgment of the district court.
C.A.2 (N.Y.),2000.
Bridgeway Corp. v. Citibank
201 F.3d 134, 53 Fed. R. Evid. Serv. 357
END OF DOCUMENT
Page 75 of 102 CONFLICT OF LAWS 3D 2/08-09
 Supreme Court, Appellate Term, New York,
First Department. Before DUDLEY, J.P., and TIERNEY and RICCOBONO, JJ.
Wilhelmine SIEDLER, Plaintiff-Appellant,
v. **834 PER CURIAM:
Dr. Julius H. JACOBSON, Defendant-Respondent. While on a week's holicay in Vienna, defendant and his companion purchased an
April 28, 1976. antique porcelain figure from plaintiff dealer, but subsequently refused to honor
payment on the ground that plaintiff had misrepresented the article's age and value.
Austrian antique dealer brought suit to enforce judgment obtained upon defendant's Two years later, defendant was served in New York with process (in German)
default after being served in New York with process issued out of Austrian court. issued out of the Austrian Superior Court, based upon that nation's counterpart to
The Civil Court of the City of New York, Walter M. Schackman, J., denied plaintiff's New York's ‘long-arm’ statute (CPLR 302). Upon defendant's default, plaintiff
motion for summary judgment in lieu of complaint and granted defendant's cross instituted this action pursuant to Article 53 of the CPLR to enforce the foreign
motion for summary judgment dismissing the action and the plaintiff appealed. The judgment.
Supreme Court, Appellate Term, held that defendant's solitary act in purchasing
antique from plaintiff in Vienna could not serve as a jurisdictional predicate sufficient [1][2] We agree with Special Term's conclusion that the judgment should not be
to grant conclusive effect to the default judgment sued upon. enforceable in New York for lack of jurisdiction over the defendant. Analysis of the
legislative history of *1011 Article 53 makes clear that it was not within the
Affirmed. intendment of that statute to adopt the broad definition of ‘transacting any business'
applicable under CPLR section 302 as the criterion for extending recognition to
West Headnotes foreign country judgments themselves bottomed upon correspondingly liberal bases
of jurisdiction (CPLR 5305(a)5; 13 N.Y. Judicial Conference Report, p. 223 (1968);
[1] Judgment 228 830.1 6 Weinstein, Korn & Miller, s 5305.02). While we are cognizant of the desirability of
affording recognition to foreign country judgments so that judgments obtained in our
228 Judgment own courts will receive reciprocally favorable treatment abroad, the nature of
228XVII Foreign Judgments defendant's solitary act in this case was so casual and incidental to the foreign
228k830 Judgments of Courts of Foreign Countries forum that it could not possibly serve as a jurisdictional predicate sufficient to grant
228k830.1 k. In General. Most Cited Cases conclusive effect to the default judgment sued upon (CPLR 5304(a)5; see Falcon
(Formerly 228k830) Manufacturing Ltd. v. Ames, 53 Misc.2d 332, 278 N.Y.S.2d 684).
Statute providing for suit to enforce foreign judgment was not intended to adopt the
broad definition of “transacting any business” applicable under New York's “long- Order, entered October 16, 1975 (Schackman, W., J.), affirmed, with $10 costs.
arm” statute as the criterion for extending recognition to foreign country judgments
themselves bottomed upon correspondingly liberal bases of jurisdiction. CPLR 302, All concur.
5301 et seq.
N.Y.Sup. 1976.
[2] Judgment 228 830.1 Siedler v. Jacobson
86 Misc.2d 1010, 383 N.Y.S.2d 833
228 Judgment
228XVII Foreign Judgments END OF DOCUMENT
228k830 Judgments of Courts of Foreign Countries
228k830.1 k. In General. Most Cited Cases
(Formerly 228k830)
Defendant's purchase of an antique from plaintiff dealer in Vienna could not serve
as a jurisdictional predicate sufficient to grant conclusive effect to default judgment
obtained by plaintiff after defendant was served in New York with process issued
out of Austrian court based upon Austrian “long-arm” statute. CPLR 302, 5301 et
seq., 5304(a), par. 5, 5305(a), par. 5.

*1010 **833 Wachtell, Manheim & Grouf, New York City (Stephen P. H. Rachlis,
New York City, of counsel), for appellant.
Reavis & McGrath, New York City (Leonard M. Leiman, Stephen R. Steinberg and
Jane Fankhanel, New York City, of counsel), for respondent.

H. CASES INVOLVING THE INTERNET Page 76 of 102 CONFLICT OF LAWS 3D 2/08-09

 United States Court of Appeals, Ninth Circuit. 170Bk71 k. Territorial Limitations and Venue in General. Most Cited
PANAVISION INTERNATIONAL, L.P., a Delaware Limited Partnership, Plaintiff- Cases
Appellee,
v. Federal Courts 170B 76.10
Dennis TOEPPEN; Network Solutions, Inc., a District of Columbia Corporation,
Defendants-Appellants. 170B Federal Courts
No. 97-55467. 170BII Venue
170BII(A) In General
Argued and Submitted March 3, 1998. 170Bk76 Actions Against Non-Residents; “Long-Arm” Jurisdiction in
Decided April 17, 1998. General
170Bk76.10 k. Defendant's Activities in Forum State; Cause of Action
Owner of marks “ Panavision” and “Panaflex” brought action against defendant for Arising Therefrom. Most Cited Cases
trademark dilution, trademark infringement, and unfair competition. The United General jurisdiction exists when defendant is domiciled in forum state or his
States District Court for the Central District of California, Dean D. Pregerson, J., 938 activities there are substantial or continuous and systematic.
F.Supp. 616, found that defendant was subject to personal jurisdiction, and, 945
F.Supp. 1296, granted summary judgment in favor of owner on its dilution claims. [3] Trademarks 382T 1560
Defendant appealed. The Court of Appeals, David R. Thompson, Circuit Judge,
held that: (1) defendant was subject to specific jurisdiction in California; (2) 382T Trademarks
defendant's registration of plaintiff's marks in his Internet domain names was 382TIX Actions and Proceedings
“commercial use” under dilution statutes; and (3) defendant's registration of marks 382TIX(A) In General
diluted those marks. 382Tk1557 Jurisdiction
382Tk1560 k. Internet Use; Cybersquatting. Most Cited Cases
Affirmed. (Formerly 382k545 Trade Regulation)
Illinois resident who used California company's “ Panavision” trademark as domain
West Headnotes name for his Internet web site was not subject to general jurisdiction in California,
since his activities in California were not substantial or continuous and systematic.
[1] Federal Courts 170B 776 U.S.C.A. Const.Amend. 14; West's Ann.Cal.C.C.P. § 410.10.

170B Federal Courts [4] Federal Courts 170B 76.10

170BVIII Courts of Appeals
170BVIII(K) Scope, Standards, and Extent 170B Federal Courts
170BVIII(K)1 In General 170BII Venue
170Bk776 k. Trial De Novo. Most Cited Cases 170BII(A) In General
170Bk76 Actions Against Non-Residents; “Long-Arm” Jurisdiction in
Federal Courts 170B 870.1 General
170Bk76.10 k. Defendant's Activities in Forum State; Cause of Action
170B Federal Courts Arising Therefrom. Most Cited Cases
170BVIII Courts of Appeals For court to exercise specific jurisdiction, (1) nonresident defendant must do some
170BVIII(K) Scope, Standards, and Extent act or consummate some transaction with forum or perform some act by which he
170BVIII(K)5 Questions of Fact, Verdicts and Findings purposefully avails himself of privilege of conducting activities in forum, thereby
170Bk870 Particular Issues and Questions invoking benefits and protections of its laws; (2) claim must be one which arises out
170Bk870.1 k. In General. Most Cited Cases of or results from defendant's forum-related activities; and (3) exercise of jurisdiction
District court's determination that personal jurisdiction can properly be exercised is must be reasonable.
question of law reviewable de novo when underlying facts are undisputed, while
district court's factual findings regarding jurisdiction are reviewed for clear error. [5] Trademarks 382T 1560

[2] Federal Courts 170B 71 382T Trademarks

382TIX Actions and Proceedings
170B Federal Courts 382TIX(A) In General
170BII Venue 382Tk1557 Jurisdiction
170BII(A) In General 382Tk1560 k. Internet Use; Cybersquatting. Most Cited Cases

H. CASES INVOLVING THE INTERNET Page 77 of 102 CONFLICT OF LAWS 3D 2/08-09

 (Formerly 382k545 Trade Regulation) (Formerly 382k545 Trade Regulation)
Illinois resident who registered “ Panavision” trademark of company with principal Registering someone else's trademark as a domain name and posting a web site on
place of business in California as domain name for resident's Internet web site was the Internet is not alone sufficient to subject a party domiciled in one state to
subject to personal jurisdiction in California, because resident engaged in tort-like jurisdiction in another.
scheme to register company's trademarks as domain names in order to extort
money from company and directed that conduct toward California, injury would be [9] Constitutional Law 92 3963
felt in California, company's trademark dilution claims arose out of that conduct, and
exercise of jurisdiction was reasonable. U.S.C.A. Const.Amend. 14; West's 92 Constitutional Law
Ann.Cal.C.C.P. § 410.10. 92XXVII Due Process
92XXVII(E) Civil Actions and Proceedings
[6] Federal Courts 170B 76.5 92k3961 Jurisdiction and Venue
92k3963 k. Personal Jurisdiction in General. Most Cited Cases
170B Federal Courts (Formerly 92k305(4.1))
170BII Venue
170BII(A) In General Federal Courts 170B 71
170Bk76 Actions Against Non-Residents; “Long-Arm” Jurisdiction in
General 170B Federal Courts
170Bk76.5 k. Contacts with Forum State. Most Cited Cases 170BII Venue
170BII(A) In General
Federal Courts 170B 76.10 170Bk71 k. Territorial Limitations and Venue in General. Most Cited
Cases
170B Federal Courts For personal jurisdiction to be reasonable, it must comport with fair play and
170BII Venue substantial justice.
170BII(A) In General
170Bk76 Actions Against Non-Residents; “Long-Arm” Jurisdiction in [10] Federal Courts 170B 76.10
General
170Bk76.10 k. Defendant's Activities in Forum State; Cause of Action 170B Federal Courts
Arising Therefrom. Most Cited Cases 170BII Venue
Purposeful availment requirement for specific jurisdiction is satisfied if defendant 170BII(A) In General
has taken deliberate action toward the forum state; it is not required that defendant 170Bk76 Actions Against Non-Residents; “Long-Arm” Jurisdiction in
be physically present or have physical contacts with forum, so long as his efforts are General
purposefully directed toward forum residents. 170Bk76.10 k. Defendant's Activities in Forum State; Cause of Action
Arising Therefrom. Most Cited Cases
[7] Federal Courts 170B 76.25 Where a defendant who purposefully has directed his activities at forum residents
seeks to defeat personal jurisdiction, he must present a compelling case that the
170B Federal Courts presence of some other considerations would render jurisdiction unreasonable.
170BII Venue
170BII(A) In General [11] Federal Courts 170B 763.1
170Bk76 Actions Against Non-Residents; “Long-Arm” Jurisdiction in
General 170B Federal Courts
170Bk76.25 k. Tort Cases. Most Cited Cases 170BVIII Courts of Appeals
In tort cases, jurisdiction may attach if defendant's conduct is aimed at or has effect 170BVIII(K) Scope, Standards, and Extent
in forum state. 170BVIII(K)1 In General
170Bk763 Extent of Review Dependent on Nature of Decision
[8] Trademarks 382T 1560 Appealed from
170Bk763.1 k. In General. Most Cited Cases
382T Trademarks In addressing question of reasonableness of personal jurisdiction, Court of Appeals
382TIX Actions and Proceedings considers (1) extent of defendant's purposeful interjection; (2) burden on defendant
382TIX(A) In General in defending in the forum; (3) extent of conflict with sovereignty of defendant's state;
382Tk1557 Jurisdiction (4) forum state's interest in adjudicating dispute; (5) most efficient judicial resolution
382Tk1560 k. Internet Use; Cybersquatting. Most Cited Cases of controversy; (6) importance of forum to plaintiff's interest in convenient and

H. CASES INVOLVING THE INTERNET Page 78 of 102 CONFLICT OF LAWS 3D 2/08-09

effective relief; and (7) existence of alternative forum; no one factor is dispositive,
and court must balance all seven. [15] Trademarks 382T 1459

[12] Constitutional Law 92 3964 382T Trademarks

382TVIII Violations of Rights
92 Constitutional Law 382TVIII(B) Dilution
92XXVII Due Process 382Tk1458 Nature and Elements in General
92XXVII(E) Civil Actions and Proceedings 382Tk1459 k. In General. Most Cited Cases
92k3961 Jurisdiction and Venue (Formerly 382k366 Trade Regulation)
92k3964 k. Non-Residents in General. Most Cited Cases To find trademark dilution, court need not rely on traditional definitions such as
(Formerly 92k305(5)) “blurring” and “tarnishment.”

Federal Courts 170B 76.1 [16] Trademarks 382T 1463

170B Federal Courts 382T Trademarks

170BII Venue 382TVIII Violations of Rights
170BII(A) In General 382TVIII(B) Dilution
170Bk76 Actions Against Non-Residents; “Long-Arm” Jurisdiction in 382Tk1462 Reduction of Mark's Capacity to Identify; Blurring
General 382Tk1463 k. In General. Most Cited Cases
170Bk76.1 k. In General. Most Cited Cases (Formerly 382k366 Trade Regulation)
(Formerly 170Bk76) Blurring of trademark which may constitute trademark dilution occurs when a
A defendant's burden in litigating in the forum is a factor in the assessment of defendant uses a plaintiff's trademark to identify the defendant's goods or services,
reasonableness, in determining whether exercise of personal jurisdiction is proper, creating the possibility that the mark will lose its ability to serve as a unique identifier
but unless the inconvenience is so great as to constitute a deprivation of due of the plaintiff's product. Lanham Trade-Mark Act, § 43(c), as amended, 15 U.S.C.A.
process, it will not overcome clear justifications for the exercise of jurisdiction. § 1125(c).
U.S.C.A. Const.Amend. 14.
[17] Trademarks 382T 1466
[13] Trademarks 382T 1470
382T Trademarks
382T Trademarks 382TVIII Violations of Rights
382TVIII Violations of Rights 382TVIII(B) Dilution
382TVIII(B) Dilution 382Tk1465 Creation of Unfavorable Associations; Tarnishment
382Tk1470 k. Internet Use. Most Cited Cases 382Tk1466 k. In General. Most Cited Cases
(Formerly 382k366 Trade Regulation) (Formerly 382k366 Trade Regulation)
Defendant's registration of company's “ Panavision” trademark as domain name Tarnishment of trademark which may amount to dilution occurs when a famous
for defendant's Internet web site was “commercial use” within meaning of Federal mark is improperly associated with an inferior or offensive product or service.
Trademark Dilution Act, where defendant registered trademarks as domain names Lanham Trade-Mark Act, § 43(c), as amended, 15 U.S.C.A. § 1125(c).
in order to sell such names to rightful trademark owners. Lanham Trade-Mark Act, §
43(c), as amended, 15 U.S.C.A. § 1125(c). *1317 Joseph D. Murphy,Meyer, Capel, Hirschfeld, Muncy, Jahn & Aldeen, P.C.,
Champaign, IL, for defendants-appellants.
[14] Trademarks 382T 1470 William E. Thomson, Jr. and Micah R. Jacobs, McCutchen, Doyle, Brown &
Enersen, LLP, Ivy Kagan Bierman, Charles M. Stern and Edward L. Adams, Katten
382T Trademarks Muchin & Zavis, Los Angeles, CA, for plaintiff-appellee.
382TVIII Violations of Rights
382TVIII(B) Dilution Appeal from the United States District Court for the Central District of California;
382Tk1470 k. Internet Use. Most Cited Cases *1318 Dean D. Pregerson, District Judge, Presiding. D.C. No. CV-96-03284-DDP-
(Formerly 382k366 Trade Regulation) JRx.
Individual's registration of trademark owner's “ Panavision” and “Panaflex”
trademarks as domain names on Internet constituted dilution of those marks under Before: BRUNETTI, THOMPSON and T.G. NELSON, Circuit Judges.
Federal Trademark Dilution Act and state law. Lanham Trade-Mark Act, § 43(c), as
amended, 15 U.S.C.A. § 1125(c); West's Ann.Cal.Bus. & Prof.Code § 14330. DAVID R. THOMPSON, Circuit Judge:

H. CASES INVOLVING THE INTERNET Page 79 of 102 CONFLICT OF LAWS 3D 2/08-09

This case presents two novel issues. We are asked to apply existing rules of
personal jurisdiction to conduct that occurred, in part, in “cyberspace.” In addition,
we are asked to interpret the Federal Trademark Dilution Act as it applies to the
Internet.
Panavision accuses Dennis Toeppen of being a “cyber pirate” who steals
valuable trademarks and establishes domain names on the Internet using these
trademarks to sell the domain names to the rightful trademark owners.
The district court found that under the “effects doctrine,” Toeppen was subject to
personal jurisdiction in California. Panavision International, L.P. v. Toeppen,
938 F.Supp. 616, 620 (C.D.Cal.1996). The district court then granted summary
judgment in favor of Panavision, concluding that Toeppen's conduct violated the
Federal Trademark Dilution Act of 1995, 15 U.S.C. § 1125(c), and the California
Anti-dilution statute, California Business & Professions Code § 14330.
Panavision International, L.P. v. Toeppen, 945 F.Supp. 1296, 1306
(C.D.Cal.1996).
Toeppen appeals. He argues that the district court erred in exercising personal
jurisdiction over him because any contact he had with California was insignificant,
emanating solely from his registration of domain names on the Internet, which he
did in Illinois. Toeppen further argues that the district court erred in granting
summary judgment because his use of Panavision's trademarks on the Internet
was not a commercial use and did not dilute those marks.
We have jurisdiction under 28 U.S.C. § 1291 and we affirm. The district court's
exercise of jurisdiction was proper and comported with the requirements of due
process. Toeppen did considerably more than simply register Panavision's
trademarks as his domain names on the Internet. He registered those names as
part of a scheme to obtain money from Panavision. Pursuant to that scheme, he
demanded $13,000 from Panavision to release the domain names to it. His acts
were aimed at Panavision in California, and caused it to suffer injury there.
We also conclude Panavision was entitled to summary judgment under the federal
and state dilution statutes. Toeppen made commercial use of Panavision's
trademarks and his conduct diluted those marks.
I Pana, Illinois.
BACKGROUND
The Internet is a worldwide network of computers that enables various individuals
and organizations to share information. The Internet allows computer users to
access millions of web sites and web pages. A web page is a computer data file that
can include names, words, messages, pictures, sounds, and links to other
information.
Every web page has its own web site, which is its address, similar to a telephone
number or street address. Every web site on the Internet has an identifier called a
“domain name.” The domain name often consists of a person's name or a
company's name or trademark. For example, Pepsi has a web page with a web site
domain name consisting of the company name, Pepsi, and . com, the “top level”
H. CASES INVOLVING THE INTERNET Page 80 of 102
domain designation: Pepsi.com.FN1
FN1. We use the arrow keys ( ) to set out a domain name or a web site.
These arrows are not part of the name or the site.
The Internet is divided into several “top level” domains: .edu for education; .org for
organizations; .gov for government entities; .net for networks; and .com for
“commercial” which functions as the catchall domain for Internet users.
Domain names with the .com designation must be registered on the Internet with
Network Solutions, Inc. (“NSI”). NSI registers names on a first-come, first-served
basis for a $100 registration fee. NSI does not make *1319 a determination about a
registrant's right to use a domain name. However, NSI does require an applicant to
represent and warrant as an express condition of registering a domain name that
(1) the applicant's statements are true and the applicant has the right to use the
requested domain name; (2) the “use or registration of the domain name ... does not
interfere with or infringe the rights of any third party in any jurisdiction with respect
to trademark, service mark, trade name, company name or any other intellectual
property right”; and (3) the applicant is not seeking to use the domain name for any
unlawful purpose, including unfair competition.
A domain name is the simplest way of locating a web site. If a computer user does
not know a domain name, she can use an Internet “search engine.” To do this, the
user types in a key word search, and the search will locate all of the web sites
containing the key word. Such key word searches can yield hundreds of web sites.
To make it easier to find their web sites, individuals and companies prefer to have a
recognizable domain name.
Panavision holds registered trademarks to the names “ Panavision” and
“Panaflex” in connection with motion picture camera equipment. Panavision
promotes its trademarks through motion picture and television credits and other
media advertising.
In December 1995, Panavision attempted to register a web site on the Internet with
the domain name Panavision.com. It could not do that, however, because Toeppen
had already established a web site using Panavision's trademark as his domain
name. Toeppen's web page for this site displayed photographs of the City of
On December 20, 1995, Panavision's counsel sent a letter from California to
Toeppen in Illinois informing him that Panavision held a trademark in the name
Panavision and telling him to stop using that trademark and the domain name
Panavision.com. Toeppen responded by mail to Panavision in California, stating
he had the right to use the name Panavision.com on the Internet as his domain
name. Toeppen stated:
If your attorney has advised you otherwise, he is trying to screw you. He wants to
blaze new trails in the legal frontier at your expense. Why do you want to fund your
attorney's purchase of a new boat (or whatever) when you can facilitate the
acquisition of ‘PanaVision.com’ cheaply and simply instead?
Toeppen then offered to “settle the matter” if Panavision would pay him $13,000
CONFLICT OF LAWS 3D 2/08-09
in exchange for the domain name. Additionally, Toeppen stated that if Panavision
agreed to his offer, he would not “acquire any other Internet addresses which are
alleged by Panavision Corporation to be its property.”
After Panavision refused Toeppen's demand, he registered Panavision's other
trademark with NSI as the domain name Panaflex.com. Toeppen's web page for
Panaflex.com simply displays the word “Hello.”
Toeppen has registered domain names for various other companies including
Delta Airlines, Neiman Marcus, Eddie Bauer, Lufthansa, and over 100 other marks.
Toeppen has attempted to “sell” domain names for other trademarks such as
intermatic.com to Intermatic, Inc. for $10,000 and americanstandard.com to
American Standard, Inc. for $15,000.
Panavision filed this action against Toeppen in the District Court for the Central
District of California. Panavision alleged claims for dilution of its trademark under
the Federal Trademark Dilution Act of 1995, 15 U.S.C. § 1125(c), and under the
California Anti-dilution statute, California Business and Professions Code § 14330.
Panavision alleged that Toeppen was in the business of stealing trademarks,
registering them as domain names on the Internet and then selling the domain
names to the rightful trademark owners. The district court determined it had
personal jurisdiction over Toeppen, and granted summary judgment in favor of
Panavision on both its federal and state dilution claims. This appeal followed.
II
DISCUSSION
A. Personal Jurisdiction
[1] A district court's determination that personal jurisdiction can properly be
exercised*1320 is a question of law reviewable de novo when the underlying facts
are undisputed. Fireman's Fund Ins. Co. v. National Bank of Coops., 103 F.3d
888, 893 (9th Cir.1996). A district court's factual findings regarding jurisdiction are
reviewed for clear error. Adler v. Federal Rep. of Nig., 107 F.3d 720, 723 (9th
Cir.1997).
There is no applicable federal statute governing personal jurisdiction in this case.
Accordingly, we apply the law of California, the state in which the district court sits.
Core-Vent Corp. v. Nobel Industries AB, 11 F.3d 1482, 1484 (9th Cir.1993).
California's long-arm statute permits a court to exercise personal jurisdiction over a
defendant to the extent permitted by the Due Process Clause of the Constitution.
Cal.Code Civ. P. § 410.10; Gordy v. Daily News, L.P., 95 F.3d 829, 831 (9th
Cir.1996). The issue we address, therefore, is whether the requirements of due
process are satisfied by the district court's exercise of personal jurisdiction over
Toeppen. Core-Vent, 11 F.3d at 1484.
Personal jurisdiction may be founded on either general jurisdiction or specific
jurisdiction.
1. General Jurisdiction
H. CASES INVOLVING THE INTERNET Page 81 of 102
[2][3] General jurisdiction exists when a defendant is domiciled in the forum state or
his activities there are “substantial” or “continuous and systematic.” Helicopteros
Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-16, 104 S.Ct. 1868, 1872-
73, 80 L.Ed.2d 404 (1984). The district court correctly concluded that it did not have
general jurisdiction over Toeppen. Toeppen is domiciled in Illinois and his
activities in California are not substantial or continuous and systematic. See
Toeppen, 938 F.Supp. at 620.
2. Specific Jurisdiction
[4][5] We apply a three-part test to determine if a district court may exercise specific
jurisdiction:
(1) The nonresident defendant must do some act or consummate some transaction
with the forum or perform some act by which he purposefully avails himself of the
privilege of conducting activities in the forum, thereby invoking the benefits and
protections of its laws; (2) the claim must be one which arises out of or results from
the defendant's forum-related activities; and (3) exercise of jurisdiction must be
reasonable.
Omeluk v. Langsten Slip & Batbyggeri A/S, 52 F.3d 267, 270 (9th Cir.1995)
(quotation omitted).
The first of these requirements is purposeful availment.
a. Purposeful Availment
[6] The purposeful availment requirement ensures that a nonresident defendant will
not be haled into court based upon “random, fortuitous or attenuated” contacts with
the forum state. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct.
2174, 2183-84, 85 L.Ed.2d 528 (1985). This requirement is satisfied if the defendant
“has taken deliberate action” toward the forum state. Ballard v. Savage, 65 F.3d
1495, 1498 (9th Cir.1995). It is not required that a defendant be physically present
or have physical contacts with the forum, so long as his efforts are “purposefully
directed” toward forum residents. Id.
i. Application to the Internet
Applying principles of personal jurisdiction to conduct in cyberspace is relatively
new. “With this global revolution looming on the horizon, the development of the law
concerning the permissible scope of personal jurisdiction based on Internet use is in
its infant stages. The cases are scant.” Zippo Mfg. Co. v. Zippo Dot Com, Inc.,
952 F.Supp. 1119, 1123 (W.D.Pa.1997). We have, however, recently addressed the
personal availment aspect of personal jurisdiction in a case involving the Internet.
See Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414 (9th Cir.1997).
In Cybersell, an Arizona corporation, Cybersell, Inc. (“Cybersell AZ”), held a
registered servicemark for the name Cybersell. A Florida corporation, Cybersell, Inc.
(“Cybersell FL”), created a web site with the domain name cybsell.com. The web
page had the word “Cybersell” at the top and the phrase, “Welcome to Cybersell!”
Id. at 415. *1321 Cybersell AZ claimed that Cybersell FL infringed its registered
trademark and brought an action in the district court in Arizona. We held the Arizona
CONFLICT OF LAWS 3D 2/08-09
court could not exercise personal jurisdiction over Cybersell FL, because it had no
contacts with Arizona other than maintaining a web page accessible to anyone over
the Internet. Id. at 419-420.
In reaching this conclusion in Cybersell, we carefully reviewed cases from other
circuits regarding how personal jurisdiction should be exercised in cyberspace. We
concluded that no court had ever held that an Internet advertisement alone is
sufficient to subject a party to jurisdiction in another state. Id. at 418. In each case
where personal jurisdiction was exercised, there had been “something more” to
“indicate that the defendant purposefully (albeit electronically) directed his activity in
a substantial way to the forum state.” Id. Cybersell FL had not done this, and the
district court could not exercise personal jurisdiction over it.
Personal jurisdiction was properly exercised, however, in CompuServe, Inc. v.
Patterson, 89 F.3d 1257 (6th Cir.1996). There, the Sixth Circuit held that a Texas
resident who had advertised his product via a computer information service,
CompuServe, located in Ohio, was subject to personal jurisdiction in Ohio. The
court found that the Texas resident had taken direct actions that created a
connection with Ohio. Id. at 1264. He subscribed to CompuServe, he loaded his
software onto the CompuServe system for others to use, and he advertised his
software on the CompuServe system. Id.
In the present case, the district court's decision to exercise personal jurisdiction over
Toeppen rested on its determination that the purposeful availment requirement was
satisfied by the “effects doctrine.” That doctrine was not applicable in our Cybersell
case. There, we said: “Likewise unpersuasive is Cybersell AZ's reliance on
Panavision International v. Toeppen, 938 F.Supp. 616 (C.D.Cal.1996), [the
district court's published opinion in this case], where the court found the ‘purposeful
availment’ prong satisfied by the effects felt in California, the home state of
Panavision, from Toeppen's alleged out-of-state scheme to register domain
names using the trademarks of California companies, including Panavision, for the
purpose of extorting fees from them. Again, there is nothing analogous about
Cybersell FL's conduct.” Cybersell, 130 F.3d at 420 n. 6.
Our reference in Cybersell to “the effects felt in California” was a reference to the
effects doctrine.
ii. The Effects Doctrine
[7] In tort cases, jurisdiction may attach if the defendant's conduct is aimed at or has
an effect in the forum state. Ziegler v. Indian River County, 64 F.3d 470, 473 (9th
Cir.1995); see Calder v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 79 L.Ed.2d 804
(1984) (establishing an “effects test” for intentional action aimed at the forum state).
Under Calder, personal jurisdiction can be based upon: “(1) intentional actions (2)
expressly aimed at the forum state (3) causing harm, the brunt of which is suffered-
and which the defendant knows is likely to be suffered-in the forum state.” Core-
Vent Corp. v. Nobel Industries AB, 11 F.3d 1482, 1486 (9th Cir.1993).
As the district court correctly stated, the present case is akin to a tort case.
Panavision, 938 F.Supp. at 621; see also Ziegler, 64 F.3d at 473 (application of
the purposeful availment prong differs depending on whether the underlying claim is
a tort or contract claim). Toeppen purposefully registered Panavision's
H. CASES INVOLVING THE INTERNET Page 82 of 102
trademarks as his domain names on the Internet to force Panavision to pay him
money. Panavision, 938 F.Supp. at 621. The brunt of the harm to Panavision
was felt in California. Toeppen knew Panavision would likely suffer harm there
because, although at all relevant times Panavision was a Delaware limited
partnership, its principal place of business was in California, and the heart of the
theatrical motion picture and television industry is located there. Id. at 621-622.
The harm to Panavision is similar to the harm to the Indianapolis Colts football
team in Indianapolis Colts, Inc. v. Metropolitan Baltimore Football Club Ltd.
Partnership, 34 F.3d 410 (7th Cir.1994). There, the Indianapolis Colts brought a
trademark infringement action in the district court in Indiana *1322 against the
Canadian Football League's new team, the “Baltimore CFL Colts.” Id. at 411.
The Seventh Circuit held that the Baltimore CFL Colts team was subject to personal
jurisdiction in Indiana even though its only activity directed toward Indiana was the
broadcast of its games on nationwide cable television. Id. Because the Indianapolis
Colts used their trademarks in Indiana, any infringement of those marks would
create an injury which would be felt mainly in Indiana, and this, coupled with the
defendant's “entry” into the state by the television broadcasts, was sufficient for the
exercise of personal jurisdiction. Id.
Toeppen argues he has not directed any activity toward Panavision in California,
much less “entered” the state. He contends that all he did was register
Panavision's trademarks on the Internet and post web sites using those marks; if
this activity injured Panavision, the injury occurred in cyberspace. FN2
FN2. In a subset of this argument, Toeppen contends that a large
organization such as Panavision does not suffer injury in one location.
See Cybersell, 130 F.3d at 420 (A corporation “does not suffer harm in a
particular geographic location in the same sense that an individual does.”)
However, in Core-Vent, we stated that Calder v. Jones, 465 U.S. 783, 104
S.Ct. 1482, 79 L.Ed.2d 804 (1984), does not preclude a determination that
a corporation suffers the brunt of harm in its principal place of business.
Core-Vent, 11 F.3d at 1487. Panavision was previously a limited
partnership and is now a corporation. Under either form of business
organization, however, the brunt of the harm suffered by Panavision was
in the state where it maintained its principal place of business, California.
[8] We agree that simply registering someone else's trademark as a domain name
and posting a web site on the Internet is not sufficient to subject a party domiciled in
one state to jurisdiction in another. Cybersell, 130 F.3d at 418. As we said in
Cybersell, there must be “something more” to demonstrate that the defendant
directed his activity toward the forum state. Id. Here, that has been shown.
Toeppen engaged in a scheme to register Panavision's trademarks as his domain
names for the purpose of extorting money from Panavision. His conduct, as he
knew it likely would, had the effect of injuring Panavision in California where
Panavision has its principal place of business and where the movie and television
industry is centered.FN3 Under the “effects test,” the purposeful availment
requirement necessary for specific, personal jurisdiction is satisfied.
FN3. We discuss the nature of Panavision's injury in following Part B.
b. Defendant's Forum-Related Activities
CONFLICT OF LAWS 3D 2/08-09

The second requirement for specific, personal jurisdiction is that the claim asserted
in the litigation arises out of the defendant's forum related activities. Ziegler, 64
F.3d at 474. We must determine if the plaintiff Panavision would not have been
injured “but for” the defendant Toeppen's conduct directed toward Panavision in
California. See Ballard, 65 F.3d at 1500.
This requirement is satisfied. Toeppen's registration of Panavision's trademarks
as his own domain names on the Internet had the effect of injuring Panavision in
California. But for Toeppen's conduct, this injury would not have occurred.
Panavision's claims arise out of Toeppen's California-related activities.
c. Reasonableness
[9][10] Even if the first two requirements are met, in order to satisfy the Due Process
Clause, the exercise of personal jurisdiction must be reasonable. Ziegler, 64 F.3d
at 474-75. For jurisdiction to be reasonable, it must comport with “fair play and
substantial justice.” Burger King, 471 U.S. at 476, 105 S.Ct. at 2184. “[W]here a
defendant who purposefully has directed his activities at forum residents seeks to
defeat jurisdiction, he must present a compelling case that the presence of some
other considerations would render jurisdiction unreasonable.” Core-Vent, 11 F.3d
at 1487 (citing Burger King, 471 U.S. at 476-77, 105 S.Ct. at 2184-85).
As we have said, Toeppen purposefully directed his activities at Panavision in
California. This placed the burden on him to “present a compelling case that the
presence of some other considerations would render jurisdiction unreasonable.” Id.
*1323 [11] In addressing the question of reasonableness, we consider seven
factors: (1) the extent of a defendant's purposeful interjection; (2) the burden on the
defendant in defending in the forum; (3) the extent of conflict with the sovereignty of
the defendant's state; (4) the forum state's interest in adjudicating the dispute; (5)
the most efficient judicial resolution of the controversy; (6) the importance of the
forum to the plaintiff's interest in convenient and effective relief; and (7) the
existence of an alternative forum. Burger King, 471 U.S. at 476-77, 105 S.Ct. at
2184-85. No one factor is dispositive; a court must balance all seven. Core-Vent, 11
F.3d at 1488.
The district court found that Toeppen had not presented a compelling case that
jurisdiction was unreasonable. Panavision, 938 F.Supp. at 622. We agree. The
balance of the Burger King factors which we articulated in Core-Vent tips in favor of
the exercise of personal jurisdiction.
i. Purposeful Interjection
“Even if there is sufficient ‘interjection’ into the state to satisfy the purposeful
availment prong, the degree of interjection is a factor to be weighed in assessing
the overall reasonableness of jurisdiction under the reasonableness prong.” Core-
Vent, 11 F.3d at 1488 (citing Insurance Company of North America v. Marina Salina
Cruz, 649 F.2d 1266, 1271 (9th Cir.1981)). Here, the degree of interjection was
substantial.
Toeppen's acts were aimed at Panavision in California. He registered
H. CASES INVOLVING THE INTERNET Page 83 of 102
Panavision's trademarks as his domain names, knowing that this would likely injure
Panavision in California. In addition, he sent a letter to Panavision in California
demanding $13,000 to release his registration of Panavision.com. The purposeful
interjection factor weighs strongly in favor of the district court's exercise of personal
jurisdiction.
ii. Defendant's Burden in Litigating
[12] A defendant's burden in litigating in the forum is a factor in the assessment of
reasonableness, but unless the “inconvenience is so great as to constitute a
deprivation of due process, it will not overcome clear justifications for the exercise of
jurisdiction.” Caruth v. International Psychoanalytical Ass'n, 59 F.3d 126, 128-29
(9th Cir.1995) (citing Roth v. Garcia Marquez, 942 F.2d 617, 623 (9th Cir.1991)).
The burden on Toeppen as an individual living in Illinois to litigate in California is
significant, but the inconvenience is not so great as to deprive him of due process.
As the district court stated, “ ‘in this era of fax machines and discount air travel’
requiring Toeppen to litigate in California is not constitutionally unreasonable.”
Panavision, 938 F.Supp. at 622 (quoting Sher v. Johnson, 911 F.2d 1357, 1365
(9th Cir.1990)).
iii. Sovereignty
This factor concerns the extent to which the district court's exercise of jurisdiction in
California would conflict with the sovereignty of Illinois, Toeppen's state of domicile.
Core-Vent, 11 F.3d at 1489. Such a conflict is not a concern in this case. The
allegations in support of Panavision's state law claim and those in support of its
federal claim under the Trademark Dilution Act require the same analysis. The
federal analysis would be the same in either Illinois or California. In this
circumstance, the exercise of jurisdiction by a federal court in California does not
implicate sovereignty concerns of Illinois.
iv. Forum State's Interest
“California maintains a strong interest in providing an effective means of redress for
its residents tortiously injured.” Gordy v. Daily News, L.P., 95 F.3d 829, 836 (9th
Cir.1996) (citing Sinatra v. National Enquirer, Inc., 854 F.2d 1191, 1200 (9th
Cir.1988)). Panavision's principal place of business is in California. This factor
weighs in Panavision's favor.
v. Efficient Resolution
This factor focuses on the location of the evidence and witnesses. Caruth, 59 F.3d
at 129. It is no longer weighed heavily given the modern advances in
communication and transportation. Id. In any event, due to the limited amount of
evidence and few potential *1324 witnesses in the present litigation, this factor is
probably neutral.
vi. Convenient & Effective Relief for Plaintiff
In evaluating the convenience and effectiveness of relief for the plaintiff, we have
given little weight to the plaintiff's inconvenience. Ziegler, 64 F.3d at 476. It may be
CONFLICT OF LAWS 3D 2/08-09
somewhat more costly and inconvenient for Panavision to litigate in another forum,
but the burden on Panavision is relatively slight. This factor is essentially neutral,
perhaps weighing slightly in Toeppen's favor.
vii. Alternative Forum
Panavision has not demonstrated the unavailability of an alternative forum. In this
case, Illinois is an alternative forum. As stated above, it may be more costly and
inconvenient for Panavision to litigate in Illinois, but this is not an unreasonable
burden. This factor weighs in Toeppen's favor.
In balancing the Burger King factors, we conclude that although some factors weigh
in Toeppen's favor, he failed to present a compelling case that the district court's
exercise of jurisdiction in California would be unreasonable.
We conclude that all of the requirements for the exercise of specific, personal
jurisdiction are satisfied. The district court properly exercised personal jurisdiction
over Toeppen. We next consider the district court's summary judgment in favor of
Panavision on its trademark dilution claims.
B. Trademark Dilution Claims
The Federal Trademark Dilution Act provides:
The owner of a famous mark shall be entitled ... to an injunction against another
person's commercial use in commerce of a mark or trade name, if such use begins
after the mark has become famous and causes dilution of the distinctive quality of
the mark....
15 U.S.C. § 1125(c).
The California Anti-dilution statute is similar. SeeCal. Bus. & Prof.Code § 14330. It
prohibits dilution of “the distinctive quality” of a mark regardless of competition or
the likelihood of confusion. The protection extends only to strong and well
recognized marks. Panavision's state law dilution claim is subject to the same
analysis as its federal claim.
In order to prove a violation of the Federal Trademark Dilution Act, a plaintiff must
show that (1) the mark is famous; (2) the defendant is making a commercial use of
the mark in commerce; (3) the defendant's use began after the mark became
famous; and (4) the defendant's use of the mark dilutes the quality of the mark by
diminishing the capacity of the mark to identify and distinguish goods and services.
15 U.S.C. § 1125(c).
Toeppen does not challenge the district court's determination that Panavision's
trademark is famous, that his alleged use began after the mark became famous, or
that the use was in commerce. Toeppen challenges the district court's
determination that he made “commercial use” of the mark and that this use caused
“dilution” in the quality of the mark.
1. Commercial Use
H. CASES INVOLVING THE INTERNET Page 84 of 102
[13] Toeppen argues that his use of Panavision's trademarks simply as his
domain names cannot constitute a commercial use under the Act. Case law
supports this argument. See Panavision International, L.P. v. Toeppen, 945
F.Supp. 1296, 1303 (C.D.Cal.1996) (“Registration of a trade[mark] as a domain
name, without more, is not a commercial use of the trademark and therefore is not
within the prohibitions of the Act.”); Academy of Motion Picture Arts & Sciences v.
Network Solutions, Inc., 989 F.Supp. 1276, 1997 WL 810472 (C.D.Cal. Dec.22,
1997) (the mere registration of a domain name does not constitute a commercial
use); Lockheed Martin Corp. v. Network Solutions, Inc., 985 F.Supp. 949
(C.D.Cal.1997) (NSI's acceptance of a domain name for registration is not a
commercial use within the meaning of the Trademark Dilution Act).
Developing this argument, Toeppen contends that a domain name is simply an
address used to locate a web page. He asserts *1325 that entering a domain name
on a computer allows a user to access a web page, but a domain name is not
associated with information on a web page. If a user were to type Panavision.com
as a domain name, the computer screen would display Toeppen's web page with
aerial views of Pana, Illinois. The screen would not provide any information about “
Panavision,” other than a “location window” which displays the domain name.
Toeppen argues that a user who types in Panavision.com, but who sees no
reference to the plaintiff Panavision on Toeppen's web page, is not likely to
conclude the web page is related in any way to the plaintiff, Panavision.
Toeppen's argument misstates his use of the Panavision mark. His use is not as
benign as he suggests. Toeppen's “business” is to register trademarks as domain
names and then sell them to the rightful trademark owners. He “act[s] as a ‘spoiler,’
preventing Panavision and others from doing business on the Internet under their
trademarked names unless they pay his fee.” Panavision, 938 F.Supp. at 621.
This is a commercial use. See Intermatic Inc. v. Toeppen, 947 F.Supp. 1227,
1230 (N.D.Ill.1996) (stating that “[o]ne of Toeppen's business objectives is to profit
by the resale or licensing of these domain names, presumably to the entities who
conduct business under these names.”).
As the district court found, Toeppen traded on the value of Panavision's marks. So
long as he held the Internet registrations, he curtailed Panavision's exploitation of
the value of its trademarks on the Internet, a value which Toeppen then used when
he attempted to sell the Panavision.com domain name to Panavision.
In a nearly identical case involving Toeppen and Intermatic Inc., a federal district
court in Illinois held that Toeppen's conduct violated the Federal Trademark
Dilution Act. Intermatic, 947 F.Supp. at 1241. There, Intermatic sued Toeppen for
registering its trademark on the Internet as Toeppen's domain name,
intermatic.com. It was “conceded that one of Toeppen's intended uses for
registering the Intermatic mark was to eventually sell it back to Intermatic or to some
other party.” Id. at 1239. The court found that “ Toeppen's intention to arbitrage
the ‘intermatic.com’ domain name constitute[d] a commercial use.” Id.See also
Teletech Customer Care Management, Inc. v. Tele-Tech Co., 977 F.Supp. 1407
(C.D.Cal.1997) (granting a preliminary injunction under the Trademark Dilution Act
for use of a trademark as a domain name).
Toeppen's reliance on Holiday Inns, Inc. v. 800 Reservation, Inc., 86 F.3d 619 (6th
Cir.1996), cert. denied, 519 U.S. 1093, 117 S.Ct. 770, 136 L.Ed.2d 715 (1997) is
CONFLICT OF LAWS 3D 2/08-09
misplaced. In Holiday Inns, the Sixth Circuit held that a company's use of the most
commonly misdialed number for Holiday Inns' 1-800 reservation number was not
trademark infringement.
Holiday Inns is distinguishable. There, the defendant did not use Holiday Inns'
trademark. Rather, the defendant selected the most commonly misdialed telephone
number for Holiday Inns and attempted to capitalize on consumer confusion.
A telephone number, moreover, is distinguishable from a domain name because a
domain name is associated with a word or phrase. A domain name is similar to a
“vanity number” that identifies its source. Using Holiday Inns as an example, when a
customer dials the vanity number “1-800-Holiday,” she expects to contact Holiday
Inns because the number is associated with that company's trademark. A user
would have the same expectation typing the domain name HolidayInns.com. The
user would expect to retrieve Holiday Inns' web page.FN4
FN4. See Carl Oppedahl, Analysis and Suggestions Regarding NSI
Domain Name Trademark Dispute Policy, 7 Fordham Intell. Prop. Media &
Ent. L.J. 73 (1996). Once the domain name system was established,
“nobody would have expected xerox.com to map to anything but the Xerox
corporation.” Id. at 95.
Toeppen made a commercial use of Panavision's trademarks. It does not matter
that he did not attach the marks to a product. Toeppen's commercial use was his
attempt to sell the trademarks themselves.FN5 Under the *1326 Federal Trademark
Dilution Act and the California Anti-dilution statute, this was sufficient commercial
use.
FN5. See Boston Pro. Hockey Assoc., Inc. v. Dallas Cap & Emblem Mfg.,
Inc., 510 F.2d 1004 (1975), which involved the sale of National Hockey
League logos. The defendant was selling the logos themselves,
unattached to a product (such as a hat or sweatshirt). The court stated:
“The difficulty with this case stems from the fact that a reproduction of the
trademark itself is being sold, unattached to any other goods or services.”
Id. at 1010. The court concluded that trademark law should protect the
trademark itself. “Although our decision here may slightly tilt the trademark
laws from the purpose of protecting the public to the protection of the
business interests of plaintiffs, we think that the two become ...
intermeshed....” Id. at 1011. “Whereas traditional trademark law sought
primarily to protect consumers, dilution laws place more emphasis on
protecting the investment of the trademark owners.” Panavision, 945
F.Supp. at 1301.
2. Dilution
[14] “Dilution” is defined as “the lessening of the capacity of a famous mark to
identify and distinguish goods or services, regardless of the presence or absence of
(1) competition between the owner of the famous mark and other parties, or (2)
likelihood of confusion, mistake or deception.” 15 U.S.C. § 1127.FN6
FN6. The Lanham Act, 15 U.S.C. § 1127, provides definitions for the
Trademark Dilution Act, 15 U.S.C. § 1125(c).
H. CASES INVOLVING THE INTERNET Page 85 of 102
Trademark dilution on the Internet was a matter of Congressional concern. Senator
Patrick Leahy (D-Vt.) stated:
[I]t is my hope that this anti-dilution statute can help stem the use of deceptive
Internet addresses taken by those who are choosing marks that are associated with
the products and reputations of others.
141 Cong. Rec. § 19312-01 (daily ed. Dec. 29, 1995) (statement of Sen. Leahy).
See also Teletech Customer Care Management, Inc. v. Tele-Tech Co., Inc., 977
F.Supp. 1407, 1413 (C.D.Cal.1997).
[15][16][17] To find dilution, a court need not rely on the traditional definitions such
as “blurring” and “tarnishment.” FN7 Indeed, in concluding that Toeppen's use of
Panavision's trademarks diluted the marks, the district court noted that Toeppen's
conduct varied from the two standard dilution theories of blurring and tarnishment.
Panavision, 945 F.Supp. at 1304. The court found that Toeppen's conduct
diminished “the capacity of the Panavision marks to identify and distinguish
Panavision's goods and services on the Internet.” Id. See also Intermatic, 947
F.Supp. at 1240 ( Toeppen's registration of the domain name, “lessens the capacity
of Intermatic to identify and distinguish its goods and services by means of the
Internet.”).
FN7. Blurring occurs when a defendant uses a plaintiff's trademark to
identify the defendant's goods or services, creating the possibility that the
mark will lose its ability to serve as a unique identifier of the plaintiff's
product. Ringling Bros.-Barnum & Bailey, Combined Shows, Inc. v. B.E.
Windows, Corp., 937 F.Supp. 204, 209 (S.D.N.Y.1996) (citing Deere & Co.
v. MTD Prods., Inc., 41 F.3d 39, 43 (2d Cir.1994)); Thomas McCarthy,
McCarthy on Trademarks and Unfair Competition, § 24:68 at 24-111 (4th
ed.1997); see also Ringling Bros.-Barnum & Bailey Combined Shows, Inc.
v. Utah Div. of Travel Development, 955 F.Supp. 605, 614-15
(E.D.Va.1997) (discussing the inadequacies of current definitions of
blurring and determining that blurring requires consumers to mistakenly
associate a defendant's mark with a plaintiff's famous trademark).
Tarnishment occurs when a famous mark is improperly associated with
an inferior or offensive product or service. McCarthy, § 24:104 at 24-
172 to 173; Ringling Bros., 937 F.Supp. at 209 (citing Hormel Foods
Corp. v. Jim Henson Prods., Inc., 73 F.3d 497, 506 (2d Cir.1996)).
This view is also supported by Teletech. There, TeleTech Customer Care
Management Inc., (“TCCM”), sought a preliminary injunction against Tele-Tech
Company for use of TCCM's registered service mark, “TeleTech,” as an Internet
domain name. Teletech, 977 F.Supp. at 1410. The district court issued an
injunction, finding that TCCM had demonstrated a likelihood of success on the
merits on its trademark dilution claim. Id. at 1412. The court found that TCCM
had invested great resources in promoting its servicemark and Teletech's
registration of the domain name teletech.com on the Internet would most likely
dilute TCCM's mark. Id. at 1413.
Toeppen argues he is not diluting the capacity of the Panavision marks to identify
CONFLICT OF LAWS 3D 2/08-09
goods or services. He contends that even though Panavision cannot use Federal Trademark Dilution Act, 15 U.S.C. § 1125(c), and the California Anti-dilution
Panavision.com and Panaflex.com as its domain name addresses,*1327 it can still statute, Cal.Bus. & Prof.Code § 14330.
promote its goods and services on the Internet simply by using some other
“address” and then creating its own web page using its trademarks. III

We reject Toeppen's premise that a domain name is nothing more than an
address. A significant purpose of a domain name is to identify the entity that owns
the web site.FN8 “A customer who is unsure about a company's domain name will
often guess that the domain name is also the company's name.” Cardservice
Int'l v. McGee, 950 F.Supp. 737, 741 (E.D.Va.1997). “[A] domain name mirroring a
corporate name may be a valuable corporate asset, as it facilitates communication
with a customer base.” MTV Networks, Inc. v. Curry, 867 F.Supp. 202, 203-204 n.
2 (S.D.N.Y.1994).
FN8. This point was made in a recent legal periodical:
The domain name serves a dual purpose. It marks the location of the
site within cyberspace, much like a postal address in the real world, but
it may also indicate to users some information as to the content of the
site, and, in instances of well-known trade names or trademarks, may
provide information as to the origin of the contents of the site.
Peter Brown, New Issues in Internet Litigation, 17th Annual Institute on
Computer Law: The Evolving Law of the Internet-Commerce, Free
Speech, Security, Obscenity and Entertainment, 471 Prac. L. Inst. 151
(1997).
CONCLUSION
Toeppen engaged in a scheme to register Panavision's trademarks as his domain
names on the Internet and then to extort money from Panavision by trading on the
value of those names. Toeppen's actions were aimed at Panavision in California
and the brunt of the harm was felt in California. The district court properly exercised
personal jurisdiction over Toeppen.
We also affirm the district court's summary judgment in favor of Panavision under
the Federal Trademark Dilution Act, 15 U.S.C. § 1125(c), and the California Anti-
dilution statute, Cal.Bus. & Prof.Code § 14330. Toeppen made commercial use of
Panavision's trademarks and his conduct diluted those marks.
AFFIRMED.
C.A.9 (Cal.),1998.
Panavision Intern., L.P. v. Toeppen
141 F.3d 1316, 46 U.S.P.Q.2d 1511, 98 Cal. Daily Op. Serv. 2846, 98 Daily Journal
D.A.R. 3929
END OF DOCUMENT

Using a company's name or trademark as a domain name is also the easiest way to
locate that company's web site. Use of a “search engine” can turn up hundreds of
web sites, and there is nothing equivalent to a phone book or directory assistance
for the Internet. See Cardservice, 950 F.Supp. at 741.

Moreover, potential customers of Panavision will be discouraged if they cannot find

its web page by typing in “Panavision.com,” but instead are forced to wade through
hundreds of web sites. This dilutes the value of Panavision's trademark. We echo
the words of Judge Lechner, quoting Judge Wood: “Prospective users of plaintiff's
services who mistakenly access defendant's web site may fail to continue to search
for plaintiff's own home page, due to anger, frustration or the belief that plaintiff's
home page does not exist.” Jews for Jesus v. Brodsky, 993 F.Supp. 282, 306-07
(D.N.J. 1998) (Lechner, J., quoting Wood, J. in Planned Parenthood v. Bucci, 1997
WL 133313 at *4); see also Teletech, 977 F.Supp. at 1410 (finding that use of a
search engine can generate as many as 800 to 1000 matches and it is “likely to
deter web browsers from searching for Plaintiff's particular web site”).

Toeppen's use of Panavision.com also puts Panavision's name and reputation at

his mercy. See Intermatic, 947 F.Supp. at 1240 (“If Toeppen were allowed to use
‘intermatic.com,’ Intermatic's name and reputation would be at Toeppen's mercy
and could be associated with an unimaginable amount of messages on Toeppen's
web page.”).

We conclude that Toeppen's registration of Panavision's trademarks as his

domain names on the Internet diluted those marks within the meaning of the

H. CASES INVOLVING THE INTERNET Page 86 of 102 CONFLICT OF LAWS 3D 2/08-09

 United States District Court, N.D. Illinois.
TRANSCRAFT CORPORATION, Plaintiffs,
v.
DOONAN TRAILER CORP., Defendant.
No. 97 C 4943.
Nov. 17, 1997.
MEMORANDUM OPINION AND ORDER
CONLON, Senior J.
*1 Transcraft Corporation (“ Transcraft”) sues Doonan Trailer Corporation (“
Doonan”) for trademark infringement, unfair competition, and trademark dilution
pursuant to the Lanham Act, 15 U .S.C. § 1051 et seq. Transcraft alleges
Doonan manufactures, markets, and sells cargo trailers with a design confusingly
similar to Transcraft's federally registered design trademark for cargo trailers.
Doonan moves to dismiss the complaint for lack of personal jurisdiction or for
improper venue pursuant to Fed.R.Civ.P. 12(b)(2) and (3).
BACKGROUND
In considering a motion to dismiss for want of personal jurisdiction or improper
venue, the court accepts all well-pleaded allegations as true unless controverted by
defendant's affidavits. Any conflicts in the affidavits are resolved in favor of the
plaintiff. Turnock v. Cope, 816 F.2d 332, 333 (7th Cir.1987).
Transcraft is a Delaware corporation with its principal place of business in Anna,
Illinois. Compl. ¶ 4. Since 1976, Transcraft has manufactured and sold cargo
trailers with a distinctive design of circular holes along its trailers' main side beams.
Id. ¶ [5.In December 1996, the U.S. Patent and Trademark Office granted
Transcraft Trademark Reg. No. 2,022,972 for its cargo trailer design. Id. ¶ 13. For
the last six years, Doonan has manufactured, marketed, and sold cargo trailers
having a design of circular holes along its trailers' main beams. Id. ¶ 23; Ans. ¶ 23.
Transcraft advised Doonan to stop infringing its trademark in May 1995. Compl. ¶
32.
Doonan is a Kansas corporation with its principal place of business in Great Bend,
Kansas. Heier Dec. ¶ 2. Doonan is not registered to do business in Illinois, and has
no agent for service of process in Illinois. Doonan has no offices, production
facilities, distribution facilities, dealers, agents, employees, sales force, telephone
listings, bank accounts, property, or assets in Illinois. Id. §§ 3 - 4. However,
Transcraft states:
[A]s inherent in the transportation industry, [ Doonan's trailers] travel on the
interstate highways and are viewed by consumers within the jurisdiction of this
Court. [ Doonan] currently operates and maintains an Internet World Wide Web site
which is viewable and accessible within the jurisdiction of this court.... [ Doonan's
web site] provide[s] residents within the Court's jurisdiction phone numbers, dealer
information (including toll free phone numbers and addresses), and sales
information for [ Doonan's] trailers. [[[ Doonan's web site] invite[s] residents within
the Court's jurisdiction to contact [ Doonan] via telephone or electronic mail for
sales information.
H. CASES INVOLVING THE INTERNET Page 87 of 102
Smith Dec. Ex. 1.
In support of personal jurisdiction, Transcraft relies on the following facts. Although
Doonan denies that it or its agents have sold new or used trailers to Illinois
residents or businesses, Doonan does not deny that its used trailers have been
purchased by Illinois residents or businesses. Pl.Ex. 4, ¶ 18. A Kentucky-based
authorized dealer of Doonan trailers sold three new Doonan trailers to Illinois
residents. Id. In conformance with industry practice, Doonan provided warranties to
the three Illinois buyers. Pl.Ex. 5, ¶ 4. Doonan has at least 21 authorized dealers,
none of whom are restricted from selling Doonan trailers to Illinois customers; from
its work with dealers of Transcraft and Doonan trailers, Transcraft knows those
dealers want to sell to Illinois customers. Id. ¶ 11; Pl.Ex. 7, ¶ 11. Doonan's
Internet web site-accessible in Illinois-promotes the sale of new and used Doonan
trailers, and features the image of a cargo trailer with the circle design. Pl.Ex. 3.
Johnson Truck Service in Anna, Illinois transports both Transcraft and Doonan
trailers. Pl.Ex. 7, ¶¶ 5 - 6. Transcraft has seen Doonan trailers with the circle
design stacked and transported with its own trailers. Id. ¶ 3. At its own location in
Illinois, Transcraft has seen Doonan trailers with the circle design. Id. ¶ 7.
DISCUSSION
I. GENERAL PRINCIPLES
*2 To exercise personal jurisdiction over a defendant in a federal question case, a
federal court must determine that: (1) the exercise of jurisdiction accords with Fifth
Amendment due process principles; and (2) the defendant is amenable to service of
process. United States v. Martinez De Ortiz, 910 F.2d 376, 381 (7th Cir.1990);
Lifeway Foods, Inc. v. Fresh Made, Inc., 940 F.Supp. 1316 (N.D.Ill.1996). In federal
question cases, Fifth Amendment due process is satisfied where the defendant has
“sufficient contacts with the United States as a whole,” rather than with a particular
state. Martinez De Ortiz, 910 F.2d at 381. Doonan is a Kansas corporation and
conducts business in the United States, its contacts with the United States are
plainly sufficient to satisfy due process.
However, the Lanham Act does not authorize nationwide service of process. The
court must therefore examine the Illinois long-arm statute to determine if Doonan is
amenable to service of process here. Fed.R.Civ.P. 4(k). A federal district court
sitting in Illinois has personal jurisdiction over a nonresident party only if an Illinois
state court would have such jurisdiction. RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d
1272, 1275 (7th Cir.1997). An Illinois nonresident may be sued in Illinois if (1)
jurisdiction is authorized under the Illinois long-arm statute, and (2) the minimum
contacts required by due process are present. FMC Corp. v. Varonos, 892 F.2d
1308, 1310 (7th Cir.1990).
The Illinois long-arm statute authorizes jurisdiction on any basis permitted by the
Illinois Constitution and the Constitution of the United States. 735 ILCS 5/2-209(c).
The Illinois Constitution requires the court to inquire whether it is “fair, just, and
reasonable to require a nonresident defendant to defend an action in Illinois,
considering the quality and nature of the defendant's acts which occur in Illinois or
which affect interests located in Illinois.” Rollins v. Ellwood, 141 Ill.2d 249, 565
N.E.2d 1302, 1316 (1990). The defendant's connection with Illinois should not be
CONFLICT OF LAWS 3D 2/08-09
merely “random, fortuitous, or attenuated”; rather, the connection should enable the
defendant “to predict that it might be subject to the jurisdiction of this state.”
Autotech Controls Corp. v. K.J. Elec. Corp., 256 Ill.App.3d 721, 195 Ill.Dec. 526,
628 N.E.2d 990, 995-96 (1993).
Similarly, federal due process requires minimum contacts with the forum state “such
that the maintenance of the suit does not offend ‘traditional notions of fair play and
substantial justice.’ “ International Shoe Co. v. Washington, 326 U.S. 310, 316, 66
S.Ct. 154, 90 L.Ed. 95 (1945). Minimum contacts have been defined as “some act
by which the defendant purposely avails itself of the privilege of conducting activities
within the forum state, thus invoking the benefits and protections of its laws.”
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 85 L.Ed.2d
528 (1985) (quoting Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2
L.Ed.2d 1283 (1958)). Put another way, the federal due process standard requires
courts to consider whether the defendant's purposeful contacts with the forum state
were such that the defendant could reasonably expect the courts of that state to
assert jurisdiction. See id.; World-Wide Volkswagen Corp. v. Woodson, 444 U.S.
286, 297 (1980).
II. PERSONAL JURISDICTION, INTENTIONAL TORTS, AND TRADEMARK LAW
*3 One source of jurisdiction under the Illinois long-arm statute is the “commission
of a tort within this State.” Ill.Rev.Stat. ch. 110, p 2-209(a)(2). In the area of
negligent torts, World-Wide Volkswagen made clear that the random or fortuitous
occurrence of an injury in the forum state is a constitutionally insufficient basis for
the exercise of personal jurisdiction. 444 U.S. 286 (1980). A different rule
developed in the context of intentional torts. In Calder v. Jones, 465 U.S. 783, 104
S.Ct. 1482, 79 L.Ed.2d 804 (1984), a California resident sued two employees of the
National Enquirer for allegedly writing a libelous article about the plaintiff. The
defendants were Florida residents and composed their article in Florida. The Court
found proper a California court's exercise of personal jurisdiction over the
defendants, because the defendants knew that California would be the “focal” point
of the injuries resulting from their intentional conduct. Id. at 789-90. Under the
circumstances, the defendants could “ ‘reasonably anticipate being haled into court
[in California]’, to answer for the truth of the statements made in their article.” Id.
at 790 (quoting World-Wide Volkswagen, 444 U.S. at 297).
The Seventh Circuit had already recognized the relevance of a plaintiff's location to
the issue of personal jurisdiction when a defendant intentionally harms the plaintiff's
intellectual property rights. See Honeywell Inc. v. Metz Apparatewerke, 509 F.2d
1137 (7th Cir.1975). In Honeywell, the court concluded personal jurisdiction over
Metz was proper because Metz intentionally induced the infringement of
Honeywell's patent:
[B]y entering into the exclusive agreement for distribution in the United States, Metz
purposely promoted American sales and ensured that such infringement would take
place, causing injury to Honeywell, a corporation with its principal place of business
in Illinois.
Id. at 1144. Based on this language, courts interpreted Honeywell to mean that the
situs of the injury to intellectual property is determined by where the property owner
resides (i.e., the injury occurred in Illinois because Honeywell's principal place of
H. CASES INVOLVING THE INTERNET Page 88 of 102
business was in Illinois). See, e.g., Acrison, Inc. v. Control and Metering Limited,
730 F.Supp. 1445, 1448 (N.D.Ill.1990).
When the Federal Circuit began hearing patent appeals from this circuit, it
encountered decisions based on the foregoing interpretation of Honeywell. The
Federal Circuit rejected the “place of residence” interpretation, stating:
Among the most important rights in the bundle of rights owned by a patent holder is
the right to exclude others. This right is not limited to a particular situs, but exists
anywhere the patent is recognized. It seems questionable to attribute to a patent
right a single situs. A patent is a federally created property right, valid throughout
the United States. Its legal situs would seem to be anywhere it is called into play.
*4 Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558, 1570 -71
(Fed.Cir.1994). The court continued:
[A] focus on the place where the infringing sales are made is consistent with other
areas of intellectual property law-it brings patent infringement actions into line with
the rule applied in trademark and copyright cases. (citations omitted).
... [A]ccordingly we hold that, in a case such as this, the situs of the injury is the
location, or locations, at which the infringing activity directly impacts on the interests
of the patentee, here the place of infringing sales in Virginia.
Id.; see also North American Philips Corp. v. American Vending Sales Inc., 35 F.3d
1576, 32 U.S.P.Q.2d 1203, 1205 (Fed.Cir.1994)(Beverly Hills Fan“disagreed that
Honeywell stood for that proposition and instead held as a matter of uniform federal
patent law that patent infringement occurs where allegedly infringing sales are
made”).
Doonan urges the following rule is applicable: “to establish personal jurisdiction in
an unfair competition and trademark action, plaintiff must show that the infringing
products were sold in the state; injury to good will or reputation, dilution of the value
of the trademark, and damages from expected lost profits did not establish personal
jurisdiction in the forum state.” Lifeway Foods, Inc. v. Fresh Made, Inc., 940
F.Supp. 1316, 1319 - 20 (N.D.Ill.1996) (citing Amba Mktg. Sys., Inc. v. Jobar Int'l.
Inc., 551 F.2d 784, 787 - 88 (9th Cir.1977)). Inexplicably, neither party cites the
Seventh Circuit's latest statement in the area of personal jurisdiction and trademark
law, Indianapolis Colts, Inc. v. Metropolitan Baltimore Football Club Limited
Partnership, 34 F.3d 410 (7th Cir.1994).
At the time of the lawsuit in Indianapolis Colts, the only activity of the defendant
undertaken in or planned for the Indiana market was the nationwide broadcast of its
games on cable television. In deciding whether due process would forbid jurisdiction
in Indiana, the Seventh Circuit stated:
We think not, and are not even certain that the broadcasts in Indiana are critical.
The Indianapolis Colts use the trademarks they seek to defend in this suit mainly in
Indiana. If the trademarks are impaired, as the suit alleges, the injury will be felt
mainly in Indiana. By choosing a name that might be found to be confusingly similar
to that of the Indianapolis Colts, the defendants assumed the risk of injuring
valuable property located in Indiana. Since there can be no tort without an injury,
(citation omitted), the state in which the injury occurs is the state in which the tort
CONFLICT OF LAWS 3D 2/08-09
occurs, and someone who commits a tort in Indiana should, one might suppose, be
amenable to suit there. This conclusion is supported by the Supreme Court's
decision in Calder v. Jones... holding that the state in which the victim of the
defendants' defamation lived had jurisdiction over the victim's defamation suit.
*5 We need not rest on so austere a conception of the basis of personal jurisdiction.
In Calder as in all the other cases that have come to our attention in which
jurisdiction over a suit involving intellectual property (when broadly defined to
include reputation, so that it includes Calder itself) was upheld, the defendant had
done more than brought about an injury to an interest located in a particular state.
The defendant had also “entered” the state in some fashion, as by the sale (in
Calder ) of the magazine containing the defamatory material. Well, we have that
here too, because of the broadcasts, so we needn't decide whether the addition is
indispensable.
Id. at 411 - 12.
Indianapolis Colts was decided after the Federal Circuit rendered its decision in
Beverly Hills Fan (which emphasized the place of the infringing sale for the
determination of personal jurisdiction in the patent area). 21 F.3d at 1570 - 71.
Presumably, the Seventh Circuit found the logic of the Federal Circuit either
unconvincing or inapplicable in the trademark context. Lower courts have resisted
reading Indianapolis Colts to mean that intellectual property “torts” can occur in the
plaintiff's home forum based on activities (e.g., infringing sales) conducted
elsewhere. See, e.g., Jan Mark, Inc. v. Reidy, 1997 WL 43203 at *3 (N.D.Ill.
Jan.28, 1997) (copyright case; “This argument ... is completely unsupported in
Indianapolis Colts, and we find it to be completely without merit”). These decisions
are undoubtedly correct, to the extent that the Seventh Circuit did not rest its
interpretation solely on the injury to the Indianapolis Colts occurring in Indiana, but
rather acknowledged the defendant's additional “entrance” in the form of cable
broadcasts. However, these district court decisions go further to state that Illinois
law forecloses the argument that “the state in which the injury occurs is the state in
which the tort occurs.” For the proposition that Illinois courts do not assert personal
jurisdiction over defendants who cause economic injury in Illinois solely through acts
committed outside Illinois, these decisions have cited Turnock v. Cope, 816 F.2d
332, 335 (7th Cir.1987); Green v. Advance Ross Electronics Corp., 86 Ill.2d 431,
927 N.E.2d 1203, 1207 (1981); and other cases applying Illinois law.
As an initial matter, it is a dubious proposition that the Seventh Circuit would be
foreclosed from holding as a matter of federal trademark law that a violation of the
Lanham Act occurs in a state when a trademark is infringed there based on the
defendant's activities in other states. Turnock, Green, and their progeny involved
state law torts. While the Illinois long-arm statute provides a procedural rule that
torts committed in Illinois give rise to jurisdiction here, neither the long-arm statute
nor Illinois courts can define the substantive scope or nature of “torts” stemming
from violations of the Lanham Act. That is purely a matter of federal law. Cf. North
American Philips Corp., 35 F.3d 1576, 32 U.S.P.Q.2d at 1205 (Fed.Cir.1994) .
Regardless, this court reads Indianapolis Colts to be consistent with Turnock and
Green. True, the Seventh Circuit intimated that it would have found personal
jurisdiction even without the cable broadcasts. Nonetheless, the Court characterized
such a conception of personal jurisdiction as “austere,” and ultimately rested its
holding on the injury in Indiana plus the defendant's additional entrance in the form
H. CASES INVOLVING THE INTERNET Page 89 of 102
of cable broadcasts. Indianapolis Colts, 34 F.3d at 412. If the cable broadcasts are
interpreted as an action taken in Indiana that contributed to the plaintiff's injury, then
Indianapolis Colts is consistent with the general notion that a defendant must take
some action in the forum state in order to commit a tort there.
*6 Transcraft is an Illinois corporation with its principal place of business in Illinois,
and it uses its trademark in Illinois. Transcraft advised Doonan to stop infringing
its trademark in May 1995. Compl. ¶ 32. Thus, Doonan was provided actual notice
that its activities were causing injury in Illinois. The critical issue is whether Doonan
“entered” Illinois in a way analogous to the cable broadcasts in Indianapolis Colts.
This issue is dispositive because this court declines to expand personal jurisdiction
in trademark actions to the point where no additional entrance in the forum state is
required. Although the Seventh Circuit intimated that injury in the forum state might
have been enough to create jurisdiction in Indianapolis Colts, that conception of
personal jurisdiction would indeed be “austere.” Moreover, the Seventh Circuit
could fairly infer the concentration of the Indianapolis Colts' use of its trademark
would be strongest in Indiana, and this appeared to be a factor in the Seventh
Circuit's analysis. 34 F.3d at 411 (“The Indianapolis Colts use the trademarks they
seek to defend mainly in Indiana. If the trademarks are impaired, as the suit alleges,
the injury will be felt mainly in Indiana.”). There is no basis to infer Transcraft's use
of its trademark is similarly concentrated in Illinois. Accordingly, the question is
whether Doonan “entered” Illinois in some way that contributed to transcraft's
injuries.
II. ALLEGED “ENTRANCES” INTO ILLINOIS
A. Traveling the Illinois Highways
Transcraft first suggests Doonan availed itself of Illinois law because “as inherent
in the transportation industry, [ Doonan's trailers] travel on the interstate highways
and are viewed by consumers within the jurisdiction of this Court.” Smith Dec.Ex. 1.
Transcraft urges that trademark law is concerned with the confusion of third
parties, in addition to the confusion of purchasers and prospective purchasers.
Transcraft asserts:
[r]eliability and safety of platform cargo trailers [are] critical concerns for the
purchaser, the driver, the shipper of the cargo transported, and the recipient of the
cargo. All of these persons are exposed to the trademark design in the main beams
of Transcraft trailers; all of these persons are exposed to the circle design in the
main beams of Doonan trailers.
Resp. at p. 8.
Transcraft offers no support for the proposition that an allegedly infringing cargo
trailer subjects its manufacturer or seller to personal jurisdiction in every state
through which the trailer passes. In the negligent tort context, World-Wide
Volkswagen made clear that a car is not a roving agent for service of process
merely because its inherent function involves travel. See 444 U.S. 286 (1980). The
intentional nature of trademark infringement combined with the fact that the
allegedly infringing article is a cargo trailer makes the present case unique in some
respects. As in World-Wide Volkswagen, however, it would be unreasonable to treat
Doonan's trailers as roving agents for service of process.
CONFLICT OF LAWS 3D 2/08-09

B. Contracting With Johnson Truck Service
*7 Transcraft presents the affidavit of its president, William R. Douglas. Douglas
asserts Johnson Truck Service in Anna, Illinois transports Doonan trailers. Pl.Ex. 7
¶ 6. In its response brief, Transcraft cryptically states, “Johnson Truck Service in
Illinois is contracted with to transport Doonan trailers with the circle design.”
Transcraft never states that Doonan contracts with Johnson Truck Service, and
the court is not convinced that such an inference is reasonable. Giving Transcraft
the benefit of the doubt, a contract between Doonan and Johnson Truck Service
would be insufficient to qualify as an “entrance” contributing to Transcraft's injuries.
Presumably, Transcraft offers the fact that an Illinois-based company transports
Doonan trailers to bolster its argument that infringing Doonan trailers travel the
Illinois highways. Transcraft might argue that in contracting with an Illinois-based
shipper, Doonan purposefully sent its trailers through Illinois. Even assuming
Doonan contracted with Johnson Truck Service, Transcraft merely alleges that
Johnson Truck Service is “in Illinois” and that Johnson Truck Service “is contracted
with” to transport Doonan trailers. Transcraft fails to present specific facts
showing that Illinois-based Johnson Truck Service transports Doonan trailers to,
from, or even through Illinois. ( Transcraft does separately allege that it has seen
Doonan trailers stacked with its own trailers in Illinois, but Transcraft does not
connect this fact to Johnson Truck Service). Given the interstate nature of cargo
trailer shipping, there is an insufficient basis to infer that Doonan specifically
contracts for shipping through Illinois. In deciding a motion to dismiss for lack of
personal jurisdiction, the court accepts all undenied factual allegations and resolves
all factual disputes in favor of the party seeking to establish jurisdiction. Turnock,
816 F.2d at 333. However, the court is not required to create facts that support
personal jurisdiction; it is Transcraft's burden to present those facts.
Moreover, Transcraft still faces the problem that doomed its first argument: it points
to no authority for the proposition that personal jurisdiction in a trademark action can
result from the allegedly infringing article merely travelling on a state's highways. At
best, perhaps Transcraft could analogize a purposeful shipment of trailers through
Illinois to purposeful advertisement in Illinois. The analogy would be a strained one,
however, and it is without factual support on this record. More importantly,
Transcraft has not established that Doonan purposefully shipped trailers through
Illinois. That conclusion could only be reached as the product of multiple inferences
of a sort not warranted in a motion to dismiss. The two facts Transcraft provides
about Johnson Truck Service-that it is based in Illinois and transports Doonan
trailers-are far too tenuous a basis to support personal jurisdiction.
C. Doonan Web Site
*8 Transcraft argues Doonan's web site-accessible in Illinois-subjects it to
jurisdiction in the Illinois courts. Transcraft states:
[ Doonan] currently operates and maintains an Internet World Wide Web site which
is viewable and accessible within the jurisdiction of this court.... [[[ Doonan's web
site] provide[s] residents within the Court's jurisdiction phone numbers, dealer
information (including toll free phone numbers and addresses), and sales
information for [ Doonan's] trailers. [ Doonan's web site] invite[s] residents within
H. CASES INVOLVING THE INTERNET Page 90 of 102
the Court's jurisdiction to contact [ Doonan] via telephone or electronic mail for
sales information.
Smith Dec. Ex. 1. To be more precise, Doonan's web site does not specifically
invite Illinois residents to transact business with Doonan or its dealers. Rather,
Doonan's web site presents a general advertisement and is accessible worldwide.
As cases involving the World Wide Web have reached the courts over the last
several years, a jurisprudence of “web” personal jurisdiction has begun to develop.
This court has independently examined these cases, and finds the following to be a
fair summary of the current state of the law:
The cases dealing with the issue can be divided into three categories. (citation
omitted). The first category includes cases where defendants actively do business
on the Internet. See, e.g., CompuServe F. Inc. v. Patterson, 89 F.3d 1257 (6th
Cir.1996) ]. In those instances, personal jurisdiction is found because defendants
“enter[ ] into contracts with residents of a foreign jurisdiction that involve the
knowing and repeated transmission of computer files over the Internet.” See
Zippo [Manuf. Co. v. Zippo Dot Com. Inc., 952 F.Supp. 1119, 1124
(W.D.Pa.1996) ]. The second category deals with situations “where a user can
exchange information with the host computer. In these cases, the exercise of
jurisdiction is determined by examining the level of interactivity and commercial
nature of the exchange of information that occurs on the Web site.” Zippo, 962
F.Supp. at 1124 (citation omitted). The third category involves passive Web sites;
i.e., sites that merely provide information or advertisements to users. See
Bensusan Restaurant Corp. v. King, 937 F.Supp. 295 (S.D.N.Y.1996). District
courts do not exercise jurisdiction in the latter cases because “a finding of
jurisdiction ... based on an Internet web site would mean that there would be
nationwide (indeed, worldwide) personal jurisdiction over anyone and everyone who
establishes an Internet web site. Such nationwide jurisdiction is not consistent with
traditional personal jurisdiction case law....” Hearst Corp. v. Goldberger, 1997 WL
97097, at *1 (S.D.N.Y. Feb.27, 1997).
Weber v. Jolly Hotels, 977 F.Supp. 327, 1997 WL 574950 at *5 (D.N.J. Sept.12,
1997).
An important addition to this summary is the very recent decision in Hasbro, Inc. v.
Clue Computing Inc., 2 BNA Electronic Information Policy & Law Report 1123, Civ.
Act. No. 97-10065-DPW, (D .Mass. Sept. 31 [sic], 1997). The Hasbro court
analogized posting information on the Web to placing a product into the “stream of
commerce.” See generally Asahi Metal Industry Co. v. Superior Court of
California, 480 B.S. 102 (1987). Thus, the court reasoned advertisements on the
Web can subject a defendant to personal jurisdiction if there is evidence that the
defendant intended that its advertisement reach a particular state. In Hasbro, the
court reasoned the defendant “availed itself of the benefits of doing business in
[Massachusetts] by advertising its work for [a Massachusetts business] on its Web
site, in an effort to attract more customers.” 2 BNA Elec. Inf. P. & L.R. at 1128.
Although its advertising was national in scope, the defendant not only took “no
measures to avoid contacts in the forum state, but rather, ... encouraged them.” Id.
*9 Applying this framework to the facts of the present case, it is plain that Doonan's
web site is insufficient to subject it to personal jurisdiction in Illinois. First,
CONFLICT OF LAWS 3D 2/08-09
Transcraft does not contend Doonan conducts business in Illinois via the Internet.
Transcraft alleges Doonan's web site invites inquiries via electronic mail. In cases
where a user can exchange information with the host computer, “the exercise of
jurisdiction is determined by examining the level of interactivity and commercial
nature of the exchange of information that occurs on the Web site.” Zippo, 962
F.Supp. at 1124. Transcraft fails to allege facts to support a reasonable inference
that electronic mail communications were made with Illinois residents, or that the
communications were of the quality required by courts who have found personal
jurisdiction in cases of this kind. The remaining question is whether Doonan's web
site was specifically intended to reach Illinois customers.
As a general rule, national advertisements (including those on the Internet) are
insufficient to subject a defendant to jurisdiction in Illinois. See e.g., IDS Life Ins.
Co. v. Sunamerica, Inc., 958 F.Supp. 1258, 1268 (N.D.Ill.1997). The Hasbro court's
“stream of commerce” analogy seems a useful one. However, in this case (unlike
Hasbro ) there is no evidence that Doonan used its web site to encourage contacts
with Illinois. Transcraft cites district court decisions that hold web page
advertisements with toll free numbers are sufficient to subject defendants to
personal jurisdiction. These opinions are fewer in number and less well-reasoned
than the opinions that hold similar web sites insufficient to support personal
jurisdiction. Thus, Doonan's web site does not subject it to personal jurisdiction in
Illinois.
Transcraft might argue that despite all this, Doonan's web site is sufficiently
analogous to the cable broadcasts in Indianapolis Colts for this court to find the
required additional “entrance” into Illinois. The analogy, although facially appealing,
breaks down upon further analysis. The “entrances” noted by the Seventh Circuit
were of a specific kind; both the sale of magazines in Calder and the broadcasting
of football games in Indianapolis Colts involved a defendant purposefully serving a
market in the forum state. Although the Seventh Circuit's brief discussion of the
issue does not provide clear guidance, the district court opinion which it affirmed
strongly emphasized this aspect of the defendant's entrance into Indiana:
Thus, although there is little evidence before the Court that the defendants intend to
serve the market for merchandise in Indiana, plaintiffs have shown that defendants
intend to and will serve, through the ESPN2 network, the market for entertainment
in Indiana. Having arranged to profit by entertaining Indiana residents, the
defendants should reasonably anticipate being haled into court in Indiana to defend
themselves in an action for infringement ... based on their use of trademarks in
connection with that entertainment.
*10 Indianapolis Colts, Inc. v. Metropolitan Baltimore Football Club Limited
Partnership, 1994 WL 592844 at *3 (S.D.Ind. June 10, 1994).
There were at least eighteen cable television companies in Indiana that provided
ESPN2 to Indiana subscribers. Id. It was thus apparent that the defendant was
purposefully serving the Indiana market. It is difficult to describe Doonan's
advertisement on the World Wide Web as purposefully serving an Illinois market; at
the very least, there are no facts in the record which would permit this inference.
Given the brevity of discussion, Indianapolis Colts does not seem to be a case that
the Seventh Circuit intended to be applied much beyond its narrow facts. Because
advertising on the World Wide Web does not serve specific geographic markets in
H. CASES INVOLVING THE INTERNET Page 91 of 102
the same sense that magazines and televised football games do, the court finds the
web advertisements in this case distinguishable from the cable broadcasts in
Indianapolis Colts.
Similarly, the court finds FMC Corp. v. Varonos distinguishable. 892 F.2d 1308 (7th
Cir.1990) (injury in Illinois sufficient to support jurisdiction where defendants sent
fraudulent telexes and monthly reports into Illinois). The telexes and monthly reports
in FMC Corp. were specifically sent into Illinois to harm Illinois interests. In contrast,
Doonan's web site was posted for a national audience.
D. Stream of Commerce: Authorized Dealer's Sale of Doonan Trailers
Doonan denies selling trailers in Illinois, and states its dealers are independent
businesses whose activities and records are not subject to its control. Pl.Ex. 5, ¶ 4.
Transcraft suggests Doonan admits to selling trailers indirectly to Illinois
customers, based on the following response to one of Transcraft's interrogatories:
“ Doonan had no dealers in Illinois and was not selling trailers directly to anyone
located in Illinois.” Id. This negative inference cannot be reasonably drawn from
Doonan's response. However, the question remains whether Doonan “entered”
Illinois in a way similar to the cable broadcasts in Indianapolis Colts by placing its
trailers in the stream of commerce intending that they be sold in Illinois.
The stream of commerce theory provides an “analytical tool useful in cases in which
the defendant's contacts are the result of establishing a distribution network in the
forum State for the sale of defendant's products....” Viam Corp. v. Iowa Export-
Import Trading Co., 84 F.3d 424, 427 (Fed.Cir.1996). The Supreme Court of Illinois
has stated:
A manufacturer whose products pass through the hands of one or more middlemen
before reaching their ultimate users cannot disclaim responsibility for the total
distribution pattern of the product. If the manufacturer sells its products in
circumstances such that it knows or should reasonably anticipate that they will
ultimately be resold in a particular state, it should be held to have purposefully
availed itself of the market for its products in that state.
*11 Connelly v. Uniroyal, Inc., 75 Ill.2d 393, 27 Ill.Dec. 343, 389 N.E.2d 155, 160
(1979). More recently, the Supreme Court of the United States addressed the
stream of commerce theory in Asahi Metal Industry Co. v. Superior Court of
California, 480 U.S. 102, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987) . In Justice
O'Connor's plurality opinion (for four Justices), she rejected the idea that a
defendant's mere knowledge of the product's entry into the forum state is sufficient
to create personal jurisdiction.
The placement of a product into the stream of commerce, without more, is not an
act of the defendant purposefully directed toward the forum State. Additional
conduct of the defendant may indicate an intent or purpose to serve the market in
the forum State, for example, designing the product for the market in the forum
State, advertising in the forum State, establishing channels for providing regular
advice to customers in the forum State, or marketing the product through a
distributor who has agreed to serve as the sales agent in the forum State. But a
defendant's awareness that the stream of commerce may or will sweep the product
into the forum State does not convert the mere act of placing the product into the
stream into an act purposefully directed toward the forum State.
CONFLICT OF LAWS 3D 2/08-09

Asahi, 480 U.S. at 112 (O'Connor, J.).
Transcraft argues Doonan grants warranties to Illinois owners of Doonan trailers.
Transcraft cites no authority for the proposition that defendants who provide
warranties to purchasers of their products are subject to personal jurisdiction
wherever the stream of commerce sweeps their products. Because most products
are sold with warranties attached to them, Transcraft's rule would subject many if
not most manufacturers to personal jurisdiction wherever their products are
ultimately sold. Even if Transcraft argues Doonan consciously grants warranties to
Illinois buyers after they have purchased Doonan trailers, the time for analyzing
whether Doonan purposefully avails itself of a given state's laws is before the sale
is made. Once a sale is made, Doonan merely follows industry custom by granting
a warranty. It will not do to point to the sale of three Doonan trailers to Illinois
customers and conclude, in hindsight, that Doonan must have been directing its
marketing efforts at Illinois.
Transcraft's strongest argument for personal jurisdiction is one that it does not
develop at all. Looking at the list of Doonan's 21 authorized dealers, it is apparent
Doonan has blanketed much of the central United States with a network of
authorized dealers. Pl.Ex. 5, ¶ 11. Doonan advertises nationally and has
authorized dealers in Kansas, Missouri, Wisconsin, Nebraska, Minnesota,
Kentucky, Arkansas, Oklahoma, Colorado, and other states. Doonan claims it has
no control over the activities of its independent dealers. However, courts have found
personal jurisdiction in cases where a defendant has set up a distribution system
that would ensure its products found their way into the forum state. See Barone v.
Rich Bros. Interstate Display Fireworks, 25 F.3d 610 (8th Cir.1994) (citing Giotis v.
Apollo of the Ozarks, Inc. 800 F.2d 660 (7th Cir.1986) (due process satisfied where
“[a] seller at the head of a distribution network ...‘delivers its products into the
stream of commerce with the expectation that [these products] will be purchased by
consumers in the forum state’ ”)).
*12 In Barone, Hosoya Fireworks Co. of Japan (the defendant manufacturer) had no
agent for service in Nebraska, no office in Nebraska, and no distributor in Nebraska.
It did not advertise in Nebraska or directly send any products to Nebraska.
However, Hosoya sold fireworks throughout the United States via a network of nine
distributors in six states. One distributor purchased about $100,000 worth of
fireworks annually, and about sixteen percent of those fireworks were resold in
Nebraska. The distributor sold fireworks through six regional salespeople, one of
whom was located in Nebraska. The Eighth Circuit concluded:
Hosoya has reaped the benefits of its network of distributors, and it is only
reasonable that it should now be held accountable in the forum of plaintiff's
choice.... More than reasonable foreseeability is at stake here, as it must be under
existing law, for Hosoya has purposefully reaped the benefits ... of Nebraska's
[laws].
Id. at 615.
The facts of the present case approach Barone. Both cases involve manufacturers
that set up distribution systems for their products across numerous states. Without
further facts from Transcraft, however, the similarities end there. Transcraft
H. CASES INVOLVING THE INTERNET Page 92 of 102
asserts Doonan's authorized dealers are not prohibited from selling trailers to
Illinois customers. But Transcraft does not allege that Doonan's authorized dealers
direct any efforts at Illinois as part of their sales territory. Transcraft alleges it
knows the dealers “want to sell to Illinois customers,” but it does not allege facts
showing those dealers make any marketing efforts directed toward Illinois
customers.
In cases finding personal jurisdiction based on a stream of commerce theory-
including the cases cited by Transcraft and the Seventh Circuit's decision in
Honeywell -a significant factor is the presence of an established distribution channel
into the forum state. See, e.g., Beverly Hills Fan, 21 F.3d at n. 15 (citing cases).
Transcraft has not demonstrated that Doonan sits atop an established distribution
channel that ends in Illinois. Indeed, Transcraft's only specific allegation
concerning the activity of Doonan's dealers towards Illinois is the Kentucky dealer's
sale of three Doonan trailers to buyers with Illinois addresses. 717 persons have
purchased Doonan trailers since January 1, 1995, and only three have been Illinois
residents. Pl.Ex. 5, ¶ 4. The sales to Illinois buyers represent less than one half of
one percent of Doonan's sales. Although quality and not quantity is the usual
benchmark for minimum contacts, three sales are not indicative of an established
distribution channel. When this fact is placed against the background of
Transcraft's failure to allege any marketing or sales activity specifically directed
toward Illinois on the part of Doonan or its authorized dealers, personal jurisdiction
cannot be based on a “stream of commerce” theory. To satisfy due process, there
must be some showing that Doonan directed its activities at Illinois. Transcraft
has not made that showing.
*13 As the Supreme Court has stated on more than one occasion, the determination
of whether minimum contacts exist “is one in which few answers will be written ‘in
black and white. The greys are dominant and even among them the shades are
innumerable.’ “ Kulko v. California Superior Ct., 436 U.S. 84, 92, 98 S.Ct. 1690, 56
L.Ed.2d 132 (1978) (quoting Estin v. Estin, 334 U.S. 541, 545, 68 S.Ct. 1213, 92
L.Ed. 1561 (1948)). This case presented some very close questions; indeed, it
presented issues at the frontier of personal jurisdiction jurisprudence. This court is
mindful of Illinois' interest in protecting the intellectual property of its citizens.
However, the Seventh Circuit has previously declined to hold that an injury alone to
intellectual property in Illinois is a sufficient basis for the exercise of personal
jurisdiction. See Indianapolis Colts, 34 F.3d at 412. Transcraft has the burden of
demonstrating an additional “entrance” into Illinois. It has failed to meet that burden.
Without further guidance, this court declines to expand personal jurisdiction in the
trademark area beyond the limits previously enunciated by the Seventh Circuit.
CONCLUSION
Defendant's motion to dismiss for lack of personal jurisdiction is granted. This action
is dismissed without prejudice.
N.D.Ill.,1997.
Transcraft Corp. v. Doonan Trailer Corp.
Not Reported in F.Supp., 1997 WL 733905 (N.D.Ill.), 45 U.S.P.Q.2d 1097
END OF DOCUMENT
CONFLICT OF LAWS 3D 2/08-09
 United States District Court, N.D. Illinois.
George H. SCHERR, Plaintiff,
v.
Marc ABRAHAMS, Improbable Research, Inc., Defendants.
No. 97 C 5453.
May 29, 1998.
MEMORANDUM OPINION AND ORDER
HOLDERMAN, J.
*1 Plaintiff George H. Scherr filed a ten-count Amended Complaint against
defendant Marc Abrahams and Improbable Research, Inc. alleging unfair
competition (Count I), trademark infringement (Count II), dilution (Count III), FTC
violations (Count IV), fraud and conspiracy to defraud (Count V), racketeering
(Count VI), libel and slander (Count VII), and fraud and deceptive business
practices (Counts VIII, IX, and X). Defendants have filed a motion to dismiss
plaintiff's Amended Complaint in its entirety based on lack of personal jurisdiction or
improper venue, or, in the alternative, to dismiss Counts IV, V, VI, and IX based on
a failure to state a claim upon which relief may be granted. For the following
reasons, defendants' motion to dismiss is granted based on a lack of personal
jurisdiction.
BACKGROUND
Plaintiff George H. Scherr is the publisher and editor of the Journal of Irreproducible
Results (“JIR”). The JIR is a humor and satire publication about the scientific and
medical communities. The JIR is published in the state of Illinois and is distributed
nationally and internationally. Defendant Marc Abrahams was the editor of the JIR
during the period of 1990 to 1994 when the JIR was owned by Blackwell Scientific
Publications. Defendant Abrahams left the JIR in 1994 and created a magazine
called the Annals of Improbable Research (“AIR”). Like the JIR, the AIR is also a
humor and satire publication about the scientific and medical communities.
Defendant Improbable Research, Inc. is a Massachusetts corporation with its
principal place of business in Massachusetts and it is the publisher of the AIR.
Improbable Research is not registered to do business in Illinois and has no agent
for service of process in Illinois. Defendant Abrahams is the sole officer and
director of Improbable Research, Inc.
The AIR has fewer than 60 subscribers in Illinois and has a smaller number of
newsstand sales. ( Abrahams Aff. ¶¶ 8,9.) Improbable Research also maintains an
Internet web site by which people can subscribe to an electronic newsletter
published by Improbable Research called “Mini-Annals of Improbable Research”
(“mini-AIR”). ( Abrahams Supplemental Aff. ¶¶ 4,5.) The mini-AIR is distributed
electronically and free of charge to those people who submit their individual e-mail
addresses in order to be put on the electronic mailing list. ( Abrahams
Supplemental Aff. ¶ 6.) Plaintiff does not dispute these assertions.
ANALYSIS
Defendants argue in their motion to dismiss that Illinois does not have personal
jurisdiction over them. Plaintiff claims that defendants are subject to personal
H. CASES INVOLVING THE INTERNET Page 93 of 102
jurisdiction in this case based on the Illinois long-arm statute. 735 ILCS 5/2-209(a).
Plaintiff has the burden of demonstrating that personal jurisdiction exists. RAR, Inc.
v. Turner Diesel, Ltd., 107 F.3d 1272, 1276 (7th Cir.1997). The allegations in
plaintiff's complaint are to be taken as true unless controverted by the defendants'
affidavits; any conflicts in the affidavits are to be resolved in plaintiff's favor. Turnock
v. Cope, 816 F.2d 332, 333 (7th Cir.1987). In order for a federal court to have
personal jurisdiction, proper service of process must be attained. Swaim v. Moltan
Co., 73 F.3d 711, 719 (7th Cir.), cert. denied, 517 U.S. 1244, 116 S.Ct. 2499, 135
L.Ed.2d 191 (1996). In a federal question case such as this case, the statute upon
which the action is based may provide rules for service of process upon
nonresidents. Id. Absent any such provision, jurisdiction is governed by the laws of
the state in which the district court is located. Id.;Fed.R.Civ.P. 4(k)(1)(A). Thus, this
court must look to the laws of the State of Illinois to determine whether defendants
are subject to personal jurisdiction.
*2 The Illinois long-arm statute authorizes personal jurisdiction on any basis
permitted by the Illinois Constitution as well as to the federal constitutional limits.
RAR, 107 F.3d at 1276. This court must first look to the Illinois Constitution then to
the United States Constitution in order to determine if personal jurisdiction is
appropriate in this case. Id.“ ‘[I]f the contacts between the defendant and Illinois are
sufficient to satisfy the requirements of due process, then the requirements of both
the Illinois long-arm statute and the United States Constitution have been met, and
no other inquiry is necessary.” ’ Klump v. Duffus, 71 F.3d 1368, 1371 (7th Cir.1995),
cert. denied, 518 U.S. 1004, 116 S.Ct. 2523, 135 L.Ed.2d 1047 (1996) (quoting L.B.
Foster Co. v. Railroad Serv., Inc., 734 F.Supp. 818, 822 (N.D.Ill.1990)).
The Due Process Clause of the Fourteenth Amendment of the United States
Constitution limits when a state may assert personal jurisdiction over nonresident
individuals and corporations. RAR, 107 F.3d at 1277. A state may assert general or
specific jurisdiction over a defendant. General jurisdiction is present when the
defendant has continuous and systematic contacts with the forum, while specific
jurisdiction is present in a suit arising out of or relating to the defendant's contacts
with the forum state. Id. Plaintiff has not explicitly stated whether he is arguing that
this court has general or specific jurisdiction over defendants in this case.
Nevertheless, plaintiff has failed to show that either of the defendants has had
“continuous and systematic contacts” with this state so this court will construe his
argument to be one made in favor of a finding of specific jurisdiction.
In specific jurisdiction cases, the court “must decide whether a defendant has
‘purposefully established minimum contacts with the forum State’ and consider
whether, by traditional standards, those contacts would make personal jurisdiction
reasonable and fair under the circumstances.”Id. (quoting Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 476-77, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) ). Critical
to the analysis is a showing that the defendant reasonably anticipated being haled
into court in the forum state. Id. Specific jurisdiction requires that the lawsuit “arise
out of” or “be related to” minimum contacts with the forum state. Id. A defendant
may have fair warning that it could be required to defend a lawsuit in the state if the
defendant “ ‘purposefully avails itself of the privilege of conducting activities within
the forum State thereby invoking the benefits and protections of the forum's laws.” ’
Klump, 71 F.3d at 1372 (quoting Burger King, 471 U.S. at 477-78). Finally, even if
minimum contacts exist, jurisdiction must be consistent with traditional notions of
fair play and substantial justice. Logan Prods., Inc. v. Optibase, Inc., 103 F.3d 49,
CONFLICT OF LAWS 3D 2/08-09
52 (7th Cir.1996).
A. No Personal Jurisdiction Over Defendant Improbable Research, Inc.
*3 Plaintiff admits that “[t]he tortious acts complained of in Plaintiff's Amended
Complaint were not directed by Defendants against Illinois residents in
general.”(Pl.'s Reply to Defs.' Mot. to Dismiss Pl.'s Am. Compl. at 35.) Nevertheless,
plaintiff argues that defendant Improbable Research has allegedly established
“minimum contacts” with Illinois in three ways: (1) the distribution of the AIR in
Illinois, (2) the location of two editorial board members in Illinois, and (3) the Internet
distribution of the mini-AIR in Illinois. For the following reasons, none of these
establish personal jurisdiction over Improbable Research in Illinois.
1. Illinois Distribution of the AIR
Plaintiff does not dispute that fewer than 60 copies of the AIR arrive in Illinois every
other month by subscription and that a smaller number are sold in Illinois at
newsstands. Both sides agree that the Illinois distribution is about 3% of the total
distribution of the AIR. “The size of a distribution of offending material helps
determine whether a defendant acted intentionally.” Noonan v. Winston Co., 135
F.3d 85, 91 (1st Cir.1998). In Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 104
S.Ct. 1473, 79 L.Ed.2d 790 (1984), the respondent distributed 10,000 to 15,000
copies of its magazine in the forum state each month. In holding that there was
personal jurisdiction in the forum state, the Supreme Court stated that there was “no
unfairness in calling [respondent] to answer for the contents of that publication
wherever a substantial number of copies are regularly sold and distributed.”
Keeton, 465 U.S. at 781. In Calder v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 79
L.Ed.2d 804 (1984), decided the same day as Keeton, the Court held that it was
proper for the state of California to execute personal jurisdiction over two Florida
newspaper employees based on the “effects” of their Florida conduct because the
allegedly libelous story was based on California sources, was about a California
celebrity, and appeared in a newspaper with a weekly circulation of 600,000 copies
in the forum state. See Calder, 465 U.S. at 788-89. “Just as widespread circulation
of a publication indicates deliberate action, thin distribution may indicate a lack of
purposeful contact.” Noonan, 135 F.3d at 91 (citing Chaiken v. VV Publ. Corp., 119
F.3d 1018 (2d Cir.1997), cert. denied, 522 U.S. 1149, 118 S.Ct. 1169, 140 L.Ed.2d
179 (1998)). In Chaiken, the Second Circuit held that the District Court of
Massachusetts did not have personal jurisdiction over an Israeli publisher for a libel
action because of the insignificant number of copies it sold in that state:
We agree with the district court that [defendant's] contacts with Massachusetts were
minimal. Even if we consider the [defendant's] Sunday edition, which did not contain
Dagoni's article, [defendant's] Massachusetts sales are a tiny fraction of its total
circulation and are insignificant compared to the 10,000 to 15,000 copies of a
monthly publication found to justify jurisdiction in Keeton.We doubt that four copies
per day, or even the 183 copies of the Sunday edition, constitute the “substantial
number of copies” that makes it fair to exercise jurisdiction over a non-resident
publisher.
*4 Chaiken, 119 F.3d at 1029.
Defendant Improbable Research's contacts with Illinois are more like those contacts
H. CASES INVOLVING THE INTERNET Page 94 of 102
in Chaiken than those in Keeton and Calder.Fewer than 60 copies of the AIR enter
Illinois by subscription every other month and an even fewer number are sold at the
newsstand. This is insubstantial when compared to the 10,000 to 15,000 monthly
copies in Keeton and to the 600,000 weekly copies in Calder.
In Indianapolis Colts v. Metro. Baltimore Football, 34 F.3d 410 (7th Cir.1994), the
Seventh Circuit held that Indiana had personal jurisdiction over the defendant
because the defendant had “entered” the state through the broadcast of its games
into Indiana, the trademarks the plaintiffs sought to defend were mainly in Indiana,
and the injury would mainly be felt in Indiana Indianapolis Colts, 34 F.3d at 411-12.
In this case, defendant Improbable Research's entrance into Illinois is insubstantial.
Moreover, the trademark plaintiff seeks to defend is not mainly in Illinois and,
therefore, the injury would not primarily be felt in Illinois. In light of these factors, this
court finds that it does not have personal jurisdiction over defendant Improbable
Research based on the distribution every other month of 60 subscription copies and
a smaller number of newsstand copies.
2. Location of Two Editorial Board Members in Illinois
Plaintiff argues that this court has jurisdiction over defendant Improbable Research
because two members of Improbable Research's editorial board reside in Illinois.
According to the affidavit of defendant Marc Abrahams, these two people are not
employees of any of the two defendants and are not even active members of the
editorial board. ( Abrahams Aff. ¶ 10.) Plaintiff has not presented any evidence to
contradict this portion of Abrahams's affidavit. As a result, the fact that two inactive
editorial board members reside in Illinois is not sufficient to establish personal
jurisdiction in this court over defendant Improbable Research.
3. Internet Distribution of the Mini-AIR
Plaintiff argues that this court has personal jurisdiction over defendant Improbable
Research because the mini-AIR is distributed over the Internet to 20,000
subscribers. The issue of what type of Internet activity is sufficient to establish
personal jurisdiction in a particular forum is relatively new and has not been
addressed by the Seventh Circuit. The court in Transcraft Corp. v. Doonan Trailer
Corp., No. 97 C 4943, 1997 WL 733905 (N.D.Ill. Nov.17, 1997) , recently found the
following to be a fair summary of the current state of the law in this area:
The cases dealing with the issue can be divided into three categories. (citation
omitted). The first category includes cases where defendants actively do business
on the Internet. See, e.g., CompuServe [F. Inc. v. Patterson ], 89 F.3d 1257 [ (6th
Cir.1996) ]. In those instances, personal jurisdiction is found because defendants
“enter[ ] into contracts with residents of a foreign jurisdiction that involve the
knowing and repeated transmission of computer files over the Internet.”See Zippo
[Manuf. Co. v. Zippo Dot Com. Inc., 952 F.Supp. 1119, 1124 (W.D.Pa.1996) ]. The
second category deals with situations “where a user can exchange information with
the host computer. In these cases, the exercise of jurisdiction is determined by
examining the level of interactivity and commercial nature of the exchange of
information that occurs on the Web site.”Zippo, 962 F.Supp. at 1124 (citation
omitted). The third category involves passive Web sites; i.e., sites that merely
provide information or advertisements to users. See Bensusan Restaurant Corp. v.
King, 937 F.Supp. 295 (S.D.N.Y.1996). District courts do not exercise jurisdiction in
CONFLICT OF LAWS 3D 2/08-09
the latter cases because “a finding of jurisdiction ... based on an Internet web site
would mean that there would be nationwide (indeed, worldwide) personal
jurisdiction over anyone and everyone who establishes an Internet web site. Such
nationwide jurisdiction is not consistent with traditional personal jurisdiction case
law....” Hearst Corp. v. Goldberger, 1997 WL 97097, at *1 (S.D.N.Y.Feb.27, 1997).
unrelated radio station, this is not sufficient to establish that defendant Abrahams
has established the minimum contacts with Illinois necessary for this court to have
jurisdiction over him.
CONCLUSION

*5 Transcraft, 1997 WL 733905, at *8 (quoting Weber v. Jolly Hotels, 977 F.Supp.
327, 333 (D.N.J.1997). Other courts have also analogized the posting of information
on the Internet to the placing of products into the “stream of commerce.”
See Bensusan Restaurant Corp. v. King, 937 F.Supp. 295, 301 (S.D.N.Y.1996)
(citing Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 112, 107 S.Ct. 1026,
94 L.Ed.2d 92 (1987) (plurality opinion)); see also Cybersell, Inc. v. Cybersell, Inc.,
130 F.3d 414, 418 (9th Cir.1997) (quoting Bensusan, 937 F.Supp. at 301); Hasbro,
Inc. v. Clue Computing, Inc., 994 F.Supp. 34, 1997 WL 836498, at *6 (D.Mass. Sept.
30, 1997) (quoting Bensusan, 937 F.Supp. at 301).
For these reasons, defendants' motion to dismiss for lack of personal jurisdiction is
GRANTED. This case is dismissed without prejudice. Having reviewed the pending
motions, the court declares them mooted by this ruling.
N.D.Ill.,1998.
Scherr v. Abrahams
Not Reported in F.Supp., 1998 WL 299678 (N.D.Ill.)
END OF DOCUMENT

Defendant Improbable Research argues that its Internet site is merely a passive
one. Nevertheless, it admits that persons who view its site may add their individual
e-mail addresses to a list of addresses to which a software program will then send
to them an electronic copy of the mini-AIR. According to Improbable Research,
roughly 20,000 people have submitted their e-mail addresses to Improbable
Research's Internet site in order to subscribe to the mini-AIR. This makes
Improbable Research's Internet site one in which the user can exchange information
with the host computer. As stated supra,“[i]n these cases, the exercise of jurisdiction
is determined by examining the level of interactivity and commercial nature of the
exchange of information that occurs on the Web site.” Transcraft, 1997 WL 733905,
at *8 (citations omitted). In this case, the level of interactivity is rather low: the only
exchange is the listing of a person's e-mail address for an electronic copy of the
mini-AIR. No money is exchanged. The only commercial information in the mini-AIR
are advertisements for the AIR and other products of Improbable Research.
Moreover, nothing on the Internet site is specifically targeted at Illinois consumers.
For these reasons, Improbable Research's Internet site and the electronic
distribution of the mini-AIR are not sufficient to create jurisdiction over defendant
Improbable Research in Illinois.

B. No Personal Jurisdiction over Defendant Abrahams

Although this court finds that it does not have jurisdiction over defendant Improbable
Research, a separate inquiry must be made as to whether there is jurisdiction over
defendant Abrahams. See Keeton, 465 U.S. at 781 n. 13. Apart from his arguments
regarding defendant Improbable Research, plaintiff argues that this court has
jurisdiction over defendant Abrahams because of Abrahams's two visits to Illinois
in 1991 and 1993 and an unspecified number of letters and telephone calls to and
from plaintiff while Abrahams was still the editor of the JIR. All of these contacts
took place before the AIR was even created. As a result, special jurisdiction is not
present because this suit could not have arisen from these contacts. Moreover,
these contacts with Illinois do not establish general jurisdiction because they are not
continuous and systematic.

*6 Plaintiff also argues that minimum contacts have been established because of an
interview that defendant Abrahams gave to the Canadian Broadcasting Company.
Although plaintiff argues that this interview was broadcast into Illinois by an

H. CASES INVOLVING THE INTERNET Page 95 of 102 CONFLICT OF LAWS 3D 2/08-09

 United States District Court, E.D. Missouri, Eastern Division. 382T Trademarks
MARITZ, INC., Plaintiff, 382TIX Actions and Proceedings
v. 382TIX(A) In General
CYBERGOLD, INC., Defendant. 382Tk1554 k. Nature and Form of Remedy. Most Cited Cases
No. 4:96CV01340 ERW. (Formerly 382k540.1 Trade Regulation)
Violation of Lanham Act is tortious in nature. Lanham Trade-Mark Act, § 1 et seq.,
Aug. 19, 1996. 15 U.S.C.A. § 1051 et seq.

Plaintiff brought action against operator of internet site for trademark infringement. [4] Constitutional Law 92 3965(8)
Operator moved to dismiss and moved to stay proceedings. The District Court,
Webber, J., held that: (1) operator was subject to personal jurisdiction in Missouri; 92 Constitutional Law
(2) court had subject matter jurisdiction; and (3) stay of action pending trademark 92XXVII Due Process
application in Patent and Trademark Office (PTO) was not warranted. 92XXVII(E) Civil Actions and Proceedings
92k3961 Jurisdiction and Venue
Motion to dismiss denied; motion to stay proceedings denied. 92k3965 Particular Parties or Circumstances
92k3965(8) k. Media and Publishing. Most Cited Cases
Reconsideration denied, 947 F.Supp. 1338. (Formerly 92k305(5))

West Headnotes Trademarks 382T 1560

[1] Courts 106 12(2.1) 382T Trademarks

382TIX Actions and Proceedings
106 Courts 382TIX(A) In General
106I Nature, Extent, and Exercise of Jurisdiction in General 382Tk1557 Jurisdiction
106k10 Jurisdiction of the Person 382Tk1560 k. Internet Use; Cybersquatting. Most Cited Cases
106k12 Domicile or Residence of Party (Formerly 382k545 Trade Regulation)
106k12(2) Actions by or Against Nonresidents; “Long-Arm” In action for trademark infringement, due process clause was not violated by
Jurisdiction in General exercise of personal jurisdiction in Missouri over California operator of internet site
106k12(2.1) k. In General. Most Cited Cases that maintained mailing list of internet users for advertising; operator knew that its
Missouri's long-arm statute allows exercise of jurisdiction over nonresidents to information would be transmitted globally, operator had transmitted information into
extent permissible under due process clause. U.S.C.A. Const.Amend. 14; V.A.M.S. Missouri approximately 131 times, alleged injuries arose out of site and information
§ 506.500. posted at site, and Missouri had interest in determining whether Missouri
corporation's trademark was being infringed in violation of Lanham Act. U.S.C.A.
[2] Trademarks 382T 1560 Const.Amend. 5; Lanham Trade-Mark Act, § 43(a), 15 U.S.C.A. § 1125(a).

382T Trademarks [5] Trademarks 382T 1565

382TIX Actions and Proceedings
382TIX(A) In General 382T Trademarks
382Tk1557 Jurisdiction 382TIX Actions and Proceedings
382Tk1560 k. Internet Use; Cybersquatting. Most Cited Cases 382TIX(A) In General
(Formerly 382k545 Trade Regulation) 382Tk1564 Persons Liable
In action for trademark infringement, operator of internet site, for which server was 382Tk1565 k. In General. Most Cited Cases
located in California, was subject to personal jurisdiction in Missouri under (Formerly 382k543 Trade Regulation)
“commission of a tortious act” provision of Missouri's long-arm statute, even Lanham Act claim can exist even before defendant actually opens business, so long
assuming that operator's allegedly infringing activities were wholly outside of as acts of defendant are imminent and impending. Lanham Trade-Mark Act, § 1 et
Missouri; allegedly infringing activities allegedly caused economic injury to Missouri seq., 15 U.S.C.A. § 1051 et seq.
corporation. Lanham Trade-Mark Act, § 43(a), 15 U.S.C.A. § 1125(a); V.A.M.S. §
506.500, subd. 1(3). [6] Trademarks 382T 1562

[3] Trademarks 382T 1554 382T Trademarks

382TIX Actions and Proceedings

H. CASES INVOLVING THE INTERNET Page 96 of 102 CONFLICT OF LAWS 3D 2/08-09

 382TIX(A) In General
382Tk1562 k. Time to Sue and Limitations. Most Cited Cases
(Formerly 382k543 Trade Regulation)
Operator of internet site that was planning to send advertisements over internet to
users could be sued for violating Lanham Act, even though operator had not yet
actually commenced its services; operator maintained site from which it sent out
information regarding its upcoming service, and it was imminent and impending that
operator would be fully operating its internet advertising service in the near future.
Lanham Trade-Mark Act, § 43(a), 15 U.S.C.A. § 1125(a).
[7] Administrative Law and Procedure 15A 228.1
15A Administrative Law and Procedure
15AIII Judicial Remedies Prior to or Pending Administrative Proceedings
15Ak228.1 k. Primary Jurisdiction. Most Cited Cases
Considerations that drive doctrine of primary jurisdiction, under which court stays its
proceedings and defers to administrative agency, include whether relevant
administrative agency has exclusive primary jurisdiction, whether awaiting decision
of issues by administrative agency will be of importance in resolving issues in
litigation before district court, whether administrative agency has specialized
expertise and experience and issues in dispute are not within conventional
experience of judges, and whether deferring to administrative agency is likely to
prolong dispute rather than lead to judicially economical disposition.
[8] Action 13 69(7)
13 Action
13IV Commencement, Prosecution, and Termination
13k67 Stay of Proceedings
13k69 Another Action Pending
13k69(7) k. Actions and Administrative Proceedings. Most Cited
Cases
(Formerly 382k540.1 Trade Regulation)
Stay of action against internet site operator for trademark infringement was not
warranted pending trademark application that had been filed by operator with Patent
and Trademark Office (PTO); PTO decision to issue registered trademark would not
be conclusive evidence, PTO did not have authority to determine whether Lanham
Act had been violated, and considerable amount of time could pass in PTO before
determination was made regarding whether to issue trademark registration to
operator. Lanham Trade-Mark Act, § 43(a), 15 U.S.C.A. § 1125(a).
*1329 Patricia S. Williams,Wayne Mitchell Barsky, Sonnenschein and Nath, St.
Louis, MO, for plaintiff.
Richard E. Haferkamp, Anthony G. Simon, Howell and Haferkamp, L.C., St. Louis,
MO, Paul R. Williams, Bowling Green, MO, for defendant.
MEMORANDUM AND ORDER
WEBBER, District Judge.
This matter is before the Court on the motion of defendant to dismiss for lack of
personal jurisdiction and improper venue [document # 18], on the motion of
H. CASES INVOLVING THE INTERNET Page 97 of 102
defendant to dismiss for failure to state a claim and lack of subject matter
jurisdiction [document # 23], and on the motion of defendant to stay the proceedings
[document # 24].
Plaintiff Maritz, Inc., has brought this action alleging that defendant Cybergold, Inc.,
is violating Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), in connection
with Cybergold's internet activities. Plaintiff seeks a preliminary injunction to enjoin
Cybergold's alleged trademark infringement and unfair competition. Plaintiff also
seeks an expedited hearing on the preliminary injunction hearing. Because of
plaintiff's requests for an expedited hearing on plaintiff's motion for a preliminary
injunction, the Court ordered expedited briefing on defendant's motions to dismiss
and to stay, in order to resolve threshold jurisdictional questions in this action. See
Falkirk Mining Co. v. Japan Steel Works, Ltd. 906 F.2d 369, 372 (8th Cir.1990)
(court must determine threshold matter of whether it possesses personal jurisdiction
over defendant before it can reach merits of dispute and enter legally binding
orders).
I. Personal Jurisdiction and Venue
Defendant has moved to dismiss pursuant to Federal Rule of Civil Procedure 12(b)
(2), asserting that this Court cannot exercise personal jurisdiction over it. Defendant
argues that plaintiff's first amended complaint fails to allege any facts on which
personal jurisdiction over defendant can be based.
Whether the Court can exercise personal jurisdiction over defendant requires a two-
part inquiry. The Court first examines whether personal jurisdiction exists under
Missouri's long-arm statute.FN1 Next, the Court must determine whether the
exercise of personal jurisdiction is consistent with due process. Bell Paper Box,
Inc. v. U.S. Kids, Inc., 22 F.3d 816, 818-19 (8th Cir.1994); CPC-Rexcell, Inc., v. La
Corona Foods, Inc., 912 F.2d 241, 243 (8th Cir.1990).
FN1. Under Federal Rule of Civil Procedure 4(e)(1) and (h), “[u]nless
otherwise provided by federal law,” service of process may be effected
upon defendant “pursuant to the law of the state in which the district court
is located.” As the Lanham Act does not contain any provisions providing
for service of process, the Court looks to the Missouri statutes providing for
service of process. See4 Charles A. Wright & Arthur R. Miller, Federal
Practice and Procedure § 1075 at 480-81 (2d ed.1987).
In considering a motion under Rule 12(b)(2), the Court views the facts in a light
most favorable to plaintiff, the party opposing the motion. Aaron Ferer & Sons Co.
v. Diversified Metals Corp., 564 F.2d 1211, 1215 (8th Cir.1977). However, the
burden remains on plaintiff to establish that jurisdiction exists. Bell Paper Box, Inc.,
22 F.3d at 818; Taylor v. Uniden Corp. of Am., 622 F.Supp. 1011, 1012
(E.D.Mo.1985). Because the Court is ruling on the submissions of the parties, and is
not conducting an evidentiary hearing on the matter, plaintiff is required to *1330
make a prima facie showing of personal jurisdiction over the defendant at this time.
See Dakota Indus. v. Dakota Sportswear, 946 F.2d 1384, 1387 (8th Cir.1991)
(citing CutCo Indus. Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir.1986)).
Viewed in the light most favorable to plaintiff, defendant's contacts with Missouri are
as follows. CyberGold maintains an internet site on the World Wide Web. The
CONFLICT OF LAWS 3D 2/08-09
server for the website is presumably in Berkeley, California. The website is at
present continually accessible to every internet-connected computer in Missouri and
the world. CyberGold's website can be accessed at “www.cybergold.com” by any
internet user.
It is estimated that there are 20 to 30 million users of the internet. Inset Systems,
Inc. v. Instruction Set, Inc., 937 F.Supp. 161, 163 (D.Conn.1996). Today, there are
around 9,400,000 computers that have present capability to access the internet.
American Civil Liberties Union v. Janet Reno, 929 F.Supp. 824, 831 (E.D.Pa.1996).
The “internet” is essentially a term that describes the interconnection of all of these
computers to each other. It is also referred to as “the information superhighway.”
The connections of these computers are completed through the use of telephone
lines, which electronically transmit information from one computer to another. The
internet has created a tremendous global means of rapid exchange of information
by the government, academic institutions, and commercial entities. Id. at 830-42
(describing the nature of the internet). There are at least 12,000 persons in Missouri
who have internet access, although the number may be much higher. (Pl.Mem. in
Opp'n to Def.Mot. to Dismiss at Pl.Ex.A.) Any internet user can access any website,
of which there are presumably hundreds of thousands, by entering into the
computer the internet address they are seeking. Internet users can also perform
searches on the internet to find websites within targeted areas of interest. Via
telephone lines, the user is connected to the website, and the user can obtain any
information that has been posted at the website for the user. The user can also
interact with and send messages to that website. Upon connecting to a website, the
information is transmitted electronically to the user's computer and quickly appears
on the users screen. This transmitted information can easily be downloaded to a
disk or sent to a printer.
CyberGold's website, located at “www.cybergold.com,” is operational. The website
provides information about CyberGold's new upcoming service. The website
explains that the forthcoming service will maintain a mailing list of internet users,
presumably including many residents of Missouri. An internet user who wants to be
on CyberGold's mailing list provides CyberGold with his or her particular areas of
interest. CyberGold will then provide the user with a personal electronic mailbox and
will forward to the user advertisements that match the users selected interests. FN2
CyberGold plans to provide users incentives for reading the advertisements.
CyberGold plans to charge advertisers for access to the internet users on its mailing
list. CyberGold's actual service is not yet in operation.
FN2. CyberGold's website does not suggest that its service will not be
available to anyone who wants to subscribe to the service. Rather, the
service appears to be available to any internet user.
Plaintiff asserts that this website acts as a state-wide advertisement for CyberGold's
forthcoming internet service. Plaintiff asserts that the website “invites Missourians to
put their names on CyberGold's mailing list and get up-to-date information about the
company and its forthcoming Internet service.” (Pl. Mem. in Opp'n to Def. Mot. to
Dismiss at 4.) Plaintiff also asserts that through this website “CyberGold is also
actively soliciting advertising customers” from Missouri. (Id.)
Since CyberGold has set up its website, the website has been accessed through
internet users located in Missouri at least 311 times, although 180 of the 311 times
H. CASES INVOLVING THE INTERNET Page 98 of 102
were by Maritz and its employees. CyberGold attests that, other than maintaining
the website “www.cybergold.com,” it has no other contacts with the state of
Missouri.
[1] Missouri's long-arm statute allows the exercise of jurisdiction over non-residents
to the extent permissible under the due process *1331 clause. See Federal
Deposit Ins. Corp. v. Malmo, 939 F.2d 535, 537 (8th Cir.1991); State ex rel. Metal
Serv. Ctr. v. Gaertner, 677 S.W.2d 325, 327 (Mo. banc 1984) . The Missouri long-
arm statute, Mo.Rev.Stat. § 506.500, provides, in relevant part:
Any person or firm, whether or not a citizen or resident of this state, or any
corporation, who in person or through an agent does any of the acts enumerated in
this section, thereby submits such person, firm, or corporation, and, if an individual,
his personal representative, to the jurisdiction of the courts of this state as to any
cause of action arising from the doing of any of such acts:
(1) The transaction of any business within this state
...
(3) The commission of a tortious act within this state
...
Id.
Plaintiff asserts first that defendant meets the “transaction of any business” within
the state test. Plaintiff compares defendant's activities with those of the defendant in
Danforth v. Reader's Digest Ass'n, Inc., 527 S.W.2d 355 (Mo. banc 1975). In
Danforth, the Missouri supreme court held that the “transaction of any business”
requirement was satisfied where defendant conducted promotional activities
directed towards recipients located in Missouri. Id. at 358. The defendant in
Danforth had mailed into Missouri, on two occasions, thousands of solicitations for
magazine subscriptions. Id. at 356-57 n. 2.
Missouri courts have not addressed the issue of whether internet transmissions
involving advertising meet the “transaction of any business” test. Plaintiff's
comparison of the maintenance of a website to the active solicitation through mass
mailings is to some extent unsatisfactory in resolving the question of whether
defendant's internet activities amount to the “transaction of any business.” As
discussed below, there are considerable differences in the two mediums of
communication and information exchange. Because the Missouri courts construe
the Missouri long-arm statute to confer jurisdiction to the extent allowed by the Due
Process Clause, this Court will resolve the long-arm statute question in the context
of the due process clause. See State ex rel. Metal Serv. Ctr., 677 S.W.2d at 327.
[2] It is unnecessary to decide whether defendant's activities satisfy the “transaction
of any business” test because the Court concludes that defendant is amenable to
service under the “commission of a tortious act” provision in Missouri's long-arm
statute. Mo.Rev.Stat. § 506.500.1(3). Plaintiff argues that CyberGold is infringing on
Maritz's trademark in violation of the Lanham Act, 15 U.S.C. § 1125(a), and that this
infringement is causing economic harm and injury to Maritz. Plaintiff asserts that the
CONFLICT OF LAWS 3D 2/08-09
injury from infringement is occurring in Missouri, as Maritz is located in Missouri.
[3] A violation of the Lanham Act is tortious in nature. See Dakota Indus., 946
F.2d at 1388. In Peabody Holding Co. Inc., v. Costain Group PLC, 808 F.Supp.
1425, 1433-34 (E.D.Mo.1992) (J. Limbaugh), and in May Dep't Stores Co. v.
Wilansky, 900 F.Supp. 1154, 1159-60 (Ed.Mo.1995) (J. Shaw), the courts
determined that the “commission of a tortious act” provision of Missouri's long-arm
statute permitted jurisdiction over a defendant corporation where the sole basis for
jurisdiction was an extraterritorial act of tortious interference with a contract which
produced an effect in the State of Missouri. Based on these decisions, the Court
concludes that Missouri's long-arm statute reaches the defendants, even assuming
CyberGold's allegedly infringing activities were wholly outside of Missouri, because
the allegedly infringing activities have produced an effect in Missouri as they have
allegedly caused Maritz economic injury.
Both Peabody Holding Co. Inc., 808 F.Supp. at 1436-38, and May Dep't Stores Co.,
900 F.Supp. at 1161, relied upon by plaintiffs, however, concluded that, while
Missouri's long-arm statute extended to the defendants, exercising jurisdiction over
the defendant corporations would violate due process. In both cases, the plaintiffs
could point to no contacts other than the impact of the defendants' alleged tortious
activity upon plaintiffs in the form of economic damages. Peabody Holding Co.,
808 F.Supp. at 1437; *1332 May Dep't Stores, 900 F.Supp. at 1161. Such limited
contact alone, was “so attenuated that the maintenance of a suit would offend
traditional notions of fair play and substantial justice.” May Dep't Stores, 900
F.Supp. at 1161 (quoting Peabody Holding Co., 808 F.Supp. at 1437-38).
Thus, the Court must turn to the issue of whether the Court's exercise of personal
jurisdiction over defendant CyberGold under the facts of this case would violate due
process.FN3 Due process requires that there be “minimum contacts” between the
nonresident defendant and the forum state before a court can exercise personal
jurisdiction over the defendant. See World-Wide Volkswagen Corp. v. Woodson,
444 U.S. 286, 291, 100 S.Ct. 559, 564, 62 L.Ed.2d 490 (1980). The Eighth Circuit
has articulated that
FN3. Even though plaintiff's claims are brought under a federal statute and
on non-diversity grounds, the Court employs the minimum contacts
analysis under the due process clause, albeit under the fifth amendment
instead of the fourteenth amendment. See Dakota Indus., 946 F.2d at
1389 n. 2.
Sufficient contacts exist when the defendant's conduct and connection with the
forum state are such that he should reasonably anticipate being haled into court
there, and when the maintenance of the suit does not offend traditional notions of
fair play and substantial justice. In assessing the defendant's “reasonable
anticipation,” there must be some act by which the defendant purposefully avails
itself of the privilege of conducting activities within the forum State, thus invoking the
benefits of its laws.
Soo Line R.R. Co. v. Hawker Siddeley Canada, Inc., 950 F.2d 526, 528-29 (8th
Cir.1991) (citations and internal quotation marks omitted). The Eighth Circuit has set
forth a five-part test for measuring minimum contacts:
(1) the nature and quality of the contacts with the forum state;
H. CASES INVOLVING THE INTERNET
(2) the quantity of those contacts:
(3) the relation of the cause of action to the contacts;
(4) the interest of the forum state in providing a forum for its residents;
(5) the convenience of the parties.
Bell Paper Box, Inc., 22 F.3d at 819 (citing Land-O-Nod Co. v. Bassett Furniture
Indus., Inc., 708 F.2d 1338, 1340 (8th Cir.1983)). The first three factors are the
most important. Id.
[4] Whether maintaining a website, such as the one maintained by CyberGold,
which can be accessed by any internet user, and which appears to be maintained
for the purpose of, and in anticipation of, being accessed and used by any and all
internet users, including those residing in Missouri, amounts to promotional
activities or active solicitations such as to provide the minimum contacts necessary
for exercising personal jurisdiction over a non-resident corporation, presents an
issue of first impression to this Court. The internet, a new and rapidly developing
means of mass communication and information exchange, raises difficult questions
regarding the scope of court's personal jurisdiction in the context of due process
jurisprudence.
Because the internet is an entirely new means of information exchange, analogies
to cases involving the use of mail and telephone are less than satisfactory in
determining whether defendant has “purposefully availed” itself to this forum. Unlike
use of the mail, the internet, with its electronic mail, is a tremendously more
efficient, quicker, and vast means of reaching a global audience. By simply setting
up, and posting information at, a website in the form of an advertisement or
solicitation, one has done everything necessary to reach the global internet
audience.
A company's establishment of a telephone number, such as an 800 number, is not
as efficient, quick, or easy way to reach the global audience that the internet has the
capability of reaching. While the internet does operate via telephone
communications, and requires users to place a “call” to a website via the user's
computer, a telephone number still requires a print media to advertise that
telephone number. Such media would likely require the employment of phone
books, newspapers, magazines, and television. Even then, an 800 number
provides*1333 a less rapid and more limited means of information exchange than a
computer with information downloading and printing capabilities. With a website,
one need only post information at the website. Any internet user can perform a
search for selected terms or words and obtain a list of website addresses that
contain such terms or words. The user can then access any of those websites.
In analyzing the first factor articulated by the Eighth Circuit-the Court finds that the
nature and quality of contacts provided by the maintenance of a website on the
internet are clearly of a different nature and quality than other means of contact with
a forum such as the mass mailing of solicitations into a forum, see, e.g., Danforth,
527 S.W.2d at 358, or that of advertising an 800 number in a national publication,
see, e.g., Dart Int'l, Inc., v. Interactive Target Sys., Inc., 877 F.Supp. 541, 543-45
Page 99 of 102 CONFLICT OF LAWS 3D 2/08-09
(D.Colo.1995); Composite Marine Propellers, Inc., v. VanDerWoude, 741 F.Supp.
873, 877-78 (D.Kan.1990).
CyberGold's posting of information about its new, up-coming service through a
website seeks to develop a mailing list of internet users, as such users are essential
to the success of its service. Clearly, CyberGold has obtained the website for the
purpose of, and in anticipation that, internet users, searching the internet for
websites, will access CyberGold's website and eventually sign up on CyberGold's
mailing list. Although CyberGold characterizes its activity as merely maintaining a
“passive website,” its intent is to reach all internet users, regardless of geographic
location. Defendant's characterization of its activity as passive is not completely
accurate. By analogy, if a Missouri resident would mail a letter to CyberGold in
California requesting information from CyberGold regarding its service, CyberGold
would have the option as to whether to mail information to the Missouri resident and
would have to take some active measures to respond to the mail. With CyberGold's
website, CyberGold automatically and indiscriminately responds to each and every
internet user who accesses its website. Through its website, CyberGold has
consciously decided to transmit advertising information to all internet users, knowing
that such information will be transmitted globally. Thus, CyberGold's contacts are of
such a quality and nature, albeit a very new quality and nature for personal
jurisdiction jurisprudence, that they favor the exercise of personal jurisdiction over
defendant.
As to the second factor-the quantity of contacts-the Court finds that defendant has
transmitted information into Missouri regarding its services approximately 131
times.FN4 The information transmitted is clearly intended as a promotion of
CyberGold's upcoming service and a solicitation for internet users, CyberGold's
potential customers. This factor suggests that defendant is purposefully availing
itself to the privilege of conducting activities in Missouri.
FN4. The Court does not consider, for purposes of establishing personal
jurisdiction, the 180 times that plaintiff accessed defendant's website. If
such contacts were to be considered, a plaintiff could always try to create
personal jurisdiction. Further, in the context of this case, plaintiff could not
argue that it is in any way being damaged by CyberGold's sending of an
advertisement or solicitation of its allegedly infringing service to Maritz.
As to the third factor articulated by the Eighth Circuit, the litigation in this action
against CyberGold results from alleged injuries that, at least in part, arise out of or
relate to CyberGold's website and the information posted at the website. See
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472-73, 105 S.Ct. 2174, 2181-83,
85 L.Ed.2d 528 (1985) (discussing requirements for specific jurisdiction). The
website invites internet users to use CyberGold's new service when it becomes
operational. This service and the promotional efforts that CyberGold is employing by
posting the information its website are allegedly infringing on plaintiff's alleged
trademark. While CyberGold has not yet set up its service of sending
advertisements to internet users on its mailing list, CyberGold's acts of developing a
mailing list through its acceptance of addresses on its website are also part of the
allegedly infringing activity about which plaintiff complains.
Whether sufficient minimum contacts to obtain personal jurisdiction over a
defendant can be established solely through the use of *1334 computers and
H. CASES INVOLVING THE INTERNET Page 100 of 102
electronic communications is a new issue under due process jurisprudence. Courts
addressing the issue have recognized that such communications via computer are
of a different nature. In California Software Inc. v. Reliability Research, Inc., 631
F.Supp. 1356, 1363 (C.D.Cal.1986), the court, in addressing whether a defendant's
communication by posting allegedly false statements about plaintiff on an interstate
computer network could create personal jurisdiction, stated:
Not only did defendants act intentionally but, by communicating through the
[computer] network, they made their messages available to an audience wider than
those requesting the information ... Through the use of computers, corporations can
now transact business and communicate with individuals in several states
simultaneously. Unlike communication by mail or telephone, message sent through
computers are available to the recipient and anyone else who may be watching.
Thus, while modern technology has made nationwide commercial transactions
simpler and more feasible, even for small businesses, it must broaden
correspondingly the permissible scope of jurisdiction exercisable by the courts.
Id. Similarly, in Inset Systems, Inc., 937 F.Supp. at 165, the district court found that
personal jurisdiction existed over a defendant corporation that made its toll-free 800
number available over the internet to the residents of the forum state. In addressing
the issue of “purposeful availment,” the Court stated:
[Defendant] has directed its advertising activities via the Internet and its toll-free
number toward not only the state of Connecticut, but to all states. The Internet as
well as toll-free numbers are designed to communicate with people and their
businesses in every state. Advertisement on the Internet can reach as many as
10,000 Internet users within Connecticut alone. Further, once posted on the
Internet, unlike television and radio advertising, the advertisement is available
continuously to any Internet user. [Defendant] therefore, purposefully availed itself
of the privilege of doing business within Connecticut.
Id.; see also CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1262 (6th Cir.1996)
(suggesting that the effect of the internet on commerce, modern transportation, and
communication requires a reconsideration of the scope of the personal jurisdictional
reach of courts). Similarly, the Court concludes that defendant CyberGold, through
its internet activities, has purposefully availed itself of the privilege of doing business
with this forum such that it could reasonably anticipate the possibility of being haled
into court here.
The Court also concludes that traditional notions of “fair play and substantial justice”
do not dictate against exercising personal jurisdiction over defendant in Missouri.
See Burger King Corp., 471 U.S at 476-78, 105 S.Ct. at 2184-85. Considerations
include the burden on defendant, the interest in the forum state in adjudicating type
dispute, the plaintiff's interest in obtaining convenient and effective relief, the
interstate judicial system's interest in obtaining the most efficient resolution of
controversies, and the shared interest of the several States in furthering
fundamental substantive social policies.” Id. at 477, 105 S.Ct. at 2184-85 (citing
World-Wide Volkswagen Corp., 444 U.S. at 292, 100 S.Ct. at 564-65). The State
of Missouri has an interest in resolving this case and determining whether a
Missouri corporation's trademark is being infringed in violation of a federal statute.
Plaintiff likewise has a strong interest in adjudicating this action in Missouri.
Defendant, who has availed itself to this forum has not shown that it is so burdened
by defending itself in this forum that traditional notions of fair play and substantial
CONFLICT OF LAWS 3D 2/08-09
justice are implicated.
Defendant's argument that venue is improper must also be denied. Because the
Court has concluded it has personal jurisdiction over defendant, venue is proper in
this judicial district. See28 U.S.C. § 1391(c).
II. Subject Matter Jurisdiction
Defendant has moved to dismiss plaintiff's Lanham Act claim for lack of subject
matter jurisdiction. Defendant points to allegations in plaintiff's first amended
complaint that CyberGold's advertising services are not yet *1335 available or
operational. Defendant also states that the complaint does not allege that
CyberGold has begun rendering any internet advertising services regarding its new
service, or that CyberGold has received any payment from prospective advertisers.
Defendant argues that because CyberGold has not yet actually rendered, sold, or
transported its goods or services in commerce, plaintiff's Lanham Act claim must be
dismissed. Defendant also argues that plaintiff's service, under the name of
GoldMail, is not yet operational, but is only in the process of soliciting and enrolling
customers to its service. Defendant essentially asserts that plaintiff's Lanham Act
claim is premature, as it cannot meet the “use in commerce” test required under the
Lanham Act, and that, therefore, it must be dismissed for lack of subject matter
jurisdiction.
The Lanham Act provides:
Any person who, in connection with any goods or services ... uses in commerce any
word, term, name, symbol, or device, or any combination thereof, or any false
designation of origin, false or misleading description of fact, or false or misleading
representation of fact, which-
(A) is likely to cause confusion, or to cause mistake, or to deceive as to the
affiliation, connection, or association of such person with another person, or as to
the origin, sponsorship, or approval of his or her goods, services, or commercial
activities by another person ...
shall be liable in a civil action by any person who believes that he or she is or is
likely to be damaged by such act.
15 U.S.C. § 1125(a)(1). Defendant argues that because in has not “used in
commerce” any of the acts enumerated in the statute, no claim arises under the
Lanham Act and thus, the Court is without jurisdiction. Defendant cites to Lang v.
Pacific Marine and Supply Co., Ltd., 895 F.2d 761, 765-66 (Fed.Cir.1990), in which
the court held that because defendant's ship, which contained an allegedly
infringing name, was still under construction in drydock and would not be ready for
nine months, the ship had not entered into commerce and thus, no Lanham Act
claim was present. Similarly, in Cognitest Corp. v. The Riverside Publishing Co., 36
U.S.P.Q.2d 1363, 1366, 1995 WL 382984 (N.D.Ill.1995), no Lanham Act claim
could be sustained where plaintiff made only conclusory allegations that defendant
had presented its infringing program to the public at a meeting, because the plaintiff
never alleged that “the defendant's product was never used in commerce.” Id.
[5] Although defendant's internet service is not operational yet, plaintiff's Lanham
H. CASES INVOLVING THE INTERNET Page 101 of 102
Act claim is not necessarily premature. A Lanham Act claim can exist even before a
defendant actually opens the business, so long as the acts of defendant are
imminent and impending. See Essie Cosmetics, Ltd. v. Dae Do Int'l, Ltd., 808
F.Supp. 952, 957 (E.D.N.Y.1992) (citing J. Thomas McCarthy, 2 Trademarks and
Unfair Competition, § 30.5 at 470 (2d ed. 1984)). In Bertolli USA, Inc. v. Filippo
Bertolli Fine Foods, Ltd., 662 F.Supp. 203, 205 (S.D.N.Y.1987), the court held that
plaintiff's Lanham Act claim was not premature where defendant had printed
infringing labels and had shipped one bottle to a potential distributor.
[6] Here, defendant clearly has not actually commenced its service of sending
advertisements over the internet to internet users on its mailing list. However,
defendant does, as discussed above, maintain a website from which it sends out
information regarding its upcoming services. The information is an advertisement of
its services and solicits names and addresses of internet users who are potential
users on its mailing list. Defendant is using the internet to develop an indispensable
part of its advertising service-its mailing list. Thus, because of these activities, the
Court concludes that the “uses in commerce” test has been satisfied. See Lobo
Enters. v. Tunnel, Inc., 822 F.2d 331, 333 (2d Cir.1987) (“in commerce” requirement
satisfied where “service mark has been advertised significantly in travel guides or
publications having interstate circulation”); see also Jerome Gilson, 1 Trademark
Protection and Practice § 5.11[2] at 5-234 (1996) (“Because Internet
communications transmit instantaneously on a worldwide basis, there is little
question that the ‘in commerce’ requirement would be met in a typical Internet
*1336 message, be it trademark infringement or false advertising”). The Court also
concludes that it is imminent and impending that defendant will be fully operating its
internet advertising service in the near future. Both developing a mailing list and
obtaining advertisers are integral to defendant's business. Plaintiff need not wait
until both are fully established before it can maintain an action for violation of the
Lanham Act.
III. Defendant's Motion to Stay
CyberGold has moved to stay the proceedings. As grounds for a stay, CyberGold
states that, on October 1, 1995, CyberGold filed an intent-to-use trademark
application for use of the mark “CYBERGOLD” with the United States Patent and
Trademark Office (the PTO) pursuant to 15 U.S.C. § 1051(b) of the Lanham Act and
that, on August 5, 1996, CyberGold's pending federal trademark was accepted for
registration and approved for publication in the Official Gazette for opposition
purposes by the PTO pursuant to 15 U.S.C. § 1062(a).FN5 CyberGold asserts that
because it filed its intent-to-use application prior to any alleged activities of plaintiff
and its use of its GOLDMAIL mark, there is a high likelihood that the opposition to
CyberGold's pending federal trademark will be unsuccessful and that CyberGold's
CYBERGOLD mark will be approved for registration by the PTO under 15 U.S.C. §
1063.
FN5. CyberGold has apparently filed an amendment to its application for
registration of its CYBERGOLD mark. (See Def. Mem. in Support of Mot. to
Stay Ex. A.) Upon the filing of an amendment to an application for
registration, the application for registration of the mark is subject to a
reexamination and possible republication in the Official Gazette for
opposition purposes. See15 U.S.C. § 1062(a)-(b).
CONFLICT OF LAWS 3D 2/08-09
If CyberGold's mark is eventually registered upon the principal register, CyberGold
will be issued a certificate of registration. 15 U.S.C. § 1057(a). Such certificate will
“be prima facie evidence of the validity of the registered mark ... and of the
registrant's exclusive right to use the registered mark in commerce on or in
connection with the goods or services specified in the certificate.” 15 U.S.C. §
1057(b). If a registration certificate is issued on the principal register, the person
holding the registration certificate for the mark has a nationwide right of priority in
using such mark, dating back to the date the person filed its application to register
the mark. 15 U.S.C. § 1057(c). Such right of priority exists as to all persons except
those who, prior to the date such person filed the application to register, have used
the mark or have filed an application to register the mark which is pending or has
been registered. Id.
Because of the pending registration of its CYBERGOLD trademark, CyberGold
argues that this Court should stay its proceedings and await the outcome of any
opposition proceedings regarding its recently published mark. CyberGold argues
that the outcome of the PTO proceedings will determine, at least through prima
facie evidence, whether CyberGold has priority in the use of its CYBERGOLD mark,
and that the outcome of the PTO proceedings will affect whether plaintiff will be able
to succeed in its Lanham Act claim against CyberGold.
[7] Under the doctrine of primary jurisdiction, a court can stay a proceeding to allow
an administrative agency to first make a determination as to an issue important to
the court proceeding. The doctrine “is concerned with promoting the proper
relationships between the courts and administrative agencies charged with
regulatory duties.” U.S. v. Western Pac. R.R. Co., 352 U.S. 59, 63, 77 S.Ct. 161,
165, 1 L.Ed.2d 126 (1956). The doctrine “comes into play whenever enforcement of
[a] claim requires the resolution of issues which, under a regulatory scheme, have
been placed within the special competence of an administrative body; in such a
case, the judicial process is suspended pending referral of such issues to the
administrative body for its views.” Id. at 64, 77 S.Ct. at 165. Several
considerations drive the doctrine of primary jurisdiction and whether a court should
stay its proceedings and defer to an administrative agency: (1) whether the relevant
administrative agency has exclusive primary jurisdiction; (2) whether awaiting the
decision of issues by the administrative agency will be of importance in resolving
*1337 issues in the litigation before the district court; (3) whether the administrative
agency has specialized expertise and experience and the issues in dispute are not
within the conventional experience of judges; and (4) whether deferring to an
administrative agency is likely to prolong the dispute rather than lead to a judicially
economical disposition. See American Bakeries Co. v. Pan-O-Gold Baking Co.,
650 F.Supp. 563, 565-68 (D.Minn.1986); The Driving Force, Inc. v. Manpower, Inc.,
498 F.Supp. 21, 24-26 (E.D.Pa.1980); see also Southwestern Bell Tel. Co. v. Allnet
Communications, Serv., 789 F.Supp. 302, 304-05 (E.D.Mo.1992).
[8] Consideration of these factors leads to the conclusion that this action should not
be stayed for initial resolution of issues by the PTO. First, this is an action for under
15 U.S.C. § 1125(a) of the Lanham Act for infringement and unfair competition. The
PTO does not have exclusive jurisdiction over such claims and whether to stay this
action is discretionary. See American Bakeries Co., 650 F.Supp. at 568. A PTO
decision as to whether to issue a registered trademark to CyberGold would not be
determinative of any issues in this Court's proceeding. While a PTO decision to
issue a registered trademark would be prima facie evidence of CyberGold's right of
H. CASES INVOLVING THE INTERNET Page 102 of 102
priority to use the CYBERGOLD mark, it would not be conclusive evidence. Id. at
567 n. 3. While such a determination would be “a material aid in ultimately deciding
the issues presented before the court” C-Cure Chem. Co., Inc., v. Secure
Adhesives Corp., 571 F.Supp. 808, 823 (W.D.N.Y.1983), it would not be dispositive
of plaintiff's infringement and unfair competition claim brought under 15 U.S.C. §
1125(a).
While the PTO clearly has specialized expertise and experience in the area of
registration of trademarks, the ultimate issue which this Court must decide is
whether a violation of 15 U.S.C. § 1125(a) has occurred. The PTO cannot resolve
such issues. Rather, the district courts are vested with jurisdiction to hear such
claims and the issues involved in such claims are within “the conventional
competence of courts.” Nader v. Allegheny Airlines Inc., 426 U.S. 290, 305-06, 96
S.Ct. 1978, 1987, 48 L.Ed.2d 643 (1976).
Finally, considerations of judicial economy suggest that stay is inappropriate at the
present time. While plaintiff has indicated that it expects to file opposition to
CyberGold's pending registration in the PTO, such proceedings have not yet
commenced, as CyberGold's pending federal trademark was only recently accepted
for registration and approved for publication in the Official Gazette for opposition
purposes. Also, because it appears that CyberGold is amending its application for
its federal trademark, it appears likely that a considerable amount of time may pass
before any determination is made by the PTO whether to issue a trademark
registration to CyberGold. Thus, a stay to allow the PTO to make its determinations
would cause considerable delay in these proceedings, yet would not resolve the
pending dispute between the parties. See Goya Foods, Inc., v. Tropicana Prods.,
Inc., 846 F.2d 848, 851-54 (2d Cir.1988). The Court will deny defendant's motion to
stay.
Accordingly,
IT IS HEREBY ORDERED that the motion of defendant to dismiss for lack of
personal jurisdiction and improper venue [document # 18] is DENIED.
IT IS FURTHER ORDERED that the motion of defendant to dismiss for failure to
state a claim and lack of subject matter jurisdiction [document # 23] is DENIED.
IT IS FURTHER ORDERED that the motion of defendant to stay the proceedings
[document # 24] is DENIED.
E.D.Mo.,1996.
Maritz, Inc. v. Cybergold, Inc.
947 F.Supp. 1328, 40 U.S.P.Q.2d 1729
END OF DOCUMENT
CONFLICT OF LAWS 3D 2/08-09