No. 80-2095 United States Court of Appeals, District of Columbia Circuit Tahan v. Hodgson, Study Guides, Projects, Research of International Law

Download No. 80-2095 United States Court of Appeals, District of Columbia Circuit Tahan v. Hodgson and more Study Guides, Projects, Research International Law in PDF only on Docsity! No. 80-2095 United States Court of Appeals, District of Columbia Circuit Tahan v. Hodgson 662 F.2d 862 (D.C. Cir. 1981) Decided Aug 25, 1981 No. 80-2095. Argued June 12, 1981. Decided August 25, 1981. *863 WILKEY, Circuit Judge: 863 Hershel Shanks, Washington, D.C., with whom Steven A. Standiford and Michael A. Gordon, Washington, D.C., were on the brief for appellant. Frank J. Martell, Washington, D.C., for appellee. Appeal from the United States District Court for the District of Columbia (D.C. Civil Action No. 80-01102). Before McGOWAN, WILKEY and WALD, Circuit Judges. Opinion for the Court filed by Circuit Judge WILKEY. Plaintiff brings this action for enforcement of a default judgment entered against defendant by an Israeli court. The matter is before this court on cross motion for summary judgment, with the diversity jurisdiction of this court invoked. The district court found for the defendant; we reverse and remand for the district court to enforce the judgment. I. FACTUAL BACKGROUND The essential facts in this case are straightforward and uncontroverted. Plaintiff Chamis Tahan operates a travel agency in Jerusalem which acted as agent for the travel agency of defendant Sir John G. Hodgson until a dispute arose and the relationship ended. Plaintiff claimed that defendant owed him a sum of money for past services, but defendant denied the debt. Mediation failed and plaintiff filed suit in Israel. Plaintiff's attorney served defendant personally in Jerusalem, but defendant refused to acknowledge service on the grounds that the papers were drawn in Hebrew, a language he did not read. Plaintiff's attorney later left the complaint with defendant, who subsequently returned the papers to the attorney's office, stating that he would submit the matter to his attorney and defend the claims once he had received a "complete translation and documentation in English." Plaintiff then obtained a default judgment against defendant in the amount of $54,114.40 plus legal fees in the amount of $3,870.00. It is this default *864 judgment in Israel which plaintiff now seeks to have enforced by the courts of the United States. 1 864 1 Letter from John G. Hodgson to Yoav Levy (31 October 1979). II. LEGAL ISSUES The seminal case in the area of enforcement of foreign judgments is Hilton v. Guyot. Hilton found that "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 on appeal, upon the mere assertion of the party that the judgment was erroneous in law or in fact" if 2 2 159 U.S. 113, 16 S.Ct. 139, 40 L.Ed. 95 (1895). Hilton's also-important but less- cited sister case was Ritchie v. McMullen, 159 U.S. 235, 16 S.Ct. 171, 40 L.Ed. 133 (1895) (Canadian judgment enforced). 1 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 . . . .3 3 159 U.S. at 202, 203, 16 S.Ct. at 158, 159 (emphasis added). Thus, requirements for enforcement of a foreign judgment expressed in Hilton are that there be "due citation" and that the original claim not violate American public policy, that is, in the language of the Restatement (Second) Conflict of Laws, that it not be "repugnant to fundamental notions of what is decent and just in the State where enforcement is sought." Hilton also established the principle of "reciprocity," which requires a judgment rendered in a foreign nation to be subjected by the federal courts in this country to a reexamination on the merits if an American judgment would be given similar treatment in the foreign nation involved. 4 5 6 4 See also H. Goodrich E. Scoles, Conflict of Laws § 211 (1964). The origin of the doctrine in American federal law is in DeBrimont v. Penniman, 10 Blatch. 436, 7 Fed.Cas. No. 3715 (1873). 5 § 117, Comment c (1971). See also A. Ehrenzweig, A Treatise on the Conflict of Laws § 56 (1962), quoting H. Goodrich, Conflict of Laws § 211 (1949) ("repugnant to our notions of decency"); Reese, The Status in This Country of Judgments Rendered Abroad, 50 Colum. L.Rev. 783, 796-98 (1950). 6 As will be discussed later, it is doubtful whether the reciprocity doctrine is still viable. See pp. 867-868 infra. It is not alleged that the Israeli court lacked competent jurisdiction, nor is the general integrity of the Israeli judicial system questioned, nor is it alleged that the judgment rendered in this case was fraudulent. Therefore, the legal issues raised in this case reduce to three. First, was there "due citation" of defendant? That is, was there effective service of process? Second, would enforcement of this default judgment be "repugnant to fundamental notions of what is decent and just" in the United States? And, third, what applicability does the doctrine of reciprocity have to this case? We shall consider each of these issues in turn. A. Effective Service of Process 7 7 This requirement has origins predating Hilton. See Sawyer v. Maine Fire Marine Ins. Co., 12 Mass. 291 (1815). Accord: Bradstreet v. Neptune Ins. Co., 3 Fed.Cas. No. 1793, 3 Sumn. 600 (1839). It remains well-established. See Griffin v. Griffin, 327 U.S. 220, 66 S.Ct. 556, 90 L.Ed. 635 (1946); Somportex Ltd. v. Philadelphia Chewing Gum Corp., 453 F.2d 435, 443 (3d Cir. 1971), cert. denied, 405 U.S. 1017, 92 S.Ct. 1294, 31 L.Ed.2d 479 (1972) ("The polestar is whether a reasonable method of notification is employed and reasonable opportunity to be heard is afforded to the person affected"). Cf. McDonald v. Mabee, 243 U.S. 90, 37 S.Ct. 343, 61 L.Ed. 608 (1917). See also Restatement (Second) Conflict of Laws § 92 (1971); A. Ehrenzweig, A Treatise on the Conflict of Laws § 55 (1962). In a default judgment, it is essential that there have been effective service of process. *865 That requirement seems clearly to have been met here. 865 2 Tahan v. Hodgson 662 F.2d 862 (D.C. Cir. 1981) Rules by a foreign nation to be ipso facto a violation of American public policy. It would be unrealistic for the United States to require all foreign judicial systems to adhere to the Federal Rules of Civil Procedure. Obviously, all foreign judgments will be inconsistent to some extent with the Federal Rules; many state court judgments are, for that matter. Surely a more important discrepancy than this is necessary to create a violation of public policy. We do not find the Israeli court's failure to provide second notice three days prior to hearing an application for entry of default to be so "repugnant to fundamental notions of what is decent and just" that American public policy requires non-enforcement of the subsequent judgment. *86718867 18 Hilton itself stands for the proposition that American courts have been signally reluctant to deny recognition to foreign judgments by virtue of mere difference of procedure (one plaintiff was permitted to testify without oath and without cross- examination). Other authority is collected in A. Ehrenzweig, A Treatise on the Conflict of Laws § 55 (1962); Reese, The Status in This Country of Judgments Rendered Abroad, 50 Colum.L.Rev. 783, 795 n. 65 (1950), including Newton v. Hunt, 59 Misc. 633, 112 N.Y.S. 573 (Sup.Ct. 1908), modified on other grounds, 134 A.D. 325, 119 N.Y.S. 3 (1909), aff'd, 201 N.Y. 599, 95 N.E. 1134 (1911) (foreign court resorted to rule of presumptive evidence not available in forum of enforcement); Matter of Rutherfurd, 182 Misc. 1019, 46 N.Y.S.2d 871 (Sur.Ct. 1944) (under French law, in a suit of debt the plaintiff may request the defendant to take a "decisive oath," and whether or not the oath is taken determines the case. Defendant took the oath at plaintiff's request and the judgment was held conclusive as against plaintiff's attack); Dunstan v. Higgins, 138 N.Y. 70, 75, 33 N.E. 729, 730 (1893) (to the effect that if the procedure is non-discriminatory and that usually afforded citizens of the foreign country, it is not subject to attack). Cf. Ingenohl v. Olsen Co., 273 U.S. 541, 47 S.Ct. 451, 71 L.Ed. 762 (1927) (enforcing Hong Kong judgment in trademark suit despite holding in Philippine lower court that Hong Kong judgment evidenced "clear mistake of law or fact"). With respect to the argument that enforcement of this judgment would violate the American policy against holding corporate officers personally liable for corporate debts, it should be pointed out that Israel also has a policy against lightly piercing the corporate veil. Defendant's arguments against holding him, rather than his corporation, liable could have and should have been made in Israel. He cannot fail to contest the Israeli plaintiff and then declare that he would have won. Our examination of the record, moreover, convinces us that the Israeli court's decision to pierce the corporate veil is not "repugnant" under the facts of this case, particularly when it is borne in mind that defendant did not present a case at all. 19 20 19 See, e. g., M. Heth, The Legal Framework of Economic Activity in Israel 79-98 (1967). Like American law, much of Israeli law is English common law. See Apelbom, Common Law A L'Americaine, 1 Israel L.Rev. 562 (1966). 20 Nor is it violative of American public policy to enforce a judgment which includes the award of attorneys' fees to plaintiff. There are of course many countries which do not follow the "American rule" and, instead, require that the losing side in a lawsuit pay the attorneys' fees of the winner. Given the fact that this practice is followed in many civilized and advanced foreign judicial systems, and the fact that even the American judicial system occasionally awards attorneys' fees, we think that enforcement of this part of the Israeli court's judgment is appropriate. There is a precedent for this view. Somportex Ltd. v. 5 Tahan v. Hodgson 662 F.2d 862 (D.C. Cir. 1981) Id. at 443 (citations omitted). Philadelphia Chewing Gum Corp., 453 F.2d 435 (3d Cir. 1971), cert. denied, 405 U.S. 1017, 92 S.Ct. 1294, 31 L.Ed.2d 479 (1972), enforced an English court's default judgment, including the requirement that defendant pay attorneys' fees. The Third Circuit court quoted approvingly from the district court's opinion: The Court finds that . . . while Pennsylvania may not agree that these elements should be included in damages for breach of contract, the variance with Pennsylvania law is not such that the enforcement 'tends clearly to injure the public health, the public morals, the public confidence in the purity of the administration of the law, or to undermine that sense of security for individual rights, whether of personal liberty or public property, which any citizen ought to feel, is against public policy.' C. The Reciprocity Requirement It is unlikely that reciprocity is any longer a federally mandated requirement for enforcement of foreign judgments or *868 that the District of Columbia itself has such a requirement that this court is obliged to follow. 21868 22 21 The reciprocity doctrine has been widely criticized and seldom invoked. See G. Stumberg, Principles of Conflict of Laws 127-30 (1963); J. Beale, The Conflict of Laws § 434.3 (1935); Peterson, Foreign Country Judgments and the Second Restatement of Conflict of Laws, 72 Colum.L.Rev. 220, 233-36 (1972); von Mehren Trautman, Recognition of Foreign Adjudications: A Survey and a Suggested Approach, 81 Harv.L.Rev. 1601, 1660-62 (1968); Reese, The Status in This Country of Judgments Rendered Abroad, 50 Colum.L.Rev. 783, 790-93 (1950); Comment, Reciprocity and the Recognition of Foreign Judgments, 36 Yale L.J. 542 (1927). It has been pointed out that even in Hilton the doctrine was unnecessary to reach the holding and was thus mere "magnificent dictum." Johnston v. Compagnie Generale Transatlantique, 242 N.Y. 381, 388, 152 N.E. 121, 123 (1926). See also H. Goodrich E. Scoles, Conflict of Laws § 208 (1964). Moreover, the federal courts may now be required by Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), to apply the rule of the state in which they sit as to the measure of respect that should be accorded the judgment of a foreign nation. See Restatement (Second) Conflict of Laws § 98, Comment e (1971). It is certainly true that some state courts, notably those of New York, have expressly rejected the Hilton requirement of reciprocity and extended recognition to judgments of foreign nations without regard to any question of reciprocity. Cases and statutes rejecting or undermining the doctrine of federally mandated reciprocity include: Somportex Ltd. v. Philadelphia Chewing Gum Corp., 453 F.2d 435 (3d Cir. 1971), cert. denied, 405 U.S. 1017, 92 S.Ct. 1294, 31 L.Ed.2d 479 (1972); Svenska Handelsbanken v. Carlson, 258 F.Supp. 448 (D.Mass. 1966); Direction der Disconto-Gesellschaft v. U.S. Steel Corp., 300 F. 741 (S.D.N.Y. 1924), aff'd 267 U.S. 22, 45 S.Ct. 207, 69 L.Ed. 495 (1925); Cowans v. Ticonderoga Pulp Paper Co., 219 A.D. 120, 219 N.Y.S. 284, aff'd, 246 N.Y. 603, 159 N.E. 669 (1927); Johnston v. Compagnie Generale Transatlantique, 242 N.Y. 381, 152 N.E. 121 (1926); and the Uniform Foreign Money Judgments Recognition Act, 13 U.L.Ann. 417 (Master ed. 1980), approved in 1962 by the National Conference of Commissioners on Uniform State Laws and adopted by eleven states. New Hampshire has passed a statute 6 Tahan v. Hodgson 662 F.2d 862 (D.C. Cir. 1981) requiring reciprocity with respect to Canadian judgments (N.H.Rev.Stat.Ann. § 524:11 (Equity Supp. 1974-75)). 22 In Cherun v. Frishman, 236 F.Supp. 292, 294 (D.D.C. 1964), Judge Tamm reviewed the requirement of reciprocity in his discussion of Hilton but had no occasion to invoke it under the facts of that case. There is no evidence that the District of Columbia has a reciprocity requirement. See D.C. Code Ann. § 12-307 (1973 Supp. VII 1980). The logical rule would seem to be that, in the absence of an action by the legislature, the courts should refrain from creating or resurrecting a reciprocity doctrine. The issue of how best to respond to a foreign nation's scrutinization of an American judgment is, after all, a political one. Moreover, notwithstanding Erie Railroad Co. v. Tompkins, the issue seems to be national rather than state. 23 24 23 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). 24 See Zschernig v. Miller, 389 U.S. 429, 88 S.Ct. 664, 19 L.Ed.2d 683 (1968); Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 421-27, 84 S.Ct. 923, 936-40, 11 L.Ed.2d 804 (1964). See also Ginsburg, Recognition and Enforcement of Foreign Civil Judgments, 4 Int'l Law. 720, 733 (1970); Homburger, Recognition and Enforcement of Foreign Judgments, 18 Am.J.Comp.L. 367, 385-90 (1970); Kulzer, Recognition of Foreign Country Judgments in New York: The Uniform Foreign Money- Judgments Recognition Act, 18 Buff.L.Rev. 1 (1969). Even assuming that reciprocity is required by either the federal government or the District of Columbia, we would still enforce the Israeli judgment since Israel in all probability would enforce a similar American judgment and thus meets the reciprocity criterion. Israel provides for enforcement of foreign judgments by a statute, which reads in relevant part that 25 25 Israel and the United States have a long and formal history of cooperation in commercial matters. See U.S.-Israel Friendship, Commerce and Navigation Treaty, 5 U.S.T. 550, T.I.A.S. No. 2948; Joint Statement of U.S.-Israel Joint Committee for Investment and Trade, 26 U.S.T. 1674, T.I.A.S. No. 8127. in dealing with and for the purposes of a matter within its jurisdiction, a court or tribunal in Israel may recognize a foreign judgment even if subsection (a) [providing for recognition of foreign judgments where an agreement with a foreign state specifically so mandates] does not apply to it, if it considers it lawful and just to do so.26 26 Foreign Judgments Enforcement (Amendment No. 2) Law, 5738-1977. Israeli courts have indeed ruled that a party with a foreign judgment may, if it wishes, bring a suit on the foreign judgment in a local Israeli court and obtain an Israeli judgment.27 27 Winter v. Kovach, 17 P.D. 2032 (1963); Rosenbaum v. Guli, 18 P.D. 374 (1964) II. For a discussion of these two cases, see Goldwater, Amendments to the Foreign Judgments Enforcement Law, 10 Israel L.Rev. 247 (1975). III. CONCLUSION As commerce becomes increasingly international in character, it is essential that businessmen recognize and respect the laws of those foreign nations in which they do business. They cannot expect foreign tribunals to have one set of laws for their own citizens and another, more favorable, set for the citizens of other countries. It is also essential that American courts recognize and respect the judgments entered by foreign courts to 7 Tahan v. Hodgson 662 F.2d 862 (D.C. Cir. 1981)