Jurisdiction and Service of Process Beyond Colorado Boundaries
| Jurisdiction | United States,Federal |
| Citation | Vol. 11 No. 3 Pg. 648 |
| Pages | 648 |
| Publication year | 1982 |
1982, March, Pg. 648. Jurisdiction and Service of Process Beyond Colorado Boundaries
Colorado is currently experiencing a growth trend in finance, construction and population that can scarcely be rivaled in recent history. A significant proportion of this expansion can be attributed to a massive influx of foreign capital, business personnel, students and visitors. The blessings engendered by this growth are sometimes offset by problems. A contractual disagreement or personal injury case can enter the picture without warning. The statistical probability of a Colorado attorney becoming involved in a local case with transnational connections is increasing.
Litigators representing clients in these cases will find themselves challenged with new procedures and theories. Little-used portions of commonly employed statutes and rules must come into play. This article provides information on jurisdiction and service of process in transnational litigation to assist attorneys in preparing for such an eventuality.
Prior to commencing a civil action, attorneys often check to see if there will be assets available to satisfy a possible judgment. Going through the motions of obtaining a judgment when there is no means of satisfaction is more often than not a waste of time. This can be especially true if the litigation involves foreign parties.
If assets are not readily available within the United States, chances of collection are substantially reduced. Reliance upon a foreign government to collect, regardless of the merits of the case, also may not be successful. Foreign governments have traditionally been loath to honor a judgment in which they have not directly participated. The primary reason for this is a fear that the receiving nation's sovereignty will be impinged upon.(fn1) Secondary reasons include possible violations of public policy,(fn2) a lack of comity(fn3) and poor political relations with the United States.(fn4) It is therefore essential to evaluate any transnational case with regard to the possible failure of collection before proceeding.
Federal courts have limited jurisdiction, the scope of which is defined generally by the U.S. Constitution, Art. Ill, § 2, and statutes enacted by Congress. Except for these specific means, jurisdiction cannot be obtained. Attempts to confer other bases of jurisdiction would be fruitless.(fn5) Thus, transnational litigation is similar to domestic litigation in that it must meet the same Constitutional standards for jurisdiction. If these standards are not met, the action cannot stay in federal court.(fn6) Moreover, jurisdiction must be specifically argued in federal cases.
Although jurisdiction may be proven by a variety of methods, this article only deals with those means that may be employed in transnational situations.
Jurisdiction over the person is normally proven by three main statutory means: federal question jurisdiction, diversity of citizenship jurisdiction, and alienage jurisdiction.(fn7)
Many attorneys wrongly confuse alienage jurisdiction with diversity of citizenship jurisdiction. Diversity jurisdiction is valid only between "citizens of different states," not foreign states. Confusion arises because both types of jurisdiction are codified under the same portion of the Code--- § 1332. Actually, alienage jurisdiction has been separated from diversity jurisdiction since the first federal trial courts were created by the Judiciary Act of 1789.(fn8) Even though the two are now codified together, history shows that the intent of the drafters was to confer different types of personal jurisdiction.(fn9) This becomes even more important today, considering the movement to abolish diversity of citizenship jurisdiction.(fn10) Unlike diversity jurisdiction, alienage jurisdiction is typically recognized as being valid since it still protects a foreign party from prejudice, avoids offending foreign sovereigns and provides guidelines for courts to interpret.(fn11) In fact, the proposed legislation to do away with diversity jurisdiction specifically supports the preservation of alienage jurisdiction.(fn12)
Alienage jurisdiction may be proven in suits between (1) citizens of a state, and citizens or subjects of a foreign state;(fn13) (2) citizens of different states and in which citizens or subjects of a foreign state are additional parties;(fn14) (3) a foreign state, defined in § 1603(a) as plaintiff against citizens of a state or of different states;(fn15) and (4) against a foreign state as defined in § 1603(a) as defendant.(fn16)
There may be some question as to how the above terms are defined. For example, a "foreign state" has been held to have different meanings under the various subsections of § 1332.(fn17)
In § 1603, a "foreign state" is defined to include a "political subdivision" or an "agency or instrumentality" of a foreign state. A general rule of thumb in determining if a body is a foreign state is to ask if the entity has been "recognized by the United States as a free and independent sovereign."(fn18) A foreign government not recognized by the U.S. or a "colony" of a foreign state not considered part of the foreign state, as defined under the alienage jurisdiction sections, cannot sue or be sued in federal court based on alienage jurisdiction alone.(fn19)
To be a "citizen of a state," an individual must be both a United States citizen and a citizen domiciled in a state. If the person is not a citizen of each, the action cannot be maintained.(fn20)
Alienage jurisdiction places a different standard of proof on corporations than does diversity jurisdiction. Under alienage jurisdiction, a corporation is a "citizen" only where incorporated for purposes of original jurisdiction.(fn21) However, courts have disagreed on this standard.(fn22) It may also be possible to allege citizenship of a corporation in the state where it has its principal place of business.(fn23) Business associations other than corporations, e.g., partnerships, should be considered citizens of every state where members are citizens, even though this rule has not yet been completely settled under alienage jurisdiction.(fn24)
Alienage jurisdiction cannot be obtained when the adverse parties are both only foreign nationals,(fn25) nor can it attach in litigation between foreign parties where citizens of a domestic state or states are additional parties on one side of the controversy.(fn26) However, if citizens of
The U.S. Constitution also gives Congress the right to confer federal jurisdiction arising under the laws and treaties it creates.(fn28) Additionally, a "state has jurisdiction to prescribe a rule of law attaching legal consequences to conduct that occurs outside its territory that causes an effect within its territory."(fn29) In fact, a state can impose penalties on non-citizens outside its borders if their conduct has a substantial effect within the state that is a direct and foreseeable result of their conduct.(fn30) In certain circumstances, the nation in which the conduct occurs has the power to displace foreign law and apply its own.(fn31) Other circumstances have even allowed federal common law, rather than statutory law, to be the basis of this type of jurisdiction.(fn32)
Many specific statutes have been enacted that affect foreign nationals and international transactions.(fn33) These statutes quite often have their own provisions conferring jurisdiction.(fn34) Therefore, it would be prudent to check the jurisdictional section of the statute that is the basis of litigation before considering an alternative means of attaching jurisdiction. It should also be noted that under both alienage jurisdiction and jurisdiction conferred by statute, there must be a minimum amount of money in controversy. This amount is presently $10,000, exclusive of costs and interest.(fn35)
Jurisdiction over foreign states has been specifically limited by statute.(fn36) Foreign states have been granted immunity from most actions by the Foreign Sovereign Immunities Act.(fn37) The few exceptions to this immunity are "commercial activities" by the foreign state; actions relating to certain property; "tortious" acts giving rise to personal or property damage; maritime liens;(fn38) and selected attachments or executions of property of a foreign state.(fn39)
Also, foreign immunity may be relinquished by a foreign state. This immunity may be surrendered subject to certain international agreements between the U.S. and other states, waiver by the foreign state, or by the filing of a counterclaim against a foreign state that initiates an action.(fn40)
Under the Act of State Doctrine, U.S. courts may decline to decide the validity of public acts of a foreign sovereign committed and having an...
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