Harmonizing Forum Non Conveniens and Foreign Money Judgment Recognition Through International Arbitration

• Citation: Vol. 29 No. 2
• Publication year: 2014

Harmonizing Forum Non Conveniens and Foreign Money Judgment Recognition through International Arbitration

Jungmoo Lee

HARMONIZING FORUM NON CONVENIENS AND FOREIGN MONEY JUDGMENT RECOGNITION THROUGH INTERNATIONAL ARBITRATION

Introduction

Picture this: A defendant argues that a dispute should be taken abroad. The plaintiff responds and pleads that the available foreign court is riddled with fraud and begs to keep the case in the united States. Fast forward twelve years. The defendant having successfully taken the claim abroad now claims that the judgment from the very same court that it advocated for is "a product of bribery, fraud and is illegitimate" and that the "judgment is [not] enforceable in any court that observes the rule of law."¹ The plaintiff, on the other hand, vehemently defends the judgment of the foreign court, stating that the ruling "marks the first time indigenous people have won a judgment against a U.S. company in a foreign court for environmental crimes."² Such is the narrative of Aguinda v. Texaco, an international legal battle between a small Amazonian town and an American multinational corporation that has been continuing since 1993.³

A case such as this two-decade saga—one between a multinational corporation Chevron and a small indigenous Amazonian tribe from Ecuador that has exploded into a legal behemoth involving multiple countries and various courts—has exposed a serious legal Catch 22 for both defendants and foreign plaintiffs. On the one hand, the plaintiff has suffered a significant harm that needs to be redressed. on the other hand, the court that ultimately decided the issue—a court that the defendant pressed to hear the case through forum non conveniens—may not have been impartial. This case would see that nobody has yet to receive justice: the plaintiff has not been compensated, and the defendant has not been fairly heard.

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But was the forum non conveniens wrongly granted? Although taking a case abroad is fairly easy, enforcing that judgment back in the U.S. is much more difficult. Much of the harm, as well as vital witnesses, are located—these are justifications for granting forum non conveniens. But what happens when the standard and integrity of that alternate forum can be questioned? In response to foreign lawsuits, the U.S. courts have systematically applied the doctrine of forum non conveniens and variations of the Uniform Foreign-Country Money Judgments Recognition Act (UFCMJRA) to decide whether the case should be litigated in the U.S., and also whether a monetary judgment from a foreign court should be enforced by an American court. However, a conflict arises (as it has for the Ecuadorian plaintiffs of Texaco) when the foreign court may meet the standard for a foreign non conveniens dismissal but does not satisfy the strict criterion of the UFCMJRA.⁴

This Comment proposes a method that would resolve the Catch 22 of cases such as the Ecuadorian example discussed above. This Comment argues that instead of making drastic doctrinal or statutory changes in the application of forum non conveniens and foreign money judgment standards to deal with such a situation, the U.S. courts should apply forum non conveniens dismissal on the condition that the case be moved to an international arbitration panel that is specifically tailored to handle the dispute at hand. Part I provides an overview of the forum non conveniens doctrine and the foreign money judgment recognition standards, and the difficulty in reconciling the two doctrines. Part II looks to see whether international arbitration could meet the criteria of an adequate forum under forum non conveniens and assesses the judicial appropriateness of using an arbitration court as an alternate forum. Furthermore, it proposes the methods that would allow courts to introduce arbitration as an alternate forum and tests the viability of the methods by applying them to Aguinda v. Texaco. Part III discuses methods to satisfy Forum Non Conveniens factors through international arbitration. Part IV concludes by summarizing the arguments made in previous part and advocates for a change in the current legal landscape to prevent future Texaco scenarios.

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I. Forum non Conveniens and Foreign Judgment Recognition in the United States

This section will discuss U.S. forum non conveniens and foreign judgment enforcement standard, and the paradox that rises once the two doctrines are simultaneously applied. Section A gives the jurisprudence of forum non conveniens in the U.S. Section B describes the doctrinal development of foreign judgment enforcement. Section C addresses the problems that arise when the two doctrines are subsequently applied together. Section D discusses the Aguinda v. Texaco in greater detail to show the real-life consequences that the paradox between the two doctrines can bring. Section E examines the solutions suggested by others in remedying this problem, and why other approaches may be required to prevent such situations.

A. History of forum non conveniens and its Current Application

Forum non conveniens is a doctrine applied in common law that allows the court to decline to exercise jurisdiction because the interests of justice are best served if the trial takes place in another court.⁵ Though forum non conveniens was a relatively infrequent occurrence in the past,⁶ the tremendous growth in international commerce since World War II has increased the variety of cases in which a foreign court would be a more convenient forum.⁷ As it is not a codified law, the standards of forum non conveniens vary from state to state in the U.S.⁸ However, the general shape of the doctrine has been made clear through seminal cases such as Piper Aircraft v. Reyno,⁹ Gulf Oil v. Gilbert,¹⁰ and Koster v. Lumbermens Mutual Casualty.¹¹

An analysis of forum non conveniens is a two stage process:

First, the court must consider whether an adequate alternative forum exists. If so, it must "then balance a series of factors involving the

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private interests of the parties in maintaining the litigation in the competing fora and any public interests at stake." The defendant seeking dismissal bears the burden as to both questions.¹²

An adequate forum is defined as a forum where the entire case and the parties involved in the suit will be subjected to its jurisdiction.¹³ Though the judicial standard of what constitutes an adequate alternative forum can be summarized as easily as a venue where the parties will not be "deprived of any remedy or treated unfairly,"¹⁴ meeting this standard can be quite complicated. For example, intrinsic elements such as the area of law that was the subject of the case, the basis of the subject matter jurisdiction, and the presence and industry of the plaintiff or defendant can influence whether an adequate forum is satisfactory.¹⁵ Extrinsic factors such as political and governmental stability of the foreign country and the country's economic development and legal system also weigh heavily in assessing the validity of the alternate forum.¹⁶

After demonstrating that the alternative forum has met the adequacy standard of the court, a two-part analysis of balancing the private and public factors takes place to analyze whether forum non conveniens should be granted. The private and public factors of forum non conveniens are laid out in the United States Supreme Court decision Gulf Oil Corp. v. Gilbert.¹⁷ Private factors are used to assess the convenience, to the litigators, of adjudication in the current federal forum in comparison to the proposed foreign forum.¹⁸ Private factors are defined using factors such as

[T]he relative ease of access to sources of proof; availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses; possibility of view of the premises, if view would be appropriate to the action; and all other practical problems that make trial of a case easy, expeditious and inexpensive.¹⁹

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Public interest factors look closer at the difficulties imposed upon the local population and the community for carrying the burden of jury duty for a case that has no local connection, as well as the third parties related to the litigation.²⁰ Public interests include "administrative difficulties associated with court congestion; the unfairness of imposing jury duty on a community with no relation to the litigation; the interest in having localized controversies decided at home; and avoiding difficult problems in conflict of laws and the application of foreign law."²¹ The factors under public and private interest analysis are applied flexibly without giving emphasis to one element or the other,²² with much of the determination left with the trial court.²³

Though much deference is given to the plaintiffs choice of forum, such a rule does not apply in the case of a foreign plaintiff.²⁴ This is because although U.S. courts have been favorably looked upon by foreign plaintiffs for the tactical advantage that can result from local laws that favor the plaintiffs case and the "habitual generosity of juries in the United States . . . and the plaintiff's popularity or the defendant's unpopularity in the region,"²⁵ the likelihood of the U.S. forum being convenient for the plaintiff is much less than in the case of a U.S. plaintiff.²⁶ Forum non conveniens can be used to prevent the plaintiffs abuse of forum to "'vex,' 'harass,' or 'oppress' the defendant by inflicting upon him expense or trouble not necessary to his own right to pursue his remedy."²⁷ As such, even though both plaintiff and defendant may be

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within the court's jurisdiction, the courts have power sua sponte to prevent the case from being litigated if it believes the plaintiff is harassing the defendant by using an inconvenient forum, or that the cause of the action has no bearing on the community that is being forced to adjudicate the case.²⁸

Due to the looseness...