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Punitive Damages and the Recognition of Judgments

Published online by Cambridge University Press:  21 May 2009

Ronald A. Brand
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Extract

Punitive damages are a heavily debated aspect of the US legal system. Courts and commentators from both within and outside the United States have leveled criticism at their foundation and application in current law. It is important to note, however, that punitive damages both originated in and exist in other legal systems. Much of the current debate in the US about punitive damages is fueled by ideological posturing in a national political debate more polarized than at any time in recent memory. It is not surprising that in the midst of such a domestic debate the view of punitive damages from abroad is less than flattering.

Type
Research Article
Information
Netherlands International Law Review , Volume 43 , Issue 2 , August 1996 , pp. 143 - 186
Copyright
Copyright © T.M.C. Asser Press 1996

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Footnotes

*

Professor of Law, University of Pittsburgh. The author gratefully acknowledges the helpful comments and translation assistance of Eva Diederichsen, comments by Vivian Curran on an earlier draft, and die research assistance of Dan Shidlovsky, David Teece, and Todd Weitzmann.

References

1. In May of 1992, the United States proposed that the Hague Conference on Private International Law take up the negotiation of a multilateral convention on the recognition and enforcement of judgments. Letter of May 5,1992 from Edwin D. Williamson, Legal Advisor, US Department of State, to Georges Droz, Secretary General, The Hague Conference on Private International Law, distributed with Hague Conference document L.c. ON No. 15 (92). In October of 1992 a Working Group at The Hague, ‘unanimously recognized the desirability of attempting to negotiate multilaterally through the Hague Conference a convention on recognition and enforcement of judgments’. Conclusions of the Working Group Meeting on Enforcement of Judgments, Hague Conference on Private International Law, Doc. L.c. ON No. 2 (93). The Seventeenth Session of the Hague Conference, in May of 1993, decided to study the matter further through a Special Commission Session. Hague Conference on Private International Law, Seventeenth Session Final Act 17 (1993). In June of 1994, a Special Commission of the Hague Conference recommended the question to be included in the Agenda for the future work of the Conference at its Eighteenth Session, and in June of 1995, the Special Commission on General Affairs and Policy of the Conference recommended to the Eighteenth Session of the Hague Conference (to be held in October 1996), that the proposal for a judgments convention be adopted as one of the works of that Session. Conclusions of the Special Commission of June 1995 on general affairs and policy of the Conference, Hague Conference on Private International Law, Prel. Doc. No. 9, at p. 31 (December 1995).

2. If a man shall steal an ox, or a sheep, and kill it, or sell it, he shall restore five oxen for an ox, and four sheep for a sheep. Exodus 22:1.

3. Code of Hammurabi ss. 5, 8, 12, 107, 112 and 265, compiled in Kocourek, A. and Wigmore, J.H., Sources of Ancient and Primitive Law (1915)Google Scholar. See Schlueter, L.L. and Redden, K.R., Punitive Damages, 2nd edn. (1989)Google Scholar; Sales, J.B. and Cole, K.B. Jr, ‘Punitive Damages: A Relic That Has Outlived Its Origins’, 37 Vand. LR (1984) pp. 1117, 1119.Google Scholar

4. See generally Jolowicz, H.F., ‘The Assessment of Penalties in Primitive Law’, Cam. Legal Essays (1926); Schlueter and Redden, op. cit. n. 3, at p. 4.Google Scholar

5. Jolowicz, loc. cit. n. 4, at pp. 205–206; Schlueter and Redden, op. cit. n. 3, at p. 4.

6. See Lee, G.C., Historical Jurisprudence (1981) p. 124Google Scholar; ‘The Laws of Manu’, compiled in Kocourek and Wigmore, op. cit. n. 3.

7. See Plato, Protagoras 324b; Plato, Laws 9.85b and 9.934a; Jolowicz, loc. cit. n. 4.

8. See, e.g., Nicholas, B., An Introduction to Roman Law (1977) pp. 215–225Google Scholar; Schlueter and Redden, op. cit. n. 3, at pp. 5–6; Sales and Cole, loc. cit. n. 3, at p. 1119 n. 5.

9. The statute of Gloucester provided for treble damages for waste. 6 Edw. I, c. 5. See also Pollock, F. and Maitland, F.W., 2 The History of English Law Before the Time of Edward, 2nd edn. (1899)p. 522Google Scholar (‘under Edward I, afavourite device of śEnglishŝ legislators śwasŝ that of giving double or treble damages to “the party grieved”). Note, ‘Exemplary Damages in the Law of Torts’, 70 Harvard LR (1957) pp. 517, 518Google Scholar.

10. 2 Wils. K.B. 205, 98 Eng. Rep. 489 (C.P. 1763).

11. Ibid, at 98 Eng. Rep. 498–499.

12. 2 Wils. K.B. 206, 95 Eng. Rep. 768 (C.P. 1763).

13. 95 Eng. Rep. at 769. Lord Chief Justice Camden's language is revealing of the disposition in this case:

‘[T]he personal injury done to [the plaintiff] was very small, so that if the jury had been confined by their oath to consider the mere personal injury only, perhaps £20 damages would have been thought sufficient; but the small injury done to the plaintiff, or the inconsiderableness of his station and rank in life did not appear to the jury in that striking light in which the great point of law touching the liberty of the subject appeared to them at the trial; they saw a magistrate over all the King's subjects, exercising arbitrary power, violating Magna Charta, and attempting to destroy the liberty of the kingdom, by insisting upon the legality of this general warrant before them; they heard the King's Counsel, and saw the solicitor of the Treasury endeavouring to support and maintain the legality of the warrant in a tyrannical and severe manner. These are the ideas which struck the jury on the trial; and I think they have done right in giving exemplary damages … I cannot say what damages I should have given if I had been upon the jury; but I directed and told them they were not bound to any certain damages, against the Solicitor-General's argument. Upon the whole, I am of opinion the damages are not excessive; and that it is very dangerous for the Judges to intermeddle in damages for torts; it must be a glaring case indeed of outrageous damages in a tort, and which all mankind at first blush must think so, to induce a Court to grant a new trial for excessive damages.’ Ibid, at pp. 768–769.

14. Ibid, at p. 768.

15. [1964] A.C. 1129. A survey of the history of English punitive damages law is found in Lord Devlin's opinion. Ibid, at p. 1221.

16. Ibid, at p. 1221.

17. Idem.

18. Ibid, at p. 1228.

19. Ibid, at p. 1226.

20. Idem.

21. Idem.

22. Ibid, at p. 1227. As an example of this third category, Lord Devlin cites the Reserve and Auxiliary Forces (Protection of Civil Interests) Act, 1951, s. 13(2), which provides that ‘in an action for damages for conversion in respect of goods falling within the statute the court may take into account the defendant's conduct and award exemplary damages’. Ibid, at p. 1225.

23. Ibid, at p. 1227.

24. Idem.

25. Ibid, at p. 1228.

26. 117C.L.R. 118(1966). The High Court's decision not to follow Rookes v. Barnard was upheld by the Privy Council. Australian Consolidated Press Ltd. v. Uren, [1969] 1 A.C. 590.

27. Ibid, at para. 19.

28. Ibid, at Taylor J., para. 4.

29. Ibid, at Menzies J., para. 15, quoting Finlay v. Chirney, [1888] 20 Q.B.D. 494, 504.

30. See, e.g., Vorvis v. Insurance Corp. of British Columbia, [1989]58 D.L.R.(4th) 193, 273Google Scholar(Mclntyre, J.). Most recently, the Supreme Court of Canada approved the use of punitive damages in Hill v. Church of Scientology, [1995] 2 S.C.R. 1130Google Scholar, upholding a judgment for CD $300,000 in general damages, $500,000 in aggravated damages, and $800,000 in punitive damages.

31. See, e.g., Fogg v. NcKnight, [1968] N.Z.L.R. 330Google Scholar.

32. See, e.g., Schlueter and Redden, op. cit. n. 3, at pp. 15–17; Rustad, M. and Koenig, T., ‘The Historical Continuity of Punitive Damages Awards: Reforming the Tort Reformers’, 42 Am. U. L. Rev. (1993) p. 1269Google Scholar; Sales and Cole, loc. cit. n. 3, at pp. 1124–1125; Morris, C., ‘Punitive Damages in Tort Cases’, 44 Harvard. LR (1931) p. 1173Google Scholar; Willis, H.E., ‘Measure of Damages When Property is Wrongfully Taken by a Private Individual’, 22 Harvard LR (1909) p. 419.Google Scholar

33. Luther v. Shaw, 157 Wis. 234, 238, 147 N.W. 18, 19–20 (1914)Google Scholar.

34. Fay v. Parker, 53 N.H. 342, 382 (1872)Google Scholar. See also Murphy v. Hobbs, 7 Colo. 541, 5 P. 119 (1884)Google Scholar; Spokane Truck & Dray Co. v. Hoefer, 2 Wash. 45, 25 P. 1072 (1891)Google Scholar; Murphy v. Hobbs, 7 Colo. 541, 5 P. 119 (1891)Google Scholar.

35. 53 N.H. at 397.

36. Greenleaf, S., A Treatise on the Law of Evidence, Vol. II, 3rd edn. (1850, reprint edn. 1972).Google Scholar

37. Ibid, at p. 244.

38. Sedgwick, T., A Treatise on the Measure of Damages (1847, reprint edn. 1972) pp. 38–39.Google Scholar

39. Ibid, at p. 39.

40. 54 US (13 How.) 363, 371 (1852).

41. Ibid, at 371. For similar decisions, see Donald, Scott v., 165 US 58, 86 (1897)Google Scholar; Lake Shore Ry. v. Prentice, 147 US (40 Davis) 101, 107 (1893)Google Scholar; Wilmington & Baltimore R.R. v. Quigley, 62 US (21 How.) 202, 213 (1858).Google Scholar

42. 115 US 512 (1885).

43. Supra, n. 13.

44. 115 US at 521.

45. See infra nn. 47–81 and accompanying text.

46. ‘[U]nder the law of most states, punitive damages are imposed for purposes of retribution and deterrence’. Pacific Mutual Life Ins. Co. v. Haslip, 499 US 1, 19 (1991).Google Scholar See also Coryell v. Colbough, 1 N.J. (Coxe) 77 (1791)Google Scholar (in which the jury was instructed to give damages ‘for examples sake, to prevent such offenses in [the] future’); Vincent v. Morgan's La. & Tex. R.R. & S.S. Co., 140 La. 1027, 74 So. 541 (1917)Google Scholar; Boyer v. Ban, 8 Neb. 68 (1879)Google Scholar; and Spokane Truck & Dray Co. v. Hoefer, 2 Wash. 45, 25 P. 1072 (1891); Sales and Cole, loc. cit. n. 3, at pp. 1119–1124.Google Scholar

47. 492 US 257 (1989).

48. ‘Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted’. US Const, amend. VIII.

49. 492 US at pp. 259–260.

50. Ibid, at p. 280.

51. Ibid, at p. 268.

52. Ibid, at p. 275.

53. ‘[N]or shall any State deprive any person of life, liberty, or property, without due process of law’. US Const, amend. XIV, s. 1.

54. ‘Because petitioners failed to raise their due process argument before either the District Court or the Court of Appeals, and made no specific mention of it in their petition for certiorari in this Court, we shall not consider its effect on this award’. 492 US at 277.

55. 499 US 1 (1991).

56. Ibid, at p. 7 n. 2.

57. Ibid, at p. 18.

58. The instructions were as follows:

‘Now, if you find that fraud was perpetrated then in addition to compensatory damages you may in your discretion, when I use the word discretion, I say you don't have to even find fraud, you wouldn't have to, but you may, the law says you may award an amount of money known as punitive damages.

This amount of money is awarded to the plaintiff but it is not to compensate the plaintiff for any injury. It is to punish the defendant. Punitive means to punish or it is also called exemplary damages, which means to make an example. So, if you feel or not feel, but if you are reasonably satisfied from the evidence that the plaintiff, whatever plaintiff you are talking about, has had a fraud perpetrated upon them and as a direct result they were injured and in addition to compensatory damages you may in your discretion award punitive damages.

Now, the purpose of awarding punitive or exemplary damages is to allow money recovery to the plaintiffs, it does to the plaintiff, by way of punishment to the defendant and for the added purpose of protecting the public by detering [sic] the defendant and others from doing such wrong in the future. Imposition of punitive damages is entirely discretionary with the jury, that means you don't have to award it unless this jury feels that you should do so.

Should you award punitive damages, in fixing the amount, you must take into consideration the character and the degree of the wrong as shown by the evidence and necessity of preventing similar wrong.’

Ibid, at p. 6 n. 1.

59. Ibid, at pp. 16–17.

60. Ibid, at p. 17, quoting from Jackman v. Rosenbaum Co., 260 U.S. 22, 31 (1922)CrossRefGoogle Scholar.

61. Ibid, at pp. 20–21.

62. Ibid, at p. 24.

63. Ibid, at p. 22.

64. Justice Scalia, in a concurring opinion, took a more aggressive approach. After a review of punitive damages in US law, and a dissertation on the historical development of the concept of due process, he concluded that ‘[t]o effect their elimination may be wise, but is not the role of the Due Process Clause’. Ibid. at p. 39 (Scalia, J., concurring). He found categorical support for punitive damages, in any amount, as a result of their consistent and continual existence in US jurisprudence. ‘[N]o procedure firmly rooted in the practices of our people can be so “fundamentally unfair” as to deny due process of law’. Ibid3, at p. 38.

65. 113 S. Ct. 2711 (1993).

66. Ibid, at p. 2716.

67. Ibid, at pp. 2716–2717.

68. 499 US at 23.

69. 113 S. Ct. at 2720. Australian courts also have rejected the need for any connection between compensatory and punitive damages. See, e.g., XL Petroleum (NSW) Pty. Ltd. v. Caltex Oil (Australia) Pty. Ltd., [1985] 155 C.L.R. 448, 471Google Scholar:

‘As an award of exemplary damages is intended to punish the defendant for conduct showing a conscious and contumelious disregard for the plaintiff's rights and to deter him from committing like conduct again, the considerations that enter into the assessment of exemplary damages are quite different from the considerations that govern the assessment of compensatory damages. There is no necessary proportionality between the assessment of the two categories … The social purpose to be served by an award of exemplary damages is, as Lord Diplock said in Broom v. Cassell and Co. (1972) A.C. 1027 at 1130, “to teach a wrong-doer that tort does not pay”.’

70. 113 S. Ct. at 2721.

71. Ibid, at p. 2722.

72. Justice Scalia, in a concurring opinion, rejected the idea of a ‘substantive due process’ right that punitive damages be reasonable. ‘To say (as I do) that “procedural due process” requires judicial review of punitive damages awards for reasonableness is not to say that there is a federal constitutional right to a substantively correct “reasonableness” determination — which is, in my view, what the plurality tries to assure today’. Ibid, at p. 2727 (Scalia, J., concurring).

73. Ibid, at p. 2722. The issue of whether it is appropriate to instruct a jury to consider the financial position of the defendant was determined not to be before the Court. Ibid, at p. 2723. Justice Kennedy, in a concurring opinion, emphasized the importance, not of the amount of the award, but rather the jury's reasons for awarding that amount. ‘When a punitive damages award reflects bias, passion, or prejudice on the part of the jury, rather than a rational concern for deterrence and retribution, the Constitution has been violated, no matter what the absolute or relative size of the award’. Ibid, at p. 2725 (Kennedy, J., concurring).

74. Ibid, at p. 2727 (Scalia, J., concurring).

75. 114 S. Ct. 2331 (1994).

76. Or. Const. Art. VII, s. 3.

77. 114 S. Ct. at 2335, quoting Haslip, 499 US 20.

78. Supra n. 69.

79. 116 S.Ct. 1589(1996).

80. Ibid, at p. 1595.

81. Ibid, at pp. 1598–1599.

82. The United States is not the only country whose legal system allows consideration of the assets of the defendant in determining the amount of an exemplary award. Lord Devlin, in Rooks v. Barnard, [1964] A.C. 1129, clearly states that, ‘the means of the parties, irrelevant in the assessment of compensation, are material in the assessment of exemplary damages. Everything which aggravates or mitigates the defendant's conduct is relevant’. Ibid, at p. 1229. See also Decision of the Courde cassation Civ. 20.10.1959, S. 1959.225, D. 1959.537, discussed in Nicholas, B., The French Law of Contract, 2nd edn. (1992) pp. 223–224Google Scholar, in which the court upheld a decision awarding an astreinte provisoire, declaring that such an award was ‘entirely distinct from [compensatory] damages’, and could be set after consideration of ‘the gravity of the recalcitrant debtor's fault and the extent of his resources’.

83. 174 Cal. Rptr. 348 (Ct. App. 1981).

84. Ibid, at pp. 390–391.

85. US General Accounting Office, Product Liability: Verdicts and Case Resolution in Five States (September 1989) p. 37.Google Scholar

86. See, e.g., Galanter, M. and Luban, David, ‘Poetic Justice: Punitive Damages and Legal Pluralism’, 42 Am. U. L. Rev. (1993) pp. 1393, 1412.Google Scholar A study of Cook County, Illinois, and California cases found punitive awards from 1980 to 1984 in only about 1% of all personal injury verdicts. Peterson, M. et al. ., The Inst. for Civil Justice (RAND), Punitive Damages: Empirical Findings (1987) p. 35Google Scholar, reporting on an Institute of Civil Justice study. A study of Texas cases in the mid-1980s found punitive damages awarded in 0.6% of nonmedical claims and 0.2% of medical malpractice claims. Texas State Board of Insurance, Texas Liability Insurance Closed Claim Survey (1987) p. 32.Google Scholar A review of 1980s product liability cases found punitive damages awards in about 2% of 359 reported cases. Landes, W.M. and Posner, R.A., ‘New Light on Punitive Damages’, Reg. (Sept.-Oct. 1986) at pp. 33, 36.Google Scholar Another study of product liability cases closed in 1985 found punitive damages paid in only four of 442 (0.7%) claims. Soular, L.W., A Study of Large Product Liability Claims Closed in 1985 (1986) pp. 18–89.Google Scholar

Not only are punitive damages awards granted less often than is commonly thought, but they also appear to be decreasing in number. When asbestos cases are factored out, a recent study discovered that the number of punitive damages awards dropped by 34% from the early 1980's (1981–85) to the late 1980s (1986–90). Rustad, M., The Roscoe Pound Foundation, Demystifying Punitive Damages in Products Liability Cases: A Survey of a Quarter Century of Trial Verdicts (1991) p. 24.Google Scholar From 1985 to 1991, federal court filings of non-asbestos product liability cases actually declined by 36%. Director of the Admin. Office of the US Courts, Annual Reports of the Proceedings of the Judicial Conference (1985–1991)Google Scholar tb. C2. See also Henderson, J.A. and Eisenberg, T., ‘The Quiet Revolution in Products Liability: An Empirical Study of Legal Change’, 37 UCLA LR (1990) pp. 479, 539–543.Google Scholar

87. Rustad, op. cit. n. 86, at p. 24 (finding that even when juries awarded punitive damages, in 40.2% of those cases, no punitive damages are paid, in 14.7% of the cases the award of punitive damages is reduced, and in only 45.7% of the cases are the full punitive damages amounts awarded by the jury collected).

88. One study found a correlation of .71 between punitive damages and compensatory damages. US General Accounting Office, Product Liability: Verdicts and Case Resolution in Five States (September 1989) p. 3.Google Scholar

89. Peterson, et al. , op. cit. n. 86, at p. 12.Google Scholar

90. Daniels, S. and Martin, J., Empirical Patterns in Punitive Damage Cases: A Description of Incidence Rates and Awards (American Bar Foundation Working Paper No. 8705, 1987) p. 11Google Scholar (studying punitive damages awards in the state courts of 42 counties in ten states in the early 1980s).

91. Galanter, and Luban, , loc. cit. n. 86, at p. 1437Google Scholar, quoting from Segall, C., ‘Bill Would Ease Punitive Damages’, 12 Wis. State J. (November 29, 1987).Google Scholar

92. Idem.

93. US Department of Justice Office of Justice Programs, Bureau of Justice Statistics Special Report, Civil Justice Survey of State Courts, 1992: Civil Jury Cases and Verdicts in Large Counties (July 1995).Google Scholar

94. Ibid. (Table 9).

95. H.R. 956, H.R. 10, 104th Cong., lst Sess. (1995). See Common Sense Product Liability Legal Reform Act of 1996, Conference Report of March 13, 1996, Westlaw BNA-DER, 1996 DER 51 d105.

96. H.R. 956 at s. 102(a)(l).

97. Ibid, at s. 106(a)(l).

98. Ibid. s. 106(l)(b).

99. Ibid. s. 108(a).

100. Ibid. s. 108(b).

101. Yang, J.E., ‘House Fails to Override Liability Veto’, Washington Post (May 10, 1996)Google Scholar, at A23; Harris, J.F., ‘Clinton Vetoes Product Liability Measure’, Washington Post (May 3, 1996)Google Scholar, at A14.

102. See Middleton, M.,‘Changing Landscape: As Congress Struggles to Rewrite the Nation’ Tort Laws, the States Already May Have Done the Job’, 81 ABA J (1995) p. 56.Google Scholar

103. See Appendix.

104. Ala. Code s. 6–ll–20(a) (1993); Alaska Stat. s. 9.17.020 (1994); Cal. Civ. Code s. 3294(a)(West 1996); Fla. Stat. Ann. s. 768.73(l)(b) (West 1996); Ga. Code Ann. s. 51–12–5. l(b) (1994); 111. Ann. Stat. ch. 735 s. 5/2–1115.05(b) (Westlaw 1996); Iowa Code Ann. s. 668A.l.(l)(a) (West 1987); Kan. Stat. Ann. s. 60–3701(c) (1994); Ky. Rev. Stat. Ann. s. 411.184(2) (Michie/Bobbs-Merrill 1991); Minn. Stat. Ann. s. 549.20(1) (West 1996); Miss. Code Ann. s. ll–l–65(l)(a) (1995); Mont. Code Ann. s. 27–l–221(5)(1995);Nev.Rev.Stat. Ann.s. 42.005(1) (Michie 1996); N.J. Stat. Ann. s. 2A:15–5.12 (West 1996); N.D. Cent. Code s. 3203.2–11(1) (1995); Ohio Rev. Code Ann. s. 2315.21(D)(3) (Baldwin 1994); Okla. Stat. Ann. tit. 23 s. 9.1(B), (C), (D) (West 1996); Or. Rev. Stat. s. 30.925 (1988); S.C. Code Ann. s. 15–33–135 (Law. Co-op. 1995); Tex. Civ. Prac. &Rem. Code Ann. s. 41.003 (West 1996); Utah Code Ann. s. 78–18–l(l)(a) (1992).

105. See Appendix infra.

106. Colo. Rev. Stat. Ann. s. 13–25–127(2) (Bradford 1987) (emphasis added).

107. Thompson v. Better-Bilt Aluminum Products Co., 832 P.2d 203 (Ariz. 1992)Google Scholar; Freeman v. Alamo Mgt. Co., 607 A.2d 370 (Conn. 1992)Google Scholar; Amfac, Inc. v. Waikiki Beachcomer Inv. Co., 839 P.2d 10 (Haw. 1992)Google Scholar; Estate of Reasor v. Putnam Co., 635 N.E.2d 153 (Ind. 1994)Google Scholar; Fitzgerald v. Gamester, 658 A.2d 1065 (Me. 1995)Google Scholar; AcandS, Inc. v. Godwin, 667 A.2d 116 (Md. 1995)Google Scholar; Boling v. Tenn. State Bank, 890 S.W.2d 32 (Tenn. 1994)Google Scholar; Loveridge v. Chartier, 468 N.W.2d 146 (Wis. 1991)Google Scholar.

108. Johnson v. Johnson, 654 A.2d 1212 (R.I. 1995)Google Scholar; Schnupp v. Smith, 457 S.E.2d 42 (Va. 1995).Google Scholar

109. See Appendix infra.

110. Fla. Stat. Ann. s. 768.73(2)(b)(1996); Ga Code Ann s. 51–12–5. l(e)(2)(1995); 111. Ann. Stat. ch. 735 para. 5/2–1207 (Westlaw 1996); Ind. Code Ann. s. 34–4–34–6(b)(2) (Burns 1995); Iowa Code Ann. s. 668A.1(2) (West 1987); Mo. Ann. Stat. s. 537.675(2) (Vernon 1988); Or. Rev. Stat. s. 18.540 (1988); Utah Code Ann. s. 78–18–1(3) (1992).

111. Col. Rev. Stat. Ann. s. 13–21–102(4)(Bradford 1987); N.Y. Civ. Prac. L. & R.s. 8701(1) (McKinney 1992).

112. See, e.g., Cal. Civ. Codes. 3294(a) (West 1996); Ga. Code Ann. s. 51–12–5. l(c) (1994); Idaho Code s. 6–1601(9) (1990). The statutes requiring payment to the state vary considerably in their requirements and scope. In Indiana, for example, 75 percent of any punitive damages award must be paid to the state and deposited into the Violent Crime Victims Compensation Fund. Ind. Code Ann. s. 34–4–34–6 (Burns 1995). Georgia also requires that 75 percent of a punitive damages award be paid to the state, but only in product liability cases. Ga. Code Ann. s. 51–12–5.l(e)(2) (1995). Iowa requires that 75 percent of any punitive damages be paid to the state, but only if the defendant's conduct was not specifically directed toward the plaintiff. Iowa Code Ann. s. 668A.1(2) (West 1987). Missouri, Oregon and Utah require that 50 percent of any punitive damages award, minus attorney fees, be turned over to the state, while Illinois allows the trial court the discretion to award a portion of a punitive damages award to the state Department of Rehabilitation Services. Mo. Ann. Stat. s. 537.675 (Vernon 1988); Or. Rev. Stat. s. 18.540 (1988); Utah Code Ann. s. 78–18–1(3) (1992); 111. Ann. Stat. Ch. 735 para. 5/2–1207 (Westlaw 1996). While the approaches differ, the effect of all the statutes is to reduce the plaintiff's financial incentive in seeking punitive damages.

113. Ala. Code s. 6–11–21 (1993); Colo. Rev. Stat. Ann. s. 13–21–102(l)(a) & (3) (Bradford 1987); Conn. Gen. Stat. Ann. s. 52–240b (West 1995); Fla. Stat. Ann. s. 768.73(l)(a) and (b) (West 1995); Ga. Code Ann. s. 51–12–5.l(e)(l), (f) and (g) (1995); 111. Ann. Stat. ch. 735, para. 5/2–1115.05(a) (Westlaw 1996); Ind. Code Ann. s. 34–4–34–4 (1995); Kan. Stat. Ann. s. 60–3702(e), (f) and (h) (1994); Mont. Code Ann. s. 27–1–220(2) (1995); Nev. Rev. Stat. Ann. s. 42.005(1) and (2) (Michie 1996); N.J. Stat. Ann. s. 2A: 15–5.14 (West 1996); N.D. Cent. Code s. 3203.2–11(4) (1995); Okla. Stat. Ann. tit. 23, s. 9.1(B), (C)and(D) (West 1996);Tex. Civ. Prac. and Rem. Code Ann. s. 41.008 (West 1996); Va. Code Ann. s. 8.01–38.1 (Michie 1992).

114. The Alabama law does provide for exceptions to the cap in cases of ‘a pattern or practice of intentional wrongful conduct’, actual malice, orlibel, slander ordefamation. Ala. Codes. 6–11–21 (1993). See also Va. Code Ann. s. 8.01–38.1 (Michie 1992).

115. Colo. Rev. Stat. Ann. s. 13–21–102(l)(a) and (3) (Bradford 1987); Fla. Stat. Ann. s. 768.73(l)(a) (1996); 111. Ann. Stat. ch. 735, para. 5/2–1115.05(a) (Westlaw 1996); Ind. Code Ann. s. 34–4–34–4 (1 Burns 1995).

116. See, e.g., N.D. Cent. Code s. 3203.2–11(4) (1995) (punitive damage award may be no more than twice the compensatory damages, or $250,000, whichever is greater); Tex. Civ. Prac. and Rem. Code Ann. s. 41.008 (West 1996) (punitive damages may be no more than the greater of twice the amount of economic damages, plus non-economic damages, not to exceed $750,000).

117. Conn. Gen. Stat. Ann. s. 52–240b (West 1991).

118. Ga. Code Ann. s. 51–12–5.l(e)(l), (f) and (g) (1995).

119. Okla. Stat. Ann. title 23, s. 9.1(B), (C) and (D) (West 1996).

120. See Int'l Harvester Credit Corp. v. Seale, 518 So. 2d 1039 (La. 1988)Google Scholar; USM Corp. v. Marson Fastener Corp., 467 N.E.2d 1271 (Mass. 1984)Google Scholar; Neb. Const. Art. VII, s. 5; N.H. Rev. Stat. s. 507.16 (1995); S.D. Codified Laws Ann. s. 21–1–4 (1987); Barry. Interbay Citizen'sBank, 635 P.2d 441 (Wash. 1981).Google Scholar

121. N.H. Rev. Stat. s. 507.16 (1995).

122. Neb. Const. Art VII, s. 5.

123. Mont. Code Ann. s. 27–1–220(2) (1995).

124. See, e.g., In'Harvester Credit Corp. v. Seale, 518 So. 2d 1039 (La. 1988)Google Scholar; USMCorp. v. Marson Fastener Corp., 467 N.E.2d 1271 (Mass. 1984)Google Scholar; Barry. Interbay Citizen's Bank, 635 P.2d 441 (Wash. 1981).Google Scholar

125. Hayes-Albion v. Kuberski, 364 N.W.2d 609, 617 (Mich. 1984).Google Scholar

126. See Appendix infra.

127. Portions of this discussion are taken from the author's earlier work: ‘Recognition of Foreign Judgments as a Trade Law Issue: The Economics of Private International Law’, in Bhandari, J. and Sykes, A.O., Economic Analysis of International Law (scheduled for publication in 1996)Google Scholar.

128. Entscheidungen des Bundesgerichtshofes (Zivilsachen) BGHZ 118, 312 (312)Google Scholar (IX ZR 149/91 Civil Division), English translation in 32 ILM (1993) p. 1320. For a more complete discussion of the case, see Behr, V., ‘Enforcement of United States Money Judgments in Germany’, 13 JL&Com. (1994) p. 211.Google Scholar

129. This distinction indicates differences in approach to a fair trial in civil cases. The US approach at this stage of the trial process favors a search for the truth over the defendant's ability to avoid disclosure of evidence harmful to his case. Despite the importance of this distinction, the Bundesgerichtshoffound that enforcement of a foreign judgment that might have been based upon pre-trial discovery was not fundamentally contrary to German public policy:

‘[T]he decisive factor is whether or not the concrete outcome of the application of the foreign law, including any associated infringement, in contravention of international law, upon the sovereignty of the country of the court to which application has been made is, in itself, manifestly incompatible with the essential principles of German law established in this manner and with the value of judicial inquiry.’

Entscheidungen des Bundesgerichtshofes, supra n. 128, at 32 ILM (1993) p. 1330.Google Scholar

130. Ibid, at p. 1332.

131. Art. 38 of the German Introductory Code to the Civil Code [EGBGB] provides that ‘[n]o claim arising out of a tort committed abroad can be made against a German citizen which is larger than that provided for by German laws’. EGBGB Art. 38 (FRG), translated in Gildeggen, R. and Langkeit, J., ‘The New Conflict of Laws Code Provisions of the Federal Republic of Germany: Introductory comment and Translation’, 17 Ga. J. Int. & Comp. L. (1987) pp. 229, 257.Google Scholar This is a conflict of laws provision preventing excessive judgments against a German citizen in a German court when foreign law otherwise may be applicable to the substantive claim. The California judgment for pain and suffering exceeded what would have been awarded had the case originally been brought in Germany. While Art. 38 is a clear expression of public policy on differences in damages available in different legal systems, the Court refused to consider its application to a judgment already rendered in a foreign court:

‘The fact that the German judge, if he had had to make a decision on the trial, would, by the application of binding German law, have come to a different conclusion to that reached by the foreign court, does not mean that a foreign judgment is incompatible with substantive ordre public’ 32 ILM (1993) at p. 1333.

132. Contingency fee agreements are forbidden under German law and considered null and void. BGB s. 138(1). Despite this important difference, the court stated that, ‘[t]his principle is not, however, sufficiently important for German notions of justice as to justify unrestricted validity in all cases world-wide)’. 32 ILM (1993) at p. 1334. Noting that different legal systems allocate costs of litigation differently, the Bundesgerichtshofrecognized that ‘[a]ll legal systems are free to determine the professional restrictions which they impose upon their own lawyers’. 32 ILM (1993) at p. 1335.

133. ILM (1993) at p. 1336.

134. Ibid, at p. 1337.

135. Ibid, at p. 1337.

136. Ibid, at p. 1339, citing s. 403 of the German Code of Criminal Procedure (StPO).

137. Ibid, at pp. 1339–1340.

138. The Bundesgerichtshof did discuss the possibility that a portion of the punitive damages award could have been for attorney fees. However, as the California court failed to indicate that punitive damages were awarded as compensation for attorney fees related to the portions of the judgment considered otherwise enforceable in Germany, the German court refused to speculate as to such an allocation on its own. 32 ILM (1993) at pp. 1342–1343.

139. Entscheidungen des Bundesverfassungsgericht, 1 BvR 1279/94, 7 12 1994.Google Scholar

140. Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (Hague Service Convention) 20 UST 361; TIAS 6638; 658 UNTS 163; reprinted in 4 ILM (1965) p. 341.

141. Entscheidungen des Bundesverfassungsgericht, 1 BvR 1279/94, 3 08 1994.Google Scholar The decision of the court to grant a preliminary injunction is criticized in Juenger, F.K. and Reimann, M., ‘Zustellung von Klagen auf punitive damages nach dem Haager Zustellungsübereinkommen’, 50 Neue Juristische Wochenschrift (1994) p. 3274.Google Scholar

142. Judgment of the Tokyo High Court of 28 June 1993, on appeal from Northcon I v. Yoshitaka Katayama; Mansei Kogyo Kabushiki Kaisha, Tokyo District Court Judgment, February 18, 1991; H.J. (1376) 79 [1991], H.T. (760) 250 [1991], English translation in 35 Jap. An. Int.L. (1992) p. 177.

143. 35 Jap. An Int.L. (1992) at p. 178.

144. Minji Sosho Ho (Code of Civil Procedure (1890 Act No. 29 as amended by 1948 Act No. 149, etc. and 1989 Act No. 91)) Art. 200: ‘An irrevocable judgment in a foreign court shall have its effect in so far as it satisfies the following conditions:

i. the jurisdiction of the foreign court is not denied either by law or a treaty;

ii. if the defeated defendant is Japanese, the defendant was served summons or an order necessary for the commencement of the procedure other than by service by publication, or has voluntarily appeared without being served;

iii. the judgment of the foreign court is not repugnant to the public policy in Japan; and

iv. reciprocity is given.

Translation found at 35 Jap. An. Int.L. (1992) pp. 177, 180.

145. For examples of US decisions on this issue, see Brand, R.A., ‘Enforcement of Foreign Money-Judgments in the United States: In Search of Uniformity and International Acceptance’, 67 Notre Dame LR (1991) pp. 253, 275–276.Google Scholar

146. 35 Jap. An. Int. L. (1992) at p. 180.

147. Ibid, at pp. 181–182.

148. Ibid, at p. 181.

149. Ibid, at pp. 182–183.

150. While the decision of the Tokyo High Court has not been published anywhere in an English translation, the following excerpt was provided by the Japanese Delegation to the Special Commission on enforcement of judgments of the Hague Conference on Private International Law, 4–7 June 1996: ‘The judgment of the American court, which ordered a payment of money as punitive damages, is given under the legal system which is tremendously different from our legal system for the compensation, based on civil law, of damage caused by torts. Considering that it should be regarded that punitive damages do have a criminal character just like a fine from the Japanese viewpoint, and that “a foreign judgment” as provided for in Article 200 of the Code of Civil Procedure and Article 24 of the Code of Civil Execution is to have a character of civil one in the sense of our legal system, it is quite doubtful that the judgment of the American court which ordered punitive damages is included in “a foreign judgment” as above.’

Hague Conference on Private International Law, Special Commission on enforcement of judgments, 4–7 June 1996, Work. Doc. No 1.

151. The material on this case was obtained with the substantial assistance of Eva Diederichsen, and is based largely on translations of documents prepared by her.

152. Decision of the Civil Court of Basel, of 1 February 1989, 1991 Basler Juristische Mitteilungen 31, affirmed by the Court of Appeals of Basel, 1 December 1989, appeal denied, Federal Court of Switzerland, 12 July 1990. The only reported decision involving the California case is Trans Container Services (Basel) A.G. v. Security Forwarders, Inc., 152 F.2d 483 (9th Cir. 1985).Google Scholar

153. Trans Container Servicesv. Security Forwarders, 752 F.2d 483, 487 (1985)Google Scholar, quoting from Rookes v. Barnard, [1964] A.C. 1129, 1226–1227Google Scholar.

154. Supra n. 148 and accompanying text.

155. Supra nn. 127–141 and accompanying text.

156. Siehr, K., ‘Zur Anerkennung und Vollstreckungausländischer Verurteilungenzu “punitive damages”,’ 37 Recht der Int. Wirtschaft (1991) p. 705.Google Scholar

157. Siehr disagrees with the Basle court conclusion that the Swiss principle of Konventionalstrafe by which a contractual penalty clause is enforced, justifies enforcement, pointing out that there is an important difference between mutual and voluntary consent to a penalty and a penalty based on the claim of a single party. He does find appropriate analogy, however, in the principle of Eingriffskondiktion (unjust enrichment caused by unauthorized use of somebody else's property). Loc. cit. n. 156.

158. Loc. cit. n. 156, at p. 709.

159. Supra nn. 9–31 and accompanying text.

160. Supra nn. 155–157 and accompanying text.

161. See Nicholas, B., The French Law of Contract, 2nd edn. (1992) pp. 221–224.Google Scholar

162. Courde cassatton, decision Civ.20.10.1959, S. 1959.225, D. 1959.537, translation from Nicholas, op. cit. n. 161.

163. See supra nn. 47–78 and accompanying text.

164. Law of 5 July 1972, No. 72–626.

165. 821 F. Supp. 292 (D.N.J. 1993).

166. Ibid, at p. 293.

167. Ibid, at p. 295 (quoting Chief Justice Marshall, John in The Antelope, 23 U.S. 66 (1825)Google Scholar).

168. 821 F. Supp. at 297 (quoting Huntington v. Attrill, 146 U.S. 657, 671 (1892)Google Scholar).

169. 821 F. Supp. at 297.

170. Ibid, at p. 299.

171. 484 F. Supp. 1063 (N.D. Ga. 1980).

172. Ibid, at p. 1068.

173. United Nations Convention on the Recognition and Enforcement of Foreign Arbitration Awards (New York Convention) done at New York, June 10, 1958,21 UST 2517, TIAS No. 6997, 330 UNTS 38.

174. 484 F. Supp. at 1069: ‘In the case of a judgment, the rate of legal interest shall be increased by 5 points upon the expiration of a period of two months from the day on which the court decision has become enforceable, even if only provisionally’. French Law No. 75–619, July 11, 1975. Ibid.

175. New York Convention, supra n. 166, Art. V: ‘2. Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that: … (b) The recognition or enforcement of the award would be contrary to the public policy of that country.’