Smart Business spoke to William Walker at Greenberg Glusker Fields Claman & Machtinger LLP about how to navigate the legal system in other countries and use it to your advantage.
I have been called many times by clients located in the United States who have been sued overseas. In addition to being unhappy about being sued at all, the prospect of litigating in a foreign country can be intimidating and daunting. Fears of the unknown, and of being “home towned,” are common, and understandable, initial reactions. In some fora, they are very real problems.
However, foreign litigation is often nothing to fear. In fact, depending on the country, foreign courts can often be much better fora for litigation than U.S. courts, even for U.S. companies. There are many reasons why.
First, the speed and efficiency of foreign courts can be impressive. At Greenberg Glusker, and at my previous firm, I worked on many litigations in Europe, particularly in Germany. Lawsuits there are often completed, from the filing of the complaint to the date of judgment, in only six to eight months.
And, the process of getting to judgment involves much less expense. In Germany, there is no pre-trial discovery. That means no depositions, no interrogatories, no requests for admissions. The parties do not produce their documents to each other. There is no “e-discovery,” and thus no related “e-vendor” expenses. Although a party may move the court to order an opponent to produce documents, such motions are rarely granted.
Instead, the parties proceed with the information they have in their possession and use it in their complaint, answer and any replies to set forth the legal and factual arguments as to why they should win. Witnesses whose testimony is relevant to particular arguments are also listed. If the parties think that expert witness opinions would support a claim or defense, they also state that in the complaint or answer. It is up to the court to decide whether it wants an expert opinion at all. If it does, it will appoint a neutral expert.
Once those pleadings are filed, the court sets a hearing date and time. Typically, one hour is allocated. At that hearing, the merits of the case will be considered. The courts often do not hear witnesses. Instead, they rely on the written submissions discussed above, and on the oral arguments of counsel at the hearing. Frequently, the court issues a judgment a few weeks after the hearing.
That sometimes takes American parties by surprise. Familiar with the American system, in which the initial hearing is a simple status conference, they fail to include all of their arguments in their papers and are unprepared to fully argue the case at the hearing, with negative consequences.
But with proper advice from counsel with knowledge of both the foreign and U.S. legal systems, those misunderstandings can be avoided and significant tactical and strategic benefits can be obtained.
For example, the absence of pre-trial discovery creates tremendous savings in attorneys’ fees and costs. That is particularly so in the era of “e-discovery,” which in the U.S. leads to substantial attorneys’ fees, disruption to a client’s business, and massive vendor bills that can dwarf the attorneys’ fees.
Juries are not used in the expeditious hearing process described above, which creates further substantial savings of time and money. If a party would rather proceed in front of judges instead of a jury, this is a significant advantage.
Punitive damages are also not available in Germany and in most other civil law countries.
And, perhaps most importantly, a good foreign forum may present excellent opportunities to seize the initiative from litigation opponents and knock them back on their heels, sometimes decisively. A party threatened with litigation in the U.S. can go to court overseas either before being sued in the U.S., or even sometimes after.
U.S. plaintiffs rarely expect to be sued overseas by the defendant. A foreign lawsuit brought by a defendant, or someone who has been threatened with a lawsuit in the U.S., means that the battle will not be fought solely on terrain chosen by the plaintiff.
Even better, the speed of some foreign fora can force the U.S. plaintiff to assert its claims in the foreign forum in the form of counter-claims. That is because if the U.S. plaintiff does not do so, then the U.S. plaintiff runs the risk of a foreign judgment being rendered only for the claims in the defendant’s foreign lawsuit. The defendant can then bring any foreign judgment to the U.S. and move the U.S. court for recognition of the foreign judgment under U.S. law and a ruling that, based on the foreign judgment, the U.S. case is res judicata and should be dismissed. Most U.S. states have statutes that provide for the recognition of foreign judgments, for example, the Uniform Foreign-Country Money Judgments Recognition Act, California Civil Procedure Code Section 1713 et seq.
Strategically, even an adverse foreign judgment might sometimes be preferable to the prospect of defending a lengthy and costly litigation in the U.S. In the event of an adverse foreign judgment, in any res judicata motion brought in the U.S., the U.S. defendant can argue that the plaintiff has already obtained relief through the foreign judgment, and that there is thus no need for the U.S. case to proceed. If the defendant is overseas, a foreign judgment allows the defendant to argue in the foreign court that a later U.S. judgment on the same, or similar, claims should not be enforced in the face of the foreign judgment.
The potential advantages are not limited to defendants. Plaintiffs usually have the same interests in limiting expenses and achieving a quicker result. Sometimes the prospect of lengthy and costly litigation deters plaintiffs from bringing otherwise meritorious claims. In such circumstances, the right foreign forum can provide a good alternative.
This is obviously a very general discussion, and each case has its own complexities. However, I have seen the foreign litigation strategy work many times in seemingly intractable disputes. For parties seeking better alternatives than years of expensive and disruptive litigation in the U.S., litigating overseas can often offer substantial advantages that really are “Smart Business.”
William “Bill” Walker’s practice focuses on representing entertainment companies and domestic and overseas corporations in all aspects of business and commercial litigation, including in California state and federal courts, domestic and international arbitrations, and assisting representation with respect to overseas litigations and transactions, especially in Germany and Greater China. He can be reached at [email protected] or (310) 201-7482.
