Meeting The Multi-jurisdictional Litigation Challenge In The Global Arena

Wednesday, December 1, 2004 - 01:00

Editor: How often do you find that litigation on the same or related subjects proceeds simultaneously, or almost simultaneously, in multiple jurisdictions around the world?

Hudspeth: This happens a great deal more often than you might expect. We have more than a few cases underway right now in our U.S. offices in which this sort of pattern is found. Often it occurs because of venue preferences or choice of law issues on tort claims or in contractual disputes in which there is no specified choice of venue or choice of law.

Editor: Can you give us an example of such a case?

Hudspeth: Yes. One of the more interesting examples occurred recently in a case in which a Chinese corporation, a major chemical distributor in China and elsewhere in the world, was in a dispute with a shipping company over the Chinese court-ordered seizure of one of the shipping company's vessels in Chinese territorial waters. This seizure occurred in the aftermath of the drawing down of a multimillion dollar letter of credit for a shipment of products transported on that vessel. Our client's position was that the drawdown occurred improperly as a result of miscertification of the timing of the loading of the cargo at a U.S. port.

Editor: So are there simultaneous actions pending in the courts of China and in the courts of the U.S. over this dispute?

Hudspeth: Yes. The actions started within a few weeks of each other in the Guangzhou Admiralty Court in China and in Federal District Court for the Eastern District of Pennsylvania. The parties on each side of these two litigations are identical, and the claims are essentially identical.

Editor: How are the courts of China and the U.S. supposed to resolve in which court the case should proceed?

Hudspeth: There is no common appellate court for both of these jurisdictions, of course, so the answer must be reached separately in each court with the hope that the decisions of each are consistent. There are certain preliminary questions that both courts need to address, and this may result in a clear answer to the question. For example, is there a basis for personal jurisdiction over each defendant in each court? If not, then it is easy to proceed with dismissal of one (or potentially both) of the actions on personal jurisdictional grounds. However, typically for U.S. courts at least, some jurisdictional discovery will be permitted to the plaintiff to assist it, the plaintiff, in addressing claims by the defendant of lack of jurisdiction over it before a decision on the personal jurisdiction issue is made.

Editor: How did the situation unfold in this particular case?

Hudspeth: In this case without such discovery, the U.S. court principally addressed the subject of forum non conveniens and on that basis dismissed the U.S. action. In so doing, the court addressed a number of forum non conveniens issues unique to this action but then proceeded to address the assertion by the plaintiff that the action should be permitted to proceed in the U.S. because discovery and trial procedures in China are not sufficiently evolved to merit a U.S. court applying forum non conveniens tests in the context of a proceeding in a Chinese court.

Editor: Were you representing the plaintiff or the defendant in the U.S. action?

Hudspeth: The defendant.

Editor: And how did you refute the plaintiff's assertion?

Hudspeth: The assertion came up in the plaintiff's answering brief and affirmations on our client's motion to dismiss. The district court permitted a reply brief to be filed by our client, though on a very short schedule. Naturally, I got affirmations on Chinese discovery and court evidentiary practices from our Chinese lawyers. I also wanted to supplement those affirmations with evidence as to what the discovery and court evidentiary practices are in countries which are acknowledged by the courts of the U.S. for the adequacy of their practices for purposes of considering forum non conveniens arguments. Accordingly, I immediately contacted by email and telephone our litigation partners in key European countries where there is no question as to the adequacy of the judicial system. I received affirmations within two days from litigation partners in our London, Paris, Brussels, Frankfurt and Rome offices describing the discovery and court evidentiary practices in the courts of their countries.

Editor: How, specifically, did these affirmations help your client's position?

Hudspeth: These affirmations helped our client's position to a very considerable degree by demonstrating that Chinese procedures are at least the equal of, and in many cases more liberal than, the procedures in the courts of those half-dozen European countries I had identified for comparison. In fact, we were also able to point out that those Chinese procedures identified in our Chinese lawyer affirmations were surprisingly similar in important respects to American ones, and that our client had already made use of the mechanisms of non-party discovery abroad permitted under Chinese law, and supported by U.S. court procedures, to secure discovery of records and information from non-parties in the U.S. for use in the Chinese action. We also noted that over half of the more than 40 judges of this particular Chinese court had ten years or more experience on the bench and that this court hears over 2000 cases per year, the majority of which involve non-Chinese parties. Indeed, the judge hearing the Chinese proceeding parallel to this U.S. one himself had 19 years of experience on the bench.

Editor: What did the U.S. court have to say about these practices in its decision?

Hudspeth: After reviewing all of these facts, the court concluded that it had no reason to doubt the competence and justice of the system the Chinese courts have in place. The court also noted that this Chinese court had already resolved, through the appellate level, the issue of its jurisdiction over the person of the parties in favor of that jurisdiction. Therefore, the Chinese action would proceed regardless of the decision of the U.S. court on this motion to dismiss.

Editor: Having a broad global network like yours really helps in situations like this?

Hudspeth: Absolutely. Having a global network is supportive in a number of ways. For example, even in a case that is proceeding in only one court - let's say in a U.S. court - it is very helpful to me as a litigator, and cost-effective for an overseas client of the firm, to be able to have Coudert attorneys available at an office in the same city as - or at least near to - the client's offices. With those kinds of supporting lawyers on the ground, information we need for the U.S. litigation can be gathered much more quickly and without the need for expensive and time consuming travel, a matter of some consequence in the case of the Chinese litigation that I just described, half-way around the world. Attorneys on the ground are sensitive to a variety of cultural and legal matters locally that can affect our client's and our own understanding of the issues in the U.S. proceeding. They are in a position to help the client to better understand these issues and, in addition, to help it gather the specific types of information that are needed for the case. The same is true in reverse, when our U.S.-based lawyers assist their overseas counterparts on behalf of a U.S. client engaged in a court proceeding abroad.

Editor: Can you give our readers some examples of how this works?

Hudspeth: Yes. We were recently engaged by a large Russian corporation to defend it in actions brought against it in Russian, Belgian and U.S. courts. One of the principal reasons we were retained was because of our litigation capabilities in each of those jurisdictions, but another very important reason was that our Moscow office is staffed almost exclusively with native Russians who have studied extensively in the U.S. and Europe and are admitted to U.S. and/or European bars as well as the Russian bar. These attorneys act, of course, as very effective litigators in Russian courts, but they also serve as facilitating fact-gathers for our attorneys representing this client in the courts in the U.S. and Belgium and as explicators of the process and issues presented in the U.S. and Belgian courts to the corporate officers of our Russian client, and in terms fully understandable to them.

Editor: Do you find that the same considerations apply to arbitration proceedings?

Hudspeth: Yes, as to the very great utility of the firm's worldwide network. With respect to jurisdiction and forum non conveniens issues, however, the answer is usually negative. On the first of these points, the fact-gathering function and the presence of an ability to explain the process in local terms are no different in arbitration than they are in litigation. On the other hand, arbitration can only be invoked by contract between the parties or by consent of the parties. Typically, arbitration clauses in even moderately sophisticated agreements today provide for choice of venue for the arbitration (and also for choice of law and even for choice of the language in which the arbitration will be conducted). It is usual for the parties to have consented in their underlying agreement to the jurisdiction of that arbitral forum over them for resolution of disputes concerning that agreement. Accordingly, jurisdiction is not usually an issue in arbitration proceedings, even though fact-gathering and the explanation of the law for a client which has agreed to arbitration are really no different than in a court-litigated context. In this last respect, of course, the usefulness of the network comes into play wherever the arbitration may take place.

Editor: Going a little farther afield from litigation and arbitration, is the network similarly useful when you are doing internal investigations for a client?

Hudspeth: Very much so. We have conducted internal investigations involving lawyers from two to a dozen of the firm's offices. They are typically engaged in reviewing documents and doing field interviews locally. Not only does this save our clients a great deal in travel expenses and the time of lawyers in transit, but it also allows our local lawyers, who are ideally suited, both culturally and linguistically, to conduct investigations on site in each relevant locale around the world, to do so. We then bring all of that information together in a central location for analysis and review and ultimately for the preparation of our report to our client on the scope and results of our investigation. It is full service and very cost-effective.