Conflict of Law Cases- 4th

1. Hilton v. Guyot,
159 U.S. 113 (1895)
Brief Fact Summary
Hilton (Plaintiff) and Libbey (Plaintiff) appealed from a federal district court holding that a French court judgment against them for amounts allegedly owed to a French firm was enforceable without retrial on the merits.
Synopsis of Rule of Law
No law has any effect, of its own force, beyond the limits of the sovereignty from which its authority is derived.
Hilton (Plaintiff) and Libbey (Plaintiff), New York citizens trading in Paris, were sued in France by Guyot (Defendant), the administrator of a French firm, for sums allegedly owed to that firm. The Plaintiffs appeared and litigated the merits in the French proceeding. The French court rendered a judgment against them that was affirmed by a higher court and became final. Defendant then sought to enforce that judgment in federal district court in New York. That court held the judgment enforceable without retrial on the merits. The Plaintiffs then appealed to the U.S. Supreme Court.
Do laws have any effect, of their own force, beyond the limits of the sovereignty from which its authority is derived?
(Gray, J.) No. No law has any effect, of its own force, beyond the limits of the sovereignty from which its authority is derived. No sovereign is bound, unless by special compact, to execute within his dominions a judgment rendered by the tribunals of another state, and if execution be sought by suit upon the judgment or otherwise, the tribunal in which the suit is brought, or from which execution is sought, is, on principle, at liberty to examine into the merits of such judgment, and to give effect to it or not, as may be found just and equitable. However, the general comity, utility and convenience of nations have established a usage among most civilized states, by which the final judgments of foreign courts of competent jurisdiction are reciprocally carried into execution, under certain regulations and restrictions, which differ in different countries. Additionally, judgments rendered in France, or in any foreign country, by the laws of which our own judgments are reviewable upon the merits, are not entitled to full credit and conclusive effect when sued upon in this country, but are prima facie evidence only of the justice of the plaintiffs’ claim. Reversed.
The Court’s decision in Hilton v. Guyot reflects the traditional rule of reciprocity. According to this concept, foreign nation judgments were granted the same or comparable treatment as American judgments were given by the judgment nation. Since the Court in Hilton found that French courts would not have enforced or executed a judgment rendered in this country, it therefore held that the French judgment at issue should be nonconclusive here.
2. G.R. No. L-57338 July 23, 1987
HON. FLORELIANA CASTRO-BARTOLOME, Presiding Judge, Br. XV, Makati, of the Court of First Instance of Rizal; JOSEPH E. SCALLON, and JEWELL C. SCALLON, respondents.
FACTS: Petitioner William Borthwick, an American citizen living in the Philippines, owned real property interests in Hawaii.
In his business dealings with private respondent, Joseph Scallon, Borthwick issued the promissory notes now sued upon, but failed to pay the sums owing upon maturity and despite demands.
The promissory notes provided that upon default, action may be brought for collection in Los Angeles, California, or at Scallon’s option, in Manila or Honolulu.

Borthwick was served with summons when he was in California, pursuant to Hawaiian law allowing service of process on a person outside the territorial confines of the State. Because Borthwick ignored the summons, a judgment by default was entered against him.

However, Scallon’s attempt to have the judgment executed in Hawaii and California failed because Borthwick had no assets in those states. Scallon then came to the Philippines and brought suit against Borthwick seeking enforcement of the default judgment of the Hawaii court. Again, after due proceedings, judgment by default was rendered against him, ordering Borthwick to pay Scallon the amount prayed for.

The court issued an amendatory order and upon receipt by Borthwick, he moved for a new trial, alleging that the promissory notes did not arise from business dealings in Hawaii, nor did he own real estate therein. He contended that the judgment of the court of Hawaii is unenforceable in the Philippines because it was invalid for want of jurisdiction over the cause of action and over his person. The motion was denied, hence this petition.]

ISSUE: WON the judgment of the court of Hawaii is enforceable in the Philippines.


“It is true that a foreign judgment against a person is merely “presumptive evidence of a right as between the parties,” and rejection thereof may be justified, among others, by “evidence of a want of jurisdiction” of the issuing authority, under Rule 39 of the Rules of Court.

In the case at bar, the jurisdiction of the Circuit Court of Hawaii hinged entirely on the existence of either of two facts in accordance with its State laws, i.e., either Borthwick owned real property in Hawaii, or the promissory notes’ sued upon resulted from his business transactions therein.

Scallon’s complaint clearly alleged both facts. Borthwick was accorded opportunity to answer the complaint and impugn those facts, but he failed to appear and was in consequence declared in default. There thus exists no evidence in the record of the Hawaii case upon which to lay a conclusion of lack of jurisdiction, as Borthwick now urges.

The opportunity to negate the foreign court’s competence by proving the non-existence of said jurisdictional facts established in the original action, was again afforded to Borthwick in the Court of First Instance, where enforcement of the Hawaii judgment was sought.

This time it was the summons of the domestic court which Borthwick chose to ignore, but with the same result: he was declared in default. And in the default judgment subsequently promulgated, the Court a quo decreed enforcement of die judgment affirming among others the jurisdictional facts, that Borthwick owned real property in Hawaii and transacted business therein.
In the light of these antecedents, it is plain that what Borthwick seeks in essence is one more opportunity, a third, to challenge the jurisdiction of the Hawaii Court and the merits of the cause of action which that Court had adjudged to have been established against him. This he may obtain only if he succeeds in showing that the declaration of his default was incorrect. He has unfortunately not been able to do that; hence, the verdict must go against him.”

3. Scherk v. Alberto-Culver Co., 417 U.S. 506 (1974)
FACTS: Respondent, an American manufacturer based in Illinois, in order to expand its overseas operations, purchased from petitioner a German citizen, three enterprises owned by him and organized under the laws of Germany and Liechtenstein, together with all trademark rights of these enterprises.
The sales contract, which was negotiated in the United States, England, and Germany, signed in Austria, and closed in Switzerland, contained express warranties by petitioner that the trademarks were unencumbered and a clause providing that “any controversy or claim [that] shall arise out of this agreement or the breach thereof” would be referred to arbitration before the International Chamber of Commerce in Paris, France, and that Illinois laws would govern the agreement and its interpretation and performance.
Subsequently, after allegedly discovering that the trademarks were subject to substantial encumbrances, respondent offered to rescind the contract, but when petitioner refused, respondent brought suit in District Court for damages and other relief, contending that petitioner’s fraudulent representations concerning the trademark rights violated § 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. Petitioner moved to dismiss the action or alternatively to stay the action pending arbitration, but the District Court denied the motion to dismiss and, as sought by respondent, preliminarily enjoined petitioner from proceeding with arbitration, holding, in reliance on Wilko v. Swan, 346 U. S. 427, that the arbitration clause was unenforceable. The Court of Appeals affirmed.
ISSUE: WON the Arbitration clause was enforceable.
HELD: The arbitration clause is to be respected and enforced by federal courts in accord with the explicit provisions of the United States Arbitration Act that an arbitration agreement, such as is here involved, “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”
(a) Since uncertainty will almost inevitably exist with respect to any contract, such as the one in question here, with substantial contacts in two or more countries, each with its own substantive laws and conflict of laws rules, a contractual provision specifying in advance the forum for litigating disputes and the law to be applied is an almost indispensable precondition to achieving the orderliness and predictability essential to any international business transaction. Such a provision obviates the danger that a contract dispute might be submitted to a forum hostile to the interests of one of the parties or unfamiliar with the problem area involved. Pp. 417 U. S. 515-517.
(b) In the context of an international contract, the advantages that a security buyer might possess in having a wide choice of American courts and venue in which to litigate his claims of violations of the securities laws, become chimerical, since an opposing party may by speedy resort to foreign court block or hinder access to the American court of the buyer’s choice. Pp. 417 U. S. 517-518.
(c) An agreement to arbitrate before a specified tribunal is, in effect, a specialized kind of forum selection clause that posits not only the situs of suit, but also the procedure to be used in resolving the dispute, and the invalidation of the arbitration clause in this case would not only allow respondent to repudiate its solemn promise but would, as well, reflect a “parochial concept that all disputes must be resolved under our laws and in our courts.” The Bremen v. Zapata Off-Shore Co., 407 U. S. 1, 407 U. S. 9. P. 417 U. S. 519.
484 F.2d 611, reversed and remanded.
4. Bachchan v. India Abroad Publications, Inc.
154 Misc. 2d 228, 585 N.Y.S.2d 661 (Sup. Ct. N.Y. Co.1992)
April 13, 1992
The judgment was granted in an action brought in the High Court of Justice in London, England by an Indian national against the New York operator of a news service which transmits reports only to a news service in India.

The story held to be defamatory was written by a reporter in London, wired by defendant to the news service in India which sent it to newspapers there. It was reported in two Indian newspapers copies of which were distributed in the United Kingdom.

The story was also reported in an issue of “India Abroad,” defendant’s New York newspaper. An edition of “India Abroad” was printed and distributed in the United Kingdom by defendant’s English subsidiary, India Abroad (U.K.) and a claim based on that distribution was asserted in the lawsuit approximately a year after its commencement.

The wire service story transmitted by defendant on January 31, 1990 stated that Dagens Nyjeter, a Swedish daily newspaper, (hereafter “DN”) had reported that Swiss authorities had frozen an account belonging to plaintiff to which money was transferred from a coded account into which commissions paid by Bofars were deposited.

Bofars is a Swedish arms company, which some time before had been charged with paying kickbacks to obtain a large munitions contract with the Indian government.
The English Court awarded £40,000 in damages plus attorney fees. Plaintiff sought enforcement of the judgment in New York,
WON the NY Supreme Court enforce a foreign judgement which is opposed to the provisions stated by US. Constitution and NY Constitution in regard to Freedom of Speech and Press.

HELD: NO, The Supreme Court don’t recognize and enforce foreign judgments when its provisions were imposed without safeguards for freedom of speech and the press as required by the 1rst Amendment of the US Constitution and NY Constitution, art 1 & 8.
The judgment fails to meet the constitutional standards for adjudicating libel claims. The grounds for non-recognition of foreign judgements are stipulated in CPLR 5304, (b), this subdivision b lacks of fair notice to enable defendant to defend himself and it goes beyond due process and it is constitutionally mandatory.
The Supreme Court considered that the entry of this English judgment granted jeopardized the protection to the freedom of speech and press included in the First amendment to the United States Constitution. Also the burden of proving the truth upon the media defendants who publish speech of public concern has been considered unconstitutional and it cause a chilling effect because of the fear of liability, it may cause deter such speech.
The Court established that the NY standard for liability in actions brought by a private person against press, in many cases is related to legitimate public concern and warranting public exposition matters. Then the party must recover by a preponderance evidence, and the plaintiff in this case did not prove as required in Chapadeau v Utica case that the defendant was grossly irresponsible.
The present case relates to a publication of public concern.
The New York Supreme Court denied the motion for summary judgment in lieu of complaint.
The difference between U.S Court and English Court lies in the lack of equivalent to the 1rst amendment to the Constitution that protect the freedom of speech and press.

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