Recognition of USA Money Judgments in as a Model for Recognition of Foreign Judgments in Georgia

George Svanadze

July 17, 2009 This is a Bucerius/WHU MLB thesis 14.734 words (excluding footnotes) Supervisor 1: Prof. Dr. Peter Hay Supervisor 2: Prof. Clifford Larsen

Table of Contents

LIST OF ABBREVIATIONS:...... III INTRODUCTION ...... 1 CHAPTER 1. CONCEPT OF THE RECOGNITION OF FOREIGN JUDGMENTS...... 7 I. STATUTORY FRAMEWORK IN GERMANY ...... 7 II. THE RATIONALE OF RECOGNITION ...... 8 III. THE PRECONDITIONS FOR THE RECOGNITION IN GERMANY AND IN GEORGIA ...... 11 CHAPTER 2.PREREQUISITES WHICH GENERALLY DO NOT IMPEDE THE RECOGNITION OF U.S. MONEY JUDGMENTS...... 17 I. DECISIONS ENTITLED TO RECOGNITION ...... 17 1. “Judgments” of “Foreign Courts”...... 17 2. Res Judicata...... 18 3. Arbitral Awards ...... 19 II. CONFLICTING JUDGMENTS AND LIS PENDENS ...... 21 III. THE RECIPROCITY ...... 22 CHAPTER 3. THE OBSTACLES TO RECOGNITION OF U.S. MONEY JUDGMENTS IN GERMANY ...... 25 I. JURISDICTION...... 25 II. SERVICE OF PROCESS ...... 28 III. PUBLIC POLICY ...... 30 1. Public Policy in Substantive ...... 33 2. Public Policy in Procedural Law...... 34 IV. PUBLIC POLICY IN GEORGIAN LEGISLATION ...... 37 CHAPTER 4. THE RECOGNITION OF U.S.A. PUNITIVE DAMAGE JUDGMENTS IN GERMANY 39 I. PUNITIVE DAMAGES IN U.S. LAW ...... 40 II. PUNITIVE DAMAGES AND GERMAN LAW ...... 41 1. The Case Law Regarding the punitive damages in Germany and U.S.A...... 43 2. Consequences ...... 45 III. THE POSSIBLE ATTITUDE OF GEORGIAN LAW ...... 45 CHAPTER 5. CONCLUSION...... 46 CHAPTER 6. BIBLIOGRAPHY...... 49 BOOKS:...... 49 ARTICLES (IN JOURNALS, IN BOOKS AND IN INTERNET):...... 52 COMMENTARIES: ...... 56 COURT JUDGMENTS:...... 56 GEORGIA: ...... 56 GERMANY: ...... 57 INTERNET SOURCES:...... 57

II

List of Abbreviations:

Art.A. ------Article BGB ------Bürgerliches Gesetzbuch BGH ------Bundesgerichtshof BGHZ ------Entscheidungen des Bundesgerichtshofes in Zivilsachen BRAO ------Bundesrechtsanwaltsordnung BverfG ------Bundesverfassungsgericht BverfGE ------Entscheidungen des Bundesverfassungsgerichts CCG ------Civil Code of Georgia CIS ------Commonwealth of Independent States EC ------European Community ECJ------European Court of Justice EGBGB ------Einführungsgesetz zum Bürgerlichen Gesetzbuch EuGH ------Gerichtshof der Europäischen Gemeinschaft EWG ------Europäische Wirtschaftsgemeinschaft Fn ------Footnote GCCP ------Georgian Code of Civil Procedural Law GVÜ ------EWG-Übereinkommen vom 27.8.1968 über die gerichtliche Zuständigkeit und Vollstreckun gerichtlicher Entscheidungen in Zivil- und Handelssachen IPR ------Internationales Privatrecht IZPR ------Internationales Zivilprozessrecht IZVR------Internationales Zivilverfahrensrecht JZ ------Juristenzeitung LG ------Landgericht LM ------Nachschlagewerk des Bundesgerichtshofs, hrsg. von Lindenmaier/Möbring NJW ------Neue Juristische Wochenschrift OHG ------Offene Handelsgesellschaft OLG ------Oberlandsgericht RIW ------Recht der Internationaler Wirtschaft Rs ------Rechtssache UWG ------Gesetz gegen den unlauteren Wettbewerb WM ------Wertpapier-Mitteilungen ZPO ------Zivilprozessordnung

III

“A generous and elevated mind is distinguished by nothing more certainly than an eminent degree of curiosity; nor is that curiosity ever more agreeably or usefully employed, than in examining the and customs of foreign nations”.1

“Absent the dictates of some higher law, each sovereign determines whether it will recognise and/or enforce judgments rendered in another State”.2

Introduction

“Whoever has to seek justice in a foreign country needs more time, energy and resources than he would need in his own country; he has to trust unfamiliar attorneys, he has difficulties with language, and he finds his way in foreign law and judicial system only with difficulty”.3 This statement holds true even in current global and very international developments in every field of social activities, where the dimensions and level of trade and commerce4 are rapidly increasing, and “… trading abroad is now common-place”.5 As a logical consequence of these developments there is far-reaching importance of international, cross-border litigation6 not only concerning the international business transactions.7 The significant focus of attention of the litigants is the final result of proceedings – the award - and the question whether the award would in their home- or another country, be recognised and enforced.8 In order to avoid such difficulties, there is a significant attempt to implement unified and harmonized international principles,9 regulations,10 conventions11 and treaties.12 Among others

1 Boswell’s Life of Johnson I (ed. Hill and Powell, Oxford 1934) p. 89. See Zweigert/Kötz, Einführung in die Rechtsvergleichung, p. V; Zweigert/Kötz, An Introduction to , p.V. 2 Lookofsky/Hertz, Transnational Litigation and Commercial Arbitration, p. 672. 3 Kegel/Schurig, Internationales Privatrecht, p. 1050: „Wer im Ausland sein Recht suchen muß, braucht mehr Zeit, Kraft und Geld als im Inland; er muß unbekannten Anwälten trauen, hat Sprachschwierigkeiten, findet sich im fremden Recht und Gerichtswesen nur im mühsam zurecht“ see the translation by Schütze, Conceptual Differences and Areas of Potential Collision between and „“ Procedure from the German Perspective, in Schütze, Prozessführung und –risiken im deutsch-amerikanischen Rechtsverkehr, 2004, pp. 17-35, p. 17. 4 “World trade”, “trips”, “communications” and “growing level of migrations” are considered as significant factors for the developments. See: von Hoffman/Thorn, Internationales Privat Recht, p. 1; Thomas Müller- Froelich, Der Gerichtsstand der Niederlassung im deutsch-amerikanischen Rechtsverkehr, p. 17. 5 Cf. Behr, Enforcement of United States Money Judgments in Germany, 13 J.L. & Com. 1993-1994, p. 211; Martinez, Recognizing and Enforcing Foreign Nation Judgments: The United States and Europe Compared and Contrasted – A Call for Revised Legislation in Florida, 4 J. Transnat’l L. & Pol’y, 1995, p. 49. 6 Campbell/Popat, Enforcing American Money Judgments in The United Kingdom and Germany, 18 S. Ill. U. L. J., 1993-1994, p. 519. 7 Silberman, The Impact of Hurisdictional Rules and Recognition Practice on International Business Transactions: The U.S. Regime, 26 Hous. J. Int’l L., 2003-2004, p. 361. 8 Nagel/Gottwald, Internationales Zivilprozessrecht, p. 3. 9 American Law Institute/UNIDROIT, Principles of Transnational Civil procedure, 2004, in Unif. L. Rev. 2004-4, pp. 758-808. 1

worth mentioning is the I Regulation13 as “… most prominent cornerstone of the European law of international civil procedure”14 on the way of facilitating the recognition and enforcement of judgments within the framework of (EU). However, for the global level it is not sufficient and the clear approval of this statement is mirrored in U.S.- German relations.15 As there is no convention or treaty concluded between Germany and U.S.A. regarding the recognition and enforcement of foreign judgments, the question to which degree U.S. money judgments16 may “… be recognised and enforced is far from settled”.17 Despite the political and economical need of facilitation, the process of recognition and enforcement of U.S. money judgments in Germany and in spite of some attempts from the German (BGH)18 toward this necessity, there are still judgments and scholars arguing that it could be stressed that solely particular differences between U.S. and German laws may not alone serve as an obstacle for the recognition. The same was held by the BGH in a landmark case in 1992.19 However, some scholars still argue that even the mere

10 Council Regulation of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (No 44/2001/EC); Council Regulation of 29 May 2000 on jurisdiction and the recognition and enforcement of judgments in matrimonial matters and in matters of parental responsibility for children of both spouses (No 1347/2000/EC) for further details see Magnus, Europäisches Zivilverfahrensrecht, European Law of Civil Proceedings, Droit europeen sur la procedure civile, 2002. 11 Brussels Convention of 27 September 1968 on jurisdiction and the enforcement of judgments in civil and commercial matters; Lugano Convention of 27 September 1988 on jurisdiction and the enforcement of judgments in civil and commercial matters; Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matter (Hague Service Convention). For further details see Magnus, Europäisches Zivilverfahrensrecht, European Law of Civil Proceedings, Droit europeen sur la procedure civile, 2002; Practical Handbook on the Operation of the Hague Service Convention, Permanent Bureau of the Hague Conference on Private International Law, 2006. 12 Many countries are contracting states of multilateral and bilateral treaties in the field of International Litigation. 13 See supra n. 10. 14 Magnus/Mankowski, Brussels I Regulation, p. VII. 15 See extensive literature but not limited to: Schütze, Prozessführung und –risiken im deutsch-amerikanischen Rechtsverkehr, 2004; Schütze, Ausgewählte Probleme des internationalen Zivilprozessrechts, 2006 (assessing the U.S.-German relations in the context of the recognition of judgments as amounting to the „Justizkonflikt“ „jurisdiction conflict“); Brokmeier, Punitive Damages, Multiple Damages und Deutscher Ordre Public, 1999; Möhrsdorf-Schulte, Funktion und Dogmatik US-Amerikanischer Punitive Damages, 1999; Rosengarten, Punitive Damages und Ihre Anerkennung und Vollstreckung in den Bundesrepublik Deutschland, 1994; Hay, The Recognition and Enforcement of American Money Judgments in Germany – The 1992 Decision of the German , 50 Am. J. Comp. L. 1992, pp. 729-750; Hay, Entschähdigung und andere Zwecke. Zu Präventionsgedanken im deutschen Schadenersatzrecht, punitive damages und Art. 40 Abs. 3 Nr. 2 EGBGB, in Festschrift für Hans Stoll, 2001, pp. 521-533; Ernst C. Stiefel, Rolf Stürner, and Astrid Stadler, The Enforceability of Excessive U.S. Punitive Damages Awards in Germany, 39 Am. J. Comp. L., 1991, pp. 779-802; Schack, Höchstrichterliche Rechtsprechung zum Internationalen Privat- und verfahrensrecht, 50 entscheidungen für Studium und Examen, 2. Auflage, 2000, pp. 181-200. 16 The term money judgment, for the purposes of this Thesis, refers to “any judgment … granting or denying recovery of a sum of money, other than a judgment for taxes, a fine or other penalty, or a judgment for support in matrimonial or family matters”; cf. Behr, Enforcement of United States Money Judgments in Germany, 13 J.L. & Com. 1993-1994, p. 211. 17 See Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 176. 18 BGHZ 118, 312. 19 Cf. Hay, The Recognition and Enforcement of American Money Judgments in Germany – The 1992 Decision of the German Supreme Court, 50 Am. J. Comp. L. 1992, pp. 729-750; Zekoll, The Enforceability of American Money Judgments Abroad: A Landmark Decision by the German Federal Court of Justice, 30 Colum. J. 2

particular differences between U.S. and German laws, if considered together, can impede the recognition of U.S. money judgments in Germany.20 In 2003 German Federal Constitutional Court (“Bundesverfassungsgericht” - BVerfG)21 even issued an interlocutory injunction and halted service of U.S. class action claim for “punitive damages”,22 in the amount of $17 billion, arguing that the claim could infringe the standards of German justice.23 In order to overcome these kinds of difficulties the idea of drafting a worldwide convention on recognition and enforcement of foreign judgments was strongly supported by the U.S. but unfortunately the project has failed.24 Consequently, for the purposes of the recognition of U.S. money judgments the national German law is still applicable, hence, this factor renders the German approach to the subject very important for the justice of the countries having legal system similar to Germany.25 After the collapse of the Soviet Union and the foundation of Georgia's26 market economy in the time when markets have become increasingly, global and the competition is still being intensified, the developments mentioned above become important for Georgia too. One of the main goals of Georgia is the integration in the western legal culture, harmonization and unification of Georgian legal system according to the internationally recognized principles. The U.S. is considered as the most important political and economic partner of Georgia, on the one hand, Germany, the largest European economy is principal partner of Georgia in forming

Transnat’l L. 1992, pp. 641-642; Wegen, Recognition and Enforcement of US Punitive Damages Judgments in Germany – A Recent Decision of the German Federal Court of Justice, 21 Int’l Bus. Law. 1993, pp. 485-488; Bungert, Enforcing U.S. Excessive and Punitive Damages Awards in Germany, 27 Int’l L. 1993, pp. 1075-1090; Behr, Myth and Reality of Punitive Damages in Germany, 24 J.L. & Com. 2004-2005, pp. 197-224; Behr, Punitive Damages in American and German Law – Tendencies Towards Approximation of Apparently Irreconciable Concepts, 78 Chi.-Kent L. Rev. 2003, pp. 105-161; Fiebig, The Recognition and Enforcement of Punitive Damage Awards in Germany: Recent Developments, 22 Ga. J. Int’l & Comp. L. 1992, pp. 635-657. 20 Schütze, Überlegungen zur Anerkennung und Vollstreckbarerklärung US-amerikanischer Zivilurteile in Deutschland-Zur Kumulierung von Ordre public Verstöben, in Einheit und Vielfalt des Rechts: Festschrift für Reinhold Geimer zum 65. Geburtstag pp. 1025-1041. 21 The court has the highest authority to interpret the German Constitution – Basic Law (“Grundgesetz” - GG). 22 For further discussion regarding legal nature and effects of “punitive damages” see chapters 3 and 4 of the thesis. 23 Cf. Rasmussen-Bonne, Zum Stand der Rechtshilfpraxis bei Zustellungsersuchen von US-Schadensersatzklagen nach dem Beschluss des Bundesverfassungsgerichts vom 25. Juli 2003, in Balancing of Interests Liber Amicorum: Festschrift für Peter Hay, zum 70. Geburtstag, pp. 323-343; Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 177. 24 For the further discussions of the convention see Fastiff, The Proposed Hague Convention on the Recognition and Enforcement of Civil and Commercial Judgments’s Jurisdiction and Enforcement Problems, 28 Cornell Int’l L. J. 1995, pp. 469-500; Juenger, A Hague Judgments Convention?, 24 Brook. J. Int’l L, 1998-1999, pp. 111-123; Traynor, An Introductory Framework For Analysing the Proposed Hague Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters: U.S. and European Perspective, 6 Ann. Surv. Int’l & Comp. L. 1 2000, pp. 1-12. 25 See ZPO section 328 (1) infra n. 87. 26 Georgia is a country in the Caucasus region of Eurasia. Situated at the juncture of Western Asia and Eastern Europe, it is bounded to the west by the Black Sea, to the north by Russia, to the south by and Armenia, and to the east by Azerbaijan. Georgia covers a territory of 69,700 km² and its population is 4.7 million, largely ethnic Georgians. See: http://en.wikipedia.org/wiki/Georgia_(country) (last visited 08.07.2009). 3

the new legislation, on the other hand.27 The fundamentals of newly drafted Georgian law are in accordance with the German law, and the recognition of foreign judgments is not an exceptional case. However, there are some relevant differences between them that need clarifications for development of Georgian justice. The very field still remains beyond the scope of Georgian scholarly attention.28 The divergences arise initially on the legislative system level, as the recognition of foreign judgments in Georgia is regulated in the Law of Georgia on International (IPR- Georgia)29 while the German legislator deals with the issue in the Code of Civil Procedure (Zivilprozessordnung - ZPO).30 The Georgian case law concerning the issue have not been evolving that much. The judgments are similar to each other, they lack important legal clarity and the relevant sections31 of the appropriate law are not construed comprehensively.32 There is no treaty concluded between U.S.A. and Georgia concerning the issue.33 Hence, the above mentioned features are the closest connecting factors causing this attempt of research. It is apparent that Georgian law needs further interpretation in this particular area. The thesis constitutes a modest attempt to research the problems, gaps and in particular the state of legal situation on recognition of foreign judgments in Georgia compared to the model provided by German justice regarding the recognition of U.S. money Judgments. Although

27 See Chanturia, Das neue Zivilgesetzbuch Georgiens: Verhältnis zum deutschen Bürgerlichen Gesetzbuch in: Aufbruch nach Europa. 75 Jahre Max-Planck-Institut für Privatrecht, Jürgen Basedow, Ulrich Drobnig, Reinhard Ellger, Klaus J. Hopt, Hein Kötz, Rainer Kulms, Ernst-Joachim Mestmäcker (Hrsg.), Mohr Siebeck, 2001, pp. 893-904; Zoidze, Reception of european Private law in Georgia, 2005 (in Georgian: Evropuli Kerdzo Samartlis Recepcia Saqartveloshi); Chanturia, Die Europäisierung des georgischen Rechts: bloßer Wunsch oder große Herausforderung? Vortrag auf einem deutsch-georgischen Kolloquium zur Europäisierung des georgischen Rechts am Max-Planck-Institut für ausländisches und internationales Privatrecht in hamburg am 24.05.2008; http://www.cac-civillaw.org/land/georgien.html (last visited: 09.07.2009). 28 There are only General course books, that have far-reaching importance for Georgian jurisprudence, but they only address the issue very narrowly under the several sub-chapters as the purpose of those books is the general overview of Georgian International Private Law and not the detailed clarification the particularities of recognition and enforcement of foreign judgments in Georgia: see Liluashvili, International Private Law, 2001 (in Georgian: Saertashoriso Kerdzo Samartali); Gabisonia, Georgian International Private Law, 2006, (in Georgian: Qartuli Saertashoriso Kerdzo Samartali); Gamkhrelidze, Introduction to International Private Law, 2000 (in Georgian: Saertashoriso Kerdzo Samartlis Shesavali). 29 See section 68 of the IPR-Georgia infra p. 13. 30 See ZPO section 328 (1) infra n. 87. 31 For the purposes of the thesis, articles, paragraphs or other names of statute’s provisions in every mentioned legal system hereto is referred as “section”. 32 See http://www.supremecourt.ge/default.aspx?sec_id=191&lang=1 (last visited: 07.07.2009): in general the court decisions are covering CIS countries. There are no in-depth interpretations of relevant sections, Georgian courts are not giving the clarifications regarding the concepts of recognition, and they only refer the sections, providing the text of law without further discussions. In some cases the court even applies section 68 of the IPR- Georgia together with the applicable convention, which is not right way, as when the convention is applicable, than application of the IPR-Georgia is automatically excluded: e.x. the cases: No.a-2297-sh-53-08 02.02.2009; No.a-1824-sh-480 02.02.2009; No.a-2481-sh-55-08 26.02.2009; No.a-2444-sh-1609 26.02.2009; No.a-1647-15- 09 26.03.2009; No.a-1647-15-09 06.04.2009; No. 492-sh-24-09 13.04.2009; No.a-407-sh-19-09 13.04.2009; No.a-1666-sh-59-07 15.01.2008; 33 The treaties Georgia has signed are with CIS countries (Azerbaijan, Ukrain, Armenia). 4

there is no case regarding recognition of USA or German money judgments in Georgia, this attempt is aimed at clarification and measurement degree of readiness of Georgian law and Georgian courts for recognition of coming U.S. money judgments in Georgia. The attempt also encompasses the purpose to serve as an unassuming contribution on the way of Europeanization of Georgian recognition law and the development of Georgia’s “Internationales Zivilprozessrecht – IZPR” (International Civil Process Law).34 As mentioned, the thesis deals only with the foreign judgment’s recognition issue. The enforcement of judgments does not constitute the subject of the research. It is apparent that the recognition is principle stage for enforcement, and on the basis of this assumption the enforcement is excluded from this thesis.35 The method applied for the research is so-called method of comparative law (“Rechtsvergleichung”), the primary aim of which, as professors Zweigert and Kötz have undisputedly formulated, is cognition, knowledge (“Erkenntniss”).36 This method assists not only to define “…the techniques of interpreting the texts, principles, rules, and standards of a national system, but also [to discover] models for preventing or resolving social conflicts…”.37 Therefore, German approach concerning the issue is employed as a model for development of Georgian law regarding the recognition of foreign money judgments, in particular, the U.S. money judgments in Georgia. The thesis highlights following issues: Chapter 1. sets forth the general principles governing German and Georgian recognition of foreign judgments. Chapter 2. provides a detailed consideration of the prerequisites pursuant to which the German and Georgian courts will recognize U.S. money judgments. Chapter 3. outlines those factors under German and Georgian law, which generally can serve as obstacles for recognition of U.S. money judgments. This chapter is attempting to delve into public policy requirement in the discussed context. Chapter 4. separately illustrates the position of German courts and justice regarding recognition of American punitive damages awards and discusses the possible attitude of

34 German scholarly writing distinguishes the fields of laws: “IZVR”, “IPR” and “IZPR”, see for further information: v.Bar/Mankowski, Internationales Privatrecht, 2nd edition, 2003 (pp. 346-348); Schack, Internationales Zivilverfahrensrecht, 2nd edition, 1996 (pp. 1-10); Schack, Internationales Zivilverfahrensrecht, 3rd edition, 2002, (pp. 1-10); Schack, Internationales Zivilverfahrensrecht, 4th edition, 2006, (pp. 1-10); Rauscher, Internartionales Privatrecht, 3rd edition, 2009 (pp. 1-5); Schütze, Deutsches Internationales Zivilprozessrecht unter Einschluss des Europäischen Zivilprozessrechts, 2nd edition, 2005 (pp. 1-26); et al., infra at n. 39. 35 Otherwise, the quite narrowed topic would expand and could not match the required measure for the thesis. 36 See Zweigert/Kötz, Einführung in die Rechtsvergleichung, p. 14; Zweigert/Kötz, An Introduction to Comparative Law, pp.14-15. 37 Ibid. 5

Georgian law towards the punitive damages. This represents one of the main focuses of the thesis. Chapter 5. presents the conclusions of practical and theoretical significance, derived from the analyses hereto. Chapter 6. lays out the list of examined sources (Bibliography).

6

Chapter 1. Concept of the Recognition of Foreign Judgments

I. Statutory Framework in Germany

The issue under analysis in the thesis, rocognition of USA money judgments in civil and commercial matters, in Germany is considered as belonging to “Internationales Zivilprocessrecht – IZPR” (International Civil Process Law), rather than conflict of laws (Kollisionsrecht - IPR). The IZPR is part of international civil procedure law (Internationales Zivilverfahrensrecht - IZVR).38 Consequently, German law differentiates between IZPR and IPR (Internationales Privatrecht).39 Actually, the Introductory Act to the German Civil Code (Enführungsgesetz zum Bürgerlichen Gesetzbuch - EGBGB), as adopted in 1896 and amended in 1986,40 governs questions of applicable law in contrast to the ZPO that regulates the recognition and enforcement of foreign judgments.41 Nevertheless, as opposed to USA, Germany is a contracting state of various bilateral and multilateral recognition and enforcement treaties. As already mentioned, the European Community (EC) has put considerable effort into developing the field. This was lunched through multilateral conventions42 such as the Brussels Convention of 1968.43 Until the enactment of the Treaty of Amsterdam in 1997 the EC was not entitled to exercise legislative power over civil procedure.44 According to the treaty, the EC has adopted several regulations.45 Among the regulations it is worth mentioning the Brussels I Regulation,46 which replaced Brussels Convention of 1968.47 In accordance with the section 33(1) of Brussels I Regulation a judgment given in a EC Memeber State shall be recognised in the other Member State without any special procedure being required.48 It means that the Regulation establishes the automatic recognition of foreign judgments within the EU.49 The judgments that are passed in states

38 See Rosner, Cross-Border Recognition and Enforcement of Foreign Money Judgments in Civil and Commercial Matters, p. 259. 39 See Kropholler, Internationales Privatrecht, 5th edition, 2004, (pp.571-578); Geimer, Internationales Zivilprozeßrecht, 5th edition, 2005 (pp.1-35). 40 See supra n. 34. 41 See Rosner, Cross-Border Recognition and Enforcement of Foreign Money Judgments in Civil and Commercial Matters, 2004, p. 259. 42 See Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 179. 43 See supra n. 11. 44 See Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 180. 45 See supra n. 10, 11, 44. 46 Ibid. 47 See Hay; Russell J. Weintraub ; Patrick J. Borchers, Conflict of Laws, 12. edition, 2004, pp. 1001, 1002. 48 See Supra n. 11, 12, Brussels I Regulation, art. 33(1). 49 See Magnus/Mankowski, Brussels I Regulation, p. 547. 7

which are not contracting states of any treaties regarding recognition and enforcement concluded with Germany, then the rules of ZPO are applicable.50 Consequently, ZPO provides the rules in accordance with which US-judgments can be recognized.51 The main preconditions for recognition and enforcement of foreign judgments are set forth in sections 328 and 723 ZPO.52 In practice, recognition and enforcement53 are very close to each other, because the enforcement of a foreign judgment always depends on the issue of whether the judgment is recognised.54 However, recognition and enforcement need to be destinguished very carefully: whereas recognition covers the general effects of the foreign judgment, enforcement means that the judgments can be given effect and enforced by German courts or other enforcement organs.55

II. The Rationale of Recognition

Section 328 of the ZPO, amended in 1986, determines preconditions when the recognition of foreign judgments shall be considered as excluded.56 The section 328 through the five requirements prescribes the situation where the foreign judgments may not be recognised.57 The description of the requirements stipulated in the section 328 which is comparable to the section 68 of the Law of Georgia on International Private Law (IPR-Georgia) is provided in the following chapters. The way that the German section is drafted gives rise to the questions.58 It is important to consider the existing and prevailing theoretical background for the enactment of ZPO and the section 328 in particular, due to understand the rationale underlying the provision.59 It is apparent that the time frame between the enactment of ZPO and the date of is not that large, therefore “ ... the newly born German identity ...”60 is translated in legal terms. The sovereignty theory had a big impact on the political

50 See Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 181. 51 Ibid at p. 179. 52 Ibid. 53 There are no in-depth analyses of the problem of the enforcement provided in the thesis, as the issue of enforcement of foreign judgments is beyond the scope of the thesis. 54 Cf. Martiny, Recognition and Enforcement of Foreign Money Judgments in the Federal Republic of Germany, 35 Am. J. Comp. L. 1987, pp. 721, 728; Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 55 Ibid. 56 Rosner, Cross-Border Recognition and Enforcement of Foreign Money Judgments in Civil and Commercial Matters, 2004, p. 266. 57 v.Bar/Mankowski, Internationales Privatrecht, 2nd edition, 2003, p. 429. 58 Supra n. 56. 59 Ibid. 60 Rosner, Cross-Border Recognition and Enforcement of Foreign Money Judgments in Civil and Commercial Matters, 2004, p. 266. 8

developments in the field of international legal co-operation.61 On the one hand, the requirement of reciprocity62 was set forth in the statute to guarantee the German State interest, but on the other hand, it excluded the principle63 called révision au fond.64 That kind of development allowed the German courts to partially renounce their sovereignty through recognising the judgments of foreign courts to the extent that foreign courts would treat the German judgments in the same way.65 That must be stated that the statutory provisions are almost unchanged since 1877 and the interpretation of the courts serve to make the process of recognition of foreign judgments more understandable and not complicated.66 Regarding the theoretical grounds for the recognition of foreign judgments in Germany several interests must be considered that are usually taken into account by the courts.67 Generally speaking “recognition occurs simply in application of the law ...”68, however the question – why, what is the main basis for that – is not addressed in-depth.69 Germany, in contrast to the USA with the comity approach70 or England with the “doctrine of obligation”,71 has not devoted comparable attention to the theories explaining and construing the question why the foreign judgments must be recognised.72 However, there is a strong understanding that the foreign judgment as a product of a foreign legal system may differ substantially, as well as procedurally, from the German legal system.73 Therefore, the necessity for mechanisms giving the tools to control the situation is quite obvious, but as already mentioned, the efforts to avoid possible re-litigation of the case or re-examination on the merits are highly significant.74

61 Ibid. 62 See definition of „Reciprocity“ in Black’s Law Dictionary, seventh ed., Bryan A. Garner, 1999, St. Paul, Minn., p. 1276: „1. Mutual or bilateral action; 2. The mutual concession of advantages or privilleges for purposes of commercial or diplomatic relations“. 63 Supra n. 60. 64 “Most systems do not allow a review of the foreign judgment on the merits (a so-called révision au fond [French: “review of the background”])” see http://www.britannica.com/EBchecked/topic/333023/conflict-of- laws/276365/Recognition-and-enforcement-of-judgments (last visited 21.03.2009). 65 Supra n. 60. 66 Rauscher, Internationales Privatrecht mit internationalem und europäischem Verfahrensrecht, p. 453. 67 Supra n. 60. 68 Martiny, Recognition and Enforcement of Foreign Money Judgments in the Federal Republic of Germany, 35 Am. J. Comp. L. 1987, p. 727. 69 Ibid. 70 Cf. Hay, On comity, Reciprocity, and Public Policy in U.S. and German Judgments Recognition Practice, (pp. 237-249) in From National Conflict Rules Towards Harmonization and Unification; Liber Amicorum Kurt Siehr, By Jürgen Basedow, 2000; Martiny, Recognition and Enforcement of Foreign Money Judgments in the Federal Republic of Germany, 35 Am. J. Comp. L. 1987, pp. 727, 729. 71 See Dieter Martiny, Recognition and Enforcement of Foreign Money Judgments in the Federal Republic of Germany, 35 Am. J. Comp. L. 1987, p. 728. 72 Rausher, Peter Wax, Joachim Wenzel, Münchener Kommentar zur Zivilprozessordnung mit Gerichtsverfassungsgesetz und Nebengesetzen, 3rd edition, 2008, p. 2048, par. 1. 73 See Martiny, Recognition and Enforcement of Foreign Money Judgments in the Federal Republic of Germany, 35 Am. J. Comp. L. 1987, p. 728. 74 Ibid. 9

The ZPO does not stipulate the definition of the recognition,75 but the understanding of the concept is firmly embodied in several statutes and conventions.76 In accordance with the prevailing theory of “extension of effect”77 the authority and effect of the foreign judgment recognised in the recognising country is equal to the authority and effect the judgment in the rendering state (“Wirkungserstreckung”).78 However, there is no doubt that the differences regarding the effects of a foreign judgment may be much broader and extensive then the limited effects of judgments in Germany, hence there is a need of some restrictions.79 Based on the consideration, it is quite obvious and logical that any effect that would be unknown for German law could not be recognised.80 Therefore it is undisputed that the so-called “Wirkungserstreckung” would be sufficient only insofar as the effects of foreign judgments are matching the understanding of the issue under the German law.81 Some scholars find preferable the theory of accumulation (“Kumulationstheorie”),82 which provides that “... a foreign judgment should be enforced as it would be in the rendering state, except insofar as its effects exceed those that German law allows for German judgments”.83 After carefully considering the ideas provided above, it becomes apparent that the German discussions are aimed to determine main points and then to achieve the balance between the interests of the relevant State and the party.84 This could be called on the one hand, as the balance between the national interests of Germany regarding international legal co-operation and on the other hand, the interests of the parties in a fair trial.85

75 Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 181. 76 Schack, Internationales Zivilverfahrensrecht, 4th edition, 2006, p. 277, par. 791. 77 Martiny, Recognition and Enforcement of Foreign Money Judgments in the Federal Republic of Germany, 35 Am. J. Comp. L. 1987, p. 728. 78 Cf. Martiny, Recognition and Enforcement of Foreign Money Judgments in the Federal Republic of Germany, 35 Am. J. Comp. L. 1987, p. 728; Zöller, ZPO, 27th edition, 2009, p. 1098, par. 21; Rausher, Peter Wax, Joachim Wenzel, Münchener Kommentar zur Zivilprozessordnung mit Gerichtsverfassungsgesetz und Nebengesetzen, 3rd edition, 2008, p. 2045, par. 2-5; Nagel/Gottwald, Internationales Zivilprozessrecht, pp. 564-565; Geimer, Internationales Zivilprozeßrecht, pp. 868-869; Schütze, Zur Anerkennung ausländischer Zivilurteile, p. 316 in Schütze, Ausgewählte Probleme des internationalen Zivilprozessrechts, 2006; Schönau, Die Anerkennung von Urteilen aus Mehrrechtstaaten nach § 328 Abs. 1 ZPO am Beispiel der USA und Kanadas, p. 31; Geimer/ Schütze, Europisches Zivilverfahrensrecht, Kommentar, 2nd edition, 2004, p. 509, par. 1-2; Musielak, Zivilprozessordnung, Kommentar, 6th edition, 2008, p. 1072, par. 2. 79 Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 181; Martiny, Handbuch des Internationalen Zivilverfahrensrecht, III/1, 1984, pp. 33-34. 80 Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 181. 81 Schack, Internationales Zivilverfahrensrecht, 4th edition, 2006, p. 278, par. 796. 82 See Supra n.78. 83 Cf. Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p.182; Schack, Internationales Zivilverfahrensrecht, 4th edition, 2006, p. 278, par. 792, 796. 84 Cf. Rosner, Cross-Border Recognition and Enforcement of Foreign Money Judgments in Civil and Commercial Matters, 2004, p. 267; Martiny, Recognition and Enforcement of Foreign Money Judgments in the Federal Republic of Germany, 35 Am. J. Comp. L. 1987, p. 728. 85 See Rosner, Cross-Border Recognition and Enforcement of Foreign Money Judgments in Civil and Commercial Matters, 2004, p. 267. 10

III. The Preconditions for the Recognition in Germany and in Georgia

As mentioned above, German legislator’s approach and legislative technique exercised regarding the issue is very interesting. It stipulates the terms and conditions which might serve as obstacles during the proceedings concerning recognition of USA money judgments in Germany. This sub-chapter provides a general outline of the preconditions set forth in German and Georgian legislation. A foreign money judgment may be recognised if the judgment meets the requirements as follows: 1) The judgment is considered as having the status of res judicata; 2) the court rendered the judgment had jurisdiction; 3) the defendant has received proper notice; 4) there is no conflicting judgment existing; 5) the judgment is not incompatible with German public policy; and 6) reciprocity between the countries of the relevant courts exists.86 This is the content of section 328 of the ZPO.87 It was stated above that the recognition of foreign judgments in civil and commercial matters in Germany is considered as belonging to IZPR rather than IPR.88 In accordance with the German understanding of the issue, IPR constitutes a body of regulations which determine whether law of which country shall be applicable in a particular case. Thus, as Professor H. Schack stresses: “… German IPR can “order” only a German court as to what private law to apply, while German IZPR may oblige it to apply the procedural law of a foreign state in particular matters”.89 The tools for the IPR are so called conflict rules.90 In contrast to the IPR,

86 Cf. v.Bar/Mankowski, Internationales Privatrecht, 2nd edition, 2003, p. 429; Martiny, Recognition and Enforcement of Foreign Money Judgments in the Federal Republic of Germany, 35 Am. J. Comp. L. 1987, p. 733. 87 The section 328 (1) of the German Code of Civil Procedure – ZPO reads as follows: The judgment of a foreign court shall not be recognised: (1) where the courts of the country to which the foreign court belongs have no jurisdiction under German law; (2) where the documents instigating the proceedings were not served duly on the defendant, who has not appeared in the proceedings and relies on that fact, in accordance with law or was not served in such a timely manner to enable him to arrange his defence; (3) where the judgment conflicts with a German judgment or with an earlier recognizable foreign judgment or where the proceedings underlining the foreign judgment conflict with a German proceeding that began before the foreign proceeding; (4) where recognition of the judgment would lead to a result that would manifestly (“offensichtlich”) conflict with essential (“wesentlichen”) principles of German law, in particular if recognition is incompatible with the German [Constitution’s] basic rights (Basic Law: Grundgesetz); (5) Where reciprocity is not guaranteed; For the purposes of translation cf. Hay, The Recognition and Enforcement of American Money Judgments in Germany – The 1992 Decision of the German Supreme Court, 50 Am. J. Comp. L. 1992, Martiny, Recognition and Enforcement of Foreign Money Judgments in the Federal Republic of Germany, 35 Am. J. Comp. L. 1987; Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005. 88 See supra n. 34. 89 Cf. section 3 I EGBGB; Schack, Internationales Zivilverfahrensrecht, 4th edition, 2006, p. 2. 90 Schack, Internationales Zivilverfahrensrecht, 4th edition, 2006, p. 1. 11

which defines the applicable substantive law for each appropriate case, the subject of the German IZPR is a set of the national rules regulating the Procedural relationships with an international component.91 The difference between the IZPR and the IPR is the technique of regulation.92 In general, the structure and body of the legislation, the system and approach to the regulation of issue is significant for each legal system, especially when it comes to the circumstances dealing with legal systems of so called Civil Law countries, which have codified law developed from Roman codified law. The issue of interaction between several fields of law is relevant for the final result. The question of the correlation between substantive and procedural law is an issue of daily consideration for academic as well as for practitioner circles.93 The considerations and discussions that have occurred periodically within the Georgian scholarly writing regarding the place of international private law in the Georgian legal system have generally not touched upon the issue of IPR and IZPR in this context. The recognition of foreign judgments in Germany is regulated under ZPO and not under the EGBGB which finds its applicability “if a situation is connected to the law of another country”.94 In some circumstances it may be the case when the same issue regulated in different countries in different statutes or fields of law entails dissimilar consequences. Despite the fact that German legislation with its system constitutes the main basis and ground for Georgian legislation adopted after the collapse of Soviet Union, especially in the field of Civil Law, International Private Law and Civil Procedural Law there are some differences still remaining between the legislation of these two countries. Among others is the case with regard to the recognition of foreign judgments. As opposed to German legislation, which regulates the issue - recognition of foreign judgments – in the ZPO, the Georgian legislator has decided to deal with the issue in the IPR-Georgia enacted in 1998. Section 68 of IPR-Georgia sets forth the precondtion for recognizing the foreign judgments in Georgia.95 In accordance with the section 1 of IPR-Georgia: the provisions of the statute designates as the law applicable to the cases with foreign elemts as well as the procedural rules in respect of the case.96 Unlike the German ZPO, Georgian Code of Civil Procedural Law (GCCP) is silent

91 Ibid, p. 2. 92 Nagel/Gottwald, Internationales Zivilprozessrecht, p. 16-17. 93 Svetlanov, The International Civil Process and Conflict of Laws, pp. 199-213, p. 199 in Festschrift für Boguslavskij, Russland im Kontext der internationalen Entwicklung, Internationales Privatrecht, Kulturgüterschuty, geistiges Eigentum, Rechtsvereinheitlichung, by Trunk, 2004. 94http://www.wf-kanzlei.de/wf-info/artikel/erb-und-erbschaftsteuerrecht/egbgb-deutsch-englisch.html(last visited 21.06.2009). 95 See supra p. 4. 96 See EGBGB section 3: Soweit nicht 1. unmittelbar anwendbare Regelungen der Europäischen Gemeinschaft in ihrer jeweils geltenden Fassung, insbesondere die Verordnung (EG) Nr. 864/2007 des Europäischen Parlaments und des Rates vom 11. Juli 2007 12

regarding recognition of foreign judgments. However, the way section 68 of the IPR-Georgia prescribes the prerequisites for recognizing the foreign judgments in Georgia is quite similar to the approach of Germany. The section 68 of the IPR-Georgia reads as follows:

1. Georgia shall recognize the valid judgments made by a foreign Court. 2. A judgment shall not be recognized if: a) a case falls under the Georgia’s exclusive jurisdiction; b) a party was not given judicial summons or there were other procedural violations according to the law of the country where the judgment was rendered; c) where the judgment conflicts with a Georgian judgment or with an earlier recognized foreign judgment; d) where the courts of the country to which the foreign court belongs have no jurisdiction under Georgian law; e) a foreign country does not recognize the Georgian Court decisions, i.e. where reciprocity is not guaranteed; f) where the proceeding which gave rise to the foreign judgment is irreconcilable with a Georgian proceeding instituted earlier here; g) where the recognition of the judgment would produce a result which would be irreconcilable with fundamental principles of Georgian law.97

On the one hand, at first sight the regulations provided by the two countries basically seem identical to each other,98 but on the other hand, there are some details to be clarified and considered as differences. First of all, it is significant to mention that Georgian law lays out the condition which is not provided by German law in section 328 of the ZPO. This applies to the section 68 (2)(a) hereto stating that: “a judgment shall not be recognized if a case falls under the Georgia’s exclusive jurisdiction.” This raises the question of what the meaning of the term “exclusive jurisdiction” is? The first explanation must be provided by the law itself. Hence, section 10 of the law is named as “International Exclusive Jurisdiction”. Therefore in the section 68 (2)(a) stipulated

(„Rom II“) (ABl. EU Nr. L 199 S. 40) über das auf außervertragliche Schuldverhältnisse anzuwendende Recht, oder 2. Regelungen in völkerrechtlichen Vereinbarungen, soweit sie unmittelbar anwendbares innerstaatliches Recht geworden sind, maßgeblich sind, bestimmt sich das anzuwendende Recht bei Sachverhalten mit einer Verbindung zu einem ausländischen Staat nach den Vorschriften dieses Kapitels (Internationales Privatrecht). 97 The author’s translation of this source. 98 Geimer/Schütze, Europisches Zivilverfahrensrecht, Kommentar, 2nd edition, 2004, p. 1269. 13

term “exclusive jurisdiction” shall be considered and construed in accordance with the section 10 as the section itself is allocated under the chapter 2 of the law named as “The International Jurisdiction of the Georgian Courts”. Section 10 reads as follows:

The Georgian Courts shall have the exclusive international jurisdiction solely to the claims regarding: a) the real property if it is located on the territory of Georgia; b) the validity or the termination of an entity’s or its body’s resolutions if the entity’s or its body’s residence is in Georgia; c) the registration of the legal entities by the Georgian Courts or the other authorities; d) the registration of a patent, trademark or another right where the registration or the relevant request was made in Georgia; e) the enforcement measures where they have been requested or taken in Georgia.99

The approach stated above can be considered as a defensive measure for Georgian legal regime. To a significant degree, such an approach may be seen in the doctrine of other countries. It can be named as an exorbitant jurisdiction. In accordance with the section 3 of Brussels I Regulation the provisions setting forth the conditions similar to the section 10, do not find applicability when both of the parties involved in a particular case are domiciled in the Contracting State of the Brussels I Regulation. This way is chosen to facilitate the recognition of foreign judgments among the Contracting States. The section 10 as the provision of the law of the Non-Contracting State under the Brussels I Regulation – Georgia – applies and can be considered as one of the obstacles for recognizing foreign judgments in Georgia. However, the difference between the German and Georgian legislations bears mere technical character. Namely, the ZPO includes the section 23 prescribing that German court may exercise exclusive jurisdiction over any party being defendant irrespective of whether the party is a resident of Germany or nonresident if the party owns assets allocated in Germany.100 Therefore the whole approach to the subject is similar to each other in Germany and Georgia, only the ways achieving same purpose are different. The second issue is comparison between section 328 (1) No. 2 of the ZPO and the section 68 2(b) of IPR-Georgia.

99 The author’s translation of this source. 100 Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 190. 14

The wording of the ZPO is as follows: “The judgment of a foreign court shall not be recognised where the documents instigating the proceedings were not served duly on the defendant, who has not appeared in the proceedings and relies on that fact, in accordance with law (“Ordnungsmäßigkeit”) or was not served in such a timely manner to enable him to arrange his defence (“Rechtszeitigkeit”)”.101 Regarding the issue it is important to name two concepts provided by German legislator. The concepts are named as “Ordnungsmäßigkeit” and “Rechtszeitigkeit”.102 Firstly, the very provision of German law can be considered as a source for section 27 of Brussels Convention of 1968, it has been adjusted to the article 27.103 The requirement regarding the service of the relevant documents that it shall be served duly in accordance with law (“Ordnungsmäßigkeit”) or in such a timely manner to enable the defendant to arrange his defence (“Rechtszeitigkeit”) is construed differently in scholarly writing. On the one hand, according to Professor H. Schack for the purposes of German national law, the two requirements - “Ordnungsmäßigkeit” and “Rechtszeitigkeit” - are not supposed to be considered as cumulative (“kumulativ”) requirement, but on the other hand, for the purposes of the interpretation of section 27 of Brussels Convention of 1968 Professor T. Rauscher citing the ECJ decision from 1990 Lancracy/Peters stresses that the two requirements are to be satisfied cumulatively.104 In section 34 of the Brussels I Regulation the requirement of “Ordnungsmäßigkeit”, assessed as conflicting with the main “goal and purpose”105 of the

101 See section 328 (1) No. 2 of the ZPO. 102 (1) Die Anerkennung des Urteils eines ausländischen Gerichts ist ausgeschlossen: 2. wenn dem Beklagten, der sich auf das Verfahren nicht eingelassen hat und sich hierauf beruft, das verfahrenseinleitende Dokument nicht ordnungsmäßig oder nicht so rechtzeitig zugestellt worden ist, dass er sich verteidigen konnte (section 328 (1) No. 2 of the ZPO). 103 Cf. Schack, Internationales Zivilverfahrensrecht, 4th edition, 2006, par. 845; Rauscher, Europäisches Zivilprozeßrecht, Kommentar, 2nd edition, 2006, volume I, 566, par. 23; Kropholler, Europäisches Zivilprozeßrecht, kommentar, 8th edition, 2005, 421; Geimer/Schütze, Europisches Zivilverfahrensrecht, Kommentar, 2nd edition, 2004, p. 555; Magnus/Mankowski, Brussels I Regulation, p. 579; Geimer, Internationales Zivilprozeßrecht, 5th edition, 2005, pp. 911-912; Martiny, Recognition and Enforcement of Foreign Money Judgments in the Federal Republic of Germany, 35 Am. J. Comp. L. 1987, p. 741. See the text of the article 27 in German: Eine entscheidung wird nicht anerlannt: wenn dem Beklagten, der sich auf das Verfahren nicht eingelassen hat, das dieses Verfahren einleitende Schriftstück oder ein Gleichwertiges Schriftstück nicht ordnungsgemäß und nicht so rechtyeitig yugestellt worden ist, daß er sich verteidigen konnte. 104 See EuGH Rs. Case 305/88 Lancracy/Peters EuGH 07.03.1990, the court held: Art. 27 Nr. 2 GVÜ ist dahin auszulegen, daß eine im Versäumnisverfahren ergangene Entscheidung nicht anerkannt werden darf, wenn das verfahrenseinleitende Schriftstück dem Beklagten, der sich auf das Verfahren nicht eingelassen hat, nicht ordnungsgemäß, jedoch so rechtzeitig zugestellt worden ist, daß er sich verteidigen konnte. Cf. Kropholler, Europäosches Zivilprozeßrecht, 8th edition, 2005 pp. 421-422, par. 33; Schack, Internationales Zivilverfahrensrecht, 4th edition, 2006, par. 845; Rauscher, Europäisches Zivilprozeßrecht, Kommentar, 2nd edition, 2006, volume I, 566, par. 23; However, it should be noted that inspite the fact that the term „ordnungsmäßigkeit“ is excluded from the article 34(2) of the Brussels I Regulation, “… the regularity of service has thus not lost all relevance … the judge can thus consider that service was effected on time for the defendant to organize his defence even if he never became aware of the proceedings, simply because service was duly affected”, “ … that the defendant did not know of the proceedings is no sufficient ground for refusal when service was duly effected” (CA Luxembourg Pas. Lux. 2000, 227-234, ECJ Website № 2001/47), see in Magnus/Mankowski, Brussels I Regulation, p. 548, par. 48. 105 Geimer/Schütze, Europisches Zivilverfahrensrecht, Kommentar, 2nd edition, 2004, p. 555. 15

regulation is excluded. The section 34 (2) reads that: A judgment shall not be recognised where it was given in default of appearance, if the defendant was not served with the document which instituted the proceedings or with an equivalent document in sufficient time and in such a way as to enable him to arrange for his defence, unless the defendant failed to commence proceedings to challenge the judgment when it was possible for him to do so. The purpose and meaning of the section 68 (2)(b) can be considered as comparable with the above discussed German provision as the wording of the Georgian law is: A judgment shall not be recognized if a party was not given judicial summons or there were other procedural violations according to the Law of the country where the judgment was rendered. As it is apparent the Georgian law is not stipulating namely the concepts of “Ordnungsmäßigkeit” and “Rechtszeitigkeit”. It expressly states that the defendant shall be duly served in accordance with the law of first judgment country. The interpretation of the German provision is the same.106 However the Georgian text may raise misunderstandings and difficulties for the Court of Georgia to construe the very provision in the above mentioned way. Firstly, the ground for saying that is the wording of the provision, as a part of it reads as obstacle for recognising foreign judgment the presence of “…other procedural violations”. The procedural violations can be interpreted very widely; especially difficulties can arise based on the fact that the procedural violations shall be considered in accordance with the foreign law. Secondly, as a matter of fact, there is a lack of case law107 devoted to the subject in Georgian jurisprudence and it makes difficult to find real interpretation of the Georgian provision. And finally, it is worth noting that Georgia is not the contracting state of the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters of 15 Nov. 1965.108 The comparative analyses of other relevant sections of IPR-Georgia with the section 328 (1) of ZPO are provided in the following chapters.

106 Schack, Internationales Zivilverfahrensrecht, 4th edition, 2006, par. 846. 107 See supra n. 32. 108 See for the details regarding the convention Practical Handbook on the Operation of the Hague Service Convention, Permanent Bureau of the Hague Conference on Private International Law, 2006. 16

Chapter 2.Prerequisites Which Generally Do Not Impede the Recognition of U.S. Money Judgments

I. Decisions Entitled to Recognition

1. “Judgments” of “Foreign Courts”

According to the section 328 of the ZPO, the term judgments of a “foreign court” “ausländisches Gericht” is construed broadly and means any public body that is authorized in accordance with the law of a rendering state to resolve the disputes.109 Thus, recognition is not limited to decisions rendered by civil and commercial courts, but it includes and extends to various administrative bodies, inasmuch as they render judgments concerning civil law cases too. The criminal court decisions concerning civil damages awards may be regarded as judgments in civil law as long as they order the criminal payments for damages in favor of the injured party. The payments are considered as amounting to the civil matter as from the functional perspective they are equal to a civil court ordering a tortfeasor to indemnify his victim.110 Nevertheless, the judgments ordering disciplinary penalties, “contempt of court” in accordance with the or “amen de civile” according to French law and judgments ordering a criminal to pay fine to the state are beyond the scope of civil law and therefore cannot be recognized under section 328 of the ZPO.111 The term “judgment” (“Urteil”) in section the 328 of the ZPO is also widely determined. It has to be understood as referring to all decisions settling a dispute between parties, despite the name given to the decision (e.g., decree, order).112 Hence, it is worth noting that the section 328 of the ZPO finds its applicability not only concerning the commercial money matters but also to decisions, to support orders or declaratory judgments (“Feststellungsurteile”). Furthermore, not mere judgments for a fixed sum, but also judgments prohibiting or ordering the doing of acts as decrees of specific performance (“Leistungs- und

109 Cf. Spellenberg/Staudinger/Hermann, (editors), Julius von Staudingers Kommentar zum Bürgerlichen Gesetzbuch mit Einführungsgesetz und Nebengsetzen § 328 ZPO, 1997, par. 217; Martiny, Recognition and Enforcement of Foreign Money Judgments in the Federal Republic of Germany, 35 Am. J. Comp. L. 1987, p. 730; Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 182. 110 Cf. Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 182; Schack, Internationales Zivilverfahrensrecht, 4th edition, 2006, par. 813, 817; Stein/Jonas, Kommentar zur Zivilprozessordnung, 22. edition, 2006, p. 387. 111 Cf. Schack, Internationales Zivilverfahrensrecht, 4th edition, 2006, par. 817; Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 183. 112 Martiny, Recognition and Enforcement of Foreign Money Judgments in the Federal Republic of Germany, 35 Am. J. Comp. L. 1987, p. 731. 17

Unterlassungsurteile”) can be recognized.113 Foreign default judgments can also be recognized, taking into consideration that the defendant has been given proper notice.114 A consent judgment that is rendered as a result of a settlement between the parties - similar to U.S. class actions – is recognizable in Germany.115 The mere fact that something is termed a “judgment” does not confer right on recognition.116 Consequently, a foreign settlement or enforceable deed cannot be recognized in Germany where it is not subject to court approval.117 Neither type of decision has to be deemed as a judgment since they do not settle disputes arising between parties, but only serve to enforce prior judgments. Hence, the foreign execution acts such as garnishment orders cannot be recognized.118 The judgments rendered by the Georgian Supreme Court regarding recognition of foreign judgments in Georgia does not include clear interpretation of terms “foreign court” or/and “judgment” in the way it is the case in the German courts judgments.119 It is important to establish uniform and predictable case law in Georgia. Hence, Georgian courts have to interpret the relevant provisions and than apply them to the cases. Whereas, the plain text of section 68 (1) of IPR-Georgia is similar to the section 328 (1) of the ZPO, Georgian courts could excercise the approach of German law in the context as a model for interpreting the terms “foreign court” or/and “judgment” as far as it would fit the particularities of each case.

2. Res Judicata

Only final judgments can be recognized in Germany. “Finality” (“formelle Rechtskraft”) means that the judgment is not subject to appeal or review that the judgments are barred from re-litigation in accordance with the laws of rendering court. However, according to Martiny: “… possibility that a case may be reopened in a later, separate proceeding in the rendering

113 Cf. Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 183, Martiny, Recognition and Enforcement of Foreign Money Judgments in the Federal Republic of Germany, 35 Am. J. Comp. L. 1987, p. 731. 114 See Regional Court (“Landgericht; LG”) Limburg 9 April 1986, 1986, „Wertpapiermitteilungen“ (WM) 627 (Irish default judgment).. 115 Cf. Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 183. 116 Martiny, Recognition and Enforcement of Foreign Money Judgments in the Federal Republic of Germany, 35 Am. J. Comp. L. 1987, p. 732. 117 Geimer, Anerkennung ausländischer Entscheidungen in Deutschland, 1995, p. 99. 118 Schack, Internationales Zivilverfahrensrecht, 4th edition, 2006, par. 825. 119 Cf. judgment of Georgian Supreme Court, No a-562-sh-26-09 03.04.2009; interpreting the interlocutory injunction as falling beyond the scope of concept judgment “urteil”; No a-1238-sh-43-07, 25.09.2007; Supra n. 32. 18

State does not prevent recognition”.120 It is worth noting that, similar to Germany, “the res judicata judgment remains doctrinally exclusive in American law when it comes to foreign country judgments”.121 Efforts have been made to find different solutions for interim injunctions in several multilateral Conventions regarding family law.122 If foreign judgments have legal nature of preliminary enforceable judgments, than they are not recognizable as they lack finality. As “preliminary enforceable judgments give a creditor the possibility of enforcing the judgment although the defendant has lodged an appeal”.123 The creditor has to deposit collateral as security that would go to the debtor if the judgment is reversed on appeal.124 Interlocutory injunctions are not recognizable in accordance with the German law as far as they order measures of provisional nature.125 As an exception can serve the cases where the injunctions either de facto end the litigation or “… are not subject to appeal during their period of validity”.126 According to “Oberlandesgericht”- OLG of Germany the above mentioned interlocutory injunctions must be final and therefore may be recognized under German law.127 The IPR-Georgia expressly stipulates in the section 68 (1) the principle of “Finality” as it reads: “Georgia shall recognize the valid judgments made by a foreign Court.” Hence, the term “valid judgments made by a foreign Court” must be considered as Georgian equivalent of the meaning staying behind the German term “formelle Rechtskraft” i.e. “Finality”.

3. Arbitral Awards

Based on the principle that the arbitral tribunals are not empowered with public authority the foreign arbitral awards rendered by the tribunals generally are not recognizable under the section 328 of the ZPO. Foreign arbitral tribunals in Germany are recognized in accordance with the section 1061 of the ZPO128 and the relevant conventions. Among the others, most

120 Cf. Dieter Martiny, Recognition and Enforcement of Foreign Money Judgments in the Federal Republic of Germany, 35 Am. J. Comp. L. 1987, p. 732; Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 183 (stating that: “subsequent reopening of the case to alter a final judgment does not bar [the] recognition”); Schack, Internationales Zivilverfahrensrecht, 4th edition, 2006, par. 821. For criticism see Geimer/Schütze, Europisches Zivilverfahrensrecht, Kommentar, 2nd edition, 2004. 121 Hay, On Merger and Preclusion (Res Judicata) in U.S. Foreign Judgments Recognition – Unresolved Doctrinal Problems –in Festschrift für Geimer: Einheit und Vielfalt des Rechts: Festschrift für Reinhold Geimer zum 65. Geburtstag, 2002, pp. 324-338, p. 326. 122 Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 183; 123 Ibid p. 184. 124 Ibid. 125 Ibid. 126 Geimer, Internationales Zivilprozessrecht, 4th edition. 2001, par. 2857. 127 See Schack, Internationales Zivilverfahrensrecht, 4th edition, 2006, par. 823. 128 Section 1061 of the ZPO reads: 19

important convention hereto is the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”), to which Germany and Georgia129 are parties. The section 1061(1) of the ZPO prescribes that generally the New York Convention is applicable for the recognition and enforcement of foreign arbitration awards, but on the other hand, the section sets forth that the awards can also be recognized and enforced by the other international treaties and conventions to which Germany is a signatory party.130 The reason for discussing the issue regarding recognition and enforcement of foreign arbitral awards in Germany under this chapter is the judgment of German BGH131 which at some extant infringed the statement of law described above. The court has held the foreign arbitral award as recognizable under section 328 of the ZPO if according “… to the request of one of the parties to the arbitration, a foreign court confirms the arbitral award by merging it with the judgment … this applies, for example, to judgments rendered in confirmation proceedings in accordance with the U.S. Federal Arbitration Act”.132 The federal court of justice’s holding has been criticized in German scholarly writing. Professor H. Schack stresses that: “… the court’s reasoning gives successful plaintiffs’ alternative, choice between enforcing the arbitral award either under section 1061 of the ZPO or the merged exequatur judgment under sections 328, 722 and 723 of the ZPO … the existence of two recognizable and enforceable decisions thus is internationally undesirable and carries the risk of both being recognized and enforced against the debtor”.133 The issue discussed above rises some unclear points in Georgian legislation. Georgia has a law on Private Commercial Arbitrations enacted in 1997, the chapter IV of which deals with the enforcement of the arbitration awards. However, there is nothing mentioned regarding recognition of arbitration awards in the law; furthermore, there is no distinction between the

(1) Die Anerkennung und Vollstreckung ausländischer Schiedssprüche richtet sich nach dem Übereinkommen vom 10. Juni 1958 über die Anerkennung und Vollstreckung ausländischer Schiedssprüche (BGBl. 1961 II S. 121). Die Vorschriften in anderen Staatsverträgen über die Anerkennung und Vollstreckung von Schiedssprüchen bleiben unberührt. (2) Ist die Vollstreckbarerklärung abzulehnen, stellt das Gericht fest, dass der Schiedsspruch im Inland nicht anzuerkennen ist. (3) Wird der Schiedsspruch, nachdem er für vollstreckbar erklärt worden ist, im Ausland aufgehoben, so kann die Aufhebung der Vollstreckbarerklärung beantragt werden. 129 Georgia is contracting state to the convention from 1994; Germany is contracting state to the convention from 1961 see: http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/NYConvention_status.html (last visited: 10.07.2009). 130 Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 184. 131 BGH, 30 RIW 557, 644, 1984. 132 See Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, pp. 184-185. 133 See Schack, Internationales Zivilverfahrensrecht, 4th edition, 2006, par. 937; for further details and another opinion see Georg Borges, Das Doppelexequatutr von Schiedssprüchen und Ausländischer Schiedssprüche und Exequaturentscheidungen 1997, p. 222.

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recognition and enforcement of arbitration awards rendered by foreign arbitration or Georgian arbitration. The case law in this field is not unified. The general approach is that because of legislative defect Georgian courts are recognizing the foreign arbitral awards in accordance with the requirement stipulated by the section 68 of IPR-Georgia dealing with the recognition of foreign judgments in Georgia.134 The courts make it based on the analogy principle. There are cases where the courts intend to make applicable the New Yourk Convention as well as the section 68 of IPR-Georgia.135 The issue in Georgia needs further development according to the modern requirement.

II. Conflicting Judgments and Lis Pendens

A foreign judgment to be recognized may include a subject matter that has already been the subject of other litigation in another court. The conflicting judgments on the same matter rendered by different courts and arisen between the same parties bring the problem of which has to be recognized.136 “Whereas the problem of conflicting judgments was once considered to be within the realm of public policy,137 it is now discussed to be a barrier to recognition”.138 Several approaches for the possible solutions are provided by the different doctrines. The United States favors the later judgment relying on the assumption that it could be decided on “better”, or more current and recent facts.139 As opposed to the Unites States, where the main concept is so called the “last-in-time rule”140 the judgment rendered first prevails in Germany, this meaning is provided by the section 328 (1) No. 3 of the ZPO. A foreign judgment is not recognizable if it would conflict with the decision of a German court regarding the case with the same subject matter, between the same parties. In order to eliminate any incentive for the plaintiff to begin a second proceeding in another state, the “first-in-time” rule was established

134 See Judgment of Georgian Supreme Court, case No. a-634-sh-40-06 15.11.2006. 135 See Tsertsvadze, International Arbitration (Comparative Research), 2008, pp. 560-564; Tsertsvadze, The recognition and Enforcemetn of Arbitral Awards, Justuce and Law, 2006, №1. 136 Cf. Dieter Martiny, Recognition and Enforcement of Foreign Money Judgments in the Federal Republic of Germany, 35 Am. J. Comp. L. 1987, p. 743; Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 185. 137 Martiny, Recognition and Enforcement of Foreign Money Judgments in the Federal Republic of Germany, 35 Am. J. Comp. L. 1987, p. 743. 138 Ibid. 139 Treinies v. Sunshine Mining Co., 308 U.S. 66 (1939). 140 Cf. Schack, Internationales Zivilverfahrensrecht, 4th edition, 2006, par. 856; Hay, US-Amerikanisches Recht, 3rd edition 2005, par. 211. 21

in German doctrine, the underlining assumption of which is “ … that in parallel proceedings, priority should be given to the first judgment”.141 Regarding domestic German cases there is a certain national provision concerning “lis pendens” in connection with recognition of foreign judgments in accordance with section 328 No. 3 of the ZPO. The section 261 (3) No. 1 of the ZPO provides that the case pending before another court based on an earlier filed action shall bar the adjudication by the second court. This approach in Germany is extended to the recognition of foreign judgments according to section 328 (1) No. 3 of the ZPO.142 Hence, foreign courts are required not to disregard “lis pendens” proceedings pending in German courts due to ensure the recognition or enforcement of their judgments before German court, as foreign judgments are not recognizable if the proceeding conflict with (“unvereinbar”) the proceedings established before that in Germany.143 Regarding the discussed issue, it has to be stated that Georgian legislation is drafted in accordance with the German one. Only difference is the technique of regulation. German ZPO prescribes the above considered approach in the one section 328 (1) No. 3, while the Georgian legislator achieves the equality with the German provision splitting the requirements of the section 328 (1) No. 3 in two parts. Namely, the section 68 (1) (c) (where the judgment conflicts with a Georgian judgment or with an earlier recognizable foreign judgment) and (f) (where the proceeding which gave rise to the foreign judgment is irreconcilable with a Georgian proceeding instituted earlier here) of the IPR-Georgia together are comparable to the German understanding of the point.

III. The Reciprocity

There are countries recognising only the judgments rendered by the court of that country with which the recognising country has reciprocity garuanteed. The underlining assumption behind the concept of reciprocity is that two nations agree to recognise the judgments of each other in accordance with the same conditions.144 There is no reciprocity requirement on the federal level in the United States. Only a few states require reciprocity. The Uniform Foreign-

141 Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 185. 142 Cf. Martiny, Recognition and Enforcement of Foreign Money Judgments in the Federal Republic of Germany, 35 Am. J. Comp. L. 1987, p. 744; Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 185. 143 Ibid. 144 Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 186. 22

Money Judgments Recognition Act adopted by more than 30 states sets forth no requirement on reciprocity.145 On the other hand, in Germany the reciprocity principle is considered as a very important prerequisite for recognition of foreign money judgments. Although, there is no definition derived from the German legislator, the room for interpretation and determination is left to the German courts.146 This very requirement in Germany was stronger in the beginning of 20th century. The precondition has served for along time as a real obstacle for recognizing US-judgments in Germany. In 1907, because of lack of assurance of reciprocity between Germany and state of California the German Imperial Court denied the recognition of Californian Courts default judgment obtained by the parties damaged in the 1906 San Francisco earthquake. The German court held that the California statute authorized the California courts with wider review powers in contrast to German courts.147 However, the decision of the Court was broadly criticized as holding the requirement of having the different countries practically with an identical approach to the subject and similar regulation of the matter unfair. It is even impossible to maintain the identity from country to country on each level of legal relations.148 The request for abolition of the reciprocity requirement has been gaining in strength.149 The requirement of reciprocity can harm every citizen, irrespective of German or any other, as the German law does not contain the distinctive regulations according to the different nationalities.150 It is true that despite the strong criticism prescribed by the scholarly writing the text of the section 328 (1) No. 5 still contains the requirement hereto, but it is worth mentioning that nevertheless, the criticism achieved its substantial goal which has found its reflection in the following decisions awarded by the German courts containing the very soft interpretations of the reciprocity requirement. This tendency has brought the situation to the approach where the existence of reciprocity is assumed by the courts without requiring any kind of special guarantee that the first judgment court will recognize the German judgments and there is no requirement that the first judgment

145 Lowenfeld, International Litigation and Arbitration, 3rd edition, 2006, p. 544. 146 Cf. Martiny, Recognition and Enforcement of Foreign Money Judgments in the Federal Republic of Germany, 35 Am. J. Comp. L. 1987, p. 751; Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 186. 147 See Imperial Court Decision – Entscheidungen des Reichsgerichts in Zivilsachen (RGZ) 70, 434; Schack, Internationales Zivilverfahrensrecht, 4th edition, 2006, pp. 302-303, par. 872. 148 Cf. Schütze, Ausgewählte Probleme des internationalen Zivilprozessrechts, 2006, Zur partiellen Verbürgung der Gegenseitigkeit bei der Anerkennung ausländischer Zivilurteil, pp. 328-337, p. 329; Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 187; Entscheidungen des Reichsgerichts in Zivilsachen (RGZ) 70, 434; Schack, Internationales Zivilverfahrensrecht, 4th edition, 2006, par. 872. 149 Cf. Behr, Enforcement of United States Money Judgments in Germany, 13 J.L. & Com. 1993-1994, p.223; Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 187. 150 Cf. Schack, Internationales Zivilverfahrensrecht, 4th edition, 2006, par. 872; Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 187. 23

state has to already have recognized a German decision. The fact proving the significant relaxation of the reciprocity requirement by the German court is the approach according to which there is no more requirement derived by the German courts regarding recognition of German judgments under the same conditions required by the German law.151 It can be stated that to some extent, this approach has given the possibility to Professor R.Kniper, despite the fact that there was no case law regarding recognition and enforcement of foreign judgments between Germany and Georgia,152 to state that the reciprocity between the two countries is guaranteed.153 However, the judgments of countries whose law allows revision on the merits (“révision au fond”) are not recognizable.154 After enactment of Uniform-Money Judgments Recognition act and amendment of laws of several states in the U.S. the reciprocity is widely assumed regarding all U.S. states, even with the states of Missisipi and Montana.155 As provided above, the section 68 (2) (e) of the IPR-Georgia contains requirement that reciprocity must be guaranteed, but however there is no case law devoted to the subject and similar to German approach the legislator has not determined the concept of reciprocity. In this very field, similar to others mentioned above, it is significant for Georgian courts to follow the recent developments the modern liberal approach acknowledges in the international transborder litigations. The reciprocity requirement is the concept that has to be considered and applied very carefully, as the facts and considerations stated above clearly shows that this requirement can serve as an obstacle to international cooperation.156 The private parties, who have litigated fairly should not suffer because of the failure of their to have agreed to assure reciprocity. Thus, Georgia has to employ more liberal approach to the issue than Germany does.

151 Cf. Martiny, Recognition and Enforcement of Foreign Money Judgments in the Federal Republic of Germany, 35 Am. J. Comp. L. 1987, p. 750; Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 187. 152 In 2008 the supreme court of Georgia rendered two decisions No a-2230-sh-7104, 11.02.2008 and No. a-300- sh-19-08 19.03.2008 recognising German judgments in Georgia in Family law cases. 153 See in Geimer/Schütze, Europisches Zivilverfahrensrecht, Kommentar, 2nd edition, 2004, p. 1268, par.164. 154 Martiny, Recognition and Enforcement of Foreign Money Judgments in the Federal Republic of Germany, 35 Am. J. Comp. L. 1987, p. 750. 155 Cf. Schütze, Ausgewählte Probleme des internationalen Zivilprozessrechts, 2006, Aktuelle Fragen der Anerkennung und Vollstreckbarerklährung von US-amerikanischen Schiedssprüchen und Gerichtsurteilen in Deutschland, p. 350. 156 Martiny, Recognition and Enforcement of Foreign Money Judgments in the Federal Republic of Germany, 35 Am. J. Comp. L. 1987, p. 749. 24

Chapter 3. The Obstacles to Recognition of U.S. Money Judgments in Germany

I. Jurisdiction

The reconsideration and review of the first court’s jurisdiction is generally the rule in German jurisdiction. This kind of rule exercised by the German legislator serves as protection of a defendant to assist him/her not to find himself/herself in the proceedings before a forum non conveniens. The section 328 (1) No. 1 of the ZPO sets forth condition requiring availability of jurisdiction in international sense (“internationale Zuständigkeit”).157 The meaning of the term “jurisdiction in international sense” is not defined on the legislative level. The room for interpretation is left to the courts of Germany. Therefore, the courts construe the term exercising the so called “mirror-image principle”158 the underlining assumption of which according to Dieter Martiny is that “… German law projects its own rules of jurisdiction on the foreign court, which is treated as having international jurisdiction if in the reverse situation a German court would be competent [would have jurisdiction]”.159 The German approach is to be considered as an extension of national law regulations, devoted to the domestic jurisdiction, to the cases on the international level. However, the rule has not to be understood as bearing very strict character, it can be sufficient if any court of the rendering country has had the jurisdiction in accordance with the mirror-image principle, unless the circumstances where the German law establishes exclusive jurisdiction.160 Mitigating of the underlining assumption staying behind the mirror-image rule allows the consequences where in case of recognizing the judgment rendered by one of the U.S. state courts, it suffices when at least one court in the same state can exercise jurisdiction over the case.161 On the one hand, the approach as such is relevant internationally and seems to have a contributing feature for the purposes of developing international cooperation in the field of transborder litigation; but on the other hand, it can potentially lead to situations where a judgment rendered by the court having no jurisdiction under its domestic law is recognisable.162 Allowing the development of such circumstances

157 Cf. Martiny, Recognition and Enforcement of Foreign Money Judgments in the Federal Republic of Germany, 35 Am. J. Comp. L. 1987, p. 734; Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 189. 158 See Schütze, Das internationale Zivilprozessrecht in der ZPO, 2008, p. 95, par. 36. 159 Martiny, Recognition and Enforcement of Foreign Money Judgments in the Federal Republic of Germany, 35 Am. J. Comp. L. 1987, p. 734. 160 Cf. Martiny, Recognition and Enforcement of Foreign Money Judgments in the Federal Republic of Germany, 35 Am. J. Comp. L. 1987, p. 734; Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 189; Zekoll, Recognition and Enforcement of American Products Liability Awards in The Federal Republic of Germany, 37 Am. J. Comp. 1989, p. 301. 161 See Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 189. 162 Martiny, Recognition and Enforcement of Foreign Money Judgments in the Federal Republic of Germany, 35 Am. J. Comp. L. 1987, p. 734; 25

entitles one to state that to some extent it amounts to indirect violation of national-domestic regime of the rendering country and makes it difficult to understand the mirror-image rule which as mentioned above serves as a defensive device. Similar to other countries’ legislation, there is broad band of basis for exercising jurisdiction stipulated by the German ZPO.163 As a general rule is provided by the sections 13 and 17 of the ZPO according to which the claim can be filed in a court where defendant has its residence (“wohnsitz”, “actor sequitur forum rei”) and in case of filing an action against legal entity where the establishment of the legal entity has been proceeded. The same approach is taken into consideration by section 21 of the ZPO regarding branches of companies. In case of disputes arising out of or in connection with contractual obligations section 29 of the ZPO prescribes that the court is empowered to exercise jurisdiction which is located where the place of performance (“Erfüllungsort”) of the is. Concerning tort claims, section 32 of the ZPO sets forth that the decisive factor is either the place where the action was committed or where the damage has occurred. Therefore, claim can be filed in one of the courts located on the relevant places. As already mentioned in the chapter 1. III, according to section 23 of the ZPO if the dispute has arisen in connection with immovable property located in Germany, then the German court located on the place where this immovable property is situated has an exclusive jurisdiction. The wide range for determining jurisdiction of German courts causes the fact, that the matter regarding jurisdiction review in international sense can prevent recognition of such U.S. money judgments, when U.S. courts exercise jurisdiction in accordance with the rules which are irreconcilable with the German law.164 As an example can serve: so-called “transient jurisdiction” (also known as “tag jurisdiction”) underlining assumption of this is that if the person travailing in a state is served with summons, than the service of process can be deemed as a basis for jurisdiction of the state;165 also “long arm statutes” in connection with “minimum contact” and “doing business” rules providing that business activities of a defendant within the territory of state can be deemed as a sufficient factor to entitle the court of the state with jurisdiction over the defendant. These and other rules like “piercing the corporate veil” can

163 Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 189. 164 Ibid, 190. 165 Cf. Ibid and Schütze, Prozessführung und – risiken im deutsch-amerikanischen Rechtsverkehr, 2004, The Recognition and Enforcement of American Civil Judgments Containing Punitive Damages in the Federal Republic of Germany, pp. 108-129, p.118; US-amerikanisches internationales Zivilprozessrecht, pp. 53-81, p. 56. 26

impede the recognition of U.S. money judgments in Germany in context of international jurisdiction.166 As it is apparent, German ZPO deals with determination of jurisdiction of the German courts not only on the domestic level, but also on the international level establishing the understanding of the concept of jurisdiction in international sense. This very feature of relevant section of the ZPO allows scholarly writing in Germany to consider the sections regarding jurisdiction as having double function (“Doppelfunktion”). The sections are divided in three parts: a) the sections not manifestly regarding the international cases; b) the sections manifestly regarding the international cases; and c) the sections that are exclusively devoted to the international jurisdiction matters.167 As opposed to German approach, IPR-Georgia contains the part two named as “International Jurisdiction of Georgian Courts” with the sections 8, 9 and in the chapter 1. III considered section 10 providing the legal definition of concept international jurisdiction. The general determination of the concept is stipulated by the section 8 which reads as follows: “the Georgian courts shall have the international jurisdiction if the defendant is domiciled or has statutory seat or habitual residence in Georgia.”168 However the provision needs additional clarification as under the concept of domicile can be construed as a) statutory seat, or b) central administration or c) principle place of business.169 For clarity, it would be better to have separate regulations regarding natural persons and legal entities and its branches when determining their domicile. The section 9 prescribes the particular cases of the international jurisdiction concerning the disputes arisen in connection with or out of contractual relations (similar to Germany defining the significant connection as place of the performance – the section 9 (b)), torts (in this case also identically as in Germany stating as main factor the place where the action was committed or where the damage has occurred - the section 9 (c)), regarding branches (determining the domicile of the Branch as the decisive point) and etc., The section 10 dealing with exclusive jurisdiction of Georgian Courts is discussed in the sub- chapter III. This means that in contrast to German approach, the provisions of GCCP dealing with the jurisdiction issues in the sections 13-24170 do not bear the double function and are

166 For further discussinos see Hay; Russell J. Weintraub ; Patrick J. Borchers, Conflict of Laws, 12. ed., 2004; Hay, US-amerikanisches Recht, 3. ed., 2005; Hay, Internationales Privat- und Zivilverfahrensrecht, 3. ed., 2007; Eugene F. Scoles; Peter Hay; Patrick J. Borchers; Symeon C. Symeonides, Conflict of Laws, 4. ed. 2004; Schack, Einführung in das US-amerikanische Zivilprozessrecht, 2. ed., 1995; Schack, Jurisdictional Minimum Contacts scrutinized, 1983. 167 See Kropholler, Internationales Privatrecht, 6th ed., 2006, pp. 609-610. 168 The author’s translation of this source. 169 Cf. with Brussels I art. 60. 170 See GCCP; Die Zivilprozessordnung Georgiens http://www.gtz.de/de/weltweit/europa-kaukasus- zentralasien/26450.htm (last visited: 11.07.2009). 27

applicable only in domestic cases. Pursuant to Georgian legislation the IPR-Georgia is the special law with its special scope of regulation, therefore, the provisions of this law are applicable regarding the recognition of foreign judgments in Georgia as the provisions prevail over the provisions of GCCP.

II. Service of Process

The comparison of regulations regarding service of process in Germany and in Georgia in general is provided in the chapter 1. III. This sub-chapter II deals with the rules of service of process in the context of recognition of U.S. money judgments in Germany. As mentioned above, section 328 (1) No. 2 sets forth that: “the judgment of a foreign court shall not be recognised where the documents instigating the proceedings were not served duly on the defendant, who has not appeared in the proceedings and relies on that fact, in accordance with law (“Ordnungsmäßigkeit”) or was not served in such a timely manner to enable him to arrange his defence (“Rechtszeitigkeit”)”. Considering the issue on the international level, the far-reaching significance has the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters of 15 Nov. 1965 (Hague Service Convention).171 The convention has been in force for USA from 10.02.1969 and for Germany only from 26.06.1979, therefore beginning from this date a great expectation has arisen of facilitating the situation concerning the recognition of U.S. money judgments in Germany.172 If the country where the defendant receives a summons is deemed as a contracting party for the purposes of Hague Service Convention, then the relevant provisions of the convention are applicable and the requirements provided by it have to be met.173 According to German scholars, despite the great expectations, some obstacles may still occur because of the interpretation of the convention when dealing with the recognition of US-judgments in Germany.174 Especially it holds true when it comes to the service of US-action for “punitive damages” on a German defendant. The in-depth discussion of the legal nature and impacts of the concept “punitive damages” concerning the recognition of U.S. money judgments in Germany is provided in the following chapter 4., but it

171 See Practical Handbook on the Operation of the Hague Service Convention, Permanent Bureau of the Hague Conference on Private International Law, 2006. 172 See Schütze, Zur Zustellung US-Amerikanischer Klagen in Deutschland, in Schütze, Prozessführung und – risiken im deutsch-amerikanischen Rechtsverkehr, 2004, pp. 242-254, p. 242, http://www.hcch.net/index_en.php?act=conventions.status&cid=17 (last visited: 10.09.2009). 173 See Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694, 699 (1988). 174 See Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 192. 28

is of essential importance to consider this concept in the context of service of summons on a German defendant. In the German scholarly writing there is no homogeneous approach to the subject. Some scholars argue that there can be two main reasons causing the halt of the service of U.S. punitive damages action. One of them is the section 1 of the convention175 providing that the convention applies in all cases, in civil or commercial matters and hence the punitive damages are considered as having “.. rather penal than civil nature”,176 therefore they fall beyond the scope of civil matters in German sense.177 The another ground for halting the services is sectino 13 (1) of the convention providing that as far as punitive damages has to be deemed as irreconcilable with fundamental principle of German law, hence with German “ordre public” than the service of the action according to the section 13 (1) of the convention shall not be allowed as the article sets forth that: “where a request for service complies with the terms of the present Convention, the State addressed may refuse to comply therewith only if it deems that compliance would infringe its sovereignty or security”.178 But, on the other hand the Federal Constitutional Court of Germany (“Bundesverfassungsgericht” - “BVerfGE”) rendered in 1995 decision stating that the punitive damages actions served on the German defendant can not be considered as infringing factor of German public order.179 The decision served as a ground for construing the issue in the Napster180 case in the same way, holding that: “… only circumstances of substantial weight may justify a delay of international service proceedings”.181 This case has given a wide range of developing other ideas among the scholars regarding the issue. These authors are arguing that it is not allowed to deny the service of U.S. punitive damages action relying on the basis of domestic public order, hence it has far- reaching significance to interpret the article 13 (1) of the convention in more narrow sense.182 Consequently, German case law seems to be very liberal concerning the issue, but because of the several opinions among highly regarded academics and practitioners there is still

175 See Practical Handbook on the Operation of the Hague Service Convention, Permanent Bureau of the Hague Conference on Private International Law, 2006. p. 115. 176 See Fiebig, The Recognition and Enforcement of Punitive Damage Awards in Germany: Recent Developments, 22 Ga. J. Int’l & Comp. L. 1992, p. 643. 177 See ibid p. 644. 178 Cf. Practical Handbook on the Operation of the Hague Service Convention, Permanent Bureau of the Hague Conference on Private International Law, 2006. p. 118; Merkten, Abwehr der Zustellung von “punitive damages”- Klagen, 1995, pp. 205-206. 179 Cf. For further details Rasmussen-Bonne, Zum Stand der Rechtshilfpraxis bei Zustellungsersuchen von US- Schadensersatzklagen nach dem Beschluss des Bundesverfassungsgerichts vom 25. Juli 2003, in Balancing of Interests Liber Amicorum: Festschrift für Peter Hay, zum 70. Geburtstag, pp. 323-343; BVerG, 91, 335. 180 BVerfG, JZ, 58 (2003), pp. 956-958. 181 Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 194. 182 Cf. Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 192; Klaus J. Hopt, Rechtshilfe und Rechtsstaat die Zustellung einer US-amerikanischen class action in Deutschland, 2006. 29

remaining the possibility to have the issue presented as one of the main obstacles on the way of recognizing U.S. money judgments in Germany.183 Concerning Georgia it has been already stated in the chapter 1. III that Georgia is not the contracting state of the Hague Service Convention and the issue finds its regulation in accordance with the relevant sections of the IPR-Georgia and as mentioned above, before getting Georgia contracting party to the convention the provisions need some clarifications and harmonization according to the modern developments as considered hereto.

III. Public Policy

According to the U.S. law approach, as a general rule, “… traditionally … in classic conflicts doctrine … the ordre public [public order, public policy] serves mainly a corrective function … its use is defensive”.184 In accordance with the above mentioned, section 328 (1) No. 4 of the ZPO provides that “… non-recognition [of foreign judgments] must be “ultima ratio”, i.e. a solution of last resort reserved for those foreign decisions [judgments]”185 where recognition of the judgment would lead to a result that would manifestly (“offensichtlich”) conflict with essential (“wesentlichen”) principles of German law, in particular if recognition is incompatible with the German [Constitution’s] basic rights (Basic Law: “Grundgesetz”). The general stipulation bearing the same meaning is prescribed by the section 34 (1) of the Brussels I Regulation stating that “a judgment shall not be recognised if such recognition is manifestly contrary to public policy in the Member state in which recognition is sought”. It is of essential importance to note that the term “manifestly” (“offensichtlich”) was not included in the section 27 (1) of the Brussels Convention of 1968186 regulating the similar issue. Introduction and bringing into service of the very term facilitated the recognition procedure regarding the cases187 where the Brussels I Regulation is applicable.188 Regarding EU law it shall be mentioned interesting differentiation between “overriding mandatory provisions” and “public policy” provided by Rome I and Rome II Regulations.189 Articles 21 (Rome I) and 26 (Rome II) set forth that “… application of the provision …

183 See supra n. 181. 184 Hay, Flexibility versus Certainty and Uniformity in Choice of Law (monograph, Hague Academy of International Law, 226 Collected Courses pp. 377, 379. 185 Zekoll, Recognition and Enforcement of American Products Liability Awards in The Federal Republic of Germany, 37 Am. J. Comp. 1989, p. 311. 186 Britton, Dutczak, Harvey, Civil Jurisdiction and Judmentin Europe, 1992, p. 289. 187 See ECJ, Case 7/98, Krombach v. Barmberski, Judgment of 28 March 2000. 188 Schack, Internationales Zivilverfahrensrecht, 4th edition, 2006, par. 861. 189 See Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I), articles 9, 21; Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (Rome II) articles 16, 26. 30

specified by this regulation may be refused only [if its application would be] manifestly incompatible with the public policy … of the forum”.190 The “overriding mandatory provisions” are provisions “… that … are applicable to any situation falling within their scope, irrespective of the law otherwise applicable to the contract under this Regulation”.191 Thus articles 21 (Rome I) and 26 (Rome II) “presuppose that a choice-of-law analysis has been made. Its results may disregarded if it is “manifestly incompatible”. [Overriding] mandatory [provisions], in contrast, apply [“by their own force”] in a “pre-conflicts-analysis” setting as it were”.192 The crucial issue, when talking about understanding of public policy in German law, is correlation and coordination between the section 328 (1) No. 4 of the ZPO and section 6 of the EGBGB193, whether the two regulations set forth in separate German statutes – ZPO and EGBGB – are equivalent and bearing the identical regulative function or not. The issue is almost undisputable, as after amendment of section 328 (1) No. 4 of the ZPO in 1986 the two above mentioned sections were construed as having the same meaning and function underlying them. However, it was stated that the introduction of the new section is not intended to change a general approach of Germany to the issue recognition of foreign judgments.194 But, afterwards, idea developed that the underlining assumption of public policy in the context of recognition of foreign judgments shall be considered as dissimilar to understanding the issue in the context of conflict of laws.195 It is stressed by the German authors that despite the similarities in wordings of the sections 328 (1) No. 4 of the ZPO and section 6 of the EGBGB

190 Cf. Hay/Weintraub/Borchers, Conflict of Laws, 12. edition, 2004, p. 1085. 191 Cf. Article 9 (Rome I):“1. Overriding mandatory provisions are provisions the respect for which is regarded as crucial by a country for safeguarding its public interests, such as its political, social or economic organization, to such an extent that they are applicable to any situation falling within their scope, irrespective of the law otherwise applicable to the contract under this Regulation. 2. Nothing in this Regulation shall restrict the application of the overriding mandatory provisions of the law of the forum. 3. Effect may be given to the overriding mandatory provisions of the law of the country where the obligations arising out of the contract have to be or have been performed, in so far as those overriding mandatory provisions render the performance of the contract unlawful. In considering whether to give effect to those provisions, regard shall be had to their nature and purpose and to the consequences of their application or non-application;” Article 16 (Rome II): „Nothing in this Regulation shall restrict the application of the provisions of the law of the forum in a situation where they are mandatory irrespective of the law otherwise applicable to the non-contractual obligation.“ 192 Cf. for further details The 2008 Conflicts Law for Regulation (Rome I), Adapted from Peter Hay, Russell J. Weintraub; Patrick J. Borchers, Conflict of Laws, (Supplement to 4th ed. 2004) in Prof. Dr. Peter Hay, International Conflict of Laws, Cases-Material-Problems, Bucerius Law School – WHU, 2008/2009, pp.139-141, 170-171; Hay; Russell J. Weintraub ; Patrick J. Borchers, Conflict of Laws, 12. edition, 2004, p. 1085 193 See EGBGB section 6: “Eine Rechtsnorm eines anderen Staates ist nicht anzuwenden, wenn ihre Anwendung zu einem Ergebnis führt, das mit wesentlichen Grundsätzen des deutschen Rechts offensichtlich unvereinbar ist. Sie ist insbesondere nicht anzuwenden, wenn die Anwendung mit den Grundrechten unvereinbar ist”. 194 Martiny, Recognition and Enforcement of Foreign Money Judgments in the Federal Republic of Germany, 35 Am. J. Comp. L. 1987, p. 745. 195 See Rosner, Cross-Border Recognition and Enforcement of Foreign Money Judgments in Civil and Commercial Matters, 2004, p. 280. 31

for the purposes and in the context of the recognition of foreign judgments the two sections shall not be construed and interpreted as carrying the same meaning.196 In the landmark case the German court197 even emphasized that the public policy requirement stipulated in the section 328 (1) No. 4 of the ZPO differs from the choice-of-law context set forth in the section 6 of the EGBGB.198 The public policy can obstacle the recognition of foreign judgments only in very extreme cases in which the recognition of the judgment is irreconcilable with the German fundamental values. German legislation left the issue interpretation of borderlines of public ordre to the courts. It is up to German courts to define whether the extreme case is at issue.199 Therefore, the German courts have been very liberal to the issue, applying relatively wide standards when interpreting the infringement of public policy in the context of the recognition.200 It is manifestly stressed that the only divergence to German law, even regarding mandatory provisions, will not allow the court to hold the judgment as unrecognizable.201 The difference of the public policy requirement between the section 328 (1) No. 4 of the ZPO and section 6 of the EGBGB goes far from the divergences in the contextual approach (the field of recognition or conflict-of-laws). In contrast to the section 6 of the EGBGB, the section 328 (1) No. 4 of the ZPO deals not only with the violation of German substantive law as amounting to the infringement of the public policy, but also with violation of German procedural standards. In other words, for the purposes of the section 328 (1) No. 4 of the ZPO the German public policy can be deemed as violated either when main principles of the substantive law is breached or if the substantial procedural standards (“verfahrensrechtliche”) are ignored.202 There is a clear difference between the public order control and above mentioned “révision au fond”. When it comes to the checking of a public policy infringement, it is important for the German court to test and consider the result of the foreign judgment rather than a law applied in the foreign forum or the merits. Consequently, the examination of outcomes is essential.203 Therefore, the public policy in the context of recognition of foreign judgments needs to be taken into consideration separately as infringement of German substantive and procedural

196 See Zekoll, Recognition and Enforcement of American Products Liability Awards in The Federal Republic of Germany, 37 Am. J. Comp. 1989, p. 316. 197 BGHZ 118, 312. 198 Hay, The Recognition and Enforcement of American Money Judgments in Germany – The 1992 Decision of the German Supreme Court, 50 Am. J. Comp. L. 1992, p. 736. 199 Behr, Enforcement of United States Money Judgments in Germany, 13 J.L. & Com. 1993-1994, p. 223. 200 Cf. Martiny, Recognition and Enforcement of Foreign Money Judgments in the Federal Republic of Germany, 35 Am. J. Comp. L. 1987, p. 745; Kropholler, Internationales Privatrecht, 6th ed., 2006, p. 667. 201 See supra n. 196. 202 Cf. Kropholler, Internationales Privatrecht, 6th ed., 2006, p. 668; Rosner, Cross-Border Recognition and Enforcement of Foreign Money Judgments in Civil and Commercial Matters, 2004, p. 280. 203 Schack, Internationales Zivilverfahrensrecht, 4th edition, 2006, par. 867, Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 195. 32

laws. Hence, the purpose of the following sub-chapters is exactly the clarification of these issues separately.

1. Public Policy in Substantive Law

In general, the developments show that the ground underlying the denial to recognise foreign judgment in Germany is manifest infringement of German substantive law, in contrast to the procedural law.204 As stated already the underlining assumption of the issue is that the German courts’ main duty is to examine the outcomes of the foreign forum’s judgment, but, nevertheless, in some cases the judgments ignoring the mandatory rules (“Zwingende Normen”) of the German legislation can be considered as a violation of the German public policy (in this case German substantive law) leading to non-recognition of the judgments. The nature and purpose of such mandatory rules is closely connected to the German legal, social and economical order and the infringement of that brings to the negative results concerning the recognition.205 For instance, the Federal Supreme Court of Germany refused to hold the New York judgment as recognisable. As a matter of fact, the judgment was against German citizen who pursuant to the Stock Exchange Act (“Börsengesetz”) had no capacity entitling him the conclusion of stock exchange transaction.206 As far as the capacity was not presented according to the requirements of German law the court held that the recognition of the judgment would conflict with the main purpose of the Stock Exchange Act and therefore infringe the German public policy, stating that it is prohibited under German law for the citizens of Germany to be involved in “economic gambling contracts”.207 It is very interesting interpretation of the section 762 (1) of the Civil Code of Germany (hereinafter referred as “BGB”), as on the one hand, the first sentence of the section provides the prohibition that: no obligation is established by gaming and betting, but on the other hand, the second sentence of the section stipulates that:

204 Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 195. 205 Rosner, Cross-Border Recognition and Enforcement of Foreign Money Judgments in Civil and Commercial Matters, 2004, p. 280. 206 BGH 4 June 1975, in NJW 1975, Heft 35, 1600-1601, „Der Zweck des deutschen Börsengesetzes würde verfehlt, wenn ausländische Urteile gegen im Inland wohnhafte Personen über Forderungen aus Börsentermingeschäften, in denen die deutsche Regelung der Börsentermingeschäftsfähigkeit und der Differenzeinwand keine Beachtung gefunden haben, zur Vollstreckung anerkannt würden“. 207 Rosner, Cross-Border Recognition and Enforcement of Foreign Money Judgments in Civil and Commercial Matters, 2004, p. 281, see BGB section 762 (1). 33

what has been paid due to such gaming or betting may not be demanded back on the basis that no obligation existed.208 In order to define the extent of deviation of foreign judgment from German standards, due to determine it as recognizable judgment, the concept of “connection of the case to Germany” is of a great significance. The concept was introduced by the Federal Court of Justice of Germany holding that the stronger connection has the case to Germany, the weaker and smaller deviation is needed the German public policy to be deemed as infringed. For example, according to the Federal Court of Justice’s statement, only German citizenship of the defendant and the fact that he was in Germany could not serve as strong connecting factors amounting the infringement of the German public policy leading to the non-recognition of the judgment.209 At first glance, there is well-developed opinion in US-German litigation that, without any kind of regard of the connection of the case to Germany, judgments awarding “punitive damages”210 as having punishing character and belonging to the field of , rather than to civil law211, are irreconcilable with the German public policy and therefore the cases face denial for recognition.212

2. Public Policy in Procedural Law

It has been already mentioned above that under section 328 (1) No. 4 of the ZPO the issue of public policy has to be read together with public policy in substantive law and public policy in procedural law. The manifest incompatibility with the German standards in procedural law can be considered as the ground for applying the public policy clause in its whole meaning against the foreign judgments.213 Under the circumstances, German courts are applying a very liberal standard and approach too. Namely, if the whole process has not been similar in to the German one, it is still not possible to refuse the recognition of the judgment. Mere technical or formal deviations are not enough. It could be assessed as paying some kind of deference from the side of German courts to the foreign procedural rules. The only circumstances of

208 See section 762(1) translation in English: http://www.gesetze-im-internet.de/englisch_bgb/englisch_bgb.html#BGBengl_000P762 (last visited 11.07.2009). 209 Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 196. 210 See chapter 4. 211 See supra n. 15. 212 See supra n. 209. 213 Martiny, Recognition and Enforcement of Foreign Money Judgments in the Federal Republic of Germany, 35 Am. J. Comp. L. 1987, p. 748. 34

substantial weight may entitle German courts to deny the recognition of the foreign judgments on the ground of infringement of German procedural standards.214 The concept of so called pre-trial discovery rules provided by U.S. law is not known for German legislation or case law.215 There is no doubt that in contrast to German procedural rules, the U.S. rule based on fact-finding system gives the parties (litigants) more possibility to be informed about the facts and evidence of the counter parties and even the third parties. At first glance, the outlined difference can serve as an underlining argument to consider the pre- trial discovery as infringing factor of German public policy.216 Nevertheless, the issue was closed after the judgment of BGH was rendered. The court construed that the issue must be considered within the functional framework. Although German law sets forth very narrow discovery rules, but reading of this German rules together with the duty of disclosure provided by the substantive law of Germany functionally makes the German approach similar to the U.S. rule’s one.217 The court even held that, it is impossible to interpret the American rule of costs218 as an obstacle for recognition of U.S. judgments in Germany. The court ruled that as opposed to German approach, where pursuant to section 91 (1) of the ZPO the unsuccessful party in litigation is required to reimburse the victorious party,219 the U.S. one says that each party bears its own costs,220 although the illustrated difference does not violate the public ordre of Germany and can not bar the recognition of U.S. judgments in Germany. Regarding the above considered issue, it is worth pointing out the concept of contingency fee, which in U.S. is a tool facilitating the reduction of the risks for the plaintiff.221 The general meaning of the concept sets forth that in U.S.A. tort litigations is examined the concept of contingency fee pursuant to which the client and the lawyer conclude the written contract and consequently the lawyer of the claimant receives a percentage of a recovery in case the claimant wins the case.222 The contingency fee in its full sense has been prohibited in Germany as violating the German public policy.223 It was stated on the legislative level too.224 The

214 Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, pp. 198-199. 215 See Schack, Einführung in das US-amerikanische Zivilprozessrecht, 2. ed. 1995, p. 44. 216 See supra n. 214. 217 Cf. Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 198; Bungert, Enforcing U.S. Excessive and Punitive Damages Awards in Germany, 27 Int’l L. 1993, pp. 1079-1080; 218 See for details concerning American Rule of Costs in Schack, Einführung in das US-amerikanische Zivilprozessrecht, 2. ed., 1995; Hay, US-amerikanisches Recht, 3. ed., 2005. 219 Cf. Schütze, Cenceptual Ddifferences and Areas of Potential Collision between United States and „Civil Law“ Procedure from the German Perspective, in Schütze, Prozessführung und – risiken im deutsch-amerikanischen Rechtsverkehr, 2004, pp. 17-35, p. 32. 220 See supra n. 218. 221 See supra n. 219, p. 33. 222 Cf. McClurg/Koyouncu/Sprovieri, Practical Global Tort Litigtion, 2007, p. 161. 223 Cf. Emmert, Contingency Fees in Germany, http://amlaw.us/emmert1.shtml, (last visited 03.07.2009). 35

underlining assumption of the legislator was a fear that economic considerations for the lawyer could influence an independence of the lawyer as part of the judiciary.225 The old version of the section 49b (2) of the Federal Rules for attorneys (“Bundesrechtsanwaltsordnung“ – BRAO) has led to the far reaching alternatives to the contingency fee in Germany. There are companies which “… do what lawyers may not, “226 the risk of litigation and its costs are assumed by these companies against a contingency fee of different percentages. This kind of possibility to underwrite the personal injury cases is well developed in Germany as well as the legal service insurance.227 That could be considered as a measure offsetting impacts caused by the prohibition on contingency fees.228 The tendency concerning recognition of the contingency fee in Germany can be assessed as quite liberal on the level of German court decisions rendered after 1990. In the landmark case of 1992,229 the court emphasized that mere existence of a contingency fee arrangement cannot reach the needed threshold for refusing the recognition of (entire) U.S. judgment.230 The very statement is of significance in the light of a 1963 award of the BGH considering the contingency fee as professionally unethical and conflicting with the German public policy.231 The German judicial qualification of the issue goes even long way towards to the minimising the strength of requirements for recognition of the contingency fee in Germany. The very issue, the subject of the increasingly public debate in Germany has been settled (at least to some extent) on the legislative level. The rule provided by the section 49b(2) of the BRAO was challenged by the BVerfG232 and the court construed the prohibition of contingency fee as unconstitutional as far as it did not include exceptions for very particular cases. As the particular case can be discussed if the claimant is not poor to such an extent to receive a legal aid but still it would not be reasonable to bear a risk of filing the case in a court.

224 See section 49 b (2) of the BRAO (Bundesrechtsanwaltsordnung) ”Vereinbarungen, durch die eine Vergütung oder ihre Höhe vom Ausgang der Sache oder vom Erfolg der anwaltlichen Tätigkeit abhängig gemacht wird (Erfolgshonorar) oder nach denen der Rechtsanwalt einen Teil des erstrittenen Betrags als Honorar erhält (quota litis), sind unzulässig”. 225 See Rott, Evaluation of the effectiveness and efficiency of collective redress mechanisms in the European Union – country report Germany, CIVIC CONSULTING, 06.10.2008, p. 31. 226 See http://www.pointoflaw.com/feature/contingent_claims0406.php (last visited 03.07.2009). 227 See supra n. 222, p. 166. 228 Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 198. 229 See BGHZ 118, 312. 230 Cf. Hay, The Recognition and Enforcement of American Money Judgments in Germany – The 1992 Decision of the German Supreme Court, 50 Am. J. Comp. L. 1992, pp. 729-750; Wegen, Recognition and Enforcement of US Punitive Damages Judgments in Germany – A Recent Decision of the German Federal Court of Justice, 21 Int’l Bus. Law. 1993, pp. 485-488. 231 See BGHZ 39, 142 judgment stating that: Ein Rechtsanwalt verstößt gegen die guten Sitten, wenn er sich von seinem Auftraggeber ein nach dem Ausmaß des Erfolges abgestuftes Erfolgshonorar, insbesondere einen Streitanteil, versprechen läßt. 232 BVerfG, Beschl. 12.12.2006, -1 Bvr 2576/04, see NJW 14/2007, pp. 979-986. 36

As a consequence, the legislator was obliged by the court233 to provide an amendment of the BRAO by 30 June 2008.234 Pursuant to the requirement law was amended by the “Gesetz zur Neuregelung des Verbots der Vereinbarung von Erfolgshonoraren” of 12 June 2008, that is valid from 18 December 2008.235 However there are some skeptical analyses of possible outcomes of the amendment,236 but the reality is that the law has been amended and the new judgments still have to be rendered in accordance with the new law. The above outlined considerations demonstrate that as main obstacles barring the recognition of U.S. judgments in Germany are lying in German substantive law, rather in the procedural law of Germany. The trend of German courts seems to have a quite liberal standard applied regarding the issue.

IV. Public Policy in Georgian Legislation

The concept of public policy is not unknown for the Georgian legislation. Similar to the German approach, the Georgian law even includes the special norms in the several statutes laying out the separate sections regarding the public policy reservation. As an example can be provided section 5 (Public Policy, Public Order) of the IPR-Georgia stipulating that: the norms of a foreign country shall not be applied in Georgia if this [i.e. the application of the foreign country’s norms] is irreconcilable with fundamental legal principles of Georgia. At first glance the Georgian provision sounds identical to the section 6 of the German EGBGB.237 However, it should be noted that the Georgian legislator has not included the term as “manifestly”

233 See the statement of the court: “Der Gesetzgeber muss bis zum 30/6.2008 eine Neuregelung treffen. Nach der ausfuehrlichen Betonung der für ein Verbot sprechenden Gemeinwohlbelange kommt die Option, das Verbot könnte auch völlig aufgegeben werden, etwas ueberraschend. Die Signale aus der Politik deuten aber eher auf die Schaffung nur eines Ausnahmetatbestands hin.” NJW 14/2007, 986. 234 Cf. Rott, Evaluation of the effectiveness and efficiency of collective redress mechanisms in the European Union – country report Germany, CIVIC CONSULTING, 06.10.2008, p. 32; Holding of the court: “Das Verbot anwältlicher Erfolgshonorare einschließlich des Verbotes der „quota litis“ (§ 49 b Abs. 2 BRAO a.F., § 49 b Abs. 2 Satz 1 BRAO) ist mit Art. 12 Abs. 1 GG insoweit nicht vereinbar, als es keine Ausnahme für den Fall zulässt, dass der Rechtsanwalt mit der Vereinbarung einer erfolgsbasierten Vergütung besonderen Umständen in der Person des Auftraggebers Rechnung trägt, die diesen sonst davon abhielten, seine Rechte zu verfolgen.” See the NJW 14/2007, 979. 235 The new text of the law reads: “1Vereinbarungen, durch die eine Vergütung oder ihre Höhe vom Ausgang der Sache oder vom Erfolg der anwaltlichen Tätigkeit abhängig gemacht wird oder nach denen der Rechtsanwalt einen Teil des erstrittenen Betrages als Honorar erhält (Erfolgshonorar), sind unzulässig, soweit das Rechtsanwaltsvergütungsgesetz nichts anderes bestimmt. 2Vereinbarungen, durch die der Rechtsanwalt sich verpflichtet, Gerichtskosten, Verwaltungskosten oder Kosten anderer Beteiligter zu tragen, sind unzulässig. 3Ein Erfolgshonorar im Sinne des Satzes 1 liegt nicht vor, wenn lediglich vereinbart wird, dass sich die gesetzlichen Gebühren ohne weitere Bedingungen erhöhen.” 236 Cf. Sebok, How an Important German Constitutional Court Decision May Change the Nature of Law Practice in Germany, 03.13.2007, see on http://writ.news.findlaw.com/sebok/20070313.html (last visited 03.07.2009); http://www.pointoflaw.com/feature/contingent_claims0406.php (last visited 03.07.2009). 237 See supra n. 193. 37

(“offensichtlich”) and the Georgian text is not clearly expressing whether it is based on the negative doctrine (German approach) of public order or on the positive understanding of the public policy (French-Italian approch),238 but nevertheless, the language of the section 5 gives right to consider it as examining the approach as Germany does, namely, the Georgian legislator speaks about the consequences of the application of foreign law leading to the irreconcilability with the Georgian fundamental legal principles. This conclusion and assessment can be derived from the sections 63(4), 64(a) and mentioned 68(2)(g) of the IPR- Georgia. The section 64(a) dealing with the topic of foreign court’s motion asking for legal assistance (aid) from the Georgian courts prescribes that the legal assistance (aid) shall not be provided where the satisfaction of the foreign court’s motion would lead to the infringement of the Georgian fundamental legal principles. The mentioned section 68(2)(g) read and construed with the section 5 (Public Order) carries an equivalent meaning of the above considered section 328 (1) No. 4 of the ZPO. However, it is worth noting regarding the similarity of the section 68(2)(g) and section 328 (1) No. 4 of the ZPO that there is no clearly defined destinction between understanding of public policy in substantive law and public policy in procedural law provided by the Georgian law (the sections 68(2)(g) and 5 (Public Order)). Although, as considered above, the very separation does not derive from the plain text of the relevant German law provisions too (section 328 (1) No. 4 of the ZPO and section 6 of the EGBGB). It is a result of interpretation of the Courts. Hence, the Georgian legislator’s language regarding the issue is quite widely understandable, as it sets forth the terms “… fundamental legal principles of Georgia …”.239 Therefore under the terms fundamental legal principles can be understood as legal principles of every field of Georgian law of course among constitutional law principles including the procedural law of Georgia too. Arguing from the point of legislation the same idea can be stated when construing the section 2 (4) of the Civil Code of Georgia (CCG) which stipulates that: customary norms shall be applied only if they do not contravene universally recognized principles of justice and morality, or the public order.240 Even more is possible to say about the issue; in particular, the section 63(4) of the IPR-Georgia goes further and makes the mentioned interpretation regarding the public policy in procedural law, as covered by the relevant Georgian provisions establishing the understanding of the public. The section reads that if concerning the legal assistance (aid) the foreign court files the motion to the Georgian court asking to apply its procedural rule(s) in proceedings, the

238 Martiny, Handbuch des Internationalen Zivilverfahrensrecht, III/1, 1984, pp. 444-445, par. 976-978. 239 Cf. sections 68 (2) (g) and 5 of the IPR-Georgia, supra at pp. 13, 37. 240 See the Civil Code of Georgia in English published by Bakur Sulakauri Publishing and United States Agency for International Development (USAID) through IRIS Center at the Univeristy of Maryland, (Translated by I.Gabriadze) p. 11. 38

procedural provisions of the foreign Law may be applied in the proceedings unless they are in conflict with the fundamental legal principles of Georgia. Accordingly, this very provision expressly prescribes the public policy in procedural law using the same term - “fundamental legal principles of Georgia” – as applied by the mentioned sections 5, 64(a) and 68 (2) (g).241 IPR-Georgia even contains the reservation that could be considered as similar to the “Overriding mandatory provisions” provided by Rome I and Rome II. Georgian legislator uses the term “imperative” instead of “mandatory”. Section 6 of the IPR-Georgia provides that: “This law shall not restrict the application of the imperative provisions of Georgian law irrespective of the law otherwise applicable to the case”. The issue is of essential importance that there is no express or implied denial of application of the contingence fee provided by the Georgian legislation. Identical to the German approach the sections 47 (2) and 53 of the GCCP provides the concept underlining assumption of which is that the unsuccessful party has to reimburse the winning party with the full litigation costs including the costs of attorney at law. The only reservation that must be mentioned is that the losing party can be required by the court to pay costs of legal services to a maximum amount of 4% of the cost of the claim. But, as said, there is no restriction provided by the Georgian legislation regarding conclusion of the contingency fee agreements between the client and the lawyer. Hence, the provided discussions concerning the regulation of the public policy on the level of Georgian legislation shows that the main grounds and principles are in accordance with the German law. At least, the functional considerations and interpretations are leading to the same consequences as German law does. Therefore, it is relevant for the Georgian courts, waiting for the future coming cases regarding recognition of foreign (U.S.A.) money judgments in Georgia, to follow the developments of German jurisprudence concerning the interpretation and application of the foreign countries law and related public policy issue.

Chapter 4. The Recognition of U.S.A. Punitive Damage Judgments in Germany

The differences in monistic and dualistic approaches to the doctrines of damages has served as irreconcilable gap separating “… the American and German concepts of the law of damages

241 However worth noting is the interesting article 4(2) of the civil code of Georgia bearing the particular practical purpose for Georgia as legal transformation country which reads that: “a court may not refuse to apply a law on the grounds that in its opinion a norm of the law is unjust or immoral”. The allocation of the provision in Civil Code is criticized from the systematic point of view, see Kereselidze, Introductory Provisions of the Civil Code, 2004, Georgian Law Review – vol. 7. N 1.2004, p. 22. 39

…”242 for more than a century.243 According to the above provided information, most frequently publicly debated issue is related to the recognition of U.S. punitive damages (also called as: “exemplary damages” and “vindictive damages”)244 judgments in Germany. In accordance with the general approach developed in Germany the American punitive damages judgments - basically viewed as excessive245- are not recognizable in Germany.246 Therefore, on the one hand, it is very important to clarify the legal nature and the purpose of the punitive damages and of the awards rendered by the U.S. courts and on the other hand, to define the grounds leading to the non-recognition of this kind of awards in Germany. Accordingly, the discussion will serve as the basis in order to consider the issue in context of Georgian law.

I. Punitive Damages in U.S. Law

In order to achieve the mentioned goals of clarification, there is a need to discuss the issue from the original realms. The provisions provided by the statutes for multiple damages as a punitive tool for misconduct have ancient roots.247 In general, the American law is familiar with the classification of the damage awards regarding tort litigations (however, there are cases making the punitive damages available even in contractual relations between the parties when the party repudiates the contract acting not in good faith248) in compensatory and punitive awards. In contrast to the compensatory damages, which are aimed to compensate the injuries suffered by the party, the punitive damages are designed to punish the delinquent for the inappropriate conduct.249 The same time the purpose of the punitive damages is to deter the repetition of the outrageous conduct. However, the purpose of punitive damages at the very beginning were also associated to the compensation of the plaintiff for the intangible harm, but afterwards, the aspect of compensation in the discussed context lost its importance in American

242 Behr, Punitive Damages in American and German Law – Tendencies Towards Approximation of Apparently Irreconciable Concepts, 78 Chi.-Kent L. Rev. 2003, p. 105. 243 Ibid, p. 106. 244 See Möhrsdorf-Schulte, Funktion und Dogmatik US-Amerikanischer Punitive Damages, 1999, p. 53 (stating that “the concepts do not always have the same meaning, sometimes the name “punitive damages” are used only in Criminal litigations”). 245 See supra n. 15. 246 See Hay, Internationales Privat- und Zivilverfahrensrecht, 3. ed., 2007, p. 77. 247 See Hay, The Recognition and Enforcement of American Money Judgments in Germany – The 1992 Decision of the German Supreme Court, 50 Am. J. Comp. L. 1992, p. 743. 248 Ibid p. 744. 249 Cf. Hay, Entschähdigung und andere Zwecke. Zu Präventionsgedanken im deutschen Schadenersatzrecht, punitive damages und Art. 40 Abs. 3 Nr. 2 EGBGB in Festschrift für Hans Stoll, 2001, pp. 521-533; Möhrsdorf- Schulte, Funktion und Dogmatik US-Amerikanischer Punitive Damages, 1999, p. 53. 40

law.250 The feature of the punitive damages – the deterrence – is even regulated on the legislation level in several states, describing them as “quasi-criminal”.251 According to the some academics opinions, the punishment is some kind of assistance in order to restore the “emotional equilibrium” of the injured party. “When the judicial system punishes a defendant, the injured plaintiff receives the satisfaction seeing the defendant suffered”.252 As stated, the main goals of the punitive damages are punishment and deterrence, which has lead the awards to very excessive amounts, which even the United States Supreme Courts have describer as “running wild”253 claiming that each amount of punitive damages should be tested in accordance with the standard of reasonableness provided by the process clause.254 This call was mirrored in the cases: BMW of N. Am., Inc. v. Gore and State Farm Mut. Auto. Ins. Co. v. Campbell. These cases showed clearly expressed new tendency of U.S. case law regarding the punitive damages testing them against the reasonableness standard and reducing the amounts awarded by the lower courts.255

II. Punitive Damages and German Law

The punitive damages regarding Germany must be considered in context of tort law taking into consideration the conflict of laws too. According to the general German attitude the damages have to be measured against the idea of compensation.256 The main purpose of a claim for damages (“Schadenersatz”) is to achieve restitution257 through the requirement to be restored the position that would exist if the circumstance obliging the defendant to pay damages had not occurred.258

250 Cf. Fiebig, The Recognition and Enforcement of Punitive Damage Awards in Germany: Recent Developments, 22 Ga. J. Int’l & Comp. L. 1992, p. 641; Hay, The Recognition and Enforcement of American Money Judgments in Germany – The 1992 Decision of the German Supreme Court, 50 Am. J. Comp. L. 1992, p. 743. 251 See: Hay, The Recognition and Enforcement of American Money Judgments in Germany – The 1992 Decision of the German Supreme Court, 50 Am. J. Comp. L. 1992, p. 743. 252 Fiebig, The Recognition and Enforcement of Punitive Damage Awards in Germany: Recent Developments, 22 Ga. J. Int’l & Comp. L. 1992, p. 641; 253 See Pacific Mutual Life Insurance Co. v. Haslip (89-1279), 499 U.S. 1 (1991). 254 See BMW of North America, Inc. v. Gore (94-896), 517 U.S. 559 (1996); State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408. 255 See Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 197. 256 Behr, Myth and Reality of Punitive Damages in Germany, 24 J.L. & Com. 2004-2005, p. 201; Beucher/Sandage, United State Punitive Damages Awards in German Courts: The Evolving German Position on Service and Enforcement, 23 Vand. J. Transnat’l L. 967, 1990-1991, p. 972, (pp. 967-991). 257 Important is to distinguish between Naturalrestitution and Compensation, for further discussions see Schack, Schadensersatz nach Veräußerung beschädigter Sachen. Zum Verhältnis von Naturalrestitution und Geldersatz in Festschrift für Hans Stoll zum 75. Geburtstag, 2001, p. 62 (pp. 61-71). 258 Cf. BGB 249(1); Fiebig, The Recognition and Enforcement of Punitive Damage Awards in Germany: Recent Developments, 22 Ga. J. Int’l & Comp. L. 1992, p. 642. 41

As the main obstacles in the context of recognizing the punitive damages awards in Germany can be taken into consideration as follows: Firstly, the punitive damages as the concept of criminal law, bearing the penal character fall outside the scope of the German ZPO dealing merely with civil or commercial matters.259 As a second barrier on the way of the recognition serves the generally excessive character of the punitive damages awards in contrast to the amount of damages a German court would award under the same circumstances.260 Finally, there is a strongly established idea, that as already mentioned, the main purpose of the German tort law is to solely compensate for the damages and harm suffered. Therefore, where the foreign damages awards exceed compensation for the harm suffered by the party, the very kind of compensation will lead to the violation of German public policy.261 The developments in the German case law regarding the issue mirrored in the amendment of EGBGB through sections 40 to 42 addressing the private international tort law in more detail.262 As optional connecting factors for defining the applicable law to the case are provided the place where the tortfeasor acted or the place where the result of the tort occurred.263 The section 40(3)264 of the EGBGB reads that: Claims under foreign law may not be entertained as far as they: 1. go substantially beyond that which is required for appropriate compensation for the injured person; 2. obviously [manifestly] serve purposes other than the provision of appropriate compensation for injured person; 3. conflict with provisions concerning liability contained in a treaty that is in force with respect to the Federal republic of Germany.265

259 See ZPO section 328 (1); Zekoll, Recognition and Enforcement of American Products Liability Awards in The Federal Republic of Germany, 37 Am. J. Comp. 1989, pp. 301, 304; Ernst C. Stiefel, Rolf Stürner, and Astrid Stadler, The Enforceability of Excessive U.S. Punitive Damages Awards in Germany, 39 Am. J. Comp. L., 1991, pp. 779, 785; Ibid p. 643. 260 See Wegen, Recognition and Enforcement of US Punitive Damages Judgments in Germany – A Recent Decision of the German Federal Court of Justice, 21 Int’l Bus. Law. 1993, p. 486; supra n. 15. 261 See Fiebig, The Recognition and Enforcement of Punitive Damage Awards in Germany: Recent Developments, 22 Ga. J. Int’l & Comp. L. 1992, p. 647. 262 See for details Hay, From Rule-Orientation to „Approach“ in Germany Conflicts Law The Effect of the 1986 and 1999 Codifications, 47 Am. J. Comp. L. 1999, p. 633. 263 See translation of the section 40(1) of the EGBGB in Hay, From Rule-Orientation to „Approach“ in Germany Conflicts Law The Effect of the 1986 and 1999 Codifications, 47 Am. J. Comp. L. 1999, pp. 650-653. 264 See the interesting consideration of the section in context of Hague Convention by Rasmussen-Bonne, Zum Stand der Rechtshilfpraxis bei Zustellungsersuchen von US-Schadensersatzklagen nach dem Beschluss des Bundesverfassungsgerichts vom 25. Juli 2003, in Balancing of Interests Liber Amicorum: Festschrift für Peter Hay, zum 70. Geburtstag, 2005, pp. 323-343. 265 Cf. for translations by Hay, From Rule-Orientation to „Approach“ in Germany Conflicts Law The Effect of the 1986 and 1999 Codifications, 47 Am. J. Comp. L. 1999, pp. 650-653; Behr, Myth and Reality of Punitive Damages in Germany, 24 J.L. & Com. 2004-2005, pp. 200-201. 42

This section practically establishes the non-recognition of the punitive damages on the legislative level. As, on the one hand, the first subsection of the section expressly prohibits recognition of the punitive damages as bearing excessive character and on the other hand, the second subsection denies recognition of the non-compensatory damages, accordingly impliedly bans the punitive damages awards.266 Based on the provided discussion, at first sight, it is possible to gain the impression that impossibility of recognizing the punitive damages in Germany has achieved its high poiont. However, the landmark decision of 1992 established the room for interpretation through the consideration that it would be allowed to recognize the punitive damages as far as the award would serve a compensatory character.267 Hence, it is relevant to compare the case law developments in Germany and U.S.A. after 1992, which made Professor V. Behr at some extant to clarify the statement sounding: “… the German attitude towards punitive damages is ... a myth which no longer describes the reality”.268

1. The Case Law Regarding the punitive damages in Germany and U.S.A.

Despite the fact that German law expressly denies the recognition of U.S. punitive damages, the case law analysis raises questions. There are cases comparable to each other proceeded in U.S.A. and Germany regarding the fields: a) Infringement of the Rights to Personality by the Press, b) Discrimination in Employment and c) Intellectual Property Rights Infringement and Unfair Competition.269 The purpose of this sub-chapter is not in-depth analyses of the cases; it only briefly provides main holdings of the courts concerning the punitive damages awards recognition. a) Holdings rendered by the U.S. court in case Cher v. Forum International, Ltd.,270 can be considered similar to the statement by the BGH in the decision Carolina I.271 The U.S. court found that272 “… exemplary damages can be supported as punishment for the false advertising

266 Cf. Behr, Myth and Reality of Punitive Damages in Germany, 24 J.L. & Com. 2004-2005, p. 201; Hay, Entschähdigung und andere Zwecke. Zu Präventionsgedanken im deutschen Schadenersatzrecht, punitive damages und Art. 40 Abs. 3 Nr. 2 EGBGB, p. 523, in Festschrift für Hans Stoll, 2001. 267 See Wurmnest, Recognition and Enforcement of U.S. Money Judgments in Germany, 23 Berkeley J. Int’l L. 2005, p. 197; Behr, Myth and Reality of Punitive Damages in Germany, 24 J.L. & Com. 2004-2005, p. 206. 268 Behr, Myth and Reality of Punitive Damages in Germany, 24 J.L. & Com. 2004-2005, p. 206. 269 Ibid pp. 206-207. 270 See Cher v. Forum Int’l Ltd., 692 F.2d 634 (9th Cir. 1982). 271 BGHZ 128, 1. 272 Behr, Myth and Reality of Punitive Damages in Germany, 24 J.L. & Com. 2004-2005, p. 209. 43

and promotional misrepresentation of those defendants”.273 The German court’s opinion is bearing the same mind: “… in order to prevent unjustified exploitation of the plaintiff’s personality, damages should be such as to deter tortfeasor from further infringements of the plaintiff’s rights”.274 It is apparent that this statement more fits to the idea of punitive damages than to the German traditional notions of compensation and satisfaction.275 b) In the case Wise v. Olan Mills Inc. of Texas276 the U.S. court expressed that awarding of punitive damages is in accordance with the purpose of the Age Discrimination in Employment Act.277 On the other hand, the case Nils Draehmpaehl v. Urania Immobilienservice OHG (“offene Handelsgesellschaft”)278 is significant, where the interpretation of the Equal Treatment Directive 76/207/EEC in connection with section 611 (a) BGB by the European Court of Justice (ECJ) was required; as a result of the interpretation ECJ lead the court to construe the section 611 (a) as bearing the punitive function and allowing “… damages that adequately deter the defendant and other employers from discrimination …”.279 c) The U.S. court did not state in case Cooper Industries, Inc. v. Leatherman Tool Group, Inc.280 whether the punitive damages are permissible, the court was only focused on reasonableness of the amount awarded.281 In a case concerning the infringement of intellectual property rights, the German court examined the triple method of calculation damages282 which allows the plaintiff to claim the damages based either on losses he has suffered, require the sum that the defendant would have had to pay for a license or ask the amount that the plaintiff gained through using the plaintiff’s intellectual property right.283 Regarding the German way of calculating damages there is the interesting case where the German court, recognizing the US-judgment, even granted bigger amount for damages than it was claimed by the plaintiff.284

273 Ibid. 274 BGHZ 128 (1). 275 See supra n. 272. 276 See Wise v. Olan Mills Inc., 485 F. supp. 542. 277 Behr, Myth and Reality of Punitive Damages in Germany, 24 J.L. & Com. 2004-2005, p. 212. 278 See NJW 1997 Heft 28. 279 See supra n. 277 at pp. 213-215. 280 See Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424 (2001). 281 Behr, Myth and Reality of Punitive Damages in Germany, 24 J.L. & Com. 2004-2005, p. 219. 282 See the triple method of calculation developed by the case law in Germany: BGHZ 20, 345, BGHZ 57, 116. 283 Cf. Behr, Myth and Reality of Punitive Damages in Germany, 24 J.L. & Com. 2004-2005, p. 220; BGHZ 122, 262, Die objektive Schadensberechnung (Verletzergewinn, angemessene Lizenzgebühr) ist für alle Fälle der wettbewerbswidrigen Leistungsübernahme zuzubilligen (Ergänzung zu BGHZ 57, 116 = NJW 1972, 102, 482 = LM § 1 UWG Nr. 235 - Wandsteckdose II). 284 See: BGH vom 29.04.1999, IX ZR 263/97, Die Schadensberechnung im Urteil des US-amerikanischen Bezirksgerichts ist mit Grundsätzen des deutschen materiellen ordre public vereinbar. Gemäß dem Versäumnisurteil setzt sich der Ausgleichsschaden wie folgt zusammen:Gezahlter Kaufpreis $ 277.467,30 Bisherige Reparaturkosten $ 23.692,06 Entgangener Gewinn $ 756.365,25 Mehrkosten für den Erwerb einer 44

2. Consequences

The provided considerations illustrate that in some particular cases the content and function of damages awarded by the German courts is not irreconcilable with the U.S. punitive damages. The damages awards do not bear merely compensatory nature. German courts allow themselves to award the damages with punitive features.285 On the one hand, German law expressly prohibits the recognition of punitive damages,286 but on the other hand, the courts render the decisions including damages with the characters perfectly fitting into a punitive damages approach, but not even mentioning the notion or name of punitive damages.287 Hence, in the question is appropriate: What is the difference? “Is manifestly infringement of the public order solely that the damages are called “punitive damages”?288 Nevertheless, the trend demonstrated by the German courts seems quite promising regarding facilitation of recognition proceedings in Germany.

III. The Possible Attitude of Georgian Law

However, the IPR-Georgia provides the regulations regarding the tort law,289 but in contrast to the EGBGB290 there is no special rule stipulated concerning the public policy in tort litigation. The IPR-Georgia only defines the connecting factors for finding an applicable law to each particular case.291 Hence, the mentioned sections 5 and 68 of the IPR-Georgia serve as a General statement regarding the public order for the tort law too.292 The CCG provides the idea of restitution.293 According to CCG the monetary compensation is allowed only in particular cases.294 CCG is familiar with the damages for lost profit.295 When

Ersatzmaschine $ 322.532,70 $ 1.380.057,31 (Statt errechnet $ 1.280.057,30) (find the case in Beck-online under BECKRS 1999 30057529). 285 See supra n. 281 at p. 221. 286 See EGBGB 40(3). 287 See supra n. 285. 288 “Was ist offensichtlich? Dass sie “punitive damages” heissen?” See Hay, Entschähdigung und andere Zwecke. Zu Präventionsgedanken im deutschen Schadenersatzrecht, punitive damages und Art. 40 Abs. 3 Nr. 2 EGBGB, in Festschrift für Hans Stoll, 2001, p. 529. 289 See IPR-Georgia sections 42-43. 290 See EGBGB section 42. 291 See IPR-Georgia section 42 providing clause connections as: the Law of the country more convenient to the affected party; the Law of the country where the protected interest was damaged; the place where the action was committed or where the damage has been occurred. 292 See Liluashvili, International Private Law, 2001, p. 41. 293 Section 408 (1) “A person who is obligated to compensate for damages must restore the state of affairs that would have existed if the circumstance giving rise to the duty to compensate had not occurred”. See The Civil Code of Georgia in English published by “Bakur Sulakauri Publishing” and United States Agency for International Development (USAID) through IRIS Center at the Univeristy of Maryland, (Translated by I.Gabriadze). 45

calculating the damages the CCG lays out standards based on General understanding of reasonableness and fairness and CCG allows the monetary compensation for immaterial i.e. so called moral damages.296 Similar to German approach regarding the triple method of calculation of damages, CCG also entitles party in particular cases to claim for damages amounting to the profit, received by a tortfeasor by intruding upon plaintiff’s immaterial rights.297 The considerations give possibility to make conclusion that, whereas, the main understanding of Georgian public policy is similar to the German one298 and the main principles of Georgian law concerning damages is generally based upon the German approach, consequently, the Georgian approach to the punitive damages must be developed in accordance with the developments of German law in order to avoid the expansion of variety approaches and establish the facilitation regarding the recognition of coming U.S. money judgments in Georgia.

Chapter 5. Conclusion

The considerations developed in the thesis illustrate, that the approach of Georgian law regarding the issue in general has potential to produce the same results and lead to the same consequences as German law does. However, there are differences in the structures of the legal systems and in the technique of the regulations. The comparison of the relevant sections of Georgian and German legislation regarding recognition of foreign judgments demonstrates that there are systematic differences.299 The issues are regulated in different legal acts with the different regulative purposes.300 However,

294 Ibid section 409: “If the compensation for damages is impossible by restoration of the original state of affairs, or if such restoration would require [unreasonably] high expenditures, then the obligee [claimant] may be given monetary compensation”. 295 Ibid section 411: “Damages shall be compensate not only for the loss of property actually incurred, but also for lost profit. Profit is deemed to be lost if the person did not receive it, but would have received it if the obligationhad been duly performed”. 296 Ibid section 413: “1. Monetary compensation for non-property damages may be claimed only in the cases precisely prescribed by law, in the form of a reasonable and fair compensation. 2. In case of bodily injury or harm inflicted on a person’s health, the victim may claim damages for non-property damage as well ”. 297 Ibid section 18 (6): “The protection of the good [i.e. human values such as honour, dignity and privacy] referred to in this article shall be exercised regardless of the culpability of the wrongdoer. And if the violation has been caused by culpable action, a person may claim damages (compensation for harm). Damages may be claimed in the form of the profit that accrued to the wrongdoer. In the case of culpable violation, the injured person may also claim compensation for non-property (moral) damage. Moral damages may be recovered independently from the recovery of the property damages ”. 298 See chapter 3. IV of the thesis. 299 See chapter 1. III of the thesis. 300 Cf. ZPO section 328 and IPR-Georgia section 68, see chapter 1. III of the thesis. 46

the detailed consideration of relevant sections brings their content close to each other. For example, the term and meaning of “exclusive jurisdiction” as an obstacle for the recognition is provided by the Georgian law among the other prerequisites for the recognition, while the German ZPO regulates it separately giving the sections “double function”.301 Anyway, the distinction has no practical meaning, as despite the formal diversity, the underlining assumption is identical to each other. The state of circumstances is identical to the above considered, with regard to the service of summons. It is true, that Georgian law does not expressly contain the concepts of “Ordnungsmäßigkeit” and “Rechtszeitigkeit”, but the general idea, derived impliedly from Georgian law is similar to German one.302 The only aspect to be noted in this context is that it is necessary for Georgia to be contracting party to the Hague Convention. This will lead to harmonisation of the Georgian regulations on a higher level. As opposed to German courts, Georgian courts do not provide the unified interpretations of the concepts “foreign courts” and/or “judgments”, but the plain text of the appropriate section of IPR-Georgia gives a basis in order to construe the law in some cases similarly to the German approach.303 Concerning the concept of “res judicata” there is a high degree of equality achieved between the Georgian and German legislation. IPR-Georgia expressly lays out that the judgment must be final which is according to the German understanding of “formelle Rechtskraft”.304 Unlike the German ZPO, providing the special section regarding recognition of arbitral awards, neither IPR-Georgia nor CPCG (Civil Procedural code of Georgia) contains the relevant section regulating the subject. This particular legislative gap has to be filled through appropriate amendments in the Georgian law on Commercial Arbitration, as the Courts are establishing wrong practice applying the regulations devoted to the recognition of foreign judgments for the cases concerning recognition of arbitral awards.305 Concerning the issue conflicting judgments and lis pendens the equilibrium is achieved through different technical ways of regulation provided by the legislations.306 Despite the lack of significant interpretations of Georgian courts regarding the reciprocity concept, the range of the above mentioned similarities between German and Georgian legislations allows one to state that the understanding of reciprocity in Georgia should not be

301 See chapters 3. I and 1. III of the thesis. 302 See Chapter 1. III of the thesis. 303 See Chapter 2. I. 1 of the thesis. 304 See Chapter 2. I. 2 of the thesis. 305 See Chapter 2. I 3 of the thesis. 306 See Chapter 2. II of the thesis. 47

considered beyond the scopes of the German approach. Even more, Georgia has to employ more liberal approach. Therefore it is highly predictable that the reciprocity requirement would not impede the recognition of U.S. money judgments in Georgia.307 Similar to the German understanding of the public policy issue, the Georgian justice construes the concept also from a quite wide perspective. The plain text and interpretation of appropriate sections of IPR-Georgia makes it apparent that the Georgian law is familiar with the distinction between the public policy in substantive law and in procedural law.308 Georgian legislation even gives possibilities to construe the public order more liberally than German courts do.309 This point of view gains more strength regarding the recognition of U.S. punitive damages awards, as far as, unlike the German EGBGB, the Georgian legislation does not provide the special regulations regarding the public policy, expressly refusing the recognition of punitive damages awards, in tort litigation.310 This point seems promising towards the recognition of coming U.S. money judgments in Georgia. However, it does not mean that Georgia has to allow infringement of its public policy. The approach of Georgian courts must be developed case by case in order to achieve the unity and predictability regarding the issue, which is valuable for the evolution of the countries’ economy and justice. After demonstrating the wide range of similarities between Georgian and German recognition regulations it is possible to stress that fundamental principles of Georgian IZPR are allocated under the IPR-Georgia while the German understanding of the field IZPR derives mainly from the ZPO.311 The above analysis justifies assessing the degree of readiness and predictability of Georgian law and Georgian courts for the recognition of future US-money judgments in Georgia on a quite reasonable level. There is wide scope left to the courts for the interpretations and the courts must treat the issues very carefully in order to achieve high standard of unified approach.

307 See Chapter 2. III of the thesis. 308 See Chapter 3. IV of the thesis. 309 Ibid. 310 See chapter IV of the thesis. 311 See sections 68, 5, 63, 64 of the IPR-Georgia. 48

Chapter 6. Bibliography

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44. Schönau, Vanessa, Die Anerkennung von Urteilen aus Mehrrechtstaaten nach § 328 Abs. 1 ZPO am Beispiel der USA und Kanadas, JWV, Jenear Wissenschaftliche Verlagsgesellschaft, Jena, 2009.

45. Schütze, Rolf A. (ed.), Einheit und Vielfalt des Rechts: Festschrift für Reinhold Geimer zum 65. Geburtstag, Beck, München, 2002.

46. Schütze, Rolf A., Ausgewählte Probleme des internationalen Zivilprozessrechts, de Gruyter, Berlin, 2006.

47. Schütze, Rolf A., Das internationale Zivilprozessrecht in der ZPO, de Gruyter, Berlin, 2008.

48. Schütze, Rolf A., Deutsches Internationales Zivilprozessrecht unter Einschluss des Europäischen Zivilprozessrechts, 2. edition, de Gruyter, Berlin, 2005.

49. Schütze, Rolf A., Prozessführung und –risiken im deutsch-amerikanischen Rechtsverkehr, Recht und Wirtschaft, Heidelberg, 2004.

51

50. Scoles, Eugene F./Hay, Peter/Borchers, Patrick J/Symeonides, Symeon C., Conflict of Laws, 4. edition, Thomson West, St. Paul, Minn, 2004. 51. The Civil Code of Georgia in English published by “Bakur Sulakauri Publishing” and United States Agency for International Development (USAID) through IRIS Center at the Univeristy of Maryland, (Translated by I.Gabriadze), Geporgia, 2001.

52. Trunk, Alexander, (ed), Russland im Kontext der internationalen Entwicklung, Internationales Privatrecht, Kulturgüterschutz, geistiges Eigentum, Rechtsvereinheitlichung, Russia in the international context: private international law, cultural heritage, intellectual property, harmonization of laws: Festschrift für Mark, Moiseevic, Boguslavskij, BWV Berliner Wiss.-Verl, Berlin, 2004.

53. Tsertsvadze, George, International Arbitration (Comparative Research), Bona Kauza, Tbilisi, 2008, (in Georgian: Saerthashoriso Arbitrajhi).

54. Zoidze, Besarion, Reception of european Private law in Georgia, sagamomcemlo saqmis sastsavlo centri, Tbilis, 2005 (in Georgian: Evropuli Kerdzo Samartlis Recepcia Saqartveloshi).

55. Zweigert, Konrad/Kötz, Hein, An Introduction to Comparative Law, Clarendon Press, Oxford, 1998.

56. Zweigert, Konrad/Kötz, Hein, Einführung in die Rechtsvergleichung, Mohr, Tübingen, 1996.

Articles (in Journals, in Books and in Internet):

1. American Law Institute/UNIDROITE, Principles of Transnational Civil procedure, 2004, in: Unif.L.Rev. 2004-4, pp. 758-808.

2. Behr, Volker, Enforcement of United States Money Judgments in Germany, in: 13 J.L. & Com. 1993-1994, pp. 211-232.

3. Behr, Volker, Myth and Reality of Punitive Damages in Germany, in: 24 J.L. & Com. 2004-2005, pp. 197-224;

4. Behr, Volker, Punitive Damages in American and German Law – Tendencies Towards Approximation of Apparently Irreconciable Concepts, in: 78 Chi.-Kent L. Rev. 2003, pp. 105-161.

5. Beucher, Klaus J./Sandage, John Byron, United State Punitive Damages Awards in German Courts: The Evolving German Position on Service and Enforcement, in: 23 Vand. J. Transnat’l L. 967 1990-1991, pp. 967-991.

6. Bungert, Hartwin, Enforcing U.S. Excessive and Punitive Damages Awards in Germany, in: 27 Int’l L. 1993, pp. 1075-1090;

7. Campbell, Dennis/Popat, Dharmendra, Enforcing American Money Judgments in The United Kingdom and Germany, in: 18 S. Ill. U. L. J., 1993-1994, p. 517-548.

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8. Chanturia, Lado, Das neue Zivilgesetzbuch Georgiens: Verhältnis zum deutschen Bürgerlichen Gesetzbuch in: Basedow, Jürgen/Drobnig Ulrich/Ellger, Reinhard/Hopt, Klaus J./Kötz, Hein/Kulms, Rainer/Mestmäcker, Ernst-Joachim (editors), Privatrecht,Aufbruch nach Europa. 75 Jahre Max-Planck-Institut für Mohr Siebeck, Türingen, 2001, pp. 893-904.

9. Chanturia, Lado, Die Europäisierung des georgischen Rechts: bloßer Wunsch oder große Herausforderung? Vortrag auf einem deutsch-georgischen Kolloquium zur Europäisierung des georgischen Rechts am Max-Planck-Institut für ausländisches und internationales Privatrecht in hamburg am 24.05.2008, in: http://www.cac- civillaw.org/publikationen.html, (last visited, 16.07.2009).

10. Emmert, Cornelia, Contingency Fees in Germany, http://amlaw.us/emmert1.shtml, (last visited 03.07.2009)

11. Fastiff, Eric B., The Proposed Hague Convention on the Recognition and Enforcement of Civil and Commercial Judgments’s Jurisdiction and Enforcement Problems, in: 28 Cornell Int’l L. J. 1995, pp. 469-500;

12. Fiebig, Andre R., The Recognition and Enforcement of Punitive Damage Awards in Germany: Recent Developments, in: 22 Ga. J. Int’l & Comp. L. 1992, pp. 635-658.

13. Hay, Peter, Entschähdigung und andere Zwecke. Zu Präventionsgedanken im deutschen Schadenersatzrecht, punitive damages und Art. 40 Abs. 3 Nr. 2 EGBGB, in: Hohloch, Gerhard, Rainer Frank, Schlechtriem, Peter, (editors), Festschrift für Hans Stoll zum 75. Geburtstag, Mohr Siebeck, Tübingen, 2001, pp. 521-533.

14. Hay, Peter, Flexibility versus Certainty and Uniformity in Choice of Law in: monograph, Hague Academy of International Law, 226 Collected Courses, (1991-I), pp. 287-412.

15. Hay, Peter, From Rule-Orientation to „Approach“ in Germany Conflicts Law The Effect of the 1986 and 1999 Codifications, in: 47 Am. J. Comp. L. 1999, pp. 633-652.

16. Hay, Peter, On comity, Reciprocity, and Public Policy in U.S. and German Judgments Recognition Practice, in: Basedow, Jürgen (ed), Private law in the international arena: From National Conflict Rules Towards Harmonization and Unification; Liber Amicorum Kurt Siehr, TMC. Asser Press, Hague, 2000, pp. 237-249.

17. Hay, Peter, On Merger and Preclusion (Res Judicata) in U.S. Foreign Judgments Recognition – Unresolved Doctrinal Problems – in: Schütze, Rolf A. (ed.), Einheit und Vielfalt des Rechts: Festschrift für Reinhold Geimer zum 65. Geburtstag, Beck, München, 2002, pp. 324-338.

18. Hay, Peter, The Recognition and Enforcement of American Money Judgments in Germany – The 1992 Decision of the German Supreme Court, in: 50 Am. J. Comp. L. 1992, pp. 729-750;

19. Juenger, Friedrich K., A Hague Judgments Convention?, in: 24 Brook. J. Int’l L, 1998- 1999, pp. 111-124.

20. Kereselidze, Davit, Introductory Provisions of the Civil Code, in: Georgian Law Review - vol 7. N 1.2004, pp. 5-41. 53

21. Martinez, Juan Carlos, Recognizing and Enforcing Foreign Nation Judgments: The United States and Europe Compared and Contrasted – A Call for Revised Legislation in Florida, in: 4 J. Transnat’l L. & Pol’y, 1995, pp. 49-92.

22. Martiny, Dieter, Recognition and Enforcement of Foreign Money Judgments in the Federal Republic of Germany, in: 35 Am. J. Comp. L. 1987, pp. 721-760.

23. Rasmussen-Bonne, Hans-Eric, Zum Stand der Rechtshilfpraxis bei Zustellungsersuchen von US-Schadensersatzklagen nach dem Beschluss des Bundesverfassungsgerichts vom 25. Juli 2003, in: Rasmussen-Bonne, Hans-Eric/Freer, Richard/Lüke, Wolfgang/Weitnauer, Wolfgang, Balancing of Interests Liber Amicorum: Festschrift für Peter Hay, zum 70. Geburtstag, Recht und Wirtschaft GmBH, Frankfurt am Main, 2005, pp. 323-343.

24. Rott, Peter, Evaluation of the effectiveness and efficiency of collective redress mechanisms in the European Union – country report Germany, in: CIVIC CONSULTING, 06.10.2008, pp. 1-56, http://ec.europa.eu/consumers/redress_cons/de- country-report-final.pdf (last viited: 16.07.2009).

25. Schack, Haimo, Schadensersatz nach Veräußerung beschädigter Sachen. Zum Verhältnis von Naturalrestitution und Geldersatz, in: Hohloch, Gerhard, Rainer Frank, Schlechtriem, Peter, (editors), Festschrift für Hans Stoll zum 75. Geburtstag, Mohr Siebeck, Tübingen, 2001, pp. 61-71.

26. Schütze, Conceptual Differences and Areas of Potential Collision between United States and „Civil Law“ Procedure from the German Perspective, in: Schütze, Rolf A., (editor), Prozessführung und –risiken im deutsch-amerikanischen Rechtsverkehr, Recht und Wirtschaft, Heidelberg, 2004, pp. 17-35.

27. Schütze, Rolf A., Aktuelle Fragen der Anerkennung und Vollstreckbarerklährung von US-amerikanischen Schiedssprüchen und Gerichtsurteilen in Deutschland, in: Schütze, Rolf A., Ausgewählte Probleme des internationalen Zivilprozessrechts, de Gruyter, Berlin, 2006, pp. 338-357.

28. Schütze, Rolf A., Cenceptual Ddifferences and Areas of Potential Collision between United States and „Civil Law“ Procedure from the German Perspective, in: Schütze, Rolf A., Prozessführung und –risiken im deutsch-amerikanischen Rechtsverkehr, Recht und Wirtschaft, Heidelberg, 2004 pp. 17-35.

29. Schütze, Rolf A., The Recognition and Enforcement of American Civil Judgments Containing Punitive Damages in the Federal Republic of Germany, in: Schütze, Rolf A., Prozessführung und –risiken im deutsch-amerikanischen Rechtsverkehr, Recht und Wirtschaft, Heidelberg, 2004pp. 108-129.

30. Schütze, Rolf A., US-amerikanisches internationales Zivilprozessrecht, in: Schütze, Rolf A., Prozessführung und –risiken im deutsch-amerikanischen Rechtsverkehr, Recht und Wirtschaft, Heidelberg, 2004, pp. 53-81.

31. Schütze, Rolf A., Zur Anerkennung ausländischer Zivilurteile, Schütze, Rolf A., Ausgewählte Probleme des internationalen Zivilprozessrechts, de Gruyter, Berlin, 2006, pp. 315-323. 54

32. Schütze, Rolf A., Zur partiellen Verbürgung der Gegenseitigkeit bei der Anerkennung ausländischer Zivilurteil, in: Schütze, Rolf A., Ausgewählte Probleme des internationalen Zivilprozessrechts, de Gruyter, Berlin, 2006, pp. 328-337.

33. Schütze, Rolf A., Zur Zustellung US-Amerikanischer Klagen in Deutschland, in: Schütze, Rolf A., Prozessführung und –risiken im deutsch-amerikanischen Rechtsverkehr, Recht und Wirtschaft, Heidelberg, 2004, pp. 242-254.

34. Schütze, Rolf A. Überlegungen zur Anerkennung und Vollstreckbarerklärung US- amerikanischer Zivilurteile in Deutschland-Zur Kumulierung von Ordre public Verstöben, in: Schütze, Rolf A. (ed.), Einheit und Vielfalt des Rechts: Festschrift für Reinhold Geimer zum 65. Geburtstag, Beck, München, 2002, pp.1025-1041.

35. Sebok, Anthony J. How an Important German Constitutional Court Decision May Change the Nature of Law Practice in Germany, 03.13.2007, http://writ.news.findlaw.com/sebok/20070313.html (last visited 03.07.2009).

36. Silberman, Linda J., The Impact of Hurisdictional Rules and Recognition Practice on International Business Transactions: The U.S. Regime, in: 26 Hous. J. Int’l L., 2003- 2004, pp. 328-362.

37. Stiefel, Ernst C./Stürner, Rolf/Stadler, Astrid, The Enforceability of Excessive U.S. Punitive Damages Awards in Germany, in: 39 Am. J. Comp. L., 1991, pp. 779-802.

38. Svetlanov, Andrej The International Civil Process and Conflict of Laws, in: Trunk, Alexander, (ed), Russland im Kontext der internationalen Entwicklung, Internationales Privatrecht, Kulturgüterschutz, geistiges Eigentum, Rechtsvereinheitlichung, Russia in the international context: private international law, cultural heritage, intellectual property, harmonization of laws: Festschrift für Mark, Moiseevic, Boguslavskij, BWV Berliner Wiss.-Verl, Berlin, 2004, pp. 199-211.

39. Traynor, Michael, An Introductory Framework For Analysing the Proposed Hague Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters: U.S. and European Perspective, in: 6 Ann. Surv. Int’l & Comp. L. 1 2000, pp. 1-12.

40. Tsertsvadze, The Recognition and Enforcemetn of Arbitral Awards, in: Justice and Law (marthlmsajuleba da kanoni), №1., Tbilisi, 2006, pp. 45-53, (in Georgian: Saerthashoriso Saarbitrajho Gadatskvetilebatha Cnoba da Aghsruleba).

41. Wegen, Gerhard, Recognition and Enforcement of US Punitive Damages Judgments in Germany – A Recent Decision of the German Federal Court of Justice, in: 21 Int’l Bus. Law. 1993, pp. 485-488.

42. Wurmnest, Wolfgang, Recognition and Enforcement of U.S. Money Judgments in Germany, in: 23 Berkeley J. Int’l L. 2005, p. 175-200.

43. Zekoll, Joachim, Recognition and Enforcement of American Products Liability Awards in The Federal Republic of Germany, 37 Am. J. Comp. 1989, pp. 301-336.

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44. Zekoll, Joachim, The Enforceability of American Money Judgments Abroad: A Landmark Decision by the German Federal Court of Justice, in: 30 Colum. J. Transnat’l L. 1992, pp. 641-660.

Commentaries:

1. Geimer Reinold/Schütze, Rolf A. Europäisches Zivilverfahrensrecht, Kommentar, zur EuGVVO,EuEheVO, EuZustellungsVO, zum Lugano-Übereinkommen und zum nationalen Kompetenz- und Anerkennungsrecht, 2. edition, Beck, München, 2004.

2. Kropholler, Jan, Europäisches Zivilprozeßrecht: Kommentar, zu EuGVO, Lugano- Übereinkommen und Europäischem Vollstreckungstitel, Verl. Recht und Wirtschaft, Frankfurt am Main, 2005.

3. Magnus, Ulrich/Mankowski, Peter, (editors), Brussels I Regulation, Sellier, European Law Publishing, München, 2007.

4. Musielak, Hans-Joachim, Zivilprozessordnung, Kommentar zur Zivilprozessordnung: mit Gerichtsverfassungsgesetz, 6. edition, Vahlen, München, 2008.

5. Rauscher, Europäisches Zivilprozeßrecht, Kommentar, Brüssel I-VO, Brüssel IIa-VO, 2. edition, 2006, volume I, Seillier, European Law Publishers, München, 2006.

6. Rausher Thomas/Wax, Peter/Wenzel, Joachim (editors), Münchener Kommentar zur Zivilprozessordnung mit Gerichtsverfassungsgesetz und Nebengesetzen, 3. edition, Beck, München, 2008.

7. Spellenberg, Ulrich/Staudinger, Julius von/Amann, Hermann, (editors), Julius von Staudingers Kommentar zum Bürgerlichen Gesetzbuch mit Einführungsgesetz und Nebengsetzen, Einführungsgesetz zum Bürgerlichen Gesetzbuch/Internationales Privatrecht: Internationales Verfahrensrecht in Ehesachen (§ 328 ZPO; Art 7 § 1), 12. edition, Sellier, Berlin, 1992.

8. Stein, Friedrich/Jonas, Martin, Kommentar zur Zivilprozessordnung, §§ 328 - 510b, 3. volume, 22. edition, Mohr-Siebeck, Tübingen, 2006.

9. Zöller, Richard/Geimer, Reinhold (editors), Zivilprozessordnung (ZPO): mit Gerichtsverfassungsgesetz und den Einführungsgesetzen, mit Internationalem Zivilprozessrecht, EG-Verordnungen, Kostenanmerkungen, Kommentar, 27. edition, Schmidt, Köln, 2009.

Court Judgments:

Georgia:

1. No. a-634-sh-40-06 15.11.2006(Supreme Court of Georgia); 2. No.a-1666-sh-59-07 15.01.2008(Supreme Court of Georgia); 3. No.a-2297-sh-53-08 02.02.2009 (Supreme Court of Georgia); 4. No.a-1824-sh-480 02.02.2009(Supreme Court of Georgia);

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5. No.a-2481-sh-55-08 26.02.2009(Supreme Court of Georgia); 6. No.a-2444-sh-1609 26.02.2009(Supreme Court of Georgia); 7. No.a-1647-15-09 26.03.2009(Supreme Court of Georgia); 8. No. 492-sh-24-09 13.04.2009(Supreme Court of Georgia); 9. No.a-407-sh-19-09 13.04.2009(Supreme Court of Georgia); 10. No.a-1647-15-09 06.04.2009(Supreme Court of Georgia);

Germany:

11. BGH, 30 RIW 447, 1984. 12. BGHZ 118, 312. 13. BVerfG, Beschl. 12.12.2006, -1 Bvr 2576/04, see NJW 14/2007, pp. 979-986. 14. BVerfG, JZ, 58 (2003), pp. 956-958. 15. BVerG, 91, 335. 16. Entscheidungen des Reichsgerichts in Zivilsachen (RGZ) 70, 434

USA:

17. BMW of North America, Inc. v. Gore (94-896), 517 U.S. 559 (1996); 18. Cher v. Forum Int’l Ltd., 692 F.2d 634 (9th Cir. 1982). 19. Cooper Industries, Inc. v. Leatherman Tool Group, Inc.,532 U.S. 424 (2001). 20. Pacific Mutual Life Insurance Co. v. Haslip (89-1279), 499 U.S. 1 (1991). 21. State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408. 22. Treinies v. Sunshine Mining Co., 308 U.S. 66 (1939) 23. Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694, 699 (1988). 24. Wise v. Olan Mills Inc., 485 F. supp. 542.

Luxembourg:

CA Luxembourg Pas. Lux. 2000, 227-234, ECJ Website № 2001/47.

ECJ:

1. EuGH Rs. Case 305/88 Lancracy/Peters EuGH 07.03.1990.

Internet Sources:

1. http://en.wikipedia.org/wiki/Georgia_(country) (last visited 08.07.2009). 2. http://www.cac-civillaw.org/land/georgien.html (last visited 09.07.2009). 3. http://www.supremecourt.ge/default.aspx?sec_id=191&lang=1(last visited: 07.07.2009). 4. http://www.hcch.net/index_en.php?act=conventions.status&cid=17 (last visited 10.07.2009). 5. http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/NYConvention_status.html (last visited 10.07.2009). 6. http://www.gtz.de/de/weltweit/europa-kaukasus-zentralasien/26450.htm (last visited: 11.07.2009). 7. http://amlaw.us/emmert1.shtml (last visited 03.07.2009). 8. http://www.pointoflaw.com/feature/contingent_claims0406.php(last visited 03.07.2009). 9. http://writ.news.findlaw.com/sebok/20070313.html, (last visited 03.07.2009). 10. http://www.britannica.com/EBchecked/topic/333023/conflict-of- laws/276365/Recognition-and-enforcement-of-judgments (last visited 21.03.2009). 57