International Litigation and Enforcement of Foreign Judgments

Ten years of “Mediation Directive”: EU Parliament adopts resolution to foster mediation – On September 12, 2017, the EU Parliament adopted a resolution on the implementation of the “Mediation Directive” (Directive 2008/52/EC of the European Parliament and of the Council of 21 May 2008 on certain aspects of mediation in civil and commercial matters), P8_TA-PROV(2017)032, Resolution of 12 September 2017. Read more 

When are Shareholders and LLC Members Personally Liable for Corporate Debts and Liabilities? Foreigners starting a business in the U.S. (and often also American business owners) wonder whether they can be called to answer for their company’s debts and liabilities. It is useful to understand that this can happen and it is even more useful to understand how to avoid it. The general rule is that shareholders and LLC members are not personally responsible for debts and liabilities of a corporation or LLC: they can be held responsible only for the value of their investment in the entity. … However, this rule – as every rule I can think of – is subject to exceptions. In certain cases shareholders and members can incur personal liability and creditors may attack their personal assets. Read more …

California federal court allows service of process on foreign defendant via Twitter. On September 30, 2016, a California federal court granted permission to serve process through Twitter on a foreign defendant. Read more …

Italy passes measures to enhance debt collection and improve insolvency procedures. On July 14, 2016, the Italian Parliament approved Law n. 119/16  containing a set of provisions aimed at expediting the recovery of claims by creditors. Read more …

The “Separate Entity” rule only applies when NY branch of bank is garnishee; it does not apply and prevent enforcement of an arbitral award against bank as debtor

On February 22, 2016, the U.S. District Court for the Southern District of New York found that New York “Separate Entity” Rule bars enforcement of an international award against a bank’s local branch if this entity is a garnishee, not if the bank itself is a debtor. Crescendo Maritime Co. v. Bank of Communications Co. Ltd., Read more …

No jurisdiction under New York long-arm statute against a foreign airline solely based on its internet presence in the US. On August 22, 2016, a New York District Court dismissed a lawsuit against Airbus (a French company) for lack of personal jurisdiction over non-domiciliaries. Merritt v. Airbus Ams., Inc., 2016 U.S. Dist. LEXIS 111572 (E.D.N.Y. Aug. 22, 2016). Read more …

Share capital increase disputes are arbitrable, Milan Court holds. An Italian Court clarified that opposition to a share capital increase is an arbitrable issue in a shareholders’ agreement. Read more … 

US Supreme Court’s recent decision on extraterritoriality, which reaffirms the presumption against it. On June 20, 2016, the Supreme Court issues an interesting decision on extraterritoriality reach of an American provision, the civil action created under RICO. Read more …

LLC that failed to comply with publication requirements of NY LLC Law §206 cannot maintain action. On March 23, 2016, the Appellate Division, Second Department – relying on Barklee Realty Co. v Pataki, 309 AD2d 310 – held that “[f]ailure to comply with … [publication requirements of Limited Liability Company Law § 206] precludes a limited liability company from maintaining any action or special proceeding in New York.”  Small Step Day Care, LLC,  v Broadway Bushwick Builders, L.P., et al.,2016 NY Slip Op 02071 available here. Read more …

A new trend in the US: the jurisdictions where foreign law is “banned” – Part One. Since 2010 a majority of the US jurisdictions passed or tried to pass bills that to a different degree prohibit courts from applying sharia or more general foreign law if the latter would have the effect to deprive the citizens of the state of the rights recognized under the US Constitution or the state constitution. The reasons behind these bills are discussed in Shariah in American Courts: The Expanding Incursion of Islamic Law in the U.S. Legal System, (focusing, however, only on the alleged danger of sharia law). Read more …

The business judgment rule in Italy. Under the American “business judgment rule,” there is “a presumption that in making a business decision, the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company.” It is so well established that you can find statements of this principle in many places even outside of the legal websites. See here. In Italy, there is a similar principle for directors, and it was recently applied by the Court of Rome (Tribunale di Roma) in a malpractice lawsuit brought by the bankruptcy trustee of Alitalia Linee Aeree Italiane S.p.A. (the Italian main airline now owned by Etihad) against directors. Alitalia Linee Aeree Italiane S.p.A. in Amministrazione Straordinaria vs. Cimoli, Mengozzi, Zanichelli, Steve, Ulissi, Tribunale di Roma n. 16839/2015 (July 30, 2015). Read more …

The hard life of plaintiffs in Italy who cannot plead facts in the alternative and cannot use discovery. The Court of Milano, Italy clarified that in a civil action the parties have the right to decide which facts to bring to the court’s attention in order to prove their claims and how they want to prove them. From the so called “principio dispositivo” (i.e., right to bring or not to bring, at one’s discretion, a claim in court to protect a right), it ensues that the parties can choose which facts they want to disclose. Read more …

A Renewed Focus on Mandatory Individual Arbitration Clauses, by Allyson Haynes Stuart.  The New York Times recently published a series of articles reporting on the abolishment of the right to sue by virtue of mandatory arbitration clauses, particularly combined with class action waivers. This development is of course not new – commentators have been bemoaning the proliferation of arbitration clauses for some time now, and the primary Supreme Court cases upholding challenges to such clauses – AT&T v. Concepcion and American Express Co. v. Italian Colors Restaurant – were issued in 2011 and 2013, respectively. What is new is the extensive analysis of cases over the past 4 years, including the increase in arbitration/no class action clauses following the Supreme Court decisions. Read more …

Can a foreign railroad be sued in the US for tortious conduct that occurred outside the US if the ticket was bought here? SCOTUS to decide soon. The U.S. Supreme Court is called to decide whether a U.S. citizen can sue a foreign government before a U.S. Court for allegedly tortious conduct that occurred outside the U.S., or whether the foreign administration is instead entitled to immunity under a 1976 law that bars most lawsuits against foreign countries. Sachs v. Republic of Austria, 737 F.3d 584 (9th Cir. 2013), cert. granted sub nom, OBB Personenverkehr AG v. Sachs, 135 S.Ct. 1172 (2015). Read more …

The court of Milan clarifies that a company’s director lacks standing to proceed in a malpractice action against other directors if shareholders’ meeting did not resolve to bring the actionA director can bring a claim, on behalf of the company, against the other directors for breach of their duties only if a shareholders’ meeting resolved to bring that action. Tribunale di Milano, January 12, 2015. Read more …

Once a motion to compel arbitration has been granted and a stay requested, the court has no discretion pursuant to the FAA to dismiss the action instead of staying it pending arbitration, the Second Circuit holds. On July 28, 2015, the US Court of Appeals for the Second Circuit ruled that “the Federal Arbitration Act, 9 U.S.C. § 1 et seq. (“FAA”), requires a stay of proceedings when all claims are referred to arbitration and a stay requested”. Read more …

If Plaintiffs lack threshold grounds for derivative actions, jurisdiction doesn’t need to be established, Second Circuit holds. On July 24, 2015, the Second Circuit held that “when confronted with a difficult or novel question of subject matter jurisdiction, a court may sometimes dismiss the case on a threshold, non‐merits issue.” Read more …

Discovery request under 28 U.S.C. §1782 does not require material to be indispensable to bring the foreign action but only that material will be “used” there. On July 17, 2015, the United States Court of Appeals for the Second Circuit clarified that U.S.C. 28 § 1782 requires the applicant to show that discovery seeks material “for use” in a foreign proceeding. It is not necessary for the applicant to show that the proceeding could not be started without the foreign material. read more …

Creditors in Italy now have direct access to debtors’ records held in online government’s files. In Italy, Section 492-bis of the criminal code, empowers the president of the Court to authorize the bailiff to perform an online research to find properties to be seized to satisfy a debt. Read more …

Good to know if you are thinking about forming an entity in Delaware: new statute bans fee-shifting in derivative actions – but exclusive forum selection clauses are allowed. On June 18, 2015 the Delaware Governor signed into law a statute banning bylaws clauses providing for fee-shifting in derivative actions (so called “English rule”). While the “loser pays” rule was a big disincentive to meritless claims, it was also a significant hindrance to bring those derivative actions all together. read more …

In Europe the court of a jurisdiction where a website publishing copyrighted material is accessible, has jurisdiction of a claim for copyright infringement as the place where the damage occurred. On 22 January 2015, the European Court of Justice (ECJ), in Case C‑441/13, deciding a request for a preliminary ruling concerning the interpretation of Article 5(3) of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Regulation 44/2001), held that

Article 5(3) of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters must be interpreted as meaning that, in the event of an allegation of infringement of copyright and rights related to copyright guaranteed by the Member State of the court seised, that court has jurisdiction, on the basis of the place where the damage occurred, to hear an action for damages in respect of an infringement of those rights resulting from the placing of protected photographs online on a website accessible in its territorial jurisdiction. That court has jurisdiction only to rule on the damage caused in the Member State within which the court is situated. Read more …

Federal judge issues subpoena for the discovery of documents to be used in foreign proceeding. On October 17, 2014, the New Jersey District Court issued an order granting subpoenas seeking production of documents for use in a foreign arbitration. Read more …

CIGS as a basis for federal jurisdiction (also over state claims that “derive from a common nucleus of operative fact”) – a short discussion. On February 18, 2015, the Southern District Court of New York affirmed that the United Nations Convention on Contracts for the International Sale of Goods (“CISG”) provides a basis for federal court jurisdiction and supplemental jurisdiction over non-CISG state-law claims if the latter “derive from a common nucleus of operative fact”. In this case, an Italian company (D&G Group, S.r.l.) brought a breach of contract action against an American importing company (H.A. Import USA). Read more …

Forum selection clause enforced notwithstanding North Carolina statutory prohibition. On June 17, 2014, the District Court for the Middle District of North Carolina a enforced forum-selection clause notwithstanding a North Carolina statute (N.C. Gen Stat. § 22B-3) prohibiting contractual forum selection clauses that identify a state other than North Carolina as the forum for litigation. The court deemed that in federal court the validity of a forum selection clause is a matter of federal law. A state statute on forum selection clauses, though persuasive, does not trump other factors in favor of the enforcement of the contractual choice of venue. Read more …

EU Regulation 1215/2012 enters into force – Enforceable judgments in civil and commercial matters from one Member State are automatically enforceable in any other EU member. On January 10, 2015, EU Regulation 1215/2012 entered into force. The regulation on the jurisdiction, recognition and enforcement of judgments in civil and commercial matters reforms the s.c. Brussels I Regulation, which was a first step toward the facilitation of civil judicial cooperation in the EU. Regulation EU 1215/2012 establishes – among others – that a judgment given in a Member State shall be recognized in another Member States “without any special procedure”. The automatic enforceability of judgments abolishes the old “exequatur” procedure, according to which a judgment had to be validated and declared enforceable by courts in the Member State of enforcement before being executed. Read more …

Consumer is not bound by an arbitration clause contained in a satellite trial subscription that consumer received when he bought a car because it was not reasonable for him to understand that the use of the satellite would bind him to arbitrate. In Knutson v. Sirius XM Radio Inc., 771 F.3d 559 (9th Cir. 2014) (No. 12-56120) the Ninth Circuit Court of Appeals held the arbitration clause included in a standard “welcome kit” unenforceable for lack of mutual assent. The decision reversed a district court’s order granting Defendant’s motion to compel arbitration pursuant to the Federal Arbitration Act (“FAA”). Read more …

Enforcement of foreign judgments in the United States? Harvardsky vs. Kozeny breaks new grounds –  Damage award in a criminal case domesticated in NY. On April 1, 2014, a New York state appellate court found that a foreign criminal judgment ordering the payment of damage to victims could be domesticated under Article 53 of the N.Y. (Uniform Foreign Money Judgments Act). Harvardsky Prumyslovy Holding, A.S.,-V Likvidaci v. Kozeny, N.Y.S.2d —, 2014 WL 1281527, 2014 N.Y. Slip Op. 02250 (1st Dep’t Apr. 1, 2014). Read more …

Jurisdiction over Foreign Companies in Italy. After the recently approved Law no. 9/2014 (which transposed into law DL 145/2013), only certain Italian courts have jurisdiction over cases involving foreign companies, even when the foreign company has an Italian branch. If the controversy concerns specific matters in the field of industrial and intellectual property (trademarks, IP, patents, etc.), corporate and contract law, you can file your suit or be suited only in Bari, Cagliari, Catania, Genova, Milan, Napoli, Roma, Torino, Venezia, Trento and Bolzano. Attention: it is not at your discretion: it depends on which court would have had jurisdiction, absent this new rule. See Article 10 DL 145/2013. For more information you are welcome to contact Francesca Giannoni-Crystal.