United States Congress Considering Legislation Relating to Foreign Defendants

On May 19, 2009, the United States Senate Committee on the Judiciary, Subcommittee on Administrative Oversight and the Courts held a hearing entitled “Leveling the Playing Field and Protecting Americans:  Holding Foreign Manufacturers Accountable.”  The purpose of the hearing was to explore whether legislation is necessary to deal specifically with foreign defendants in products liability cases.  The Committee Chairman, Senator Sheldon Whitehouse of Rhode Island, described the need for legislation as follows.

“We all know American manufacturers must comply with regulations that ensure the safety of American consumers.  When they fail to do so, they must answer to regulators and are held accountable through the American system of justice.  Unfortunately, however, foreign manufacturers are not being held to the same standards – this puts at risk American consumers and businesses, and puts American manufacturers at a competitive disadvantage.

A major cause of this disparity is that Americans injured by foreign products face unnecessary and inappropriate procedural hurdles if they seek to hold foreign manufacturers accountable.  First, they must identify the manufacturer of the product that injured them – often not an easy task since many foreign products do no more than indicate their country of origin.  Second, an injured American must serve process on the foreign manufacturer.  This means the injured American has to deliver legal papers to the company directly or through a registered agent explaining that he or she is bringing a legal action against it.  But this simple step often requires enormous time and expense – lawsuits even can fail over it – as the injured American attempts to comply with various complicated international treaties.  Third, an injured American must overcome the technical defense that, even though a foreign manufacturer’s product was used by an American consumer, the courts of that consumer’s home state do not have jurisdiction over that company.  Finally, even after an injured American has overcome these hurdles and prevailed in court, a foreign manufacturer can avoid collection on the judgment – often simply cutting off communications or shutting up its business and starting up again with a different name.

Americans harmed by defective foreign products need justice, and they do not get it when foreign manufacturers use technical legal defenses to avoid paying damages to the people they have injured.  Today’s hearing will help us learn more about these failures of justice and what we can do to fix them.”

More details on the hearing, including witness statements and a webcast, can be found here.

Among other things, it will be interesting to see whether Congress steps into the ongoing debate concerning the exercise of personal jurisdiction over foreign defendants in US courts.