Tag Archive for: United States

Choice of Law in the American Courts in 2024

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The thirty-eighth annual survey on choice of law in the American courts is now available on SSRN. The survey covers significant cases decided in 2024 on choice of law, party autonomy, extraterritoriality, international human rights, foreign sovereign immunity, adjudicative jurisdiction, and the recognition and enforcement of foreign judgments.

This annual survey was admirably maintained by Symeon Symeonides for three decades. The present authors are pleased to have extended this tradition.

U.S. Courts Recognize NAFTA Award Against Mexico

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This submission written by Celeste Hall, JD Candidate at the University of Pittsburgh School of Law and Global Legal Scholar.

The legal news has been awash lately in the recognition and enforcement of investment arbitration awards by U.S. courts. Most of the press is on the long-running and still-unfolding saga regarding Spain (see here and here). And a new decision recognizing an award against Zimbabwe was just issue at the end of December, as well. Here, however, we would like to add to the news with the recent decision recognizing an investment arbitration award against Mexico in United Mexican States v. Lion Mexico Consolidated.

Like most investment arbitrations, the decision tells a sordid tale. Lion Mexico Consolidated (LMC) is a Canadian company which provided financing to a Mexican businessman, Mr. Hector Cardenas Curiel, to develop real estate projects in Nayarit and Jalisco, Mexico. Cardenas’ company failed to pay on the loans, and LMC tried for years to obtain payment, all to no avail. Cardenas then began what was described as a “complex judicial fraud” to avoid payment, including a forgery and a subsequent lawsuit in a Jalisco court to cancel the loans. LMC was never informed of the suit and therefore, never appeared. The Jalisco Court issued a default judgment discharging the loans and ordering LMC to cancel the mortgages; Cardenas then arranged for an attorney to act fraudulently on LMC’s behalf to file and then purposefully abandon the appeal. LMC only learned of the entire scheme when they attempted to file their own constitutional challenge and were rejected. The Mexican Courts refused to allow LMC to submit evidence of the forgeries, so LMC brought a NAFTA Chapter 11 arbitration against Mexico for its failure to accord Lion’s investments protection under Article 1105(1) of NAFTA. Read more

Choice of Law in the American Courts in 2023

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The thirty-seventh annual survey on choice of law in the American courts is now available on SSRN. The survey covers significant cases decided in 2023 on choice of law, party autonomy, extraterritoriality, international human rights, foreign sovereign immunity, adjudicative jurisdiction, and the recognition and enforcement of foreign judgments. So, on this leap day, we thought we would leap into the new month by looking back at the old year.

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U.S. Supreme Court Decides Great Lakes

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On February 21, 2024, the U.S. Supreme Court handed down its decision in Great Lakes Insurance SE v. Raiders Retreat Realty Company, LLC.

The question presented was whether, under federal admiralty law, a choice-of-law clause in a maritime contract can be rendered unenforceable if enforcement is contrary to the “strong public policy” of the U.S. state whose law is displaced. In a unanimous opinion authored by Justice Kavanaugh, the Court concluded that the answer to this question was no. It held that choice-of-law provisions in maritime contracts are presumptively enforceable as a matter of federal maritime law. It further held that while there are narrow exceptions to this rule, state public policy is not one of them.

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Data on Choice-of-Court Clause Enforcement in US

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The United States legal system is immensely complex. There are state courts and federal courts, state statutes and federal statutes, state common law and federal common law. When I imagine a foreign lawyer trying to explain this system to a foreign client, my heart fills with pity.

This feeling of pity is compounded when I imagine this same lawyer trying to advise her client as to whether a choice-of-court clause will be enforced by a court in the United States. The law on this subject is complicated. It is, moreover, not easy to determine how it is applied in practice. Are there differences in clause enforcement rates across the states? Across federal circuits? Do state courts enforce these clauses at the same rate as federal courts? Until recently, there was no data that would allow a foreign lawyer – or a U.S. lawyer, for that matter – to answer any of these questions.

Over the past several years, I have authored or co-authored several empirical articles that seek to answer the questions posed above. This post provides a summary of the data gathered for these articles. All of the cases referenced involve outbound choice-of-court clauses, i.e. clauses that select a jurisdiction other than the one where the suit was filed. Readers interested in the data collection process, the caveats to which the data is subject, or other methodological issues should consult the articles and their appendices. This post first describes state court practice. It then describes federal court practice. It concludes with a brief discussion comparing the two.

 

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