The Awkward Age
Litigation is becoming increasingly globalized. Except when it¿s not.
A sense of place, as defined by the marble-and-columned courthouses that can be found in cities across America, has always been at the heart of litigation in the United States. The courthouse was imposing and solid on the outside, but a lively neighborhood within. And success as a litigator depended on knowing one's way around the neighborhood¿not just understanding the applicable laws and procedures, but knowing the community of judges, court personnel, and jurors. All litigation, like all politics in the famous Tip O'Neill phrase, was local.
Globalization has challenged that truism. As U.S. banks and businesses march relentlessly across the world, litigation has been complicated in ways that the builders of those sturdy nineteenth-century courthouses could not have imagined. This issue chronicles some of those complications: European shareholders crossing the Atlantic to file securities class actions in the United States [see "Coming to America"]; Chevron fighting to reclaim U.S. jurisdiction in a sprawling environmental class action mired in the jungle in Ecuador ["Jungle Warfare"]; a Holocaust survivor battling in the U.S. Supreme Court to recover heirloom paintings from the Republic of Austria ["The Case of the Stolen Klimts" ]. Disputes no longer involve just clashes of understanding about facts and law, but conflicts of culture and nationality. Litigants, like the Chinese defendants whose hand-holding by U.S. lawyers is described in "Culture Shock," are ever likelier to be strangers in a strange land.
But just because foreign businesses find themselves litigating in U.S. courts (and U.S. companies have to defend themselves abroad) doesn't mean that civil justice systems around the world have become more uniform. Gary Born, a London-based partner at Wilmer Cutler Pickering Hale and Dorr who just published the fourth edition of his casebook, International Civil Litigation in United States Courts, describes a pair of trends running along improbably parallel tracks: convergence and divergence. Globalization, say Born and a half-dozen partners at Am Law 100 firms with significant international litigation practices, has smoothed away some of the differences between U.S., European, and Asian systems, but developed countries remain resistant to wholesale changes in their court systems. Even in international arbitration, the forum of choice for an increasing number of the most sophisticated international business disputes, parties continue to elect to operate under the laws and procedures of their chosen jurisdiction¿most often New York, England, or France¿rather than to create a new international civil justice system. So, for the foreseeable future, international litigation will remain fraught with the awkwardness that the stories in this issue document.
To be sure, say Robert Ruyak of Howrey and David Mulliken of Latham & Watkins, American business power and influence have prompted a modest movement in Europe and elsewhere toward the U.S. civil justice model. "The old style of litigation in Europe was very truncated, and you were often not able to put forth your position," says Ruyak. "Now there's a sense that when there are disputes, the U.S. system is a fair and equitable way to resolve them." The creeping U.S. influence can be seen in a couple of trends described in our Developments section: the new boom in internal investigations at companies based outside of the U.S. and the European Union's recent decision to consider private antitrust suits in addition to regulatory actions. Germany has approved a version of the U.S.¿style class action. Universities in India have hired a Madison County plaintiffs lawyer to defend their patents. Even the long-derided contingency fee is turning up, albeit in modified form, on the other sides of both the Atlantic and the Pacific. (Influence does run both ways: One could argue, though you'll never hear an American politician admit it, that tort reforms setting caps on damages and raising barriers to entry for plaintiffs in personal injury cases and class actions have brought the United States closer to the rest of the world's vision of civil justice.)
In "Decline and Fall?" British legal journalist Chris Crowe describes the impact of the 1999 Woolf reforms, which were intended to bring the best features of the American civil justice system¿most notably, pretrial proceedings and expanded judicial power¿to England. "High-end litigation in international business centers is where you're most likely to find a measure of convergence," says Wilmer's Born.
And in international arbitration. David Allen of Mayer, Brown, Rowe & Maw says that even though arbitration is long-established as a means of resolving major business disputes, in the last few years it has surged as never before. In cross-border deals, particularly when investors are venturing into developing economies, it's the safest option. "In places where there are unpredictable legal systems," explains Jones Day partner Thomas Cullen, Jr., "the impetus is for commercial disputes to find their way out of those systems." The parties to arbitration agreements select both the legal system and the procedural system that will govern their cases. The result can be a hybrid: British laws, for instance, but expanded discovery and cross-examination that's closer to a U.S. proceeding than a European suit. (Wilmer's Born jokes, however, that it's still an effective deterrent strategy to accuse an arbitration opponent of attempting to conduct "a U.S.¿style fishing expedition.")
More than any other form of international dispute resolution, arbitration has developed a multinational bar of practitioners¿a well-traveled cadre that specializes in the practice. The International Bar Association has managed to adopt some universal conventions on procedures, partly based on British-style common law, partly on U.S.¿style civil law. Arbitration is now so inevitable, says Born, that even Latin American countries that once insisted on funneling international disputes through their court systems have accepted arbitration clauses in bilateral investment treaties.
But for all the cross-border cross-pollination, international practitioners say that litigation remains a country-specific art. Court systems vary too much to make litigation skills internationally fungible¿and countries seem to be in no rush to change that. When the United States urged a Hague convention on civil litigation in the late 1990s, Wilmer's Born points out, negotiators from the U.S., Europe, and Asia failed to reach consensus on anything but some narrowly focused service and evidentiary procedures. "Underlying [the failure of negotiations] was a set of basic and deeply felt foreign concerns," says Born. "U.S. judgments were too big, too unpredictable, and produced by a system that was too alien."
"It's no secret that American-style litigation¿discovery-intense, pretrial-motion-practice-intense¿is very much the exception to the rule in Europe and Asia," agrees Latham's Mulliken. "Globalization of litigation¿I'm not sure that's going to happen. Litigation continues to be dominated by unique [circumstances] in the countries in which we operate."
Indeed, Mulliken and other litigators from firms with an international litigation presence say that's why they have so many offices. Clients with global interests need native lawyers prepared to go to court in all of the countries in which they operate. Howrey's Ruyak says that a patent infringement dispute, for instance, might result in cases being filed in three or more different countries¿all of which have to be litigated under that country's rules. "You need to have native litigators," Ruyak says. Adds Cullen of Jones Day: "You can't train U.S. people to do French, Spanish, Italian litigation. The expatriate model is pretty much dead."
Finally, this issue should remind you that for much of the world, the state of business litigation is beside the point. In side panels that accompany the feature stories, we report on the rule of law's advances and retreats in eight developing nations. Essential human rights are still a dream in most of them, and civil justice is an unimaginable luxury.
True reform, like all litigation advances, happens one courthouse at a time.