INTRODUCTION

Late in his life, Arthur von Mehren took the lead in positioning The Hague as the forum for negotiations between the United States and Europe on matters of transnational litigation, albeit with mixed success. In this memorial essay, I will try to shed some light on recent German-American experiences under an already well-established Hague Convention, the Hague Service Convention of 1965 (hereinafter: Service Convention or HSC). The fact that Arthur von Mehren took a keen interest in these developments is shown by his contribution to the 2004 Hamburg symposium in honor of Hein Kötz, which was published posthumously last year. If an American plaintiff has to effect service of process in Germany, the Service Convention is the pertinent legal instrument. During the 1990s, international judicial assistance between the United States and Germany functioned smoothly because the German Constitutional Court had decided in 1994 that the mere risk of possibly having to pay punitive damages does not suffice to halt service of process. This rather liberal attitude met with considerable opposition from the German industry, although it was supported by the majority of German private international lawyers. In 2003, however, the Constitutional Court granted an interim order that protected the German media giant Bertelsmann AG from service of process in a suit filed by several competitors in the United States. The plaintiffs claimed $17 billion on the theory that Bertelsmann had, by giving loans to the internet file-sharing platform Napster, contributed to the infringement of the plaintiffs' copyrights.

INTRODUCTION

Antitrust law at the beginning of the twenty-first century is characterized by a dilemma. The forces of globalization cause markets to integrate on a worldwide scale. Economic activities become ever more international and are less and less bound to national borders. Value chains are “sliced up,” which means that products are not produced at one location but at various sites spread around the globe. Competition law, though, remains fundamentally in the hands of national legislators, courts, and authorities. Although international rules abound in other areas of economic law, they are only of marginal importance in antitrust. There is no international merger regime and there is no comprehensive set of multilateral rules to combat globally operating cartels that fix prices and allocate territories to the detriment of consumers. As a consequence, competition problems, which are the result of growing transborder economic activity, are dealt with, primarily, on the national, state level.

The recent Empagran affair is a case in point. It started with the global vitamins cartel that had operated from 1989 until 1999 and had caused massive economic losses. There are currently no binding international rules, including customary international law, prohibiting the formation of cartels. Thus, charges against the cartel's participants had to be pursued under national law. Some of these charges led to the imposition of record-breaking fines by competition authorities in the United States, the European Union, Australia, Canada, and Korea.

INTRODUCTION

Arthur von Mehren's last and most ambitious project, a Hague Convention unifying rules on international jurisdiction and foreign judgments, did not come to fruition. One reason was prevailing differences over substantive issues – differences that have been discussed at length. Such differences might have been overcome through compromise had there not been a problem that has received less attention but may have been more fundamental, precisely because it was not fully recognized: Most delegates implicitly presumed that judgments conventions must take on a certain shape. One such presumption that has been discussed was that all jurisdictional bases in a convention must be either required (so that courts in all member states must exercise jurisdiction under certain circumstances), or excluded (so that courts are not allowed to exercise jurisdiction under certain circumstances). A second assumption, less well-recognized, was that conventions that regulate jurisdiction, in addition to recognition and enforcement of judgments, must be symmetrical: If a judgment rests on a required basis of jurisdiction, other states must be obliged to enforce it (unless there are other reasons not to enforce it, such as fraud); if it rests on an excluded basis, other states must be restrained from enforcing it.

Both assumptions are wrong, and Arthur von Mehren worked tirelessly to show this. The alternative he developed was the mixed convention, an ingenious model to bridge the gap between single conventions (conventions that regulate only the recognition of foreign judgments) and double conventions (conventions that regulate jurisdiction both at the decision stage and at the recognition stage).

INTRODUCTION

Choice of law in international arbitration is a topic – one among many – that Arthur von Mehren excelled at. His contributions in this field admirably combine the analytical brilliance of a world-leading conflicts law scholar, the impressive expertise of an equally world-leading comparative lawyer, and insights in concept, structure, and functioning of multilevel judicial proceedings ripened over decades. In addition, Arthur von Mehren could draw on his rich practical experiences as an arbitrator, and it was of particular importance to him to pass on his profound knowledge to the next generations: not only did he copublish one of the leading educational text books on international commercial arbitration, but he also continued to teach his strongly demanded course on international commercial arbitration at the Harvard Law School, which I had the privilege of attending during my time as Story Fellow of 1998/99.

This contribution deals with one particular issue of choice of law in international arbitration: it seeks to identify the source and nature of mandatory elements in the process of law selection, that is, the elements an arbitral tribunal is bound by while determining the applicable law. Evidently, any arbitral tribunal is primarily bound by the parties' will including their choice of law – based on their choice of choice-of-law rules that, in turn, grant party autonomy. However, the parties' freedom to choose choice-of-law rules might not be unlimited.

INTRODUCTION

Arthur Taylor von Mehren was a great scholar of the old school. As Detlef F. Vagts puts it: “He relied on his immense knowledge of comparative law rather than relying on search engines and modern machinery, and he knew an enormous number of people around the world in the field. He was an institution.” Von Mehren did not see retirement as fundamentally changing his life, he wrote: “More than in the past, I shall write about the forests rather than the trees – how they came to be what they are and how to find paths through them.” Unfortunately, we cannot rely anymore on von Mehren to find paths through the dense forest of intellectual property and choice of law. As cross-border conflicts have soared in a world of increased global trade and borderless communication, the relationship between intellectual property and choice of law is becoming more complex. It has become a real challenge to master both fields and to identify appropriate solutions. The following three cases will illustrate the tension between choice of law and intellectual property.

Hotel Maritime

In Hotel Maritime, the owner of German and E.U. trademarks for Maritim, who used the name for a chain of hotels in Germany, sued a Danish defendant who ran a bed and breakfast establishment in Copenhagen. The defendant had registered HOTEL MARITIME as a trademark in Denmark and ran a website using the domain name http:www.hotel-maritime.dk that also included information, in German, about the hotel.

INTRODUCTION

Every legal order must face the problem of parallel proceedings. A plaintiff may bring a coercive action involving the same issue against the same defendant in more than one country. Or a plaintiff against whom a coercive action in one country could be brought, or has already been brought, may initiate proceedings in another country for a declaration that he or she is not liable; that is an action for a negative declaratory judgment. Multiplicity of proceedings can have very undesirable effects. It involves more expense and inconvenience to the parties, and, in the worst case, it leads to conflicting judgments.

There are different ways in which a legal order may be used to react to concurrent actions. Under the doctrine of forum non conveniens, the fact that an action is already pending abroad, certainly is an element to be taken into account in order to decide whether or not the “own”proceedings (the second proceedings) should be stayed. Another way to avoid duplicative litigation is by the use of antisuit-injunctions that restrain a party from instituting proceedings or prosecuting a case in a foreign court. The following remarks will address a third way to avoid the negative results of parallel litigation: the so-called lis pendens doctrine and its application to cases where negative declaratory actions are involved. Arthur von Mehren dealt in depth with the problems raised by parallel proceedings.

Arthur von Mehren's life and academic work will be chronicled by Michael von Hinden. This brief preface will focus instead on the Joseph Story Research Fellowship Program under which Professor von Mehren brought to Harvard the twelve young German legal scholars who have contributed to this volume, where he oversaw their work here during the last years of his wonderfully productive life.

The Story Research Fellowship represent the lives and values of three remarkable individuals, Joseph Story, to whose memory the program was dedicated, Kurt Nadelmann, who endowed the Fellowships, and of course Arthur von Mehren, who created the program in 1992 and mentored the Fellows up to the time of his death in 2006.

Joseph Story looms large in the history of both American jurisprudence and Harvard Law School. Born in 1779 in Salem, Massachusetts, Story studied at Harvard College and practiced law for a time in his native town. In the early 1800s, he became active in Democratic politics and was appointed to the United States Supreme Court in 1811 when he was only 32 years old. A natural scholar, Story wrote voluminously in almost every area of early nineteenth-century legal literature. His erudition led to his appointment as the first Dane Professor of Law at the Harvard Law School (HLS) in 1829. Although the Law School had been founded in 1817, it had struggled for identity and recognition during the first decade of its existence.

I met his spirit before I met him in person. It was at the end of the 1970s, and I was working at the Max Planck Institute for Comparative and International Private Law as a member of the editorial staff of the International Encyclopedia of Comparative Law. I had the privilege of reading manuscripts of chapters, which had been finalized by the authors and approved by the volume editors. It was my task to draw the general editor's attention to unclear or contradictory passages of the various texts. Moreover, I had to survey the author's compliance with the basic methodological approach of the Encyclopedia, which is the elaboration of model solutions for a given substantive problem from the great variety of national laws. As time went by, I noticed that many authors had great difficulty attaining this objective. For most of them, the point of intellectual departure by necessity appeared to be their own national law, not the societal or economical conflict or the substantive issue that can occur anywhere.

Arthur von Mehren was different. I studied his introduction to the contract volume of the Encyclopedia with great attention and growing enthusiasm. I soon realized that it was a masterpiece of functional comparison. To date, I remember how much I was impressed by the treatment of consideration and its equivalence in other legal systems.

INTRODUCTION

Given present trends toward economic globalization in the course of which foreign entities increasingly do business in the United States, significant choice-of-law issues often arise with respect to a foreign entity's liability in U.S. courts. A foreign defendant's exposure to punitive damages undoubtedly ranks among the more difficult and interesting of these issues. Punitive damages aim to punish a defendant's alleged wrongdoing and deter future misconduct. They are largely a peculiarity of U.S. law; most legal systems around the world reject them altogether or at least grant them much less frequently. Given these differences, under what circumstances will U.S. courts find that punitive damages may be appropriately imposed on foreign defendants?

This contribution will endeavor to address the foregoing question in light of the recent aviation decision In re: Air Crash at Belle Harbor, New York, on November 12, 2001, and, in particular, its analysis of the issue of choice of law for punitive damages. This chapter surveys the case law applying two choice-of-law frameworks – the “interest analysis” and Second Restatement of Conflicts of Laws tests – that both assign controlling significance to the place of alleged misconduct and the place of the defendant's incorporation when determining the applicable law of punitive damages. Because both of these factors will tend to point to a foreign jurisdiction when a foreign defendant is involved, courts have on several occasions decided that foreign law should govern the imposition of punitive damages.

INTRODUCTION

When Arthur Taylor von Mehren died on January 16, 2006, the academic community lost a leading scholar of international and comparative law whose work influenced generations of lawyers throughout the world. In addition to educating thousands of law students in the course of a teaching career spanning nearly 60 years, von Mehren was one of the few scholars with a truly global reputation.

The best evidence for the respect and affection von Mehren experienced from friends and colleagues is the overwhelming number of personal tributes published within the few weeks since he passed away. The editors of the Harvard Law Review respectfully dedicated the May 2006 issue to him. A recent issue of the American Journal of Comparative Law contains warm and illuminating tributes by James R. Gordley and Symeon C. Symeonides. Similar obituaries appeared in European law reviews.

The aim of this article is to trace back the evolution of an outstanding academic career and to highlight some of the many important contributions to legal scholarship authored by von Mehren.

INTRODUCTION

There are probably few things more intertwined with Arthur von Mehren's life and work than his intellectual leadership relating to the Hague Conference on Private International Law's efforts to create a global convention covering the jurisdiction and enforcement of judgments. After years of hard labor, on June 30, 2005, such efforts finally culminated in the adoption of the Convention on Choice of Court Agreements. The Convention, which bears Arthur's actual signature, implemented, albeit not as broadly as originally intended, much of what Arthur believed to be essential goals, first and foremost, international cooperation and harmonization. The Convention has therefore been rightly characterized as Arthur's final legacy and his “baby.”

The adoption of the Hague Convention concluded a process that commenced more than a decade earlier and that was originally designed to create a comprehensive worldwide convention on the jurisdiction and recognition and the enforcement of foreign judgments. However, it soon became obvious that this goal would be difficult to achieve, largely due to the clash between common law and civil law concepts and ideas. Although the U.S. delegation to the Hague Conference, in particular, had always advocated a “mixed-convention” format, that is, a convention providing for required, prohibited, and permitted bases of jurisdiction to adjudicate, most European delegates preferred a double convention that provided only for required and prohibited bases for jurisdiction and that did not leave open any “gray” areas that a court in a member state could choose to rely on.

INTRODUCTION

It is commonly acknowledged that during the twentieth century, American and European choice of law have drifted apart: in the United States, the American Conflict of Laws Revolution ousted the traditional vested rights theory and paved the way for a variety of novel approaches focusing on flexibility and fairness in individual cases. In Europe, in contrast, classical choice-of-law theory favoring predictability and legal certainty prevailed. The twentieth century, however, has not only seen transatlantic divergence in choice of law. In fact, after years of vigorous debates, legal regimes on both sides of the Atlantic have adopted the same approach when it comes to the private international law of contracts. Specifically, both American law and European law follow the principle of party autonomy and, therefore, allow parties to choose the applicable law.

Of course, the fact that American law and European law have moved closer over the last few years has not escaped the attention of conflicts scholars around the world. However, up until today the precise extent of transatlantic convergence is essentially unclear. In fact, nobody has, as yet, determined how similar the American and the European concepts of party autonomy actually are. And nobody has, as yet, analyzed how similar the handling of the two concepts is in practice. In this chapter, I will fill this gap by analyzing the design and the practical handling of party autonomy in both Europe and the United States.

The functions of the law seem to have developed dramatically since the days of Miss Emma Hamlyn.

What I seek to show in this book is that many fundamental choices for society are now made, and probably have to be made, not by the legislature, not by the executive, but by the courts. This requires the courts not merely to apply existing legal rules, but to develop the law. In doing so, the courts will necessarily be making value choices, and often balancing competing values, especially where they are confronted with conflicts between them.

For example, in the moral sphere, acute problems arise on the ostensibly sacrosanct right to life: what is its scope? The duty to protect and respect human life may conflict with our conceptions of human dignity. What then should be the response of the courts to the issue of euthanasia?

Many examples of competing values have their origin in the idea of fundamental rights. Especially over the past fifty years, it has become widely accepted in Europe that the protection of fundamental human rights is a principal function of the courts. But often fundamental rights are not, despite the language sometimes used, absolute and unqualified. Freedom of speech may conflict with the right to privacy; currently, there is vital debate about the limits on the fundamental right to practise a religion. So the courts, necessarily, have to strike the balance.

Here I would like to stand back and look at the overall picture: what has the European Union achieved? What are its strengths and its weaknesses? How should it move forward?

The subject is of course very large, but I will concentrate primarily on the aspects of the rule of law and the role of the courts.

There is much that could be said about the achievements of the European Union. There is the single market. The free movement of persons – and not least the free movement of students, able to study in other Member States: a great asset on many counts. There are the achievements of many Community policies: the environmental policy; social policy; greater progress towards equal rights for men and women than would have been achieved nationally. Other policies have been less successful from a UK vantage point, although some might seek to defend them: the common agricultural policy and the common fisheries policy. There is the capacity of the Union to take a collective position in international negotiations, where it has far more influence than the Member States would have individually.

These are certainly significant achievements – not to mention the broader goals of peace and prosperity over a period of more than half a century.

From our present viewpoint, in terms of the rule of law, we see a Union based on law – indeed there is no other basis available.