State Court to Exchange Guidance With a Foreign One

Thomas H. Lee in New York Times, October 29, 2010

Media Source

By John Eligon

The concept is novel and, as far as New York State’s chief judge can tell, unprecedented: a state court agreeing with a court system in another country to provide each other with legal guidance.

That was the announcement Thursday by Jonathan Lippman, New York’s chief judge, and James Spigelman, the chief justice of the Supreme Court of New South Wales in Australia. Under the agreement, when a court in one of the jurisdictions is hearing a case that is dealing with the laws of the other jurisdiction, the court –- with the consent of the parties in the case -– can ask judges in the other jurisdiction to provide an opinion on the case.

So, for instance, if an Australian company is suing a New York company in Australia for breach of contract, a panel of judges in New York might be asked to provide an opinion, based on New York contracts law, about the case.

These opinions will not be legally binding –- the judge who has the case can either accept or reject the opinion. The opinions also may not be used to set precedents, meaning a New York lawyer could not use one of these opinions in a case in New York.

While this may seem to the lay person like an obscure pact, legal experts say it is somewhat common in commercial litigation that cases before a particular court are governed by laws of a different country.

“It’s important to New York because we’re the center of international commerce in the world,” Judge Lippman said.

Judge Lippman said he believed it was the only such agreement between a state court in the United States and a foreign court.

Under Judge Lippman’s plan, he would appoint a five-judge panel made up of a judge from each of the state’s four appellate courts and one from the Court of Appeals, the state’s highest court. That panel would then issue the opinions. The court in New South Wales will create its own program for providing guidance on issues of its law that arise in New York courts.

This new agreement also raises the question of whether it is appropriate for judges to provide guidance to foreign courts, especially when that guidance is not binding or precedential. Some might argue that these opinions could add new wrinkles and complications to cases in New York. Even though the opinions are unofficial and not considered precedents, there could be an urge by judges or litigators in cases in New York to rely on them when they make arguments.

Duncan B. Hollis, a Temple Law School professor who has written on agreements between states and foreign countries, said that the legality of this pact, and many others between other states and countries, remains an open question. A provision in the federal constitution says that states may enter into an agreement with a foreign government only if approved by Congress.

But states and foreign countries have entered hundreds of agreements without first going to Congress, Mr. Hollis said.

“How is that possible given the constitutional text?” Mr. Hollis said. “This has not been answered definitively” by the courts.

The pact could be tricky in that “you’ve got this hybrid panel that’s not a court,” said Thomas H. Lee, a professor at Fordham Law School.

But, he added, “As a policy matter I think it’s a great thing. It seems to me that a lot of times foreign courts have New York law issues and New York courts have foreign law issues.”

Richard Epstein, a professor at New York University Law School, said that New York courts relying on these unofficial opinions would be no different than what courts do now when they cite law review articles.

Judge Lippman said he hoped to some day put in effect an amendment to the New York Constitution that would allow the state to provide official opinions on New York law to foreign courts. That would allow these opinions to serve as precedents in New York law and be cited in litigation.

Currently, the state constitution allows the state’s Court of Appeals to provide official opinions on New York law to United States federal courts.

Court officials in New York and New South Wales did not have any figures on how many cases have been before them that have centered on the other jurisdiction’s laws.

But several legal academics said they believed the agreement was innovative and a good idea.

“I would think that this would be a healthy development for court systems to not have to guess at the law of another country,” said Richard Pildes, an N.Y.U. law professor.

As it stands now, lawyers litigating a case regarding a foreign jurisdiction’s laws will spend a lot of time and resources to bring in experts from that country to testify about the law. Often times, the experts of both sides cancel each other out. Judge Lippman said this initiative would provide an opinion from a neutral body without all the costs.

In cases involving international companies, lawyers may often shop for the country with laws most favorable to their clients and try to get the case heard there. But before companies from different countries do business with one another, they often write into a contract which country’s law will govern a dispute if they have one. Even if they decide, for instance, that New York law will govern their disputes, it may still be more appropriate to file the case in a different country’s court. For instance, if a defective product from a New York company hurts people in Australia, that country might be the better place to file the lawsuit.

The coordination of laws and legal information between countries will be the topic of a conference in Italy in December hosted by N.Y.U. and the European Union Institute.