Enforcing Multiple-Damage Judgments in Europe - Part 4 Chapter 14 - The Practice of International Litigation - 2nd Edition
Lawrence W. Newman has been a partner in the New York office of Baker & McKenzie since 1971, when, together with the late Professor Henry deVries, he founded the litigation department in that office. He is the author/editor of 4 works on international litigation/arbitration.
Michael Burrows, Formerly, Of Counsel, Baker & McKenzie, New York.
It seemed like such a good idea at the time. You remember the client coming to your office and telling you the details of the how he had been defrauded out of millions of dollars in a scheme engaged in by a group of European companies, primarily in a number of European money centers. You also remember that the client was able to support his allegations with evidence. But what you remember most is that, although the client came seeking your advice about the best European forum for his lawsuit, you suggested that he bring a RICO claim in New York so that treble damages would be available.
You explained to the client that, as is typically the case, litigation in the U.S. would be much more costly than in Europe. You also recognized that the jurisdictional battle alone would be a mini-war. But the allure of treble damages ultimately won the day. The litigation turned out to be as difficult and expensive as you had feared, but your client prevailed at trial and the $30 million judgment was trebled to $90 million. The client was, of course, ecstatic and just called to tell you that he has arranged a celebratory weekend for the entire team at a fantastic new resort. You hung up the phone with pride that your recommendation to eschew the European fora in favor of the U.S. was vindicated. Or was it? For no sooner had you hung up the phone that you start reading the memo just placed in your inbox and begin to realize that enforcing multiple-damage judgments outside the United Sates is a proposition fraught with peril.
English law is probably the clearest in holding that multiple damage awards will not be enforced. The Protection of Trading Interests Act (“PTIA”) was a highly political piece of legislation passed in 1980 in response to pending antitrust claims in the U.S. courts against a number of British companies, which the British government did not want enforced against those companies’ British assets. Section 5 of the statute provides that the English courts will not enforce a judgment for “an amount arrived at by doubling, trebling or otherwise multiplying a sum assessed as compensation.” In December 2003, 25 years after the statute was enacted, the English Court of Appeal handed down the first decision of the English courts applying Section 5.
The case concerned a dispute between boxing heavyweight champion Lennox Lewis and his ex-promoter and manager, Panos Eliades. Lewis applied to the English court to enforce a U.S. judgment in a lawsuit in which he had asserted six causes of action under RICO and six common law causes of action, including fraud and breach of fiduciary duty. The jury awarded a total of $7,273,641, only $396,082 of which was attributable to the RICO causes of action. At the time that Lewis sought to enforce the judgment in England, the RICO award had not yet been trebled.