Enforcing Punitive Damage Awards in France After Fountaine Pajot », 60 American Journal of Comparative Law 775-804 (2012)

Electronic copy available at: http://ssrn.com/abstract=1985578

Enforcing Punitive Damage Awards in France after Fountaine Pajot† Benjamin West JANKE* & François-Xavier LICARI**

† DOI http://dx.doi.org/10.5131/AJCL.2011.0029 * Attorney, Baker, Donelson, Bearman, Caldwell & Berkowitz, PC (New Orleans); J.D. & B.C.L. (Paul M. Hebert Law Center, Louisiana State University); B.S. & M.Ed. (Vanderbilt University). ** Dr. en droit (University of Strasbourg, France); Dr. iuris (University of Saarland, Germany); Maître de conférences (Associate Professor), University of Metz, France. All translations, unless otherwise indicated, are our own. The original text is retained where appropriate. The authors would like to thank Maîtres Jacques-Alexandre Genet and Jacques Manseau, attorneys in Paris, for providing them with the unpublished cases from the lower courts. François-Xavier Licari wishes to thank them for all the stimulating talks about the development of the case.

In a landmark ruling, the Cour de cassation held that “an award of punitive damages is not, per se, contrary to public policy,” but that “it is otherwise when the amount awarded is disproportionate with regard to the damage sustained and the debtor’s breach of his contractual obligation.” Schlenzka & Langhorne v. Fountaine Pajot, S.A. involved the failed attempt by American judgment creditors to enforce their California judgment against a French defendant in France. At the same time that the judgment creditors were taking their case through the French legal system, the Cour de cassation, in a different line of cases, liberalized the conditions under which a foreign judgment could be enforced in France. But when the Court opened one door for the American plaintiffs, it closed another by refusing to enforce the judgment because it included disproportionate punitive damages. The Court’s reasons were inconsistent with prior interpretations of proportionality and disingenuous to the court’s modern approach to the enforcement of foreign judgments. In just a few words, the Court echoed prevailing French and European sentiments about American punitive damage awards. Unfortunately, the prevailing attitudes are dominated more by prejudice than by fact and reason.

Electronic copy available at: http://ssrn.com/abstract=1985578

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“The chances of getting a substantial punitive damages judgment from a U.S. court recognized by any court outside of the U.S. are virtually nil.”1

I. Introduction

In a landmark ruling, the Cour de cassation held that “an award of punitive damages is not, per se, contrary to public policy.”2 Schlenzka & Langhorne v. Fountaine Pajot, S.A. involved an attempt by American judgment creditors to enforce their California judgment against a French defendant in France. However, the plaintiffs were ultimately unsuccessful in enforcing their judgment because the Cour de cassation found that the punitive damages were disproportionate to the damage actually sustained and to the seriousness of the defendant’s contractual breach, and thus, contrary to public policy.3

It will come as no surprise to private international law (PIL) scholars or practitioners that a French court refused to recognize an American punitive damage award. For decades, commentators have lamented the reluctance of European courts to recognize and enforce American judgments awarding non-compensatory damages.4 In Germany, for example, the Federal Court of Justice (the Bundesgerichtshof (BGH), the highest court in Germany in civil and criminal matters) set an early tone for European disapproval of American punitive damage awards.5 While there were scholarly efforts to reverse the trend,6 those efforts have largely failed.

Nevertheless, two caveats are in order at the outset. First, the position of the French Cour de cassation is not as radical as that of the Bundesgerichtshof. Where the Bundesgerichtshof declared punitive damages incompatible with German public policy7 in principle,8 the French

1 Patrick J. Borchers, Punitive Damages, Forum Shopping, and the Conflict of Laws, 70 LA. L. REV. 529, 531 (2010). 2 Schlenzka & Langhorne v. Fountaine Pajot S.A., Cass. Civ. 1st, December 1, 2010, Fountaine Pajot, N°09-13303, Recueil Dalloz [D.] 2011, 423, comment François-Xavier Licari & ibidem, 1371, 1382, comment Fabienne Jault-Seseke, Juris-Classeur Périodique, Edition Générale, [J.C.P. Ed. G.] 2011, I,139, comment Jennifer Juvénal & ibidem, 435, n° 11, comment Philippe Stoffel-Munck, Revue critique de droit international privé [Rev. crit. DIP] 2011, 93, comment Hélène Gaudemet-Tallon, Gazette du Palais [G.P.], 24 mars 2011, n° 83, 13, comment François de Bérard, Droit maritime français 2011, 331, comment Olivier Cachard; 138 JDI 614, comment Olivera Boskovic (2011). 3 Id. 4 Ronald A. Brand, Punitive Damages and the Recognition of Judgments, 43 NETHERLANDS INTERNATIONAL LAW

REVIEW [NILR] 143 (1996); Borchers, supra note 1, at 540 (“Without any foreign full faith and credit command, it should come as no surprise that the chances of getting a foreign court to recognize a substantial punitive judgment rendered by a U.S. court are virtually nil.”). 5 See infra note 7. 6 See, e.g., Karen J. Tolson, Punitive Damage Award in International Arbitration: Does the Safety Valve of Public Policy Render Them Unenforceable in Foreign States?, 20 LOY. L.A. L. REV. 455 (1987); Russell J. Weintraub, How Substantial Is Our Need for a Judgments—Recognition Convention and What Should We Bargain Away to Get It, 24 BROOK. J. INT’L L. 167, 203 et seq. (1998); Ronald A. Brand, Punitive Damages Revisited; Taking the Rationale for Non-Recognition of Foreign Judgments Too Far, 24 J.L. & COM. 181 (2005); John Y. Gotanda, Charting Developments Concerning Punitive Damages: Is the Tide Changing?, 45 COLUM. J. TRANSNAT’L L. 507 (2007); Jessica J. Berch, The Need For Enforcement of U.S. Punitive Damages By the European Union, 19 MINN. J. INT’L L. 55 (2010). 7 BGH [Bundesgerichtshof], 4 june 1992, BGHZ [Entscheidungen des Bundesgerichtshofs in Zivilsachen] 118, 312, NJW [Neue Juristische Wochenschrift] 1992, 3096, IPrax [Praxis des Internationalen Privat– und Verfahrensrechts] 1993, 310, RTDciv. [Revue trimestrielle de droit civil] 1994, 457, comment Claude Witz; RGDA [Revue générale

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Cour de cassation declared them contrary to the French ordre public only to the extent they are “disproportionate” to the actual injury. Second, not all European courts have sided with the German position, and some have actually embraced punitive damages.9 Recent attempts to harmonize EU member nations against punitive damages have produced only modest results.10

In France, before Fountaine Pajot, there was only one decision concerning the enforcement of a U.S. punitive damage award. In that case, the lower court refused to grant the judgment creditors an exequatur for two reasons: first, punitive damages are penal in nature and cannot be enforced in French civil courts; and second, punitive damages offend the fundamental principle of full compensation (principe de compensation intégrale).11 However, there were

de droit des assurances] 1996, 205, comment J.-M. Gardette; Harald Koch, Ausländischer Schadensersatz vor deutschen Gerichten, NJW 1992, 3073; Stiefel, Stürner & Stadler, The Enforceability of Excessive U.S. Punitive Damage Awards in Germany, 35 AM. J. COMP. L. 779 (1991); Peter Hay, The Recognition and Enforcement of American Money Judgments in Germany—The 1992 Decision of the German Supreme Court, 40 AM. J. COMP. L. 729 (1992); Joachim Zekoll, The Enforceability of American Money Judgments Abroad: A Landmark Decision By the German Federal Court of Justice, 30 COLUM. J. TRANSNAT’L L. 641 (1992); Andre R. Fiebig, The Recognition And Enforcement of Punitive Damages Awards in Germany; Recent Developments, 22 GA. J. INT’L & COMP. L. 635 (1992); Hartwin Bungert, Enforcing U.S. Excessive and Punitive Damages Awards in Germany, 27 INT’L L. 1075 (1993); Madeleine Tolani, U.S. Punitive Damages Before German Courts: A Comparative Analysis With Respect to the Ordre Public, 17 ANNUAL SURVEY OF INT’L & COMP. LAW 185 (2011). 8 The Bundesgerichtshof evoked some possible narrow exceptions: “The matter might be different if punitive damages are intended to compensate for some remaining economic disadvantages that have not been compensated, are hard to prove, or if they are intended to have the defendant disgorge profits realized as a result of the tort . . . . Shifting the plaintiff’s litigation expenses . . . to the defendant is something that generally can be considered in this context.” (translation, P. Hay, supra note 7, at 747). 9 Italy followed the same path as Germany. See Francesco Quarta, Recognition of U.S. Punitive Damages Awards in Continental Europe: The Italian Supreme Court’s Veto, 31 HASTINGS INT’L & COMP. L. REV. 753 (2008); Elena d’Alessandro, Pronunce americane di condanna al pagamento di punitive damages e problemi di riconoscimento in Italia, RIV. DE DIRITTO CIVILE 2007, 383; Zeno Crespi Reghizzi, Sulla contrarietà all’ordine pubblico di una sentenza straniera di condanna a punitive damages, RIV. DI DIRITTO INTERNAZIONALE PRIVATO E PROCESSUALE, 2002, 977. Spain, to the contrary, has no obstacle to the recognition of U.S. punitive damage awards. See Scott R. Jablonsky, Translation And Comment, Enforcing U.S. Punitive Damages Awards in Foreign Courts – A Recent Case in the Supreme Court of Spain, 24 J.L. & COM. 225 (2005) (exequatur granted to a Texas judgment allowing punitive damages for the infringement of intellectual property rights). England shows the same favor. See JAMES J. FAWCETT & JANEEN CARRUTHERS, CHESHIRE AND NORTH’S PRIVATE INTERNATIONAL LAW 555–56 (2008); Michael Polonski, Particular Issues Affecting the Recognition and Enforcement of U.S. Judgments, 19-AUT INT’L

PRACTICUM 156 (2006). In Greece, the Areios Pagos (Άρειος Πάγος, the Greek Supreme Court) is favorable to the recognition of such awards as long as the amount allowed is reasonable. See Christos D. Triadafillidis, Anerkennung und Vollstreckung von punitive damages – Urteilen nach kontinentalem und insbesondere nach griechischem Recht, IPRAX 2002, 236. There is a strong possibility that the Swiss Federal Court will follow the same path. See Martin Bernet & Nicolas C. Ulmer, Recognition and Enforcement in Switzerland of US Judgments Containing an Award of Punitive Damages, 22 INT’L BUS. LAW, 272 (1994). For a variety of European jurisdictions, see also Marta Requejo Isidro, Punitive Damages From a Private International Law Perspective, in HELMUT KOZIOL & VANESSA WILCOX

(eds.), PUNITIVE DAMAGES: COMMON LAW AND CIVIL LAW PERSPECTIVES 237, 245–51 (2009); Harry Duintjer Tebbens, Punitive Damages: Towards a Rule of Reason for U.S. Awards and Their Recognition Elsewhere, in II GABRIELLA VENTURINI & STEFANIA BARIATTI (eds.), LIBER FAUSTO POCAR 273, 276–82 (2009). 10 In the original draft of the Rome II Regulation, “non-compensatory damages” were declared “contrary to Community public policy.” In the enacted version of this regulation, only a cautious statement remains in recital 32 of the preamble. For a complete picture of the different drafts, see Bernhard A. Koch, Punitive Damages in European Law, in PUNITIVE DAMAGES: COMMON LAW AND CIVIL LAW PERSPECTIVES 197, 197–99 (Helmut Koziol and Vanessa Wilcox eds., 2009). 11 Tribunal de Grande Instance [TGI] de Paris, July 15, 2004, 1ère chambre, n° 03/09481, Consorts Chapgier v. Taitbout Prévoyance & B. Mesqui, 8 (“En effet . . . les dommages-intérêts punitifs . . . ont été ordonnés pour . . .

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some faint hints in the jurisprudence that the Cour de cassation would recognize damages of a punitive nature. For example, French courts consistently enforce foreign sanctions based on contempt of court12 and penalty clauses (clauses pénales) in private contracts.13 Otherwise, there was little caselaw on the enforcement of foreign punitive damage awards in France to guide the Cour de cassation. By contrast, French doctrine was much more prolix in admitting, almost unanimously, the compatibility of foreign punitive damage awards with the French ordre public so long as the sum is not disproportionate or excessive.14 In this uncertain context, only a decision of the Cour de cassation could clarify the law.

Before exploring French attitudes to punitive damages in particular, one must generally understand how French courts recognize foreign judgments. In the Napoleonic era and beyond, one came into this world with a tremendous legal birthright as a French Citizen. In the realm of jurisdiction, the Code civil offered two guarantees: first, under Civil Code Article 14, French courts have jurisdiction over matters in which a French citizen is a plaintiff, even if the defendant is not French or even residing in France, and even if the defendant incurred the obligation abroad;15 and second, under Civil Code Article 15, French courts have exclusive jurisdiction over matters concerning a defendant who is a French citizen.16 sanctionner un comportement avec une fonction principale de dissuasion, proche de la sanction pénale qui relève en France du monopole de l’Etat. Prononcés pour punir et dissuader, ces ’punitive damages’ sont en contradiction avec le principe de l’ordre public de l’équivalence, en droit français de la responsabilité, entre la réparation et le préjudice subi.”) (unpublished opinion). (“Indeed . . . punitive damages . . . have been ordained to sanction behavior with a primary function of deterrence, closer to a criminal sanction, that is in France a monopoly of the State. Delivered to punish and deter, these ‘punitive damages’ are in contradiction with the principle of public policy of equivalence, under the French law of liability, between the remedy and the damage suffered.”) (unpublished opinion). 12 See infra note 106 and accompanying text. 13 See generally Saúl Litvinoff, The Law of Obligations, Part II, Putting in Default and Damages, in 6 LOUISIANA

CIVIL LAW TREATISE §13.5 (2d. ed.) (discussing the enforcement of penalty clauses (clauses pénales) by the Cour de cassation, which reversed the trend of trial courts (nicknamed la rébellion des juges du fond) to modify penalty clauses on the basis of equity); Charles Calleros, Punitive Damages, Liquidated Damages, and Clauses Pénales in Contract Actions: A Comparative Analysis of the American Common Law and the French Civil Code, 32 BROOK. J. INT’L L. 67 (2006). 14 HENRI BATIFFOL & PAUL LAGARDE, I TRAITÉ DE DROIT INTERNATIONAL PRIVÉ, n° 247, 415–16 (1993); Jérôme Ortscheidt, Les dommages et intérêts punitifs en droit de l’arbitrage international, LES PETITES AFFICHES (LPA) 20 nov. 2002, n° 232, 17, § 13 et seq.; Olivera Boskovic, LA RÉPARATION DU PRÉJUDICE EN DROIT INTERNATIONAL

PRIVÉ n° 408 et seq. (2007); Olivera Boskovic, Les dommages-intérêts en droit international privé. Ne pas manquer une occasion de progrès, J.C.P. 2006, Ed. G., I, 163; DOMINIQUE BUREAU & HORATIA MUIR WATT, DROIT

INTERNATIONAL PRIVÉ, vol. 2, n° 995 (2007); Marie-Elodie Ancel, Contrefaçon internationale; le juge français face aux dommages-intérêts punitifs, CAHIERS DE DROIT DE L’ENTREPRISE, n°4, juillet-août 2007, 51, 54 seq.; Andrea Pinna, Recognition and Res Judicata of US Class Action Judgments in European Legal Systems, 1 ERASMUS L. REV. 31, 53 et seq. (2008); Gwendoline Lardeux, Sources extra-contractuelles des obligations – Détermination de la loi applicable, J.-CL. DROIT INTERNATIONAL, FASC. 553–1, n° 67 (2008); Bernardo M. Cremades, Liquidated Damages, Penalty Clauses and Punitive Damages Within International Contracts, 2002 INT’L BUS. L.J. 329; contra Bernard Audit, DROIT INTERNATIONAL PRIVÉ n° 802 (2008) in fine. 15 C. CIV. art. 14 (1804) (Fr.) (“L’étranger, même non résidant en France, pourra être cité devant les tribunaux français, pour l’exécution des obligations par lui contractées en France avec un Français; il pourra être traduit devant les tribunaux de France, pour les obligations par lui contractées en pays étranger envers des Français.”) (“The foreigner, though not residing in France, can be brought before the courts of France, for the performance of obligations contracted by him in France with a Frenchman; he can be brought before the courts of France, for obligations contracted with Frenchmen”). The text of article 14 remains the same today. For a detailed analysis of this provision, see Kevin M. Clermont & John R. B. Palmer, Exorbitant Jurisdiction, 58 ME. L. REV., 474, 482–503 (2006). For an historical perspective on the interpretation of these articles, see Hélène Gaudemet-Tallon, Le destin mouvementé des articles 14 et 15 du Code civil français de 1804 au début du XXIème siècle, in II GABRIELLA

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In practice, however, French courts would recognize foreign judgments on the condition that such judgments were correct on the merits according to French law (a power known as la révision au fond).17 After more than 150 years of French courts exercising the révision au fond,18 the Cour de cassation eliminated this disputed doctrine and replaced it with a five-part test for the enforcement of foreign judgments in its landmark 1964 decision, Munzer v. Munzer.19 This test, as we will explain in detail, shifted the focus away from the merits of the case towards a deference to the judgment of the foreign court. The Cour de cassation continued to tweak the Munzer analysis20 and further liberalized the process by limiting the scope of Civil Code Articles 14 and 15 and by reducing the Munzer requirements in another series of noteworthy decisions in 2006 and 2007: Prieur v. de Montenach,21 Banque de développement BDL v. Fercometal,22 and Cornelissen v. Avianca Inc.23

At the same time that the Cour de cassation made these significant changes to the conditions under which a foreign judgment could be enforced in France, two California judgment creditors were seeking to enforce their U.S. judgment, which included punitive damages, in a French court against a French defendant: Fountaine Pajot.

VENTURINI & STEFANIA BARIATTI (eds.), LIBER FAUSTO POCAR, VOLUME 433 (2009) (showing how courts first extended and later restricted the scope of these provisions, and that jurisdiction based on nationality still exists in EU law and is justified). For a European perspective, see L. I. De Winter, Excessive Jurisdiction in Private International Law, 17 INT’L & COMP. L.Q. 706 (1968); Diego P. Fernández Arroyo, Exorbitant and Exclusive Grounds of Jurisdiction in European Private International Law: Will They Ever Survive?, in I FESTSCHRIFT FÜR ERIK JAYME

169 (2004). 16 C. CIV. art. 15 (1804) (Fr.) (“Un Français pourra être traduit devant un tribunal de France, pour des obligations par lui contractées en pays étranger, même avec un étranger.”) (“A Frenchman can be brought before a French court, for the obligations he contracted in a foreign country, even with a foreigner”). The text of article 15 remains the same today. 17 In the first French case under the Code civil involving the recognition of a foreign judgment, the Cour de cassation held in Holker v. Parker (Cass. Civ., April 19, 1819, Sirey, I, 288) that the courts had the right to review the issues adjudicated in the American judgment. The examination of the merits affected both facts and law. See GEORGES R. DELAUME, AMERICAN-FRENCH PRIVATE INTERNATIONAL LAW 161–65 (1961). The Code civil said nothing of the conclusive effect of foreign judgments, but the jurisprudence would support the révision au fond. In the Ancien Régime, a Royal Decree in 1629 precluded the conclusive effect of foreign judgments. See Kurt Nadelmann, French Courts Recognize Foreign Money-Judgments: One Down and More to Go, 13 AM. J. COMP. L. 72, 73 n.6 (1964) (citing Ordinance of June 15, 1629, art. 121). 18 Here, we should note that the law of foreign judgments in France is almost entirely judge-made caselaw. While it may seem out of place for caselaw to dominate any area of law in a civil law jurisdiction, the jurisprudence drives much of any conflicts of law analysis in France. On the exact position of caselaw in France, see Marc Ancel, Case Law in France, 16 JOURNAL OF COMPARATIVE LEGISLATION AND INTERNATIONAL LAW [Third series] 1 (1934); D. Kurt Lipstein, The Doctrine of Precedent in Continental Law with Special Reference to French and German Law, 28 JOURNAL OF COMPARATIVE LEGISLATION AND INTERNATIONAL LAW [Third series] 34 (1946); A.N. Yiannopoulos, Jurisprudence and Doctrine as Sources of Law in Louisiana and France, in JOSEPH DAINOW (ed.), THE ROLE OF JUDICIAL DECISIONS AND DOCTRINE IN CIVIL LAW AND IN MIXED JURISDICTIONS, 69, 72–77 (1974). On the role of caselaw in the French conflicts of law analysis, see Gilles Cuniberti, The Liberalization of the French Law of Foreign Judgments, 56 INT’L & COMP. L.Q. 931, 932 (2007); Sylvette Guillemard & Alain Prujiner, La codification internationale: un échec, 46 LES CAHIERS DU DROIT 175, 180 (2005). 19 Cass. civ. 1st, January 7, 1964, Munzer, Bull, I, N°15. 20 See Bachir v. Bachir, Cass. civ. 1st, October 4, 1967, Bachir, Bull., I, N°277; Simitch v. Fairhusrt, Cass. civ. 1st, February 6, 1985, Simitch, Bull. 1985, I, N°55, N°83-11241. 21 Cass. civ. 1st, May 23, 2006, Prieur, Bull., I, N°254, N°04-12777. 22 Cass. civ. 1st, May 22, 2007, Fercometal, Bull., I, N°195, N°04-14716. 23 Cass. civ. 1st, February 20, 2007, Cornelissen, Bull., I, N°68, N°05-14082.

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In this Article, we will present in detail the Fountaine Pajot case, the historical and recent developments to the enforcement of foreign judgments in France, and commentary on the future of enforcing foreign punitive damage awards following Fountaine Pajot. II. The Fountaine Pajot Case: From California to Paris

A. The Underlying Litigation and the California Judgment

In 1999, a California couple, Peter Schlenzka and Julie Langhorne, purchased a 56-foot Marquises catamaran from Rod Gibbons’ Cruising Cats USA, an authorized dealer and agent for the French manufacturer, Fountaine Pajot, S.A.24 The couple purchased the boat for approximately $800,000 to sail around the world with their children. Pursuant to the purchase agreement, Fountaine Pajot would deliver the catamaran to the purchasers in Miami in “like-new” condition after first exhibiting the boat at the Miami boat show. The purchase agreement included provisions for attorneys’ fees and jurisdiction and venue in the State of California should any disagreement between the parties arise.

Unbeknownst to the purchasers, who were told that the catamaran was in top-flight condition when it was delivered to them, the vessel had been severely damaged in a storm with hurricane-force winds that struck the port of La Rochelle, where the boat was manufactured. The catamaran broke away from its mooring and collided with other loose vessels. Fountaine Pajot concealed this information from the purchasers, as well as the extent of the subsequent repair work. As the purchasers experienced problems with the catamaran, they found that its structural integrity was compromised and concealed by Fountaine Pajot’s patchwork repairs.

The purchasers sued Fountaine Pajot in California. Fountaine Pajot unsuccessfully resisted the jurisdiction of the California court, relying on Article 15 of the French Civil Code. Article 15, at the time of the California litigation, had been interpreted by French courts as giving exclusive jurisdiction to French courts over contractual disputes involving French defendants.25 After losing the jurisdictional argument in the California court, Fountaine Pajot resisted the

24 The facts of the Fountaine Pajot case as presented in this Article are taken from the judgment of the French district court in Rochefort (TGI Rochefort, Peter Schlenzka & Julie Langhorne v. S.A. Fountaine Pajot, November 12, 2004, n° 03/01276, unpublished opinion), which denied the plaintiffs an exequatur of their February 26, 2003 California judgment. In the proceeding before the French court, the plaintiffs applied for an exequatur in order to enforce their judgment in France. The French court reviewed the original English and a French translation of the transcript from the California proceeding in which the court announced its tentative decision after the trial on the merits. In that proceeding, the California court gave extensive reasons for its tentative judgment. The plaintiffs withdrew their request for a statement of decision based on the record developed orally by the Court and transcribed by the court reporter. The transcript, along with the final judgment of February 26, 2003, were submitted to Le Tribunal de Grande Instance de Rochefort, which further elaborated on the facts in its Judgment of November 12, 2004, based on the record before it. See also the English transcript of the hearing, at Schlenzka v. Pajot, No. 837722-1 (California Superior Court), Tr. Feb. 26, 2003. 25 For a detailed analysis of this provision, see Thomas E. Carboneau, The French Exequatur Proceeding: The Exorbitant Jurisdictional Rules of Articles 14 and 15 (Code Civil) as Obstacles to the Enforcement of Foreign Judgments in France, 2 HASTINGS INT’L & COMP. L. REV. 307, 316–26 (1979); Clermont & Palmer, supra note 15; Gaudemet-Tallon, supra note 15. As we will discuss later in this Article, the Cour de cassation dramatically limited the scope of article 15 in 2006 with its holding in Prieur v. de Montenach. See Cass. civ. 1st, May 23, 2006, Prieur, Bull., I, N°254, N°04-12777. In Prieur, the Cour de cassation held that article 15 “only establishes the non-exclusive competence of the French courts. It is inappropriate to exclude indirect competence of a foreign court where the dispute is inherently linked to the country to whose courts a matter has been submitted if the choice of jurisdiction is not artificial.” See André Huet, Le nouvel article 15 du Code civil, in VERS DE NOUVEAUX ÉQUILIBRES

ENTRE ORDRES JURIDIQUES: LIBER AMICORUM HÉLÈNE GAUDEMET-TALLON 311 (2008).

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plaintiffs’ discovery requests, did not participate in the trial, and was not even present when the California court rendered judgment against it for $3,253,734.45, comprised of $1,391,650.12 in actual damages, $402,084.33 in attorneys’ fees, and $1,460,000.00 in punitive damages.

The California court found that punitive damages were appropriate given that the defendant committed fraud and that its withdrawal from the trial was an attempt to avoid accountability and to conceal its net worth. The court noted that the purpose of awarding punitive damages is not to bring financial ruin to the defendant but instead to punish the defendant and deter it from engaging in such conduct in the future. Based on the court’s finding that Fountaine Pajot’s net worth at the time of the trial was approximately $7.3 million, the court held that an award of $1,460,000.00, “which is approximately 20 percent of the net worth of the corporation,”26 was appropriate.

B. The California Plaintiffs Take their Judgment to France

To enforce their California judgment against Fountaine Pajot, the U.S. plaintiffs took their judgment to France.

The plaintiffs filed suit in Le Tribunal de Grande Instance de Rochefort, near the port where the catamaran had been manufactured. There, the plaintiffs sought an exequatur of their judgment to make it executory in France, and an additional 10,000 € in attorneys’ fees for having to seek judicial enforcement under Code of Procedure Article 700.27 Fountaine Pajot alleged that the judgment was unenforceable in France because: (1) it failed the five-part analysis for enforcing foreign judgments established in Munzer;28 and (2) because, under Civil Code Article 15, French courts have exclusive jurisdiction over Fountaine Pajot, a French defendant.

The French court denied the exequatur request on the basis of Civil Code Article 15, holding that the French defendant benefits from the exclusive jurisdiction of France unless the defendant expressly renounces the benefits of Article 15 or else submits to another jurisdiction by contract.29 While the California court noted that the purchase agreement between the purchasers and the agent, Rod Gibbons’ Cruising Cats, provided for jurisdiction of all disputes in California, the French court noted that Fountaine Pajot was not a party to that agreement and that, while the agreement identified “Rod Gibbons’ Cruising Cats” as “agent,” the plaintiffs did not provide any proof to demonstrate that the agent was acting on behalf of Fountaine Pajot.30 The court instead found that there was a separate delivery contract between the agent and Fountaine Pajot, which provided for exclusive jurisdiction before the tribunal de commerce de La Rochelle.

26 Schlenzka v. Pajot, No. 837722-1, Final Judgment (California Superior Court, Feb. 26, 2003). 27 C.C.P. [Fr.] art. 700: “As provided for under I of Article 75 of the Act n° 91-647 of 10 July 1991, in all proceedings, the judge will order the party obliged to pay for legal costs or, in default, the losing party, to pay to the other party the amount which he will fix on the basis of the sums outlaid but not included in the legal costs. The judge will take into consideration the rules of equity and the financial condition of the party ordered to pay. He may, even sua sponte, for reasons based on the same considerations, decide that there is no need for such order.” 28 Cass. civ. 1st, January 7, 1964, Munzer, Bull., I, N°15. 29 TGI Rochefort, supra note 24. 30 The court further noted as relevant that the agent did not exclusively sell boats manufactured by Fountaine Pajot. We critically regard this distinction as dubious and a mere attempt by the French tribunal to resist the exequatur (and the punitive damages) without discussion of the merits.

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The French court noted that, according to the jurisprudence constante,31 a defendant’s refusal to accept the competency of a foreign court demonstrates that it has not renounced the benefits of Article 15. Indeed, the court specifically found that Fountaine Pajot contested the competency of the California court and expressly invoked Article 15. The court denied the plaintiffs’ request for an exequatur and further ordered them to pay 4,000 € in attorneys’ fees to Fountaine Pajot on the basis of Article 700 of the Code of Civil Procedure.

The California plaintiffs appealed their case to the Cour d’appel de Poiters. But, to understand the appellate court’s reasoning, we must briefly explain the modern French case law of recognizing foreign judgments. III. A Brief Detour: The Modern French Law of Recognizing Foreign Judgments

The analysis for recognizing foreign judgments in France starts with the geographic origin of the judgment. If the judgment originates from a member State of the EU, the “Brussels I” Regulation applies.32 This regulation offers a simple method of recognition comparable to the U.S. full faith and credit system, whereby a judgment rendered in one Member State is automatically recognizable and enforceable in any other Member State33 (with a few limited

31 “Jurisprudence constante” refers to a settled rule of law that has become accepted by the courts following repeated decisions in a long line of cases. The notion commands dignity, but not necessarily strict adherence or binding effect as with the common law doctrine of stare decisis. See Garvey Algero, The Sources of Law and the Value of Precedent: A Comparative and Empirical Study of a Civil Law State in a Common Law Nation, 65 LA. L. REV. 775, 799 (2005) (citing Johnson v. St. Paul Mercury Ins. Co., 236 So. 2d 216, 218 (La. 1970)). 32 Council Regulation 44/2001, 2001 O.J. (L 12) 1 [hereinafter, Brussels I Regulation]. The original Member States of the European Community signed the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (“Brussels Convention”) in Brussels, Belgium, on September 27, 1968. See Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, done Sept. 27, 1968, 1972 O.J. (L 299) 32, reprinted in 8 I.L.M. 229 [hereinafter Brussels Convention]. The Convention entered into force for the original six parties—Belgium, West Germany, France, Italy, Luxembourg, and the Netherlands—on Feb. 1, 1973. Id. The official English language version of the Brussels Convention may be found in 1978 O.J. (L 304) 36. The Convention ensures that judgments move as freely throughout Europe as do goods, services, workers, and capital. As the E.C. has welcomed new members, additional States have acceded to the Convention and to the parallel Lugano Convention of 1988, which applies to the Member States of the European Free Trade Association (EFTA). In late 2000, the Council of the European Union promulgated it as a Regulation, an action that transforms the Convention into a directly binding legal instrument on all member States of the European Union. For more details on the Brussels Regulation, see Robert C. Reuland, The Recognition of Judgments in the European Community: The Twenty-Fifth Anniversary of the Brussels Convention, 14 MICH. J. INT’L L. 559 (1993); Brandon D. Danford, The Enforcement of Foreign Money Judgments in the United States and Europe: How Can We Achieve a Comprehensive Treaty?, 23 REV. LITIG. 381 (2004). 33 The Brussels Regulations prohibits the examination of the merits of the foreign judgment (révision au fond) and certain exorbitant grounds of jurisdictions such as articles 14 and 15 of the French Code civil and comparable provisions in other jurisdictions. See Kurt H. Nadelmann, Jurisdictionally Improper Fora in Treaties on Recognition of Judgments: The Common Market Draft, 67 COLUM. L. REV. 995 (1967); Kathryn A. Russell, Exorbitant Jurisdiction and Enforcement of Judgments: The Brussels Impetus for United States Action, 19 SYRACUSE J. INT’L

L. & COM. 57. But for the marginal survival of jurisdiction based upon nationality, see Hélène Gaudemet-Tallon, supra note 15, at 443-48. Today, there are calls in the European Union to abolish exequatur proceedings altogether. See Peter F. Schlosser, The Abolition of Exequatur Proceedings – Including Public Policy Review?, IPrax 2010, 101; Paul Beaumont & Emma Johnston, Abolition of the Exequatur in Brussels I: Is a Public Defence Necessary for the Protection of Human Rights?, ibid., 105; Paul Beaumont & Emma Johnston, Can Exequatur Be Abolished in Brussels I Whilst Retaining a Public Policy Defence?, 6 JPIL, 249 (2010); Gilles Cuniberti & Isabelle Rueda, Abolition of Exequatur: Addressing the Commission's Concerns, 75 RABELSZ (RABELS ZEITSCHRIFT FUR AUSLÄNDISCHES UND INTERNATIONALES PRIVATRECHT) 286 (2011). Indeed,

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exceptions).34 Under Article 33 of the Regulation, a foreign judgment of a Member State has the same authority as a judgment rendered in the State where enforcement is sought.

On the other hand, if the judgment originates from a non-member State (as was the case in Fountaine Pajot), the analysis turns to the abundant case law developed by the Cour de cassation. In this domain, the attitude of the Cour vis-à-vis foreign judgments has shifted markedly away from distrust to deference to the foreign court. This brings us back to the Fountaine Pajot case.

For more than 150 years, French courts exercised their power to recognize foreign judgments (their révision au fond) on the condition that such judgments were correct under French law.35 In 1964, however, the Cour de cassation replaced the révision au fond with a five-part test in its decision in Munzer v. Munzer.36 Under Munzer, a foreign judgment must satisfy five conditions:

(1) the foreign court must have jurisdiction;37

(2) the foreign court must have properly applied its rules and procedure;38

(3) the foreign court must have applied the law that the French choice-of-law rule would have designated;39

(4) the foreign judgment must not be contrary to public policy;40 and

(5) the foreign judgment must not have been obtained for the sole purpose of avoiding the applicable law (fraude à la loi41).42

in some special areas, the EU has already abolished the requirement of an exequatur. See, e.g., Marek Zilinsky, Abolishing Exequatur in the European Union: The European Enforcement Order, 53 NILR 471 (2006). 34 There are only four grounds for refusing the foreign judgment under the Regulation. See Brussels I Regulation, art. 34: “1. If such recognition is manifestly contrary to public policy in the Member State in which recognition is sought; 2. Where it was given in default of appearance, if the defendant was not served with the document which instituted the proceedings or with an equivalent document in sufficient time and in such a way as to enable him to arrange for his defense, unless the defendant failed to commence proceedings to challenge the judgment when it was possible for him to do so; 3. If it is irreconcilable with a judgment given in a dispute between the same parties in the Member State in which recognition is sought; 4. If it is irreconcilable with an earlier judgment given in another Member State or in a third State involving the same cause of action and between the same parties, provided that the earlier judgment fulfills the conditions necessary for its recognition in the Member State addressed.” 35 See Cuniberti, supra note 18, at 932. 36 Cass. Civ. 1st, January 7, 1964, Munzer, Bull., I, N°15. On this leading case, see also the analysis of Kurt Nadelmann, supra note 17, at 75–79. 37 See Cuniberti, supra note 18, at 932 (citing Munzer v. Munzer, Cass. civ. 1st, January 7, 1964, Munzer, Bull., I, N°15). 38 Id. 39 Id. This condition was itself a veritable révision au fond in that the French court would continue to apply its own choice of law rules, but the Cour de cassation later clarified that the French court would only verify whether the foreign court’s analysis comported with the French choice of law analysis, not whether the foreign court applied the analysis properly. Later, the Cour de cassation would further soften its interpretation by stating that a foreign court could apply the incorrect law in a flawed choice of law analysis so long as the law it applied was equivalent in result to the law that should have been applied under the correct choice of law analysis. Id. at 937 and n.21–22 (internal citations omitted). 40 Id.

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The five-part test shifted the focus away from a review of the merits of the underlying case towards a deference to the judgment of the foreign court—that is, so long as the foreign judgment comports with French public policy. While the Munzer shift replaced one mode of subjectivity with another, the new era may generally be regarded as a liberalization of the recognition of foreign judgments. Not long after Munzer, it was apparent that some of the conditions still placed the French court in an overly paternalistic role and were thus inconsistent with the liberal deference to foreign courts. In 1968, the Cour de cassation eliminated the second condition (that the foreign court properly applied its rules of procedure) in Bachir v. Bachir,43 reasoning that the foreign courts are in the best position to evaluate whether their laws of procedure had been followed, and that any objection to the fairness of such procedure could be adequately evaluated under the fourth condition (whether the foreign law offends public policy).

For similar reasons, the Court de cassation also reshaped the first condition (that the foreign court had jurisdiction to hear the dispute) in its 1985 decision, Simitch v. Fairhusrt.44 Before Simitch, there was confusion whether the substantive jurisdictional inquiry should be evaluated according to the foreign law, which, like the procedural inquiry, put the French court in a position that was best suited for the foreign court; or according to French law, which effectually eliminated the possibility that a foreign court could attach jurisdiction on a basis not recognized by French law. The Simitch decision established a middle ground: the jurisdictional condition was satisfied so long as there was “an actual connection between the dispute and the country of the foreign court.”45

The more significant pronouncement in Simitch on the jurisdictional condition, however, was the exception that it underscored: that the foreign judgment could not be recognized if there remained a ground for exclusive jurisdiction in France. The exception would include the exclusive jurisdiction established by Civil Code Article 14 over French plaintiffs and Civil Code Article 15 over French defendants. Of course, the greatest number of cases in which one tries to

41 Id. The fraude à la loi element concerns the intentional avoidance of the law that a French court would have applied. It requires that a party’s action results in the application of one rule over another, the sole purpose of which is to avoid the application of the other rule. The sanction of such fraude à loi is that the party does not get to benefit from his intentional avoidance. Such fraud arises, for example, when a party seeks to change nationalities in order for a court to apply another law. Id. at 936–37. See also William Tetley, Evasion/Fraude À La Loi and Avoidance of the Law, 39 MCGILL L. J. 303 (1994). 42 For another translation, see Nadelmann, supra note 17, at 76: “[T]he French judge must make sure that five conditions are fulfilled, namely, jurisdiction of the foreign court which rendered the decision, regularity of the procedure adopted in that jurisdiction, the application of the law which governs according to the French conflicts rules, conformity with international public policy and absence of evasion of the law; as this verification which suffices to protect the legal order and the interests of France, the very object of the exequatur proceeding, constitutes for all matters both the expression and the limit of the power of control of the judge charged with authorizing the enforcement in France of a foreign decision, without asking the judge to proceed to a revision of the substance of the decision.” 43 Bachir v. Bachir, Cass. civ. 1st, October 4, 1967, Bachir, Bull., I, N°277. 44 Simitch v. Fairhusrt, Cass. civ. 1st, February 6, 1985, Simitch, Bull., I, N°55, N°83-11241. 45 See Cuniberti, supra note 18, at 932 (citing Simitch v. Fairhusrt, Cass. Civ. 1st, February 6, 1985, Simitch, Bull., I, N°55, N°83-11241). The middle ground established in Simitch seemed to offer a fairly open acceptance by the Cour de cassation to foreign and unknown modes of jurisdiction; but the French court’s willingness to extend the foreign ground for jurisdiction was limited by the strength of the connection between the dispute and the country of the foreign court. Thus, the more tenuous grounds of exorbitant jurisdiction familiar to some jurisdictions (particularly, the United States), would fail the jurisdictional condition, but it was in essence another iteration of the public policy condition.

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enforce a foreign judgment in France involves either a French plaintiff or a French defendant. Thus, regardless of the liberalization of the enforcement of foreign judgments, Articles 14 and 15 still provided a safety net to French litigants. This was no minor exception, and indeed, Fountaine Pajot was a champion beneficiary of Article 15’s protection. IV. The California Plaintiffs’ First Appeal

Returning to the case at hand, the California plaintiffs appealed to the Cour d’appel de Poitiers. Not surprisingly, the court affirmed the decision of the Tribunal de Grande Instance de Rochefort. In a decision issued June 28, 2005, it confirmed the tribunal’s application of Article 15 on the basis that Fountaine Pajot, as a French defendant, enjoys the exclusive jurisdiction of France; rejecting the appellant’s argument that Cruising Cats was an agent or mandatary of Fountaine Pajot;46 and expounding on the modern French analysis of the enforcement of foreign judgments under Munzer and Bachir.47

The appellants argued that the action by the Tribunal de Grande Instance was a veritable révision au fond of the California judgment, but the appellate court determined that the lower court’s actions were consistent with Munzer and its progeny. Thus, having confirmed that Article 15 gives exclusive jurisdiction to French courts over actions against French defendants like Fountaine Pajot, the Cour d’appel de Poitiers held that the California court was competent to hear the dispute. Since the California appellants could not satisfy the first condition of the Munzer/Bachir analysis, the appellate court found no reason to evaluate the remaining three.

Adding insult to injury, the court ordered the appellants to pay 2,100 € in attorneys’ fees for the appeal under Code of Civil Procedure Article 700 (on top of the 10,000 € ordered by the Tribunal de Grande Instance), as well as the other expenses of the appeal.48 But in a remarkable stroke of luck for the plaintiffs, the Cour de cassation would reshape its interpretation of Article 15 in a different case just a few months after the appellate court again rejected the California appellant’s exequatur request—just in time for the Cour de cassation to revisit the Fountaine Pajot case. V. A Second Brief Detour: The Revirement de Jurisprudence in 2006

For nearly a century, through and including the dispositions by the lower and appellate courts in the Fountaine Pajot case in 2004 and 2005, French courts had consistently interpreted Article 15 to prevent the recognition of foreign judgments against French citizens. In 2006 and 2007, the backdrop changed dramatically.

46 Regarding the agency issue, the appellate court confirmed that there was no evidence to show that Cruising Cats operated as the agent or mandatary of Fountaine Pajot, regardless of whether it was designated as an “agent” in the agreement between the purchasers and Cruising Cats, when Fountaine Pajot was not a party to that agreement. On the same basis, the appellate court rejected the appellants’ invocation of Convention on the Law Applicable to Contractual Obligations of 1980 (the “Rome Convention”) relative to that convention’s harmonized choice of law provisions. See now, Rome I Regulation (Regulation (EC) N° 593/2008). 47 Cour d’Appel [CA] de Poitiers, 1ère Chambre civile, February 26, 2009, Schlenzka v. S.A. Fountaine Pajot, n° 07/02404, 137 JDI, 1230 (2010), comment François-Xavier Licari. 48 C.C.P. [Fr.] art. 699: “Advocates and avoués (solicitors) may, in matters where their representation is mandatory, request that the order to pay the legal costs gives them the right to get paid by the party ordered to pay the legal costs they had covered without having been received any interim payment. The party against whom the recovery is prosecuted may, however, deduct, by legal set-offs, the amount of his claim on legal costs.”

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In 2006, in Prieur v. de Montenach,49 the Cour de cassation engaged in a revirement de jurisprudence (overruling of prior caselaw) by deciding that Civil Code Article 15 did not give French courts exclusive jurisdiction over French defendants. Rather, the Simitch analysis of the strength of the connection between the dispute and the country of the foreign court was sufficient to determine whether the first condition of the Munzer analysis was satisfied (that the foreign court has jurisdiction to hear the dispute). One year later, in Banque de développement local BDL v. Fercometal SARL,50 the Cour de cassation rendered the same interpretation for Civil Code Article 14 by holding that the Article does not give French courts exclusive jurisdiction over French plaintiffs. Thus, according to Prieur and Fercometal, Articles 14 and 15 give French citizens optional—not exclusive—access to French courts.

Also in 2007, in Cornelissen v. Avianca Inc,51 the Cour de cassation further reduced the remaining four conditions in the Munzer/Bachir analysis to just three by eliminating the third condition (that the foreign court ought to have applied the law that the French choice-of-law rule would have designated). As a result, as of 2007, the remaining three conditions in the stripped-down Munzer analysis for enforcing foreign judgments were: (1) jurisdiction of the foreign court; (2) no violation of French public policy; and (3) an absence of fraude à loi. This shift in interpretation came just in time for the California plaintiffs as they took their case to the Cour de cassation.52 VI. The California Plaintiffs’ Second Chance

A. Taking the Case to the Cour de cassation

The Cour de cassation reversed the appellate court’s decision in Fountaine Pajot, which had been based on the now-outdated interpretation by the appellate court.53 It would seem that the California plaintiffs had finally caught their big break. However, the Cour de cassation noted that the appellate court gave no opinion on whether the California forum was adequately connected to the dispute for purposes of evaluating the jurisdictional element of the Munzer test, nor did the appellate court discuss whether the remaining Munzer conditions were satisfied. Accordingly, the case was remanded to the appellate court.

B. The Court of Appeal’s Decision on Remand: One Step Forward, Three Steps Back

1. One Step Forward

Since Article 15 could no longer operate to protect Fountaine Pajot by affording it exclusive jurisdiction in France, the issue of whether it had waived such protections was moot.

49 Cass. civ. 1st, May 23, 2006, Prieur, Bull., I, N°254, N°04-12777. See also Huet, supra note 25. 50 Cass. civ. 1st, May 22, 2007, Fercometal, Bull., I, N°195, N°04-14716. 51 Cass. civ. 2st, February 20, 2007, Cornelissen, Bull., I, N°68, N°05-14.082. 52 It is important to understand that the plaintiffs sought a “review,” not an “appeal,” of the appellate court judgment from the Cour de cassation through a pourvoi en cassation. The distinction is important: while the Cour d’appel conducts a de novo review of the lower court’s decision, the Cour de cassation’s review is limited to matters of law. For a discussion of these differences in terminology, see Nicolas Marie Kublicki, An Overview of the French Legal System From an American Perspective, 12 B.U. INT’L L.J. 57, 63–66 (1994); Sofie M.F. Geeroms, Comparative Law and Legal Translation: Why the Terms Cassation, Revision and Appeal Should Not be Translated, 50 AM. J. COMP. L. 201 (2002). 53 Cass. civ. 1st, May 22, 2007, No. 05-20473, Bull., I, N° 196.

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But the jurisdictional element was not resolved, and the inquiry remained whether there were sufficient points of contact between Fountaine Pajot and California. The answer given by the Court of Appeal on remand was unequivocally “yes.” This was based on the finding that there had been direct negotiations between Fountaine Pajot and the purchasers, that the vessel was custom built for the purchasers, and that Fountaine Pajot offered the catamaran at a discount based in part on its ability to exhibit the vessel at the Miami boat show.54 The designation in the contract of Miami as the place of delivery, while not in California, was still in the United States and further evidence of the exclusion of French jurisdiction. The appellate court, differently composed when the case was on remand, did not discuss whether Cruising Cats acted as an agent for Fountaine Pajot, an argument that both the Tribunal de Grande Instance and the original Cour d’appel had rejected. Now, the appellate court referred to the agent as “merely an intermediary,” focusing instead on the direct contacts between the purchasers and Fountaine Pajot.

The California plaintiffs had seemingly crossed the toughest threshold to enforcing their judgment in France. But over the course of the California plaintiff’s journey through the French legal system, not one French court had yet said anything about punitive damages—until the appellate court heard the case on remand.

2. The First Step Back

On remand, the appellate court outright rejected the enforcement of any foreign judgment comprising punitive damages as against public policy.55 Remarkably, the consequence was a rejection of the entire judgment—not just the punitive damage component.

French law, in the civilian tradition, largely rejects the notion of punitive damages,56 and the appellate court confirmed as much by noting that the proper purpose of civil liability is merely to return the victim to the status quo. Therefore, the amount of compensation should be determined neither by the extent of the wrongdoer’s fault nor by the wrongdoer’s financial situation, but solely by the extent of the plaintiff’s damage.

The appellate court regarded an award that punishes the wrongdoer to the benefit of a plaintiff as a windfall,57 effectively unjustly enriching him,58 and as such, offensive to the French

54 CA Poitiers, 1ère Chambre civile, February 26, 2009, supra note 47, at 1230. 55 Id. 56 Sébastien Borghetti, Punitive Damages in France, in HELMUT KOZIOL & VANESSA WILCOX (eds.), PUNITIVE

DAMAGES; COMMON LAW AND CIVIL LAW PERSPECTIVES 55 (2009). 57 Of course, the idea that punitive damages are inappropriate because they constitute a windfall for the plaintiff is an oft-cited argument against punitive damages in the U.S. as well as in France and Europe. See, e.g., James A. Breslo, Taking the Punitive Damage Windfall Away from the Plaintiff: An Analysis, 86 NW. U. L. REV. 1130 (1992); ALEXIS JAULT, LA NOTION DE PEINE PRIVÉE, n° 286 et s. (2005); PHILIPPE LE TOURNEAU, DROIT DE LA

RESPONSABILITÉ ET DES CONTRATS, DALLOZ ACTION, n° 45 (2008–09). But we believe that they are mistaken: in reality, there is not always a windfall or even full compensation for the plaintiff because there are many legal or factual obstacles to a veritable full compensation. See John A. Sebert, Punitive And Nonpecuniary Damages in Actions Based upon Contract: Toward Achieving the Objective of Full Compensation, 33 UCLA L. REV. 1565 (1986). In fact, the first French author to support punitive damages regarded them as a means to fully implement the principle of full compensation. See René Demogue, Validity of the Theory of Compensatory Damages, 27 YALE L.J. 585, 593 (1918). The “American Rule” regarding attorneys’ fees is one such significant (and controversial) impediment. See James R. Maxeiner, Cost and Fee Allocation in Civil Procedure, 58 AM. J. COMP. L. 195 (2010). A major principle of American tort law is the principle of full compensation. See John Leubsdorf, Recovering Attorney Fees As Damages, 38 RUTGERS L. REV. 439, 442 (1985–86). But inconsistent with the principle of full compensation is that the plaintiff generally may not recover his attorney fees. Hence, paradoxically, punitive

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ordre public international.59 We regard the appellate court’s determination as incorrect and incongruent with how the Cour de cassation has interpreted principles of compensation in light of the ordre public international.

There is no doubt that the principle of full compensation belongs to the ordre public. The Cour de cassation regularly quashes decisions of inferior courts that grant awards higher or lower than the damages actually sustained.60 But in those cases, the court addresses the “ordre public interne” (i.e., a fundamental principle of law concerning territorial or national legal relations).61 In cases involving the recognition of foreign judgments, we deal with the doctrine of public policy (ordre public international), “an institution universally accepted but so conceptually French as to be referred frequently in English-speaking textbooks as ‘ordre public.’”62 The “ordre public international” is “a set of intangible and superior values, which combine the general (or public) interest, such as political, moral, and social rights.”63 It is a doctrine “whereby the courts will reject foreign laws or judgments when they are considered contrary to fundamental national cultural values.”64 It is a well-established rule that the public policy exception of the forum, be it in the choice-of-law process or in the recognition process, is a corrective mechanism reserved for extraordinary cases.

Consequently, the ordre public international has to be distinguished from the ordre public interne.65 Only the ordre public international, which contains a limited scope of essential

damages can sometimes operate to fill the gap to achieve full compensation. Against what is denounced as an instrumentalization of punitive damages, see Judith L. White, Critical Reappraisal of Punitive Damages Encompassing Attorneys’ Fees: Normative Analysis and Pragmatic Concerns, 42 BAYLOR L. REV. 737, 743 (1990). 58 Here, we must note that even if there is enrichment in a particular case, it would not be “unjust,” in the civilian sense of the term, because its “cause” would be a judgment. For an explanation of the concept of unjust enrichment, see Louisiana Civil Code article 2298, which states in part: “A person who has been enriched without cause at the expense of another person is bound to compensate that person. The term ‘without cause is used in this context to exclude cases in which the enrichment results from a valid juridical act or the law. The remedy declared here is subsidiary and shall not be available if the law provides another remedy for the impoverishment or declares a contrary rule.” 59 CA Poitiers, 1ère Chambre civile, February 26, 2009, supra note 47, at 1230. 60 See, e.g., Cass. Civ. 1st, November 9, 2004, Bull. I, n° 264; Cass. Com., May 11, 1999, Bull., IV, n° 101, 126 JDI 1048 (1999), comment Gérard Légier; Cass. Civ. 1st, July 3, 1996, Bull., I, n° 296; Cass. Civ. 3rd September 26, 2007, Bull., III, n° 149; CA Versailles, 12ème chambre, 2ème section, September 10, 2009, n° 08/04982: “Attendu que Y. sollicite encore des dommages-intérêts du fait de la parfaite mauvaise foi de la SCI; Attendu cependant que Y. n’allègue aucun préjudice spécifique qui résulterait de la mauvaise foi de la SCI; que la cour ne saurait, en l’absence de préjudice, allouer ainsi de tels punitive damages . . . .”). 61 Compare C. CIV. art. 6 (1804) (Fr.) (“On ne peut déroger, par des conventions particulières, aux lois qui intéressent l’ordre public et les bonnes moeurs”) with LA. CIV. CODE art. 7 (2011) (“Persons may not by their juridical acts derogate from laws enacted for the protection of the public interest. Any act in derogation of such laws is an absolute nullity.”). 62 Horatia Muir Watt, Evidence of an Emergent European Legal Culture: Public Policy Requirements of Procedural Fairness under the Brussels and Lugano Conventions, 36 TEX. INT’L L. J. 539, 542. For matters of terminology and a comparative exposure of common law and civil law doctrines, see Gerhart Husserl, Public Policy and Ordre Public, 25 VA. L. REV. 37 (1938). 63 Marie-Laure Niboyet & Géraud Géouffre de La Pradelle, Droit International Privé n° 307 (2009) (defining the ordre public international as “un ensemble de valeurs intangibles et supérieures, qui mêle des intérêts généraux (ou publics), comme des intérêts politiques, moraux, économiques et sociaux.”). 64 Id. 65 For further discussion about the distinction, see Ramy El-Boraei, Forum of Competent Jurisdiction: Lessons from the European Union Insolvency Regulation, 39 INT’L LAW. 781, 809 n.130 (2005) (“Under the French legal system,

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rules, may be invoked as a defense to the application of foreign law or the recognition of a foreign judgment, and it is seldom, if ever, applicable in a commercial context.66 The underlying idea is that the French forum should be more tolerant of certain results in international cases, which involve a diversity of foreign legal cultures, than in domestic disputes.67 Furthermore, according to the doctrine, it is not the foreign law or judgment as such that must be scrutinized but rather the result of its application or recognition in the particular case. As a result, application of a foreign law or recognition of a foreign judgment may be denied only if the outcome produced is manifestly repugnant to the ordre public international.

In other words, the scope of the ordre public international is much narrower than the scope of the ordre public interne.68 Hence, a foreign law or a foreign judgment offending the ordre public interne is not sufficient to trigger the ordre public international exception. Thus, the fact that the principle of full compensation is part of the ordre public interne does not necessarily make it part of the ordre public international. In fact, for four decades, the Cour de cassation has held that the principle of full compensation is not a rule that belongs to the ordre public international.69 Here, the Court of Appeal went too far by applying a principle of domestic concern, which may otherwise violate the ordre public interne, and calling it a matter of ordre public international.

3. The Second Step Back

The appellate court found support not only in French law but also in international law. Noting that the sale was an international one, the court referenced Article 74 of the United Nations Convention on Contracts for the International Sale of Goods of April 11, 1980 (the “CISG” or “Vienna Convention”),70 pursuant to which:

Damages for breach of contract by one party consist of a sum equal to the loss, including loss of profit, suffered by the other party as a consequence of the breach. Such damages may not exceed the loss which the party in breach foresaw or ought to have foreseen at the time of the conclusion of the contract, in the light

there are two public policy concepts. The first is known as ordre public national and relates to purely domestic considerations, and is rarely waived by French courts. The second concept is known as ordre public international and is more flexible since it applies when international aspects, such as an international contract or a tort occurring in a foreign jurisdiction, arise from the case at stake and produce some effects in France.”). See also Alex Mills, The Dimensions of Pubic Policy in Private International Law, 4 JPIL 201, 213 (2008). 66 See Cuniberti, supra note 18, at 933 (noting that the public policy exception is reserved for matters that are contrary to principles of equity, such as denying the recognition of certain North African Islamic repudiations (the unilateral cancellation of marriage by the husband). 67 In the words of a famous American judge, Benjamin N. Cardozo: “Our own scheme of legislation may be different. We may even have no legislation on the subject. That is not enough to show that public policy forbids us to enforce the foreign right. . . . We are not so provincial as to say that every solution of a problem is wrong because we deal it otherwise at home.” Loucks v. Standard Oil Co. of New York, C 120 N. E. 198, 201 (N.Y. 1918) (Cardozo, J.). 68 PIERRE MAYER & VINCENT HEUZÉ, DROIT INTERNATIONAL PRIVÉ, n° 205 (2004). 69 Cass. Civ. 1st, May 30, 1967, Bull., I, n° 189, Kieger, D. 1967, comment Philippe Malaurie; Cass. civ. 1st, December 15, 1969, Bull., I, n° 393; Cass. Crim., June 16, 1993, Bull. crim., n° 214, n° 92-83871; Cass. civ. 1st, September 30, 2003, Bull., I, n° 39, n° 00-22294. 70 CA Poitiers, 1ère Chambre civile, February, 26, 2009, supra note 47, at 1233.

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of the facts and matters of which he then knew or ought to have known, as a possible consequence of the breach of contract.71

There is no doubt that this provision of the CISG supports a strict conception of compensatory damages to exclude punitive damages.72 Nevertheless, the court’s application of the CISG was wrong because the CISG was manifestly inapplicable; first, because the sale was a consumer transaction, and merchant to consumer contracts are not within the scope of the CISG;73 and second, because marine vessels are not within its scope either.74

4. The Third Step Back

The appellate court’s last reason for refusing recognition of the Californian judgment was that “disproportionate” punitive damages violate Article 8 of the Declaration of Human Rights of Man and of the Citizen75—a pre-Code artifact of the French Revolution that retains some constitutional value today.76 We will discuss this last (and redundant) argument in our comments on the decision by the Cour de cassation.

It is unfortunate for the appellants that no French court addressed the issue of punitive damages until three years after they first brought their California judgment to France. However, as we reach the climax of the case, the appellants had one last stroke of luck.

C. The Final Decision by the Cour de cassation: One More Step Forward, and One Fatal Step Back

Once again, the appellants brought their case before the Cour de cassation, this time to seek review of the Court of Appeal’s holding that punitive damages violate l’ordre public international. Remarkably, the Cour de cassation held that an award of punitive damages “is not, in principal, contrary to l’ordre public international.”77 Unfortunately for the appellants, however, their second victory was just as hollow as the first, because the court also held that

71 Id. (citing article 74 of the Vienna Convention, available at http://www.uncitral.org/pdf/english/texts/sales/cisg/V1056997-CISG-e-book.pdf). 72 Amy A. Kirby, Punitive Damages in Contract Actions; The Tension Between the United Nations Convention on Contracts For the International Sales of Goods and U.S. Law, 16 J.L. & COM. 215 (1997); see more generally on compensatory damages in CISG, Jeffrey S. Sutton, Measuring Damages Under the United Nations Convention on the International Sales of Goods, 50 OHIO ST. L.J. 737 (1989); Joseph M. Lookofsky, Consequential Damages in CISG Context, 19 PACE INT’L L. REV. 63 (2007); PETER SCHLECHTRIEM & CLAUDE WITZ, CONVENTION DE VIENNE

SUR LES CONTRATS DE VENTE INTERNATIONALE DE MARCHANDISES, n° 386 seq. (2008). 73 The CISG specifically states, at Article 2: “This Convention does not apply to sales: (a) of goods bought for personal, family or household use, unless the seller, at any time before or at the conclusion of the contract, neither knew nor ought to have known that the goods were bought for any such use.” 74 The CISG also specifically states, at Article 2: “This Convention does not apply to sales . . . (e) of ships, vessels, hovercraft or aircraft.” 75 Cour d’Appel [CA] de Poitiers, 1ère Chambre civile, February, 26, 2009, supra note 47, at 1230. 76 See article 8 of the Declaration of Human Rights of Man and of the Citizen of 1789 (Déclaration des droits de l’Homme et du Citoyen), which states: “The law shall provide for such punishments only as are strictly and obviously necessary, and no one shall suffer punishment except it be legally inflicted in virtue of a law passed and promulgated before the commission of the offense.”). According to the Preamble of the French Constitution, the principles of the Declaration have constitutional value. 77 The Cour de cassation held: “qu’une décision étrangère condamnant une partie à paiement de dommages-intérêts punitifs n’est pas, par principe, contraire à l’ordre public international de fond.” Schlenzka & Langhorne v. Fountaine Pajot S.A., Cass. Civ. 1st, December 1, 2010, Fountaine Pajot, N°09-13303.

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even “if the principle that a punitive damage award is not, by itself, contrary to public policy, it is otherwise when the amount awarded is disproportionate to damages actually suffered and breach of the debtor’s contractual obligations.”78 And in the Court’s eyes, this lack of the proportionality of the award was contrary to the ordre public international.79 As a result, the Cour de cassation rejected the entire judgment (including the compensatory and punitive components). VII. Understanding the Factors That Led to the Holding in Fountaine Pajot

French decisions are always a bit frustrating for foreign jurists, especially for those who are familiar with the American style of lengthy and policy-oriented opinions.80 Fountaine Pajot is much more frustrating because the issue is so significant, yet the Court’s opinion seems to be a mere sleight of pen. To understand Fountaine Pajot more deeply, it is necessary to explore the external factors that could have led to the Cour de cassation’s failure to recognize a U.S. judgment that was arguably quite balanced.81

The Court echoed a familiar and pervasive ideology of distrust vis-à-vis punitive damages. In public perception, and in French82 and European83 academic circles, punitive damages are regularly depicted as an archaic remedy,84 or worse, the Trojan horse of the Americanization of continental law.85 The chorus of negative opinions drowns out the voices of any position favorable to accepting punitive damages.86

78 Id. “Mais attendu que si le principe d’une condamnation à des dommages-intérêts punitifs, n’est pas, en soi, contraire à l’ordre public, il en est autrement lorsque le montant alloué est disproportionné au regard du prejudice subi et des manquements aux obligations contractuelles du débiteur.” 79 It is also worth noting that the Cour de cassation discredited the appellate court’s application of international public policy. Specifically, the Cour recognized that the CISG was inapplicable to the sale of consumer goods, which, in this case, was unquestionably so. 80 For a comparison, see Jean Louis Goutal, Characteristics of Judicial Style in France, Britain and U.S.A, 24 AM. J. COMP. L. 43 (1976); Michael Wells, French and American Judicial Opinions, 19 YALE J. INT’L L. 81, 104 (1994). 81 The exercise is difficult and the results may be questionable, but it is worth the effort. Cf. Basil Markesinis, Judicial Mentality: Mental Disposition or Outlook as a Factor Impeding Recourse to Foreign Law, 80 TUL. L. REVIEW 1325 (2006); see more generally RICHARD A. POSNER, HOW JUDGES THINK (2008). 82 See, e.g., YVONNE LAMBERT-FAIVRE & STÉPHANIE PORCHY-SIMON, DROIT DU DOMMAGE CORPOREL, n° 92 & 375 (2009). 83 See, e.g., Heinrich Honsell, AMERIKANISCHE RECHTSKULTUR, FESTSCHRIFT ZÄCH 39 (1999); Helmut Koziol, Punitive Damages – A European Perspective, 68 LA. L. REV. 741 (2008); see also Monique Hazelhorst, Private Enforcement of EU Competition Law: Why Punitive Damages Are a Step Too Far, 2010 EUROPEAN REVIEW OF

PRIVATE LAW 757. 84 See, e.g., Stéphane Piedelièvre, Les dommages et intérêts punitifs; une solution d’avenir?, RESPONSABILITÉ

CIVILE ET ASSURANCE, hors-série juin 2001, 68. 85 Lambert-Faivre & Porchy-Simon, supra note 82. 86 See, e.g., Sophie Schiller, Hypothèse de l’américanisation du droit de la responsabilité, 45 ARCHIVES DE

PHILOSOPHIE DU DROIT 177 (2001) (concluding that the influence of American law on French tort law is modest and limited to certain technical fields); see also the blog of a French attorney, Me Eolas, “Qu’ils sont cons ces ricains”, http://www.maitre-eolas.fr/post/2004/04/20/21-quils-sont-cons-ces-ricains (advocating that the hostility against punitive damages and American law is essentially based on a caricatured view of American society and American law); Patrick S. Ryan, Mc Do, Café brûlant, et un animal domestique dans le four à micro-ondes; une reconsidération de la notion américaine de dommages exemplaires, GLOBAL JURIST ADVANCES: Vol. 3 (2003), Iss. 1, Article 3, http://www.bepress.com/gj/advances/vol3/iss1/art3; Patrick S. Ryan, Revisiting the United States Application of Punitive Damages: Separating Myth from Reality, 10 ILSA J. INT’L & COMP. L. 69 (2003) (criticizing

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The national and international normative context is equally inauspicious. Seeing that dommages-intérêts punitifs were consecrated in the recent Catala draft87 revision of the French law of obligations,88 one might think that the tide was turning.89 But the hope of a meaningful change vanished as the Catala draft was replaced by a draft from the Department of Justice that did not even mention punitive damages. This document is still waiting in a drawer of the Department. Punitive damages furtively reappeared in a recent Senate proposal (and only with limited scope),90 but the future of the proposal is less than certain in any event. A recent international convention shows the same reluctance towards punitive damages.91 Even when the French Republic appeared as amicus curiae in a recent U.S. Supreme Court case involving issues of private international law, she did not miss the opportunity to express her antipathy against

the urban legends and inaccuracies about U.S. punitive damage awards that are shared by many, including academics, in Europe). 87 Article 1371: “One whose fault is manifestly premeditated, particularly a fault whose purpose is monetary gain, may be ordered to pay punitive damages besides compensatory damages. The judge may direct a part of such damages to the public treasury. The judge must provide specific reasons for ordering such punitive damages and must clearly distinguish their amount from that of other damages awarded to the victim. Punitive damages may not be the subject of a contract of insurance” (Levasseur and Gruning trans.). For comments, see Muriel Chagny, La notion de dommages-intérêts punitifs et ses répercussions sur le droit de la concurrence – Lectures plurielles de l’article 1371 de l’avant-projet de réforme du droit des obligations, J.C.P. 2006, Ed. G., I, 149; Solène Rowan, Comparative Observations on the Introduction of Punitive Damages in French Law, in REFORMING THE FRENCH

LAW OF OBLIGATIONS 325. 88 A private group of French scholars and judges under the direction of Professor Pierre Catala took the initiative to propose a revision of the French law of obligations and of the law of prescription, wanting to follow the recent success of the German model. They offered the judicial community a preliminary draft of reform, which was presented to the Minister of Justice in 2005 as the Avant-projet de réforme du droit des obligations et de la prescription, La documentation française (the “Avant-Projet”) (Avant-projet de réforme du droit des obligations et de la prescription, La documentation française (2006), http://www.lexisnexis.fr/pdf/DO/RAPPORTCATALA.pdf). The purpose of the work was not only to revise the Code Civil, but also to have an influence in the process of codification of European private law. For a general comment of the draft, see Olivier Moréteau, France, in TORT

AND INSURANCE LAW YEARBOOK – European Tort Law 2005 no. 1 seq. (Helmut Koziol & Barbara C. Steininger eds. 2006); see also REFORMING THE FRENCH LAW OF OBLIGATIONS: COMPARATIVE REFLECTIONS ON THE AVANT-PROJET DE RÉFORME DU DROIT DES OBLIGATIONS ET DE LA PRESCRIPTION (‘THE AVANT-PROJET CATALA’) 347 (John Cartwright, Stefan Vogenauer & Simon Whittaker eds. 2009). This book provides an English translation of the draft at the page 445. There is also a prior translation by Alain Levasseur and David Gruning, available at http://www.henricapitant.org/sites/default/files/Traduction_definitive_Alain_Levasseur.pdf. Both translations were requested by the chief drafter of the project, Pierre Catala. 89 John Y. Gotanda, Charting Developments Concerning Punitive Damages: Is the Tide Changing?, 45 COLUM. J. TRANSNAT’L L. 507 (2007). 90 Article 1326-25 C. CIV. de la proposition de loi n° 657 du 9 juillet 2010 portant réforme de la responsabilité civile, présentée par L. Béteille, sénateur, http://www.senat.fr/leg/ppl09-657.html (limiting the availability of punitive damages to fault with a view to gain, and in no case more than twice the amount of compensatory damages). 91 Art. 11 of the Hague Convention of 30 June 2005 on Choice of Courts Agreements:

Damages: (1) Recognition or enforcement of a judgment may be refused if, and to the extent that, the judgment awards damages, including exemplary or punitive damages, that do not compensate a party for actual loss or harm suffered. (2) The court addressed shall take into account whether and to what extent the damages awarded by the court of origin serve to cover costs and expenses relating to the proceedings.

For an overview of the contentious drafting of this provision, see Harry Duintjer Tebbens, supra note 9, at 282-86.

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punitive damages.92 Last but not least, in a recent report, justices of the Cour de cassation themselves expressed in an unvarnished manner their deep aversion to punitive damages and their strong commitment to the principle of strict compensation.93 Against this backdrop, the ultimate result of Fountaine Pajot came as no surprise. VIII. “Proportionality” and Punitive Damage Awards in France after Fountaine Pajot

The Cour de cassation cited disproportionality as the reason for refusing the punitive damage award against Fountaine Pajot. But how does “proportionality” apply in French civil law?

Tracing back to Aristotle’s view,94 “proportionality” has become in France, and in most European countries, a fundamental standard of public law, especially of administrative and constitutional law.95 It is a general rule against excess and “the yardstick for measuring the appropriate relationship between the ends and the means of discretionary action.”96 On the one hand, proportionality is generally valued for its rationality, objectivity, and judicial restraint. On the other hand, one can see it as an instrument of judicial activism.97 Be that as it may, the principle of proportionality has extended beyond public law and reached private law as well, where its meaning is far from clear.98

By one approach, proportionality is a requirement that a judicial remedy or penalty be properly adjusted to the degree of fault or culpability.99 Proportionality also plays a role in contractual relationships. For example, in standard contracts, clauses that embody an excessive disproportionality between the obligations of the parties are sometimes null.100

92 See Brief for the Republic of France as Amicus Curiae in Support of Respondents in Morrison v. National Australia Bank Ltd., 2010 WL 723010, *14 (2010). The amicus brief to the U.S. Supreme Court references the decision of the Court of Appeal in Fountaine Pajot. Id. at *23, n.17. 93 Rapport du groupe de travail de la Cour de cassation sur l’avant-projet de réforme du droit des obligations et de la prescription (15 juin 2007), http://www.courdecassation.fr/institution_1/autres_publications_discours_2039/ discours_2202/travail_cour_10699.html, n° 91 94 Eric Engle, The History of the General Principle of Proportionality, SSRN, Forthcoming, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1431179. 95 Juan Cianciardo, The Principle of Proportionality: The Challenge of Human Rights, 3 JOURNAL OF CIVIL LAW

STUDIES 177 (2010); Evangelia Georgitsi, La proportionnalité comme instrument de “conciliation” des normes antagonistes, 63 RIDC 559 (2011). 96 Elisabeth Zoller, Congruence and Proportionality for Congressional Enforcement Powers: Cosmetic Change or Velvet Revolution, 78 IND. L.J. 567, 581–82 (2003). 97 Moshe Cohen-Eliya & Iddo Porat, Proportionality and the Culture of Justification, 59 AM. J. COMP. L. 463, 473 (2011). 98 François Terré, La proportionnalité comme principe?, J.C.P. 2009, Ed. G., 52, n° 13; Jean-Pierre Gridel, Le contrôle de proportionnalité exercé par le juge judiciaire français, LPA 5 mars 2009, n° 46,113. 99 DENIS ALLAND & STEPHANE RIALS (eds.), DICTIONNAIRE DE LA CULTURE JURIDIQUE, V° Proportionnalité (2003). 100 For more discussion on a general ground for the correction of unconscionable clauses, especially in contracts between merchants in French law, and for possible solutions in the light of comparative law, see François-Xavier Licari, Quelques réflexions et propositions au sujet des clauses “déraisonnables” ou “abusives” dans les contrats conclus entre professionnels, à la lueur du droit comparé et des propositions savantes, in LIBRE DROIT, MÉLANGES

EN L’HONNEUR DE PHILIPPE LE TOURNEAU 655 (2008). The French legislature adopted in August of 2008 a provision similar to section 2-302 of the Uniform Commercial Code: C. COM. art. L442-6, pt. I, ¶ 4 (Fr.). See also W.T. Tête, Contractual Balance: A Comparative Perspective, in ESSAYS IN HONOR OF SAÚL LITVINOFF 761, 771 (2008).

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The precise scope of this principle is not easy to delineate, but the basic mechanism is always the same: the court weighs the interests as in a cost-benefit analysis.101 Only very recently has proportionality entered French private international law under the influence of the European Court of Human Rights.102

A 2009 judgment by the Cour de cassation provides an excellent example of the application of proportionality in a private international law context. The Court confirmed the enforceability of a $13 million U.S. financial penalty stemming from a Ponzi scheme perpetrated in the U.S.103 The accused, Richard Blech, was an American citizen and a French resident. The receiver appointed to trace Blech’s proceeds sought an injunction from the United States Court ordering Blech to cooperate with him. As Blech failed to do so, the receiver sought a sanction of $100 per day, which would double each day for noncompliance. When the receiver applied for an accounting of the penalty four months later, the Court entered an order for Blech to pay more than $13 million in penalties.

The receiver then sought to enforce the order in France, where Blech owned property. In 2003, the French court (the Tribunal de Grande Instance de Thonon-les-Bains) declared the American order enforceable. The judgment was confirmed by the Cour d’appel de Chambery in 2006, and Blech further sought review from the Cour de cassation. Blech challenged the enforceability of the sanction in France on the grounds that it was criminal in nature and because it sanctioned a contempt of court.104 Blech also challenged the enforceability of the penalty because it was disproportionate to the offense.

The Cour de cassation characterized the foreign penalty as an astreinte—that is, “a court order that threatens to compel a debtor who has an outstanding obligation to pay her creditor a sum of money unless she performs the obligation.”105 Given that the Cour de cassation regarded the astreinte as civil in nature, the penalty was enforceable in the French civil court.106 As for 101 Proportionality is a means to implement the role of law, which is “to adjust conflicts of interests.” Joseph Charmont, The Conflict of Interests Legally Protected in French Civil Law, 13 ILL. L. REV. 693 (1918–19). For an American view, see STEPHEN BREYER, MAKING OUR DEMOCRACY WORK – A JUDGE’S VIEW 166–70 (2010). 102 See Patrick Kinsch, The Impact of Human Rights on the Application of Foreign Law and on the Recognition of Foreign Judgments – A Survey of the Cases Decided by the European Human Rights Institutions, in T. EINHORN &

KURT SIEHR (eds.), INTERCONTINENTAL COOPERATION THROUGH PRIVATE INTERNATIONAL LAW – ESSAYS IN

MEMORY OF PETER E. NYGH 198 (2004). 103 Cass. Civ. 1st, January 28, 2009, n° 07-11.729, Blech, Bull., I, n° 15, D. 2009, AJ, 436, comment Isabelle Gallmeister, ibid., 2392, comment Sylvain Bollée, J.C.P. 2009, Ed. G., II, 10086, comment David Martel, 136 JDI 1237 (2009), comment Fabien Marchadier, D. 2010,1585, comment Fabienne Jault-Seseke. 104 Blech’s argument was supported by the Stolzenberg case (Cass. Civ. 1st, June 30, 2004, n° 01-03248 & 01-15452, Bull., I, n° 191), wherein the Cour de cassation said in dicta that contempt of court is criminal in nature. There, the action was to declare a Mareva injunction (an action to freeze assets) enforceable in France. The Court ruled that a freezing order is civil in nature irrespective of the sanction of “contempt of court” (cited as such in the judgment) that backs it, which is criminal in nature. In Blech, the issue was not to recognize the foreign injunction, but to recognize a foreign sanction. A mechanical application of Stolzenberg would have led the Court to rule in Belch that it was a U.S. penal judgment that could not be enforced in France. For a review of the epic saga of the Stolzenberg case, see http://conflictoflaws.net/2008/daimler-chrysler-v-stolzenberg-part-9-luxembourg/ 105 See M. P. Michell, Imperium by the Back Door: The Astreinte and the Enforcement of Contractual Obligations in France, 51 U. TORONTO FAC. L. REV. 250, 252 (1993). 106 The judgment did not address whether the astreinte was an exercise of state power that ought to remain strictly territorial, although the introductory report prepared by one of the members of the court did discuss the issue. The likely reason is that the French courts did not perceive the sanction as an exercise of state authority. This is because there is an agreement among French scholars that when a threat of financial sanction is reduced to an order to pay, it is not considered an exercise of state authority.

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Blech’s challenge that the U.S. penalty was disproportionate, the Cour de cassation answered that the U.S. court’s sanction could not be criticized as disproportionate given the underlying fraud of $200 million. Implicitly, however, the Court suggested that foreign civil penalties could only be recognized if proportionate to the underlying harm. The Court specifically referred to the principle of proportionality, which has foundations in both the French Constitution107 and in European Human Rights Law.108 By comparing the degree of misconduct to the amount of the penalty, the Court borrowed a principle of criminal law in a civil setting.109

The extent to which principles of criminal law should be applied to private penalties is a hot topic, but we will not enter this debate here. We will simply note the inconsistency of the Cour de cassation in Fountaine Pajot: instead of comparing the amount of punitive damages to the fault of the seller, the Cour de cassation now compared the amount of the damage award to the damage actually sustained.110 If one understands the rationale of punitive damages in particular and of private penalties in general, the primary criterion should be the fault. Comparing the amount of punitive damages with the extent of the damage sustained can only lead to the conclusion that this amount is excessive, due to the fact that the plaintiff has already been hit with having to pay compensatory damages. Furthermore, if words have any meaning, one cannot seriously assert that the award in Fountaine Pajot was manifestly disproportionate: the amount of punitive damages was certainly higher than the amount of compensatory damages, but the supposedly disproportionate difference was only $70,000.

The critical flaw in applying the proportionality principle in cases involving the recognition of foreign damage awards is that it resurrects the révision au fond.111 It is important to bear in mind that the “excessiveness” of punitive damage awards is tempered by recent U.S.

107 See supra note 76 (referencing the 1789 Déclaration des droits de l’homme et du citoyen, article 8). 108 See Article 1 of the First Protocol to the European Convention on Human Rights. The application of this provision is an illustration of the growing Europeanization of the content of the “ordre public international.” See also the excellent insights of Horatia Muir Watt, supra note 62, at 543–54; Hans van Houtte, From a National to a European Public Policy, in LAW AND JUSTICE IN A MULTISTATE WORLD: ESSAYS IN HONOR OF ARTHUR T. VON

MEHREN 841, 845–53 (2002); Jacques Foyer, L’ordre public international est-il toujours français?, in MELANGES EN

L’HONNEUR DE SERGE GUINCHARD 267 (2010); Peter Hay, The Development of the Public Policy Barrier to Judgment Recognition Within the European Community, 2007 THE EUROPEAN LEGAL FORUM 289. 109 “Mais attendu qu’ayant relevé que les détournements qui étaient reprochés à M. X. [Blech] étaient évalués à 200 millions de dollars US, c’est sans méconnaître l’article 8 de la Déclaration des droits de l’homme et du citoyen du 26 août 1789 et l’article 1er du protocole additionnel n° 1 à la Convention européenne des droits de l’homme, que la cour d’appel a pu en déduire que le montant de l’astreinte liquidée n’était pas contraire au principe de proportionnalité; que le moyen n’est fondé en aucune de ses branches . . . .” Cass. Civ. 1st, January 28, 2009, n° 07-11.729, Blech, Bull., I, n° 15. 110 In Fountaine Pajot, the Cour de cassation stated: “But whereas if the principle of an award of punitive damages is not, per se, contrary to public policy, it is otherwise when the amount awarded is disproportionate with regard to the damage sustained and the debtor’s breach of his contractual obligation; in the present case, the appellate decision notes that the foreign decision awarded to the purchaser, in addition to the reimbursement of the ship’s price and of the repair costs, an indemnity which largely exceeds this sum; the court of appeal could conclude from that that the amount of damages was manifestly disproportionate with regard to the damages sustained and the breach of the contractual obligations, so that the foreign judgment could not be recognized in France.” Nathalie Meyer Fabre, Enforcement of US Punitive Damages Award in France: First Ruling of the French Court of Cassation in X. v. Fountaine Pajot, December 1, 2010, 26 MEALEY’S INTERNATIONAL ARBITRATION REPORT #1 (2011) (translation of the French opinion). 111 Cf. Professor Audit’s statement: “le contrôle du montant des dommages-intérêts alloués par le juge étranger constituait une manifestation caractéristique de la révision à l’époque où celle-ci était pratiquée.” Bernard Audit, comment on CA Paris, September 21, 1995, D. 1996, 168.

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Supreme Court jurisprudence such as BMW v. Gore and State Farm v. Campbell, which suggest that few awards exceeding a single-digit ratio (i.e., punitive damages that are no more than 10 times the actual damage) would satisfy the dictates of due process under U.S. law.112 The Californian court was quite faithful to the rule in Fountaine Pajot.113 Given that U.S. courts already police punitive damage judgments for excessiveness, the French court’s measurement of the same is duplicative unless the French court can explain why the U.S. standard is unacceptable and contrary to the ordre public international. When the French court weighs the interests for a second time after the California court has already done so, it is a pure révision au fond.114 Of course, a review of the ordre public international is, inevitably, a révision au fond of a special and limited nature. But is difficult to distinguish between a legitimate review of a foreign judgment under the ordre public international and a disingenuous review of the merits.115 We question whether the Cour de cassation made a genuine evaluation of the proportionality of the damage award against the ordre public international. It rather seems that it exceeded the appropriate review to clandestinely change the result of the case and to prevent the enforcement of future punitive damage awards. IX. Possible Solutions to a Seemingly Inescapable Quandary

Are U.S. punitive damage awards per se unenforceable in France? We cannot go that far in our interpretation of the Fountaine Pajot case. Nevertheless, it is clear that only small awards will be enforceable, if at all.

The American plaintiff faces a dilemma if his French defendant has no significant U.S. assets. If he seeks punitive damages, the chances of enforcing the judgment in France are small. If he renounces punitive damages before the American court, he does not have as much to gain.

One possible solution to this quandary is to embrace what one author terms the “fungibility” of damages;116 that is, cross-over resulting in “compensatory punitive damages” or

112 See, e.g., BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996); Cooper Indus., Inc., v. Leatherman Tool Group, Inc., 532 U.S. 424 (2001); State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003); Philip Morris v. Williams, 549 U.S. 346 (2007); see also Thomas H. Dupree, Punitive Damages and the Constitution, 70 LA. L. REV. 421 (2010); Jim Gash, The End of an Era: The Supreme Court (Finally) Butts Out Punitive Damages For Good, 63 FLA. L. REV. 525, 549 (2011) (noting that recent Supreme Court jurisprudence has put the single digit rule in question). On the nature of mathematical ratios and punitive damage awards in general, see Clarence Morris, Punitive Damages in Tort Cases, 44 HARV. L. REV. 1173, 1180 (1933) (“this test is probably more often a rationalization of results than a means of obtaining them.”). 113 In fact, even after deducting attorneys’ fees, the punitive damages were only about 4% higher than the actual damages. The actual damages were $1,391,650.12; the attorneys’ fees were $402,084.33; and the punitive damage award was $1,460,000.00. In other cases, the California Supreme Court has carefully implemented the Gore and State Farm standards and regularly reduces incompatible damage awards by lower courts. See, e.g., Simon v. San Paolo U.S. Holding Co, Inc., 113 P.3d 63 (Cal. 2005); Johnson v. Ford Motor Co., 113 P.3d 82 (Cal. 2005); Roby v. McKesson Corp., 219 P.3d 749 (Cal. 2010). One may speculate that if the amount allowed by the California court could have been regarded as excessive, Fountaine Pajot’s counsel would have suggested to appeal the California judgment. On the other hand, an appeal might risk submission to jurisdiction in California. 114 For example, when a foreign court has ruled in family matter, a French court of appeal is not allowed to formulate a new appreciation of the “interest of the child.” See Cass. Civ. 1st, October 27, 1993, n° 91-18384, Bull., I, n° 298. 115 A few authors have attempted to offer some guidelines. See Dominique Holleaux, Les conséquences de la prohibition de la révision, in TRAVAUX DU COMITÉ FRANÇAIS DE DROIT INTERNATIONAL PRIVÉ 53 (I, 1980-81); F.-X. Licari, supra note 2, at 426. 116 Catherine M. Sharkey, Crossing the Punitive-Compensatory Divide, in B. H. BORNSTEIN ET AL. (eds.), CIVIL

JURIES AND CIVIL JUSTICE 79 (2008).

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“punitive compensatory damages.117 “Compensatory punitive damages” may concern a jury’s desire to both punish and compensate when punitive damages are unavailable. Here, a punitive element inflates a compensatory damage award.118 “Punitive compensatory damages” involve damage awards related to inherently ambiguous losses such as pain and suffering, where noneconomic damages are awarded to “compensate” the victim. For an attorney anticipating enforcement difficulties, the strategy could be to ask for “vindictive” and hence inflated compensatory damages by using the ambiguity inherent in them and especially in the cases of “moral damages.”119

The reader may wonder why the court could not simply reduce the amount of the punitive damages if they are disproportionate, instead of merely rejecting the judgment altogether (as was the case in Fountaine Pajot). While this solution seems reasonable, it is not possible because it would be a reductive partial exequatur that, in effect, amounts to nothing more than a pure révision au fond.120 Nevertheless, at least one distinguished PIL scholar and practitioner advocates authorizing this kind of revision to avoid the “all-or-nothing” approach, which unjustly penalizes the plaintiff.121 We agree with this suggestion.122

Currently, the only possible solution under French law is to seek a partial recognition (an exequatur partiel), that is, an exequatur of just the compensatory damages if the judgment creditor fears that the French court will regard the punitive damages as disproportionate.123 The complete expression is selective partial exequatur, because the court selects between the regular and irregular points of the decision.124 In the present case, the only reason why the plaintiffs did not obtain a partial exequatur is because they did not demand it.125

117 As stated by the Restatement (Second) of Torts: “In many cases in which compensatory damages include an amount for emotional distress, such as humiliation or indignation aroused by the defendant’s act, there is no clear line of demarcation between punishment and compensation and a verdict for a specified amount frequently includes elements of both.” RESTATEMENT (SECOND) OF TORTS § 908 cmt. (c) (1979). 118 We can observe this phenomenon in Louisiana, a civil law island in the United States that prohibits punitive damages with very few statutory exceptions. While punitive damages are available in neighboring jurisdictions, Louisiana jury awards are often just as high or higher. 119 The ambiguity of moral damages is shared in French and other civil law jurisdictions. See, e.g., René Demogue, Validity of the Theory of Compensatory Damages, 27 YALE L.J. 585, 592 (1918); Georges Ripert, La règle morale dans les obligations civiles, n° 345–348 (4th ed., 1949); Paul Esmein, Peine ou réparation, in 2 MÉLANGES EN

L’HONNEUR DE PAUL ROUBIER 37, 40 (1961); Saúl Litvinoff, Moral Damages, 38 LA. L. REV. 1, 27 (1977); Saúl Litvinoff, The Law of Obligations, Part II, Putting in Default and Damages, in 6 LOUISIANA CIVIL LAW TREATISE §7.7 (2d. ed.); Hans Stoll, Penal Purposes in the Law of Tort, 18 AM. J. COMP. L. 3, 4 (1970). 120 F.-X. Licari, supra note 47, at 1261; Fabre, supra note 110: “[A] partial exequatur is indeed possible in France when the foreign judgment details the various heads of damages awarded, singling out at least the punitive damages. Otherwise, the French court is not authorized to reduce the amount of the damages awarded by the foreign court, as this would amount to a review of the merits of the foreign judgment.” 121 See Georges A. L. Droz, Variations Pordea, Rev. crit. DIP 2000 181, 194. 122 F.-X. Licari, supra note 47, at 1262. See also Boskovic, supra note 2. 123 This was the solution chosen by the Bundesgerichtshof. See P. Hay, supra note 7, at 749. 124 See, e.g., CA Aix-en-Provence, December 19, 1974, 103 JDI 929 (1976), comment Yves Lequette; CA Versailles, February 6, 1997, 125 JDI 119 (1998), comment Bernard Fillion-Dufouleur; Tribunal Civil de la Seine, May 14,1956, 84 JDI, 146 (1957),; TGI Paris, January 22, 1969 & CA Paris, July 1, 1970, Rev. crit. DIP 1970, 718, comment Jean Foyer; TGI Paris, November 26, 2008, Rev. crit. DIP 2009, 310, comment Bertrand Ancel. 125 In French law, nothing can be allowed that is not included in the demand. The judge is not authorized to adjudicate extra petita, or “outside or beyond that which is sought.”

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X. Conclusion

The history of France’s treatment of foreign judgments shows a growing acceptance of foreign law and of deference to foreign judiciaries. France’s participation in a world of increasing globalization requires it. No longer can a French court invoke the power of révision au fond to determine what it thinks is an appropriate result, but giving up that power necessitates that French courts have faith and trust in the judgment of the foreign court and in the foreign law. When it comes to French and European perspectives on American punitive damage awards, the air of distrust is overwhelming. As the Cour de cassation evaluated the ordre public international in Fountaine Pajot, its judgment may have succumbed to this distrust. One wonders if the Court made a genuine evaluation of the ordre public international, or whether it performed a révision au fond in disguise. Perhaps the French judiciary will soon recognize that punitive damages are not as foreign as they think.126

126 See Georgios Georgiades, Punitive Damages in Europe and the USA: Doctrinal Differences and Practical Convergence, 58 REVUE HELLÉNIQUE DE DROIT INTERNATIONAL (RHDI) 145 (2005); F.-X. Licari, supra note 47, at 1244–60. Cf. Volker Behr, Punitive Damages in American and German Law – Tendencies Towards Approximation of Apparently Irreconcilable Concepts, 78 CHI.-KENT L. REV. 105 (2003).