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758 Unif. L. Rev. 2004-4 ALI / UNIDROIT Principles of Transnational Civil Procedure * Scope and Implementation These Principles are standards for adjudication of transnational commercial disputes. These Principles may be equally appropriate for the resolution of most other kinds of civil disputes and may be the basis for future initiatives in reforming civil procedure. Comment: P-A A national system seeking to implement these Principles could do so by a suitable legal measure, such as a statute or set of rules, or an international treaty. Forum law may exclude categories of matters from application of these Principles and may extend their application to other civil matters. Courts may adapt their practice to these Principles, especially with the consent of the parties to litigation. These Principles also establish standards for determining whether recognition should be given to a foreign judgment. See Principle 30. The procedural law of the forum applies in matters not addressed in these Principles. P-B The adoptive document may include a more specific definition of ficommercialfl and fitransnational.fl That task will necessarily involve careful reflection on local legal tradition and connotation of legal language. Transnational commercial transactions may include commercial contracts between nationals of different states and commercial transactions in a state by a national of another state. Commercial transactions may include sale, lease, loan, investment, acquisition, banking, security, property (including intellectual property), and other business or financial transactions, but do not necessarily include claims provided by typical consumer-protection statutes. P-C Transnational disputes, in general, do not arise wholly within a state and involve disputing parties who are from the same state. For purposes of these Principles, an individual is considered a national both of a state of the person™s citizenship and the state of the person™s habitual residence. A jural entity (corporation, unincorporated association, partnership, or other organizational entity) is considered to be from both the state from which it has received its charter of organization and the state in which it has its principal place of business. P-D In cases involving multiple parties or multiple claims, among which are ones not within the scope of these Principles, these Principles should apply when the court determines that the principal matters in controversy are within the scope of application of these Principles. However, these Principles are not applicable, without modification, to group litigation, such as class, representative, or collective actions. * The text of the Principles and the accompanying commentary were adopted by the American Law Institute (ALI) in May 2004 and by the International Institute for the Unification of Private Law (UNIDROIT) in April 2004.
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ALI / UNIDROIT Principles of Transnational Civil Procedure 760 Unif. L. Rev. 2004-4 P-E These Principles are equally applicable to international arbitration, except to the extent of being incompatible with arbitration proceedings, for example, the Principles related to jurisdiction, publicity of proceedings, and appeal. 1. Independence, Impartiality, and Qualifications of the Court and Its Judges 1.1 The court and the judges should have judicial independence to decide the dispute according to the facts and the law, including freedom from improper internal and external influence. 1.2 Judges should have reasonable tenure in office. Nonprofessional members of the court should be designated by a procedure assuring their independence from the parties, the dispute, and other persons interested in the resolution. 1.3 The court should be impartial. A judge or other person having decisional authority must not participate if there is reasonable ground to doubt such person™s impartiality. There should be a fair and effective procedure for addressing contentions of judicial bias. 1.4 Neither the court nor the judge should accept communications about the case from a party in the absence of other parties, except for communications concerning proceedings without notice and for routine procedural administration. When communication between the court and a party occurs in the absence of another party, that party should be promptly advised of the content of the communication. 1.5 The court should have substantial legal knowledge and experience. Comment: P-1A Independence can be considered a more objective characteristic and impartiality a more subjective one, but these attributes are closely connected. P-1B External influences may emanate from members of the executive or legislative branch, prosecutors, or persons with economic interests, etc. Internal influence could emanate from other officials of the judicial system. P-1C This Principle recognizes that typically judges serve for an extensive period of time, usually their entire careers. However, in some systems most judges assume the bench only after careers as lawyers and some judicial officials are designated for short periods. An objective of this Principle is to avoid the creation of ad hoc courts. The term fijudgefl includes any judicial or quasi-judicial official under the law of the forum. P-1D A procedure for addressing questions of judicial bias is necessary only in unusual circumstances, but availability of the procedure is a reassurance to litigants, especially nationals of other countries. However, the procedure should not invite abuse through insubstantial claims of bias. P-1E Proceedings without notice (ex parte proceedings) may be proper, for example in initially applying for a provisional remedy. See Principles 5.8 and 8. Proceedings after default are governed by Principle 15. Routine procedural administration includes, for example, specification of dates for submission of proposed evidence. P-1F Principle 1.5 requires only that judges for transnational litigation be familiar with the law. It does not require the judge to have special knowledge of commercial or financial law, but familiarity with such matters would be desirable.
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ALI / UNIDROIT Principles of Transnational Civil Procedure 762 Unif. L. Rev. 2004-4 2. Jurisdiction Over Parties 2.1 Jurisdiction over a party may be exercised: 2.1.1 By consent of the parties to submit the dispute to the tribunal; 2.1.2 When there is a substantial connection between the forum state and the party or the transaction or occurrence in dispute. A substantial connection exists when a significant part of the transaction or occurrence occurred in the forum state, when an individual defendant is a habitual resident of the forum state or a jural entity has received its charter of organization or has its principal place of business therein, or when property to which the dispute relates is located in the forum state. 2.2 Jurisdiction may also be exercised, when no other forum is reasonably available, on the basis of: 2.2.1 Presence or nationality of the defendant in the forum state; or 2.2.2 Presence in the forum state of the defendant™s property, whether or not the dispute relates to the property, but the court™s authority should be limited to the property or its value. 2.3 A court may grant provisional measures with respect to a person or to property in the territory of the forum state, even if the court does not have jurisdiction over the controversy. 2.4 Exercise of jurisdiction must ordinarily be declined when the parties have previously agreed that some other tribunal has exclusive jurisdiction. 2.5 Jurisdiction may be declined or the proceeding suspended when the court is manifestly inappropriate relative to another more appropriate court that could exercise jurisdiction. 2.6 The court should decline jurisdiction or suspend the proceeding, when the dispute is previously pending in another court competent to exercise jurisdiction, unless it appears that the dispute will not be fairly, effectively, and expeditiously resolved in that forum. Comment: P-2A Subject to restrictions on the court™s jurisdiction under the law of the forum and subject to restrictions of international conventions, ordinarily a court may exercise jurisdiction upon the parties™ consent. A court should not exercise jurisdiction on the basis of implied consent without giving the parties a fair opportunity to challenge jurisdiction. In the absence of the parties™ consent, and subject to the parties™ agreement that some other tribunal or forum has exclusive jurisdiction, ordinarily a court may exercise jurisdiction only if the dispute is connected to the forum, as provided in Principle 2.1.2. P-2B The standard of fisubstantial connectionfl has been generally accepted for international legal disputes. Administration of this standard necessarily involves elements of practical judgment and self-restraint. That standard excludes mere physical presence, which within the United States is colloquially called fitag jurisdiction.fl Mere physical presence as a basis of jurisdiction within the American federation has historical justification that is inapposite in modern international disputes. The concept of fisubstantial connectionfl may be specified and
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ALI / UNIDROIT Principles of Transnational Civil Procedure 764 Unif. L. Rev. 2004-4 elaborated in international conventions and in national laws. The scope of this expression might not be the same in all systems. However, the concept does not support general jurisdiction on the basis of fidoing businessfl not related to the transaction or occurrence in dispute. P-2C Principle 2.2 covers the concept of fiforum necessitatisfl Š the forum of necessity whereby a court may properly exercise jurisdiction when no other forum is reasonably available. P-2D Principle 2.3 recognizes that a state may exercise jurisdiction by sequestration or attachment of locally situated property, for example to secure a potential judgment, even though the property is not the object or subject of the dispute. The procedure with respect to property locally situated is called fiquasi in rem jurisdictionfl in some legal systems. Principle 2.3 contemplates that, in such a case, the merits of the underlying dispute might be adjudicated in some other forum. The location of intangible property should be ascribed according to forum law. P-2E Party agreement to exclusive jurisdiction, including an arbitration agreement, ordinarily should be honored. P-2F The concept recognized in Principle 2.5 is comparable to the common-law rule of forum non conveniens. In some civil-law systems, the concept is that of preventing abuse of the forum. This principle can be given effect by suspending the forum proceeding in deference to another tribunal. The existence of a more convenient forum is necessary for application of this Principle. This Principle should be interpreted in connection with the Principle of Procedural Equality of the Parties, which prohibits any kind of discrimination on the basis of nationality or residence. See Principle 3.2. P-2G For the timing and scope of devices to stay other proceedings, such as lis pendens, see Principles 10.2 and 28.1. 3. Procedural Equality of the Parties 3.1 The court should ensure equal treatment and reasonable opportunity for litigants to assert or defend their rights. 3.2 The right to equal treatment includes avoidance of any kind of illegitimate discrimination, particularly on the basis of nationality or residence. The court should take into account difficulties that might be encountered by a foreign party in participating in litigation. 3.3 A person should not be required to provide security for costs, or security for liability for pursuing provisional measures, solely because the person is not a national or resident of the forum state. 3.4 Whenever possible, venue rules should not impose an unreasonable burden of access to court on a person who is not a habitual resident of the forum. Comment: P-3A The term fireasonablefl is used throughout the Principles and signifies fiproportional,fl fisignificant,fl finot excessive,fl or fifair,fl according to the context. It can also mean the opposite of arbitrary. The concept of reasonableness also precludes hyper-technical legal argument and leaves a range of discretion to the court to avoid severe, excessive, or unreasonable application of procedural norms. P-3B Illegitimate discrimination includes discrimination on the basis of nationality, residence, gender, race, language, religion, political or other opinion, national or social origin, birth or other status, sexual orientation, or association with a national minority. Any form of
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ALI / UNIDROIT Principles of Transnational Civil Procedure 766 Unif. L. Rev. 2004-4 illegitimate discrimination is prohibited, but discrimination on the basis of nationality or residence is a particularly sensitive issue in transnational commercial litigation. P-3C Special protection for a litigant, through a conservatorship or other protective procedure such as a curator or guardian, should be afforded to safeguard the interests of persons who lack full legal capacity, such as minors. Such protective measures should not be abusively imposed on a foreign litigant. P-3D Some jurisdictions require a person to provide security for costs, or for liability for provisional measures, in order to guarantee full compensation of possible future damages incurred by an opposing party. Other jurisdictions do not require such security, and some of them have constitutional provisions regarding access to justice or equality of the parties that prohibit such security. Principle 3.3 is a compromise between those two positions and does not modify forum law in that respect. However, the effective responsibility of a nonnational or nonresident for costs or liability for provisional measures should be evaluated under the same general standards. P-3E Venue rules of a national system (territorial competence) generally reflect considerations of convenience for litigants within the country. They should be administered in light of the principle of convenience of the forum stated in Principle 3.4. A venue rule that would impose substantial inconvenience within the forum state should not be given effect when there is another more convenient venue and transfer of venue within the forum state should be afforded from an unreasonably inconvenient location. 4. Right to Engage a Lawyer 4.1 A party has the right to engage a lawyer of the party™s choice, including both representation by a lawyer admitted to practice in the forum and active assistance before the court of a lawyer admitted to practice elsewhere. 4.2 The lawyer™s professional independence should be respected. A lawyer should be permitted to fulfill the duty of loyalty to a client and the responsibility to maintain client confidences. Comment: P-4A A forum may appropriately require that a lawyer representing a party be admitted to practice in the forum unless the party is unable to retain such a lawyer. However, a party should also be permitted the assistance of other lawyers, particularly its regular lawyer, who should be permitted to attend and actively participate in all hearings in the dispute. P-4B A lawyer admitted to practice in the party™s home country is not entitled by this Principle to be the sole representative of a party in foreign courts. That matter should be governed by forum law except that a foreign lawyer should at least be permitted to attend the hearing and address the court informally. P-4C The attorney-client relationship is ordinarily governed by rules of the forum, including the choice-of-law rules. P-4D The principles of legal ethics vary somewhat among various countries. However, all countries should recognize that lawyers in independent practice are expected to advocate the interests of their clients and generally to maintain the secrecy of confidences obtained in the course of representation.
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ALI / UNIDROIT Principles of Transnational Civil Procedure 768 Unif. L. Rev. 2004-4 5. Due Notice and Right to Be Heard 5.1 At the commencement of a proceeding, notice, provided by means that are reasonably likely to be effective, should be directed to parties other than the plaintiff. The notice should be accompanied by a copy of the complaint or otherwise include the allegations of the complaint and specification of the relief sought by plaintiff. A party against whom relief is sought should be informed of the procedure for response and the possibility of default judgment for failure to make timely response. 5.2 The documents referred to in Principle 5.1 must be in a language of the forum, and also a language of the state of an individual™s habitual residence or a jural entity™s principal place of business, or the language of the principal documents in the transaction. Defendant and other parties should give notice of their defenses and other contentions and requests for relief in a language of the proceeding, as provided in Principle 6. 5.3 After commencement of the proceeding, all parties should be provided prompt notice of motions and applications of other parties and determinations by the court. 5.4 The parties have the right to submit relevant contentions of fact and law and to offer supporting evidence. 5.5 A party should have a fair opportunity and reasonably adequate time to respond to contentions of fact and law and to evidence presented by another party, and to orders and suggestions made by the court. 5.6 The court should consider all contentions of the parties and address those concerning substantial issues. 5.7 The parties may, by agreement and with approval of the court, employ expedited means of communications, such as telecommunication. 5.8 An order affecting a party™s interests may be made and enforced without giving previous notice to that party only upon proof of urgent necessity and preponderance of considerations of fairness. An ex parte order should be proportionate to the interests that the applicant seeks to protect. As soon as practicable, the affected party should be given notice of the order and of the matters relied upon to support it, and should have the right to apply for a prompt and full reconsideration by the court. Comment: P-5A The specific procedure for giving notice varies somewhat among legal systems. For example, in some systems the court is responsible for giving the parties notice, including copies of the pleadings, while in other systems that responsibility is imposed on the parties. The forum™s technical requirements of notice should be administered in contemplation of the objective of affording actual notice. P-5B The possibility of a default judgment is especially important in international litigation. P-5C The right of a party to be informed of another party™s contentions is consistent with the responsibility of the court stated in Principle 22. P-5D According to Principle 5.5, the parties should make known to each other at an early stage the elements of fact upon which their claims or defenses are based and the rules of law that will be invoked, so that each party has timely opportunity to organize its case.
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ALI / UNIDROIT Principles of Transnational Civil Procedure 772 Unif. L. Rev. 2004-4 Comment: P-7A In all legal systems the court has a responsibility to move the adjudication forward. It is a universally recognized axiom that fijustice delayed is justice denied.fl Some systems have specific timetables according to which stages of a proceeding should be performed. P-7B Prompt rendition of justice is a matter of access to justice and may also be considered an essential human right, but it should also be balanced against a party™s right of a reasonable opportunity to organize and present its case. 8. Provisional and Protective Measures 8.1 The court may grant provisional relief when necessary to preserve the ability to grant effective relief by final judgment or to maintain or otherwise regulate the status quo. Provisional measures are governed by the principle of proportionality. 8.2 A court may order provisional relief without notice only upon urgent necessity and preponderance of considerations of fairness. The applicant must fully disclose facts and legal issues of which the court properly should be aware. A person against whom ex parte relief is directed must have the opportunity at the earliest practicable time to respond concerning the appropriateness of the relief. 8.3 An applicant for provisional relief should ordinarily be liable for compensation of a person against whom the relief is issued if the court thereafter determines that the relief should not have been granted. In appropriate circumstances, the court must require the applicant for provisional relief to post a bond or formally to assume a duty of compensation. Comment: P-8A fiProvisional relieffl embraces also the concept of fiinjunction,fl which is an order requiring or prohibiting the performance of a specified act, for example, preserving property in its present condition. Principle 8.1 authorizes the court to issue an order that is either affirmative, in that it requires performance of an act, or negative in that it prohibits a specific act or course of action. The term is used here in a generic sense to include attachment, sequestration, and other directives. The concept of regulation includes measures to ameliorate the underlying controversy, for example supervision of management of a partnership during litigation among the partners. Availability of provisional remedies or interim measures, such as attachment or sequestration, should be determined by forum law, including applicable principles of international law. A court may also order disclosure of assets wherever located, or grant provisional relief to facilitate arbitration or enforce arbitration provisional measures. P-8B Principle 5.8 and 8.2 authorize the court to issue an order without notice to the person against whom it is directed where doing so is justified by urgent necessity. fiUrgent necessity,fl required as a basis for an ex parte order, is a practical concept, as is the concept of preponderance of considerations of fairness. The latter term corresponds to the common-law concept of fibalance of equities.fl Considerations of fairness include the strength of the merits of the applicant™s claim, relevant public interest if any, the urgency of the need for a provisional remedy, and the practical burdens that may result from granting the remedy. Such an injunction is usually known as an ex parte order. See Principle 1.4.
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ALI / UNIDROIT Principles of Transnational Civil Procedure 774 Unif. L. Rev. 2004-4 P-8C The question for the court, in considering an application for an ex parte order, is whether the applicant has made a reasonable and specific demonstration that such an order is required to prevent an irreparable deterioration in the situation to be addressed in the litigation, and that it would be imprudent to postpone the order until the opposing party has opportunity to be heard. The burden is on the party requesting an ex parte order to justify its issuance. However, as soon as practicable, the opposing party or person to whom the order is addressed should be given notice of the order and of the matters relied upon to support it and should have the right to apply for a prompt and full reconsideration by the court. The party or person must have the opportunity for a de novo reconsideration of the decision, including opportunity to present evidence. See Principle 8.2. P-8D Rules of procedure generally require that a party requesting an ex parte order make full disclosure to the court of all issues of law and fact that the court should legitimately take into account in granting the request, including those against the petitioner™s interests and favorable to the opposing party. Failure to make such disclosure is ground to vacate an order and may be a basis of liability for damages against the requesting party. In some legal systems, assessment of damages for an erroneously issued order does not necessarily reflect the proper resolution of the underlying merits. P-8E After hearing those interested, the court may issue, dissolve, renew, or modify an order. If the court had declined to issue an order ex parte, it may nevertheless issue an order upon a hearing. If the court previously issued an order ex parte, it may dissolve, renew, or modify its order in light of the matters developed at the hearing. The burden is on the party seeking the order to show that it is justified. P-8F Principle 8.3 authorizes the court to require a bond or other compensation, as protection against the disturbance and injury that may result from an order. The particulars of such compensation should be determined by the law of the forum. An obligation to compensate should be express, not merely by implication, and could be formalized through a bond underwritten by a third party. P-8G An order under this Principle in many systems is ordinarily subject to immediate appellate review, according to the procedure of the forum. In some systems such an order is of very brief duration and subject to prompt reconsideration in the first-instance tribunal prior to the possibility of appellate review. The guarantee of a review is particularly necessary when the order has been issued ex parte. Review by a second-instance tribunal is regulated in different ways in various systems. However, it should also be recognized that such a review might entail a loss of time or procedural abuse. 9. Structure of the Proceedings 9.1 A proceeding ordinarily should consist of three phases: the pleading phase, the interim phase, and the final phase. 9.2 In the pleading phase the parties must present their claims, defenses, and other contentions in writing, and identify their principal evidence. 9.3 In the interim phase the court should if necessary: 9.3.1 Hold conferences to organize the proceeding;
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ALI / UNIDROIT Principles of Transnational Civil Procedure 776 Unif. L. Rev. 2004-4 9.3.2 Establish the schedule outlining the progress of the proceeding; 9.3.3 Address the matters appropriate for early attention, such as questions of jurisdiction, provisional measures, and statute of limitations (prescription); 9.3.4 Address availability, admission, disclosure, and exchange of evidence; 9.3.5 Identify potentially dispositive issues for early determination of all or part of the dispute; and 9.3.6 Order the taking of evidence. 9.4 In the final phase evidence not already received by the court according to Principle 9.3.6 ordinarily should be presented in a concentrated final hearing at which the parties should also make their concluding arguments. Comment: P-9A The concept of fistructurefl of a proceeding should be applied flexibly, according to the nature of the particular case. For example, if convenient a judge would have discretion to hold a conference in the pleading phase and to hold multiple conferences as the case progresses. P-9B An orderly schedule facilitates expeditious conduct of the litigation. Discussion between the court and lawyers for the parties facilitates practical scheduling and orderly hearings. See Principle 14.2 and Comment P-14A. P-9C Traditionally, courts in civil-law systems functioned through a sequence of short hearings, while those in common-law systems organized a proceeding around a final fitrial.fl However, courts in modern practice in both systems provide for preliminary hearings and civil-law systems have increasingly come to employ a concentrated final hearing for most evidence concerning the merits. P-9D In common-law systems, a procedure for considering potentially dispositive issues before final hearing is the motion for summary judgment, which can address legal issues, or the issue of whether there is genuine controversy about facts, or both such issues. Civil-law jurisdictions provide for similar procedures in the interim phase. P-9E In most systems the objection of lack of jurisdiction over the person must be made by the party involved and at an early stage in the proceeding, under penalty of forfeiting the objection. In international litigation it is particularly important that questions of jurisdiction be addressed promptly. 10. Party Initiative and Scope of the Proceeding 10.1 The proceeding should be initiated through the claim or claims of the plaintiff, not by the court acting on its own motion. 10.2 The time of lodging the complaint with the court determines compliance with statutes of limitation, lis pendens, and other requirements of timeliness. 10.3 The scope of the proceeding is determined by the claims and defenses of the parties in the pleadings, including amendments. 10.4 A party, upon showing good cause, has a right to amend its claims or defenses upon notice to other parties, and when doing so does not unreasonably delay the proceeding or otherwise result in injustice.
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ALI / UNIDROIT Principles of Transnational Civil Procedure 778 Unif. L. Rev. 2004-4 10.5 The parties should have a right to voluntary termination or modification of the proceeding or any part of it, by withdrawal, admission, or settlement. A party should not be permitted unilaterally to terminate or modify the action when prejudice to another party would result. Comment: P-10A All modern legal systems recognize the principle of party initiative concerning the scope and particulars of the dispute. It is within the framework of party initiative that the court carries out its responsibility for just adjudication. See Principles 10.3 and 28.2. These Principles require the parties to provide details of fact and law in their contentions. See Principle 11.3. This practice contrasts with the more loosely structured system of finotice pleadingfl in American procedure. P-10B All legal systems impose time limits for commencement of litigation, called statutes of limitation in common-law systems and prescription in civil-law systems. Service of process must be completed or attempted within a specified time after commencement of the proceeding, according to forum law. Most systems allow for an objection that service of process was not completed or attempted within a specified time after commencement of the proceeding. P-10C The right to amend a pleading is very restricted in some legal systems. However, particularly in transnational disputes, the parties should be accorded some flexibility, particularly when new or unexpected evidence is confronted. Adverse effect on other parties from exercise of the right of amendment may be avoided or moderated by an adjournment or continuance, or adequately compensated by an award of costs. P-10D The forum law may permit a claimant to introduce a new claim by amendment even though it is time-barred (statute of limitations or prescription), provided it arises from substantially the same facts as those that underlie the initial claim. P-10E Most jurisdictions do not permit a plaintiff to discontinue an action after an initial phase of the proceeding over the objection of the defendant. 11. Obligations of the Parties and Lawyers 11.1 The parties and their lawyers must conduct themselves in good faith in dealing with the court and other parties. 11.2 The parties share with the court the responsibility to promote a fair, efficient, and reasonably speedy resolution of the proceeding. The parties must refrain from procedural abuse, such as interference with witnesses or destruction of evidence. 11.3 In the pleading phase, the parties must present in reasonable detail the relevant facts, their contentions of law, and the relief requested, and describe with sufficient specification the available evidence to be offered in support of their allegations. When a party shows good cause for inability to provide reasonable details of relevant facts or sufficient specification of evidence, the court should give due regard to the possibility that necessary facts and evidence will develop later in the course of the proceeding. 11.4 A party™s unjustified failure to make a timely response to an opposing party™s contention may be taken by the court, after warning the party, as a sufficient basis for considering that contention to be admitted or accepted.
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