Punitive Damages in Applicable Law and Enforcement of Judgments: Normative Considerations. An Attempt at Formulating Guidelines

Abstract

The aim of this chapter is to list a set of guidelines courts can fall back on when having to apply U.S. law providing for punitive damages or when confronted with a request to enforce an American judgment containing punitive damages. The concrete guiding principles offered in this chapter are derived from the dominating American rules on punitive damages (chapter 1) as well as the existing case law on the enforcement of punitive damages in the European Union (chapter 4). APPLICABLE LAW In chapter 3 it became clear that the public policy (to be understood in its international sense) of the forum regulates the application of foreign rules. At the European level recital 32 of the Rome II Regulation indicates that the public policy clause of article 26 of the Regulation should be interpreted in such a way as to allow the granting of foreign punitive damages, to the extent that they are not excessive. Although devoid of any binding effect, it is to be expected (or hoped) that national courts will construe the public policy mechanism in light of the recital. For those cases still governed by national rules of private international law, the situation is different. In Germany, for instance, the public policy exception for tort cases found in article 40, paragraph 3 EGBGB makes the awarding of U.S. punitive damages impossible. There is, therefore, a stark contrast between matters falling within the scope of the Rome II Regulation and those outside its ambit. We argue that the national rules should follow the model of the Rome II Regulation. A point-blank refusal to apply U.S. punitive damages when these are appropriate under the foreign law, such as put forward by article 40, paragraph 3 EGBGB, is not in line with the legal status quo. The findings in chapter 5 debunk the argument that punitive damages in se violate international public policy. The problem with article 40, paragraph 3 EGBGB lies in the fact that it is a rigid provision which represents and solidifies a hostile view on punitive damages at the time of its introduction. The general public policy exception of article 6 EGBGB, on the other hand, allows for a more flexible interpretation as it orders the court to look at the public policy as it exists at the time the court renders its judgment.