International Judicial Monitor
Published by the International Judicial Academy, Washington, D.C., with assistance from the
American Society of International Law

Winter 2015 Issue

Private international law Discourse


A Brief Comparison of “At Home” Jurisdiction in Transnational Cases in the United States and the EU

Carolyn A. Dubay

By Carolyn A. Dubay, Associate Editor, International Judicial Monitor and Assistant Professor of Law, Charlotte Law School

In recent years, the United States Supreme Court has issued several important decisions defining the permissible reach of American courts over foreign defendants.  At the same time, the European Union has recast its governing regulations (known as the Brussels Regime) relating to civil and commercial litigation to accommodate recent changes in international treaty obligations.  These parallel developments in jurisdictional rules highlight the inherent differences in the American common law and constitutional approach to personal jurisdiction and the governing EU regulatory framework.  At the same time, the latest pronouncement of the United States Supreme Court on jurisdictional issues suggests an opening for harmonization of American and European jurisdictional rules, which in turn may refuel the decades’ long effort to secure a convention on the enforcement of foreign judgments.

In 2011, the Supreme Court issued its unanimous opinion in Goodyear Dunlop Tires v. Brown and signaled new restrictions on when an American state or federal court may exercise general jurisdiction over a defendant. The American concept of general jurisdiction parallels the more commonly understood notion of “at home” jurisdiction - the circumstances in which a court may exercise jurisdiction over a defendant in any matter, regardless of where the claim arose. This jurisdiction is distinct from the specific or special jurisdiction that is recognized in the forum where the claim arose. Again in 2014, the Supreme Court addressed the parameters of general jurisdiction in Daimler AG v. Bauman, which clarified Goodyear and reaffirmed that general jurisdiction over a foreign defendant must be based on the defendant’s domicile (or substantial equivalent) in the forum state.  For corporate defendants, the default rule for domicile would be the corporation’s principal place of business or state of incorporation.  With these two decisions, American lawyers and academics have generally focused on the impact of Goodyear and Daimler on the fate of what is known in the US as “doing business” jurisdiction over corporate defendants.  Embedded in this issue are remaining ambiguities as to when the actions of a subsidiary can be imputed to a parent corporation for jurisdictional purposes. 

Meanwhile, across the pond in the EU, and almost exactly one year after the Daimler decision reshaped American general jurisdiction jurisprudence in transnational cases, the Brussels I Regulation (Recast) became effective on January 10, 2015.  Implemented in 2012, the official name of the new Brussels I Regulation (Recast) is Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast).  The Brussels I Regulation (Recast) is essentially an amended version of the Brussels I Regulation, which governs various jurisdictional and procedural issues in civil cases involving parties from different EU member states. Brussels I (Recast) implements a number of procedural changes within the EU, particularly with respect to the enforcement of choice of court agreements (in tandem with other implementation efforts for the Hague Convention on Choice of Court Agreements). What did not change in Brussels I (Recast) is the basic principle as laid out in its preamble: “jurisdiction should be highly predictable and founded on the principle that jurisdiction is generally based on the defendant’s domicile.” In the case of corporate entities, Article 63 of Brussels I (Recast) provides that such company or other entity is domiciled in the place where it has its:  (a) statutory seat; (b) central administration; or (c) principal place of business.

The EU framework for the exercise of general jurisdiction over corporate defendants was clearly in the mind of the United States Supreme Court in its opinion in Daimler.  Building on the Goodyear decision, Justice Ruth Bader Ginsburg again wrote a virtually unanimous opinion in Daimler (subject to Justice Sotomayor’s concurring opinion) reversing the lower courts’ expansive view of general jurisdiction.  In Daimler, the Argentine plaintiffs sued Daimler, a German corporation, in California, based on alleged human rights violations


committed by Daimler’s subsidiary, Mercedes-Benz Argentina (MB Argentina) during Argentina’s “Dirty War” from 1976-1983.  The sole basis for jurisdiction in California against Daimler was the allegation that Daimler’s subsidiary, Mercedes-Benz USA (MB USA) had distributed vehicles that entered the stream of commerce in California.  After the trial court dismissed the action against Daimler for lack of personal jurisdiction, the federal court of appeals adopted an agency theory of corporate parent liability and concluded that jurisdiction over Daimler existed by virtue of its subsidiary’s business transactions in California. The Supreme Court reversed this decision, and took the opportunity to build on its 2012 decision in Goodyear. For general jurisdiction against a foreign corporate defendant to exist, the Supreme Court found, the affiliation with the forum state must be “continuous and systematic” such that the foreign corporation is essentially “at home in the forum State.”  Simply because Daimler, as the parent, may have benefitted from MB USA’s business transactions, some of which were derived from business in California, did not create “continuous and systematic” contacts with the forum state that would give rise to jurisdiction over Daimler.

Importantly for the sake of comparing the emerging rules on general jurisdiction in the United States with the EU model, the Supreme Court in Daimler gave specific credence to the “domicile” rule for the exercise of general jurisdiction over a defendant.  As the Supreme Court stated, “[f]or an individual, the paradigm forum for the exercise of general jurisdiction is the individual’s domicile; for a corporation, it is an equiva­lent place, one in which the corporation is fairly regarded as at home, ” such as the corporation’s “place of incorporation and principal place of business.” While the Supreme Court did not reject the notion that general jurisdiction over a corporation could exist in a forum other than its place of incorporation or principal place of business, the connection to the forum would have to be more than a “continuous, and systematic course of business.” Rather, the relevant inquiry is “whether that corpora­tion’s affiliations with the State are so ‘continuous and systematic’ as to render [it] essentially at home in the forum State.”

The drawing together of the US and EU approach to personal jurisdiction in Daimler was no accident. The Supreme Court specifically reprimanded the lower court for paying “little heed to the risks to international comity its expansive view of general juris­diction posed .”  Citing Article 63 of Brussels I (Recast), the Supreme Court specifically noted the EU rule that a corporation may generally be sued only in the nation in which it is “domiciled”  by virtue of the location of the corporation’s “statutory seat,” “central admin­istration,” or “principal place of business.”  The Supreme Court also acknowledged the views of the United States Government that existing expansive rules of jurisdiction over foreign defendants in the United States had been a significant roadblock in efforts to secure an international convention on the recognition and enforcement of foreign judgments.

While the Supreme Court’s decisions in Goodyear and Daimler point to potential harmonization of jurisdictional rules in substance, the nature of the development of these rules speaks volumes to the critical difference between US and EU approaches to personal jurisdiction.   Because of the constitutionalization of procedural rules in US courts as a component of the due process rights of defendants, it is the United States Supreme Court that ultimately determines the permissibility of jurisdictional rules in both federal and state courts.  When the Supreme Court is silent, as it was in the decades before Goodyear and Daimler, lower courts and legislators are free to expansively define jurisdiction in ways that may be wholly inconsistent with international norms.  It is only if and when the Supreme Court exercises it prerogative to hear a case that some definitive rule may emerge. Even when such prerogative is exercised, as in Goodyear and Daimler, nuanced applications of those rulings may create later divergences in the lower courts. Whether this process is more cumbersome than rule-making in the EU can be debated, but at least for the time being, it has yielded a window of opportunity to jump start negotiations for an international agreement to deal with the jurisdictional challenges to the enforcement of foreign judgments.

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with assistance from the American Society of International Law.

Editor: James G. Apple.
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