Cross-border enforcement of US civil judgments

Distinctive features of US damages awards

US law on damages is considerably more favourable to claimants than English or German law. Thus, in addition to traditional compensatory damages, which compensate for the actual loss suffered, the injured party may also be awarded punitive damages or multiple damages (also known as “double” or “treble damages”).

Multiple damages are usually awarded by operation of law as a fixed multiple of the actual loss (e.g. by automatically doubling or tripling the amount of damages).

Punitive damages are at the discretion of the court or the jury and serve to punish the wrongdoer and deter others from committing similar acts.

Enforcement in England

In England, Section 5 of the Protection of Trading Interests Act 1980 (PTIA) provides the relevant legal basis for the enforcement of foreign judgments. Under this provision, courts in the United Kingdom may not permit proceedings relating to the enforcement of foreign judgments awarding multiple damages. The wording of the Act refers exclusively to a ‘judgment for multiple damages’, i.e. a judgment for an amount based on a doubling, tripling or other multiplication of the base amount determined as compensation for a loss or other damage suffered. The Act therefore does not focus on the legal classification of individual items of damage, but on the mechanism of multiplication.

In such cases, a prohibition on enforcement applies to the entire amount awarded in the judgment, irrespective of whether individual components thereof constitute compensatory damages. The prohibition on enforcement also covers interest, costs, lawyers’ fees and other ancillary claims, insofar as they are ancillary to a judgment awarding multiple damages.

Enforcement in Germany

In Germany, there are no specific statutory provisions governing the enforcement of US judgments awarding punitive damages.

However, the highest court’s case law derives a prohibition on enforcement from the ordre public principle in Section 328 of the Code of Civil Procedure (ZPO) and constitutional principles (Federal Court of Justice (BGH) judgment of 4 June 1992 – IX ZR 149/91, BGHZ 118, 312).

Under the ordre public reservation, the recognition of foreign judgments must not lead to a result that is incompatible with fundamental principles of German law. German law does not recognise punitive damages in the US sense, which is why such judgments cannot be enforced in Germany in this respect. There are several reasons for this:

• The imposition of punitive damages under civil law, in addition to any criminal sanctions, would contravene the constitutional prohibition of double punishment set out in Article 103(3) of the Constitution.
• Punitive damages run counter to the principles of German civil law, according to which only the damage suffered is to be compensated, whilst the tortfeasor is not to be punished.
• The imposition of penalties is the responsibility of the state’s criminal justice system and not of civil courts.

A further argument against the enforcement of multiple damages is that they are incompatible with the German prohibition on unjust enrichment, according to which the injured party should not receive more than the actual loss they have suffered.

If a US court judgment clearly distinguishes between the amount awarded as compensatory damages and that awarded as punitive or multiple damages, then that judgment is partially enforceable in Germany (i.e. only in respect of the compensatory damages).

Key points in brief

• German companies must participate in US proceedings but are protected at the enforcement stage by the ordre public test if enforcement is to take place in Germany.
• US judgments awarding punitive or multiple damages are enforceable in England and Germany only in respect of compensatory damages
• The question of the enforceability of a US judgment must therefore be examined before legal proceedings commence