Hunt v. BP Exploration Co.(Libya) Ltd.

• Decision Date: 23 January 1984
• Docket Number: Civ. A. No. CA3-75-0715-G.
• Citation: 580 F. Supp. 304
• Parties: Nelson Bunker HUNT, Plaintiff, v. BP EXPLORATION COMPANY (LIBYA) LTD., Defendant.
• Court: U.S. District Court — Northern District of Texas

580 F. Supp. 304

Nelson Bunker HUNT, Plaintiff, v. BP EXPLORATION COMPANY (LIBYA) LTD., Defendant.

Civ. A. No. CA3-75-0715-G.

United States District Court, N.D. Texas, Dallas Division.

January 23, 1984.

Ivan Irwin, Jr., A.B. Conant, Jr., Shank, Irwin, Conant, Williamson & Grevelle, Dallas, Tex., for plaintiff.

Mark Martin, Patrick F. McGowan, James K. Peden, Strasburger & Price, Dallas, Tex., Robert MacCrate, James H. Carter, Jr., D. Stuart Meiklejohn, Sullivan & Cromwell, New York City, for defendant.

MEMORANDUM OPINION

FISH, District Judge.

Nelson Bunker Hunt ("Hunt"), the plaintiff in this diversity case, asks this court to declare that a prior English judgment adjudicating the same dispute between these parties is unenforceable, to declare further that he is not indebted to defendant BP Exploration Company (Libya) Ltd. ("BP"), and to order that BP repay him the amount it previously collected under the English judgment ($40,833,000.00 plus interest). Alternatively, Hunt seeks a declaration that, in accordance with the parties' agreement, the dispute is subject to arbitration.

In a prior opinion, this court held "that the English judgment is entitled to recognition and that such recognition would bar most if not all of Hunt's claims in this litigation," but that summary judgment could not be granted BP until exhaustion of all appeals determined the scope of the bar. Hunt v. BP Exploration Co. (Libya) Ltd., 492 F.Supp. 885, 888 (N.D.Tex.1980) ("Hunt I"). The facts and procedural history of the case are set out in that opinion and need not be repeated here.

BP's Renewed Motion for Summary Judgment

BP renews its motion for summary judgment, stayed by the court's earlier opinion, on grounds that the English judgment, which was not modified by the appellate courts in any respect, has become final (i.e., all appeals have been exhausted)¹; that the English judgment is entitled to recognition here; and that such recognition bars all of Hunt's claims in this case. Hunt does not dispute the finality of the English judgment. He argues instead that the question of recognition is governed by the Texas Uniform Foreign Country Money-Judgment Recognition Act, Art. 2328b-6, TEX.REV. CIV.STAT.ANN. (Vernon Supp.1982) (the "Texas Act") and that BP has failed to conclusively establish, on its motion for summary judgment, that all conditions of that statute have been satisfied.

Hunt's response to BP's renewed motion for summary judgment presents only two issues not previously determined by this court: the question of reciprocity, i.e., whether England grants recognition to American judgments, and whether the parties agreed to arbitrate, rather than litigate, their differences. These issues arise under Sections 5(b)(7) and 5(b)(5), respectively, of the Texas Act, the terms of which are set forth below.²

The summary judgment record reveals no disputed material fact involved in the determination of these issues. Summary judgment is appropriate where the only issues to be decided are questions of law. See Central Oil & Supply Corp. v. United States, 557 F.2d 511, 515 (5th Cir.1977); Wright & Miller, Federal Practice & Procedure § 2725 at 79.

Reciprocity

Both parties agree that this court, sitting in diversity, must apply the law of Texas, including its choice of law rules. See Hunt I, above, at 892. At the time of Hunt I, that is, before the Texas Act was adopted, "the law in Texas as to reciprocity was not clear." Hunt I at 899. Due to this lack of clarity, the court attempted to chart the future course of Texas law regarding reciprocity as a condition of recognizing foreign judgments:

Not having plainly committed themselves in the past, the court is of the opinion that Texas courts will not hereafter adopt this oft-criticized concept.

Hunt I at 899. In support of this conclusion, the court noted the difficulties involved in applying reciprocity, and the institutional limitations on judicial determination of foreign law, as well as the general trend in the federal courts against requiring reciprocity.

Notwithstanding these considerations and the court's view of the direction of Texas law, the Texas legislature later chose to include lack of reciprocity as a ground for not giving conclusive effect to a foreign judgment.³ See the Texas Act, § 5(b)(7).

Although the Texas Act does not apply to "a judgment rendered before the effective date of this Act," and the English judgment was rendered prior to that date, the Fifth Circuit has indicated that

While it is true that the Act specifically states that it will not apply to judgments entered before its passage, we think that the Texas courts would nevertheless apply to the present case those provisions in the Act that incorporate the doctrine of reciprocity .... Since the issue of reciprocity had never been squarely addressed in recent years by the Texas judiciary, a Texas court in our position would look to the new statute in the interests of uniformity ... rather than carving out a new and different rule for an arbitrary set of cases.

Royal Bank of Canada v. Trentham Corp., 665 F.2d 515, 517-18 (5th Cir.1981). The Texas legislature thus declared invalid, retrospectively, Hunt I's conclusion that the question of reciprocity need not be decided.⁴ This court must therefore apply the Texas Act, which includes a reciprocity requirement, in deciding the question of recognition.

The Texas Act provides that a foreign country judgment,⁵ conclusive where rendered, is conclusive in Texas between the parties to the extent that it grants or denies recovery of a sum of money, and that it "is enforceable in the same manner as the judgment of a sister state that is entitled to full faith and credit." See Sections 3 and 4. The only barriers to recognition appear in Section 5, entitled "Grounds for nonrecognition," which lists certain exceptions to the recognition of foreign money judgments. While Section 5(a)⁶ employs mandatory language ("A foreign country judgment is not conclusive if ..."), Section 5(b)⁷ speaks in discretionary terms ("A foreign country judgment need not be recognized if ...") emphasis added.

Although Section 5(b) of the statute calls for an exercise of discretion, this court must proceed cautiously in the absence of criteria for guidance fashioned by the Texas courts. Trentham, supra, 665 F.2d at 519. With only the words of the subsection as guideposts, it appears that the legislature placed the burden of proof on the party opposing recognition of a foreign money judgment:

Sec. 5(b) A foreign country judgment need not be recognized if:

* * * * * *

(7) it is established that the foreign country in which the judgment was rendered does not recognize judgments rendered in this state ... emphasis added.

This allocation of the burden of proof harmonizes with the purpose of the Act, to recognize, with limited exceptions, foreign country money judgments. See the Texas Act, § 4. In effect, it codifies the leading decision regarding recognition and enforcement of foreign country judgments, Hilton v. Guyot, 159 U.S. 113, 16 S.Ct. 139, 40 L.Ed. 95 (1895). There the Supreme Court held that a judgment of a foreign country constituted prima facie evidence of the matters which had already been adjudicated. See also Gull v. Constam, 105 F.Supp. 107 (D.Colo.1952) (party who seeks to avoid burden of foreign judgment must plead absence of reciprocity as a matter of defense). Given the language of the Supreme Court describing a foreign judgment as "prima facie evidence," and the wording of Section 5(b)(7) of the Texas Act, Hunt had the burden to establish lack of reciprocity as a ground for non-recognition.

BP did not wait, however, for Hunt to establish lack of reciprocity. Instead, it presented the consularized affidavit of Robert Alexander MacCrindle, currently based in Paris as European Counsel to the New York firm of Shearman & Sterling. A member of the Bar of England, Wales and Hong Kong, Mr. MacCrindle practiced law as barrister in London for 24 years. He has specialized in commercial and corporate law.⁸ Faced with the question whether England does or does not recognize Texas money judgments, MacCrindle stated:

There can in my view be only one answer. It does. There are countless examples of an English Court recognizing as conclusive a final money judgment rendered on the merits in a country outside England, even where the legal system prevailing in that country has nothing like the affinity with English law which is found in the common law of Texas. The reported decisions show that the English Court will do this even, on occasion, where it believes the foreign judgment to have been palpably erroneous .... Foreign judgments granting a sum of money are daily enforced in England. The English courts have no prejudice against judgments rendered in Texas. Texas money judgments are at least as effective in this regard as judgments from any state outside England.

Affidavit of MacCrindle filed July 23, 1982 at 4 and 5.

According to MacCrindle, there are only three grounds upon which an English court would refuse recognition to a Texas judgment: (1) lack of personal jurisdiction, (2) procurement by fraud and (3) recognition being contrary to public policy. Affidavit, supra, at 5. None of these grounds are presently relevant to the determination of reciprocity, since the court has previously rejected claims based on the first and third; Hunt has never urged the second.

MacCrindle explains that a foreign money judgment, under English common law, affords the successful defendant the defense of res judicata, barring relitigation of the same claim, as well as the defense of collateral estoppel as to certain issues, facts or rights. Most important of all, MacCrindle states that the foreign money judgment will be recognized between the parties as conclusive evidence, rather than merely prima facie evidence, justifying a summary judgment of the English court to the same effect. Affida...