PROBLEMS IN THE RECOGNITION AND ENFORCEMENT OF US CLASS ACTION JUDGMENTS IN SINGAPORE

• Citation: (2013) 25 SAcLJ 51
• Date: 01 December 2013
• Published date: 01 December 2013
• Author: CHAN Junhao Justin LLB (cum laude) (Singapore Management University).

An important consequence of the increasing prevalence of cross-border transactions today is that local courts are also increasingly likely to be presented with a judgment from a foreign country with its own unique dispute resolution mechanisms and jurisprudence. A resultant judgment from a US class action judgment is one such foreign judgment. Yet, the traditional rules governing the recognition and enforcement of foreign judgments have largely remained unchanged since they were first developed over a century ago. This article ventures to examine the limits of the existing rules of recognition or enforcement when applied in the context of a US class action judgment, should it be presented before a Singapore court. After highlighting the theoretical and practical difficulties that may arise in applying the existing rules of recognition or enforcement, this article suggests that the adoption of the domestic privity of interests test to foreign judgments may provide a more satisfactory conclusion.

I. Introduction

1 In today's globalised world economy, the increasing participation in US-based commerce has been matched by an increase in the use of the US system of justice and its mechanisms for dispute resolution. Of the available civil litigation devices, the class action is arguably the most controversial.1

2 The class action has been described to bring about certain important practical benefits. Essentially, the class action permits individuals (“the representative plaintiff”) to bring a claim on behalf of a class of similarly situated non-participating others (“the absent plaintiffs”). Therefore, not only may it afford plaintiffs with small claims access to judicial relief that would otherwise be uneconomical to obtain individually,2 it also allows defendants to dispose of the claims of all members of a class, thereby avoiding the risks and inconvenience of defending a large number of suits elsewhere in a variety of jurisdictions.3 Thus, the res judicata effect of a US class action judgment, particularly when it is brought outside the US for the purpose of recognition or enforcement, is of significant practical importance. In fact, whether such a judgment will be recognised elsewhere also has the potential of influencing the structure of the class action in the US itself:4

For instance, in Bersch v Drexel Firestones Inc,^[5] the ‘dubious binding effect’ of a defendant's judgment on absent foreign plaintiffs was a significant factor in the court's decision to exclude from the action all persons who were not resident or citizens of the United States.

3 However, despite its practical implications, there remains no judicial guidance whatsoever on the question of recognition or enforcement of a US class action judgment in Singapore.6 Yet, going by the recent developments in the ongoing Pinnacle Notes dispute,7 there appears the increasing likelihood of an impending US class action that will not only be led by Singaporean representatives, but will also include

as part of the class thousands of Singaporean absent plaintiffs.8 Thus, it may not be too long before the question of recognition or enforcement of a US class action judgment is presented before a Singapore court for determination.

4 In anticipation, this article seeks to attempt such an enquiry. At the very least, it strives to provide a clear framework through which to consider the various conflict of laws issues that may arise in relation to the recognition or enforcement of a US class action judgment in Singapore.

5 To that end, Part II first outlines the procedural mechanism of the US class action device, so as to better understand the manner in which absent plaintiffs are brought into the class action picture. Part III then sets out Singapore's existing common law rules on the recognition of foreign judgments before attempting to apply these rules to US class action judgments. In doing so, it seeks to highlight the unique conflict of laws issues that may arise vis-à-vis: (a) the representative plaintiff; (b) the opted-out class member; and (c) the absent plaintiffs. Part IV then highlights as the main dissatisfaction with the existing rules of recognition the incongruity in permitting an absent plaintiff to resist the recognition of an adverse US class action judgment while remaining entitled to rely on a resultant judgment in his favour. Part V considers first the possibility of adopting the Canadian approach towards international jurisdiction before arguing that the application of the common law doctrine of privity of interests may provide a more satisfactory answer to the conundrum presented by the absent plaintiffs. In acknowledging that the privity of interests doctrine has so far only been applied to local judgments, Part VI finally argues that the incorporation of the doctrine into the international context is not only theoretically sound but also adheres to the fundamental tenet of finality in litigation.

II. The US class action procedure

6 The procedural mechanism of the US class action is governed by Rule 23 of the US Federal Rules of Civil Procedure.9 In essence, the

rule enables a representative plaintiff to bring an action on behalf of a larger group of non-participating absent plaintiffs.10

7 However, an action brought by the representative plaintiff will only be certified as a class action (with the class of members defined) if it satisfies the requirements of a two-stage test11 as laid out under Rule 23. First, the action must satisfy the threshold requirements of Rule 23(a): (a) numerosity of parties; (b) commonality of legal and factual issues; (c) typicality of the claims and defences of the class representative; and (d) adequacy of representation.12 Second, once these four prerequisites of Rule 23(a) are satisfied, the proposed action must then fall within one of the four recognised categories of class actions under Rule 23(b).

8 Of the four available categories,13 Rule 23(b)(3) specifically provides that a class action may be maintained if the court determines that the common questions of fact or law predominate over any questions affecting only individual members and that the class action is superior to other available methods for adjudicating the controversy.14 Given its broad formulation, it is unsurprising that class actions brought pursuant to Rule 23(b)(3) are the most common15 and might even be

seen to encompass the other three available categories of class actions.16 However, an important distinction lies in the additional requirement that for class actions certified under Rule 23(b)(3), notice to the non-participating absent plaintiffs is mandatory.17 More importantly, Rule 23(c)(2) further mandates that such notice must not only inform the absent plaintiff of the binding effect of any resultant judgment over them18 but also of their choice to be excluded from the class action proceedings.19

9 As can be seen, a Rule 23(b)(3) class action clearly provides for an “opt-out” mechanism through which non-participating absent plaintiffs may be brought within the class action litigation and be subject to any resultant judgment without the need to take any positive steps. In so far as these absent plaintiffs are concerned, they “[are] not required to do anything. [They] may sit back and allow the litigation to run its course”.20 In the eyes of the US courts, all that is required is that they are provided with certain procedural safeguards — adequate notice and an opportunity to opt out21— in order to bind them to the res judicata effects of any resultant class action judgment.22

10 It is the recognition or enforcement in Singapore of Rule 23(b)(3) class action judgments — the most common form of class action judgments — that will be the focus of this article. The article shall now pay attention to the existing Singapore common law rules of recognition.

III. Applying the existing rules of recognition to US class action judgments

11 Apart from the available statutory regimes for the registration of foreign judgments,23 a foreign judgment will prima facie be recognised in Singapore if the judgment was one that was final and conclusive on the merits, emanating from a court of competent jurisdiction in civil proceedings, and if the foreign court had international jurisdiction over the party sought to be bound.24 A foreign judgment will additionally be enforceable if the judgment is for a fixed or ascertainable sum of money.25 If the above-mentioned legal requirements are satisfied, a foreign judgment is prima facie entitled to recognition or enforcement unless one of the defences to recognition can be established.26

12 Bearing in mind the aforementioned legal framework, in determining whether a US class action judgment is prima facie entitled to recognition or enforcement in Singapore, the requirements that the foreign judgment be final and conclusive on the merits from a court of competent domestic jurisdiction, are unlikely to prove much of an obstacle since these are “largely in the control of the US court”.27 Rather, it is the requirement of international jurisdiction that may prove especially problematic, particularly in the context of the absent plaintiffs.

13 Under Singapore's existing conflict of laws rules, international jurisdiction is established only if the party sought to be bound had a

territorial connection with the foreign court, in the sense that he was either resident at the time when the foreign proceedings were commenced,28 or had voluntarily submitted to the jurisdiction of the foreign court.29

14 Difficulties therefore arise in applying such jurisdictional rules to absent plaintiffs who were obviously not resident or present within the US jurisdiction, but are nonetheless considered by the US courts to be part of the class action proceedings by virtue of their omission to opt out.30 As shall be seen, whether the US courts had the requisite jurisdictional competence over these absent...