[Hague-jur-commercial-law] Time factor

[Manon Ress]

A new US Supreme Court decision (see cut and paste) relevant to one of 
the Hague draft footnote for bracketed language in Article 1 Scope:
"the jurisdiction of the Court depends upon the state of things at the 
time of the action brought"

On April 27, 2004, one of the issues that Special Commission delegates 
agreed to leave in bracket (to be discussed at the diplomatic 
conference)was the
"time factor".  Is a case international unless at the time of the 
agreement is concluded and/or at the time of  commencement of the 
proceedings...the parties are resident...etc?.  The new Supreme Court 
case reaffirms that relevant time is time of filing of the lawsuit. 

How is this done in other legal systems?

Manon

See DRAFT:
CHAPTER I    SCOPE AND DEFINITIONS
Article 1    Scope
1.    The present Convention shall apply in international cases to 
exclusive choice of court agreements concluded in civil or commercial 
matters.
2.    For the purposes of Chapter II, a case is international unless[ at 
the time the agreement is concluded][ and][ at the time of commencement 
of the proceedings] the parties are resident in the Contracting State of 
the court seised and the relationship of the parties and all other 
elements relevant to the dispute, regardless of the location of the 
chosen court, are connected only with that State.
3.    For the purposes of Chapter III, a case is international where 
recognition or enforcement of a foreign judgment is sought.

SUPREME COURT DECISION

    5.  Grupo Dataflux v. Atlas Global Group, L.P., No. 02-1689 (May 17, 
2004) (non-gov't), holds (5-4) that diversity jurisdiction must be 
determined based on a partnership party's citizenship at the time suit 
is filed and that a defect then cannot be cured by a later change in 
citizenship.  Atlas, the partnership, brought a breach of contract 
diversity suit against Dataflux, a Mexican corporation, in federal 
district court in Texas.  A jury awarded Atlas $750,000 in damages.  
Before entry of judgment, however, Dataflux moved to dismiss, arguing 
that diversity was lacking, even though it had admitted to jurisdiction 
in its answer.  Two of Atlas' five partners were Mexican citizens when 
the complaint was filed.  The district court dismissed.  On appeal, 
Atlas argued that the defect had been cured because its Mexican partners 
had left the partnership before the trial began, so there was complete 
diversity when the jury returned its verdict and when Dataflux first 
raised its objection.  The Fifth Circuit agreed that the defect had been 
cured.

    The Supreme Court reversed in a 5-4 decision by Justice Scalia.  The 
Court began by stating that the long-established hornbook law that is 
"taught to first-year law students in any basic course on federal civil 
procedure" is that "'the jurisdiction of the Court depends upon the 
state of things at the time of the action brought'" (quoting an 1824 
decision by Chief Justice Marshall).  The Court recognized that 
Caterpillar Inc. v. Lewis, 519 U.S. 61, 75 (1996), created a limited 
exception to this rule by stating that "[o]nce a diversity case has been 
tried in federal court . . . considerations of finality, efficiency, and 
economy become overwhelming."  But Caterpillar "broke no new ground," 
the Court held, "because the jurisdictional defect it addressed had been 
cured by the dismissal of the party that had destroyed diversity."

    Justice Ginsburg, joined by Justices Stevens, Souter, and Breyer, 
dissented.  They noted that the "time-of-filing rule 'represents a 
policy decision,' not a constitutional or statutory requirement.  They 
stated that the rule has long been applied "categorically to post-filing 
changes that otherwise would destroy diversity jurisdiction," but that 
"the Court has not adhered to a similarly steady rule for post-filing 
party line-up alterations that perfect previously defective statutory 
subject-matter jurisdiction," citing Caterpillar and other cases.  In 
the dissent's view, this case is equivalent to Caterpillar because in 
both cases, "minimal diversity within Article III's compass existed * * 
* from the start," and "the absence of complete diversity" was cured "at 
a later stage of the proceedings."  (The Court's opinion disputed this 
view, arguing that in this case minimal diversity did not exist at the 
start because the only plaintiff was the Atlas partnership, which was 
treated as a citizen of Mexico as well as other places.  For the Court, 
this case was equivalent to a case where the only plaintiff moves to 
another state to create diversity after the complaint has been filed.  
Both the Court and dissent agreed that this tactic fails to cure the 
defect.)  For the dissenters, however, Atlas was "minimally, but not 
completely, diverse at the time" the proceeding began.  As in 
Caterpillar, the dissent stated, "those that spoiled statutory diversity 
dropped out of the case."  The dissent stated that it was guided by the 
principle that "in procedural rulings generally, even on questions of a 
court's adjudicatory authority in particular, salvage operations are 
ordinarily preferable to the wrecking ball."  "The 'considerations of 
finality, efficiency, and economy' central to" Caterpillar "have equal 
force" here, they added.  "[N]othing other than this Court's readiness 
to cut loose a court-made rule from common sense * * * accounts for 
[the] waste of" requiring Atlas to refile another suit in the same 
federal court, the dissent stated.  (The Court took issue with this 
point, stating, "The time-of-filing rule is what it is precisely because 
the facts determining jurisdiction are subject to change, and because 
constant litigation in response to that change would be wasteful."  The 
Court argued that "it is the dissent's proposed rule that is wasteful."  
Under a clear time-of-filing rule, the Court stated, Atlas should have 
refiled its action immediately after the district court dismissed it, 
instead of appealing and litigating over jurisdiction for 3 ½ years.)  
The dissent countered that Dataflux was attempting to "erase the trial 
and verdict here" only after it lost by raising a jurisdictional 
objection that had already been cured.  Moreover, the dissent added, 
their position would not produce a "wave of new jurisdictional 
litigation" because "[r]arely, if ever, will a plaintiff bring suit in 
federal district court, invoking diversity jurisdiction under § 1332(a), 
with the knowledge that complete diversity does not exist, but in the 
hope of a post-filing jurisdiction-perfecting event." 

-- 
Manon Anne Ress
Consumer Project on Technology
www.cptech.org
PO Box 19367, Washington, DC 20036
manon.ress@cptech.org, voice: 1.202.387.8030, fax: 1.202.234.5176