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EXHIBIT A

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LEXSTAT 1-5 BUSINESS TRANSACTIONS IN GERMANY § 5.03 Business Transactions in Germany Copyright 2007, Matthew Bender & Company, Inc., a member of the LexisNexis Group. Part I Government and Legal System CHAPTER 5 Civil Procedure 1-5 Business Transactions in Germany § 5.03 AUTHOR: by Dr Georg A. Wittuhn LL.M. (McGill) Dr Ralf Stucken Alexander Turowski Huth Dietrich Hahn Warburgstra e 50, 20354 Hamburg, Germany Tel.: +49 40 41525-280 Fax: +49 40 41525-111 § 5.03 Commencing the Action

[1] Complaint [a] Stating the Essential Elements and the Relief Sought. The minimum requirements for the statement of claim and the defense are laid down in Section 253(2) of the ZPO. According to this provision, the statement of claim has to include a precise motion that sets out what the party seeks. It must be clear whether the performance of a certain act, a judgment for payment of a certain sum, a declaration of a certain right or something else is sought from the court. If, for example, a plaintiff asks for delivery of a car he has to specify the make and the official registration number etc. If the plaintiff asks for payment he has to specify in principle the exact amount of money. Neither the plaintiff nor the defendant has in theory to cite any provisions of acts or statutes or any court decisions. The old Roman principle of iura novit curia applies. In practice, however, the lawyers will refer to statutory provisions and cite case law favorable to their position. If the motion is not precise enough the claim must be dismissed as inadmissible. Furthermore, the plaintiff has to assert in detail all facts necessary to establish his case. Evidence should be offered for all questions for which a party bears the burden of proof. This does not mean that each and every piece of information available to the parties has to be written down in the statement of claim. It is possible to wait and see which allegations are in dispute and amend the pleadings accordingly. In particular, the plaintiff is not obliged to anticipate the factual allegations and legal arguments of the defendant. However, the pleadings in Germany provide much more information than in most other jurisdictions, especially the common law countries. This is necessarily so since the pleadings have to enable the parties to evaluate their situation without the possibility of a discovery procedure.n1 The plaintiff has to assert as many facts as are necessary to allow the conclusion that he has the right he claims. The keyword in this context is substantiation. Both, the statement of claim and the defense, must substantiate and identify what the case is about. This obligation may seem extremely hard to satisfy in cases where the defendant has all available information at his disposal. However, it has to be kept in mind that the jurisprudence and case law have developed duties of cooperation and changes in the onus of proof in certain situations. The standard of relevancy and precision required for the statement of claim comes back to a basic principle of the German law of civil procedure, the prohibition of probing. This principle states that the court will only order the taking of evidence, if:

A precise material fact is at issue; and

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The evidence nominated by the party is material to the proof of such fact.

A mere allegation or the speculation by a party ''out of blue'' made in the hope that the taking of evidence will have some result or lead to new evidence, will not cause the court to order the taking of evidence. This principle makes ''fishing expeditions'' virtually impossible. For example, if a party requests the court to take evidence about an alleged contract or agreement by hearing a witness, this request will be rejected for lack of precision. The party has to be able to substantiate the nominated evidence, e.g., by saying that the witness is to be heard about a contract and specifying when, where and between whom the alleged contract was concluded and why the witness has knowledge about the material facts. The rationale for this principle is twofold. First, it promotes efficiency by preventing the waste of judicial time and effort. Second, it protects individuals and businesses from the nuisance, costs and interference of privacy rights that follow inevitably from the taking of evidence. Evidence will not be taken if the request for it is based on mere speculation. An example may be helpful to clarify this principle: In a case decided by the Federal Court of Justice (BGH), the plaintiff had a contractual claim to be admitted to the administration and management of a company of which he was a shareholder. The defendants - the other shareholders - alleged that the plaintiff did not have the necessary qualifications and sought to prove this with a scientific test. The BGH ruled that such a test was inadmissible as a pure fishing expedition in the absence of any other indication that the plaintiff was not fit for the job. The BGH specifically stated that the taking of evidence is not intended to provide the parties with material they do not have before and that nobody is obliged to provide his opponent with the material necessary to win at trial. A limitation on this strict rule is to be found where the party that has the burden of proof cannot satisfy this burden whereas the other party could easily provide the information. In accordance with the general principles of the duties of the parties a vague motion for the taking of evidence is admissible. This principle governs all different kinds of evidence. [b] Action by Stages. If a party is unable to specify and substantiate his claim right from the beginning, and if the opposing party is not obliged to provide this information under the principles discussed above, the only remaining possibility is to start an action by stages (Stufenklag) according to Section 254 of the ZPO. If, for example, the plaintiff has a claim for information that will enable him to specify his ''real'' claim, the claim for information is followed in the first stage, and the real claim followed on the second stage. Such claims for information are granted by statute in most cases where the parties are involved in constant and narrow relationships. Partners in a partnership, shareholders in a company or the spouses in divorce proceedings, for example, have farreaching claims for information. In the absence of such a special relation the general claim for information applies, according to which anybody who has a reason to believe that someone else is in the possession of documents, which give him a case against such person may ask for the production of such document.n2 However, the documents have to be described in a very detailed way that satisfies the aforementioned principle of substantiation. [2] Types of Answer If the factual assertions are not sufficiently clear the defending party does not even have to respond to the statement of claim for the judge has a duty to dismiss the claim as inadmissible without entering into the merits of the case. From a practical perspective, however, it is a rather dangerous game not to react when faced with a deficient statement of claim, hoping that the judge will dismiss the claim. Generally a lawyer will state in defense that the statement of claim is considered not to be in accordance with the standards of precision of the ZPO. At the same time the judge will be asked to state whether he shares this opinion. If he does not there is still an opportunity to plead to the merits. Such extreme cases are very rare. In general the statement of defense will have to satisfy the same standards as the statement of claim. This means, in particular, that the principle of substantiation applies. It is not sufficient to simply deny the allegations of the plaintiff. The defendant has to deny every single factual assertion and give reasons for such denial. Alternatively, the defendant may deny the facts stated by the plaintiff altogether by alleging a different set of

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facts. Facts, which have not been denied, are deemed to be admitted,n3 if the intention to deny such facts does not appear from the statements of the defendant in other respects. [3] Reply The plaintiff is entitled to reply to factual assertions of the defendant. The court may determine whether a first hearing precedes the reply or whether further briefs are exchanged prior to the hearing.n4 [4] Amendments to Pleadings [a] Facts. Another factor that encourages the parties to file complete briefs right from the beginning of the proceedings is the constant threat of being precluded with factual assertions and offers of evidence. Assertions made after the specified time limit has elapsed are only admissible if they do not delay the proceedings or if the party concerned can show that he did not act negligently.n5 The decision of the court is a discretionary one. Time limits are regulated in the ZPO or may be fixed by the court. Assertions that have not been raised in time according to the general duty of the parties to promote the development of the proceedings, are also inadmissible unless the party acted negligently or the proceedings are delayed.n6 There is considerable dispute as to the meaning of the word ''delay'' in Section 296 of the ZPO. According to one opinion, ''delay'' only requires that the proceedings take longer if the additional assertion is taken into consideration. The contrary view is that one must ask whether the proceedings would take longer than if the assertions had been raised before the time limit elapsed. It is not necessary to enter into a discussion of these niceties of German procedural law in order to understand that Section 296 gives an extremely strong incentive to the parties to make complete and precise statements. This provision together with possible cost sanctions - ensures that no trial by surprise occurs. Section 530 of the ZPO contains similar provisions to ensure that new assertions are not raised in the court of second instance. [b] Change of Motion. Once the statement of Claim has been served upon the defendant a change of the motion is only admissible if the defendant agrees to it or if the court considers it to be appropriate.n7 The following situations are, by operation of law, not to be considered as a change of motion and, therefore, always admissible:n8

If the legal or factual assertions of a party are amended or additional points are brought forward; If the motion is extended or limited, i.e., cases where at the beginning of the proceedings the plaintiff asked only for a partial amount and subsequently changes to the complete amount owed to him; and If the motion has to be changed due to a change in the underlying facts, i.e., situations where the action pursued initially the handing over of the possession of a good and such good is destroyed during the proceedings; in such a scenario the plaintiff may ask for damages without the consent of the defendant or the court considering the change of the motion to be appropriate.

The consent of the defendant to a change of the motion is deemed to be given if he argues to the merits of the new motion without stating that the change is inadmissible.n9 If Section 264 of the ZPO does not apply and the defendant refuses to give his consent the court may nevertheless deem the change of motion to be appropriate. The court has a relatively vast discretionary power in this respect. The court is likely to deem the change of motion to be appropriate if it helps to finally settle the dispute between the parties and avoids fresh proceedings. [5] Supplemental Pleadings

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Other claims may be introduced in the proceedingsn10 against the same defendant if the court is competent to hear these claims. In addition, the parties may at any time introduce or amend legal arguments. It is even possible for one party to adopt the legal arguments or factual assertions of the other party. If, for example, the plaintiff pursues an action based on a contract and the facts pleaded by the defendant justify a claim based on the concept of unjust enrichment the plaintiff may adopt the defendant's argument. [6] Joinder of Claims and Parties The only parties to the civil lawsuit in a legal sense are the plaintiff and the defendant. However a joinder of parties as plaintiffs (aktive Streitgenossenschaft) or defendants (passive Streitgenossenschaft) is possible (Streitgenossenschaft or subjektive Klagenhaufung). A joinder of claims is given when the plaintiff pleads two or more claims in one action against the defendant (objektive Klagenhaufung). [a] Joinder of Parties. A joinder of parties (as plaintiffs or defendants) is possible, when

(1) the right in dispute is owned or owed jointly by the parties, e.g., joint and several debtors, co-owners or co-heirs;n11 (2) the joint parties are entitled or committed to by the same cause in law or fact, e.g., joint buyers to a sales contract, injured parties of an accident;n12 or (3) similar claims or obligations that are founded on similar causes in law or on similar facts are subject matter of the action, e.g., claim of an insurance company against several policyholders for payment of the insurance premium.n13

Apart from these specific prepositions the general procedural prerequisites must be fulfilled with respect to each joinder of party, e.g., the court must be locally competent for the claim against each defendant. If this is not the case, e.g., the court has no jurisdiction for one of the defendants, the action is inadmissible with respect to this joinder of party. The joinder of parties means the consolidation of several actions for one trial and hearing of evidence. Only the litigation is consolidated, the joined parties remain legally independent and one party is not influenced by the conduct of the case by the other.n14 Accordingly, the joined parties may conduct the litigation differently or even contradictive. For example, one defendant may apply for the dismissal of the claim while the other defendant acknowledges the claim. Therefore, joinder of parties does not necessarily mean a uniform decision in favor of or against the joined parties. Special rules apply if a compulsory joinder of parties (notwendige Streitgenossenschaft) is given. The joinder of parties is a compulsory joinder,n15 when

(1) the right in dispute must be decided unitary for the joined parties; or (2) the joinder of parties is a compulsory joinder by other reasons.

Therefore, compulsory joinder of parties is given when the res judicata effect applies to all joined parties,n16 when the decision will change a legal right or a status with effect to all joined parties (e.g., action to set aside the resolution of the shareholders' meeting of a joint stock company) or when the joined parties must hold and dispose of a right jointly under substantive law (e.g., heirs). If a compulsory joinder of parties is given, the judgment must be uniform for the joined parties. To ensure a uniform judgment, contradictive acts in litigation by the joined parties are without effect, e.g., if one defendant applies for the

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dismissal of the claim while the other defendant has acknowledged the claim, the court is prevented from rendering a judgment on acknowledgment against the defendant who has acknowledged the claim. [b] Joinder of Claims. A joinder of claims is possible, provided that the same kind of proceedings is admissible and the same court is competent to hear all pleaded claims.n17 Several claims may be independent and pleaded with equal priority or as main claim joined with an alternative claim which shall be decided only subject to the condition that the main claim is dismissed. [7] Counterclaims The counterclaim is an admissible mean of attack for the defendant provided that all general procedural prerequisite for the counterclaim are fulfilled and the court is competent to hear the counterclaim in the pending proceedings. The consistent practice of the Federal Court of Justice furthermore requires a legal connection between claim and counterclaimn18 and allows a counterclaim even against third parties if the third party consents or in view of the court it is appropriate to hear this claim in the same proceedings.n19 [8] Cross-Claims In German Civil Procedure cross-claims in the meaning of a claim by one plaintiff against another plaintiff or one defendant against another defendant are not admissible.n20 [9] Third-Party Claims A party (plaintiff or defendant) may bring a third party into the action by serving a third party notice - third party claim (Streitverkundung).n21 A party may commence third-party notice procedure if the third party would be liable to the party or might have a claim against the party in case of a detrimental judgment in the pending trial.n22 The party will request with the notice the third party to join the trial for support. If the third party does join the trial, the provisions on interventionn23 apply.n24 If the third party does not join the trial, it will be proceed without taking into account the third-party claim. Notwithstanding whether the third party has joined the trial or not, the third-party notice provokes the effect of an intervention under Section 68 of the ZPO.n25 Accordingly, in a later trial between the third party and the party who has served the third-party notice, the third party cannot argue that the judgment (by the pending trial) is not correct or that the trial was conducted insufficiently or faulty by the party. [10] Impleader A third party who is claiming a right or thing which is the subject matter of an action between the parties of a pending lawsuit, may bring an action against both parties of this pending trial (Hauptintervention).n26 In this (new) lawsuit both parties of the pending trial will be joined parties as defendants. On the basis of the application by a party, the court may suspend the pending trial until a final judgment in the action launched by the third party is made. [11] Interpleader A defendant sued for payment of a debt may serve a third-party notice on a person who is alleged to be entitled to the claim in dispute in the trial, if the defendant is prepared to pay the debt but uncertain about the rightful claimant. If the third party does join in the trial the defendant will resign from the lawsuit upon deposition of the amount in dispute and the proceeding will be carried on (only) between the plaintiff and the third party about their entitlement to the claim.n27 The same or similar principles apply if a defendant is sued for the possession of a thing he is holding not as a legal owner but, for example, as tenant or as depositary. The defendant may serve a third-party notice if in his opinion he must return the possession to a third party other than the plaintiff. If the third party does join the trial, the third party may take over the proceedings and continue the lawsuit about the entitlement to the possession with the plaintiff; the defendant will then resign from the lawsuit. If the third party does not join the trial, the defendant may acknowledge the claim and return the possession to the plaintiff. In this case the third party is excluded from any claim against the defendant with regard to the possession.n28 [12] Intervention

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A third party - the intervener - may join a pending lawsuit in support of one party if the intervener has a legal interest in the success of the supported party (Nebenintervention).n29 The necessary legal interest is given when the decision in the pending trial would effect the legal position or status of the intervener, e.g., if the decision would prejudice his legal position; if he would be subject to the res judicata effect of the decision; or if the supported party would have a claim against him in case of a detrimental decision. Notwithstanding the fact that the intervener is not party to the lawsuit but only assisting to the party he supports, the intervener may plead all means of attack and defense unless they would be in contradiction to the conduct of the supported party (an exception applies in case of an intervention under Section 69 of the ZPO - streitgenossische Nebenintervention - where the intervener has a more independent status and may even act in contradiction to the party supported). As far as the supported party is precluded from the introduction of new facts or fresh evidence the intervener is barred to the same effect.n30 The judgment in the lawsuit will be rendered only between the plaintiff and the defendant, however will cause the specific intervention effect between the intervener and the supported party. By this intervention effect the intervener is barred in a later lawsuit against the supported party with the argument that the judgment is not correct. He is, furthermore, precluded with the assertion that the litigation was conducted faulty or insufficient by the supported party unless at the point in time of his intervention the intervener was barred to introduce new facts and fresh evidence or means of attack and defense unknown by the intervener where not pleaded by the party intentionally or gross negligently.n31 FOOTNOTES: (n1)Footnote 1. See the chapter ''Obtaining Information Prior to Trial,'' infra. (n2)Footnote 2. BGB, Section 810. (n3)Footnote 3. ZPO, Section 138(3). (n4)Footnote 4. See Chapter on Trial, infra. (n5)Footnote 5. ZPO, Section 296(1). (n6)Footnote 6. ZPO, Section 296(2). (n7)Footnote 7. ZPO, Section 263. (n8)Footnote 8. ZPO, Section 264. (n9)Footnote 9. ZPO, Section 267. (n10)Footnote 10. ZPO, Section 260. (n11)Footnote 11. ZPO, Section 59, 1st Alternative. (n12)Footnote 12. ZPO, Section 59, 2nd Alternative. (n13)Footnote 13. ZPO, Section 60. (n14)Footnote 14. ZPO, Section 61. (n15)Footnote 15. ZPO, Section 62. (n16)Footnote 16. See Chapter on ''The Conclusiveness of Judgment,'' infra. (n17)Footnote 17. ZPO, Section 260. (n18)Footnote 18. BGHZ 40, 185, 187 et seq.; BGH NJW 1975, 1228 et seq. (n19)Footnote 19. BGHZ 69, 37, 44 et seq.; BGH NJW 1975, 1228 et seq. (n20)Footnote 20. Rosen-berg, Schwab, Gottwald, Zivilproze recht, 15th ed. (1993), Section 98, No. 4. (n21)Footnote 21. ZPO, Sections 72 et seq. (n22)Footnote 22. ZPO, Section 72. (n23)Footnote 23. ZPO, Sections 66 et seq.

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(n24)Footnote 24. ZPO, Section 74(1). (n25)Footnote 25. ZPO, Section 74(3). (n26)Footnote 26. ZPO, Section 64. (n27)Footnote 27. ZPO, Section 75. (n28)Footnote 28. ZPO, Section 76. (n29)Footnote 29. ZPO, Sections 66 et seq. (n30)Footnote 30. ZPO, Sections 67. (n31)Footnote 31. ZPO, Section 68.

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EXHIBIT B

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25 U. Pa. J. Int'l Econ. L. 1297

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University of Pennsylvania Journal of International Economic Law Winter 2004 25th Anniversary Articles *1297 IS TRANSNATIONAL LITIGATION DIFFERENT? Samuel P. Baumgartner [FNa1] Copyright (c) 2004 Trustees of the University of Pennsylvania; Samuel P. Baumgartner Abstract During the last fifteen years, there has been a growing interest in litigation transcending national borders. Yet, both in the United States and in Europe, where this interest is much older, a comprehensive intellectual framework to deal with this type of litigation is hard to find. In fact, courts and procedural law reformers still approach transnational cases in the same fashion as purely domestic ones, adjusting the concepts of domestic law where they believe it necessary. This has created significant problems both for litigants seeking justice in transnational cases and for lawmakers fashioning policy specifically for the transnational setting. In light of recent developments in international trade law and in the European Union, this Article argues that, as a normative matter, we should begin to treat transnational litigation as a distinct field. It suggests that indepth procedural comparison and international relations theory would have much to contribute to such a field. It uses a case study on judicial cooperation in Germany for litigation in the United States to demonstrate various ways in which lawmaking for transnational litigation is interconnected beyond national borders. The Article concludes that procedural law reformers who continue to disregard insights from both international politics and comparative procedure are apt to lose control over their lawmaking efforts to savvy groups, to international trade regimes such as the WTO and NAFTA, and to lawmakers abroad. *1298 Overview

1. 2. 3.

Introduction. The Traditional Model. The Case Study: German Judicial Cooperation for Litigation in the United States. 3.1. The German Develop-

1298 1307 1312

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ments. 3.1.1. Initial Stages. 3.1.2. The "Judicial Conflict" Emerges. 3.1.3. The Second Stage: Recognition and Enforcement of U.S. Judgments. 3.2. Lessons From the German Experience. 4. A Suggested Framework. 4.1. Insights From International Relations Theory. 4.2. Applying Liberal International Relations Theory to Transnational Litigation. 4.3. Refining the Suggested Framework. 4.4. What Makes Transnational Litigation Different?. 5. The Basis of the Field: Comparative Procedure and International Relations Theory. Conclusion. 1317 1327

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6. 1. Introduction

1390

Judicial procedure plays a powerful role in the making and application of law. Despite prominent attempts to relegate "adjective law" [FN1] to the status of a "handmaid of justice," [FN2] students of procedure have long since realized, [FN3] and empirical studies have confirmed,*1299 [FN4] that no matter what its features, procedural law affects the rights and the behavior of groups and individuals--including those involved in the administration of justice. It is therefore important that those in charge of applying and devising procedural rules continuously reflect upon the values that those rules serve or ought to serve. [FN5] Equally important, procedural

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lawmakers must *1300 regularly assess the effectiveness of our approaches to civil litigation in furthering the chosen process values. Such an assessment is particularly urgent with regard to the quickly growing class of civil cases that transcend national borders. In this Article, I want to pursue the question whether our approaches to civil litigation are adequate to deal with this expanding class of transnational cases. Closely related, I want to know whether the presence of a transnational element, such as a foreign party or evidence located abroad, [FN6] does more than add an interesting twist to an otherwise fairly typical domestic case. These are important queries. Both the demise of the Cold War and the revolution in communications technology have heightened our awareness of the limits of national borders and of the concomitant importance for our own law-making enterprises of social, economic, and legal developments elsewhere. This awareness has led to a sense among some that our traditional methods of dealing with litigation transcending national borders are inadequate. It is a sense that has culminated in two new projects undertaken by the American Law Institute ("ALI")--an effort to draft Transnational Rules of Civil Procedure [FN7] and a project to improve international cooperation and understanding in transnational insolvency procedures [FN8]--and in an international attempt to create a worldwide convention on jurisdiction and enforcement of foreign judgments, [FN9] *1301 which in turn has spawned another ALI project. [FN10] Moreover, international trade regimes, such as the World Trade Organization ("WTO") and North American Free Trade Agreement ("NAFTA"), and supranational organizations, of which the European Union ("EU") is the most prominent example, have begun significantly to affect the content of the law of transnational litigation. [FN11] Within the European Community ("EC"), this has occurred so swiftly and so frequently during the last few years that some scholars have advocated caution, flagging an urgent need for scholarship to assess the larger implications of these transnational reform efforts. [FN12] *1302 Unfortunately, the foundations of this area of law have largely remained untouched by systematic scholarship. This is not for lack of scholarly attention. In fact, the distinct issues raised by transnational cases have inspired a growing number of casebooks and treatises that capably map the terrain, suggest textual analyses, and identify recurrent patterns of response. [FN13] Correspondingly, within the last decade, a new course of study named transnational (or international civil) litigation has emerged in the curriculum of U.S. law schools. [FN14] In other countries, particularly in German-speaking Europe, both the course and textbooks accompanying it have been around much longer. [FN15] However, both in the United States and *1303 elsewhere suggestions of a comprehensive intellectual framework that would provide definition to the cases and materials thus covered are hard to find. Equally rare are studies on any distinct factors that might affect lawmaking for transnational litigation. Under these circumstances, one may wonder whether transnational litigation is "a distinct field." [FN16] Until relatively recently, the prevailing view seems to have been that it is not--at least not in a functional sense. [FN17] As Professor Burbank put it over a decade ago, transnational litigation should instead be understood, as part of a process of cross-fertilization in which (1) doctrine and techniques developed in the context of domestic cases are brought to bear on problems presented in international litigation, and (2) the increasingly international dimensions of litigation in our courts prompt changes in doctrine and techniques, which are then applied in domestic cases. [FN18] *1304 This analytical model nicely captures what courts and lawmakers have been doing both in the United States and in Europe. [FN19] In practice, however, this approach has created serious difficulties both for litigants seeking justice in transnational cases and for lawmakers fashioning policy for transnational procedure. [FN20] It is therefore time that we develop an analytical framework for transnational litigation that takes sufficient cognizance of the international interconnectedness of these cases, both factual and legal, and of the way this interconnectedness affects the

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process of making law for transnational proceedings. In this sense, I submit, we need to view and treat transnational litigation as a distinct field. Fortunately, the last decade has witnessed the emergence of interdisciplinary cooperation between scholars of international law and international political scientists. [FN21] The fruits of this cooperation*1305 are highly valuable for the purpose of developing a better understanding of the factors that affect the process of making law for transnational procedure. Thus, I will use some of this recent international law and international relations scholarship to shed some light on the complex interplay among lawmaking for transnational litigation, transnational actors, and lawmaking abroad. My central claim is this: the law applicable to transnational litigation affects the behavior of transnational actors--groups and individuals who are both subject to the laws of more than one sovereign and have access to more than one sovereign to have their interests counted. [FN22] Those actors, in turn, may affect the international as well as domestic law of transnational litigation both *1306 abroad and at home in the future. If those in charge of making and applying the law of transnational litigation want to be in control of their efforts, they need to be aware of this interplay between lawmaking and transnational actors and of how particular procedural choices may influence it in the long run. They also need to reflect on the values they want to and can usefully promote within this scheme, realizing that simply advancing their domestic procedural preferences in the short run may implicate their own values of transnational justice in the future. Once we appreciate this need, it becomes evident that, although courts and lawmakers have occasionally considered one or the other of these factors in making their decisions on transnational litigation, they have not paid much attention to the big picture just described, largely overestimating the power of unilateral lawmaking. What is even more striking from this view is the lack of any in-depth procedural comparison guiding their work. After all, as we shall see, one of the most pervasive difficulties with understanding the forces that affect the law relating to transnational litigation lies in the complexity of procedural law and its strong control by local ideational values and the concomitant lack of information on foreign approaches to transnational cases. Thus, I contend that, together with international relations theory, comparative procedural analysis is perhaps the most important building block in the construction of a distinct field of transnational litigation. After setting out briefly the traditional model of lawmaking for transnational litigation in Section 2 of this Article, I will proceed, in Section 3, to a case study to pinpoint important factors that the traditional model has largely ignored. As a distinct example of what can happen if we merely approach our subject from domestic doctrines without paying systematic attention to transnational litigation as a field, I will trace the development of judicial cooperation in Germany for litigation in the United States. This German-U.S. example supplies ample material with which to examine my claim that transnational litigation in one country may affect that in another and vice versa. In Section 4, I will then suggest a larger analytical framework. The case of Germany also provides abundant evidence that decision-making based on ignorance about other procedural systems is apt to yield unpleasant surprises and that, in the long run, it may hurt rather than advance the distinct values we have chosen to pursue in transnational litigation. Thus, in Section*1307 5, I will return to comparative procedural analysis and explore its potential to serve, together with further research in international relations, as the basis of a discrete field of transnational litigation. 2. The Traditional Model According to the traditional view, transnational litigation, as civil procedure, is primarily controlled by domestic law. At least this is what European textbooks like to point out in order to clarify for students of

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"international civil procedure," as the subject is known in continental Europe, [FN23] that the "international" label does not necessarily refer to the source of the principles and rules that those students are about to explore, but to the fact that these principles and rules apply to cases with an international element--a foreign party, a foreign proceeding, or evidence located abroad. [FN24] This view serves students as a helpful rule of thumb to gain a first conceptual orientation to transnational litigation. As such it is likely to be shared in the United States, where treaties have long been neglected as a source for lawmaking in private international law [FN25] and where customary international law is not generally credited with playing much of a role in this area. [FN26] But what exactly does it mean to say that domestic law primarily controls transnational litigation? Unfortunately, practitioners and law reformers have largely been left to their own devices in answering this question. Without profound analysis of larger issues of transnational litigation, they have mostly proceeded from the assumption that it means just what it says, namely that, absent controlling treaty provisions, "a sovereign state may fashion domestic law as it deems fit." [FN27] Seemingly straightforward, this view *1308 is often based on positivist, [FN28] and primarily in Europe, formalist [FN29] assumptions as well as by the further traditional belief that there is *1309 a clear line dividing domestic and international law. [FN30] In addition, traditional international law doctrine, with its strong state-centric outlook, has envisioned for international law a role only on the state-to-state level. [FN31] In the United States, these assumptions have increasingly been interpreted to mean that, on the one hand, international law can have domestic effect only to the extent that it has been implemented by domestic legislation [FN32]--whereby Senate advice and consent*1310 under Article II, Section 2(2) of the U.S. Constitution may not be sufficient [FN33]--while, on the other hand, there is little in international law that prevents domestic law, including procedural law, [FN34] from being applied transnationally. [FN35] While the former view has been under attack within the area of human rights, [FN36] the latter has *1311 had considerable staying power, most recently through theories of globalization and transnationalism that in effect claim that the time for countries to invoke national sovereignty against the unilateral actions of other nations [FN37] is over. [FN38] In the United States and elsewhere, the respective views and assumptions have operated to focus the attention of courts, commentators, and lawmakers on domestic law and policy in transnational litigation. Not surprisingly, the result has often been a distinct preference for domestic solutions, including in the interpretation and application of international law. [FN39] All of this has spawned a long list of false starts and misconceived policies. [FN40] The resulting differences among lawmakers and courts of various *1312 countries go deeper than many of them realize. Not surprisingly, the negotiations for a multilateral treaty on jurisdiction and judgments at the Hague have been stalled. [FN41] The reason for all this, as a fresh look at the subject reveals, is that the traditional view fails to capture the richness and complexity of interrelations between the international and the domestic levels of lawmaking and among groups, individuals and governments acting transnationally. As it turns out, there is a closer connection between the foreign elements that characterize a certain type of case as "transnational" [FN42] and the law applicable to it than one might at first assume. 3. The Case Study: German Judicial Cooperation For Litigation in the United States To see why this is so, I present a case study concentrating on the ways in which the conduct of transnational litigation in one country, through various channels, affects the conduct of transnational litigation in another and vice versa. In what follows, I analyze the way in which transnational litigation in the United States affected judicial cooperation for litigation in the United States (including judgment recognition) in Germany from the 1950s to the mid-1990s. Judicial cooperation is the performance of a judicial act by one court on its territory

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upon the request and for the benefit of another. [FN43] The need for such cooperation is based on the notion that the power of national courts is limited, among other things by national sovereignty. [FN44] What makes judicial cooperation especially interesting for our purposes are the considerable disagreements between the United States and a number of civil law countries on the extent to which national sovereignty limits the power of domestic courts and on how to properly grant judicial cooperation. These *1313 disagreements are based largely on differences in domestic procedural concepts and on disparate views on how best to approach transnational cases. [FN45] The case of Germany is particularly interesting because the relevant actors were steeped in the traditional approaches to transnational litigation sketched above. [FN46] The concentration on Germany within continental Europe is also apt because in that country, one finds a well documented record of the relevant events, influences, and legal views during what Germans have termed the Justizkonflikt (judicial conflict) [FN47] with the United States. The analysis that follows is based on mostly published materials as well as on personal conversations with some of the individuals involved in what has become known in Germany as the "judicial conflict" with the United States. [FN48] One caveat remains, however. For various reasons, the minutes of legislative committee meetings and much of the materials of administrative decision making are either shrouded in confidentiality or have otherwise become unavailable. [FN49] It may well be that knowledge gained from *1314 such materials would change the analysis to some degree. 3.1. The German Developments Disagreements about the proper method of judicial cooperation between Germany and the United States are nothing new. There was a lengthy diplomatic exchange as early as 1874 when imperial Germany saw itself forced to defend its newly obtained sovereignty against perceived U.S. intrusions. [FN50] While post-World War II West Germany was relatively forthcoming to unilateral U.S. interests in its approach to judicial cooperation, [FN51] the country quickly reverted to its prewar position after U.S. occupation ended in 1955. [FN52] The position, similar to that of other civil law countries, [FN53] briefly stated, is: that the performance of judicial acts by foreign officials, such as the service of process and the taking of evidence, are not permitted on German territory without the previous permission of German authorities; that the proper way to obtain such judicial acts on German territory is to request a German court, through diplomatic channels, to perform them; and that, in executing such a request, usually called a letter rogatory or letter of request, [FN54] a German court will generally apply German law, including limitations on the collection of evidence that are considerably tighter than in the United States. [FN55] This position and its various ramifications had been developed through transnational cases that *1315 mostly involved other countries of the European continent, countries with which Germany shares a good deal of legal history and procedural approaches as well as traditions regarding the territorial limits of state action in private international law. [FN56] Countries, moreover, with which Germany had concluded a staggering number of treaties on judicial cooperation, [FN57] thus further harmonizing approaches. [FN58] How this historically grown German position should be applied in detail to cases involving the United States with its entirely different litigation system and different views on judicial cooperation is a question that began to vex governmental authorities, courts, and, after a while, academics beginning in the late 1970s, when German companies, having invested heavily in the United States, increasingly became involved in U.S. litigation. [FN59] The response both under German domestic law and, since 1979, [FN60] under the Hague Service [FN61] and

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Hague Evidence [FN62] Conventions, has been a steady and relatively rigid application of the traditional German position, thus leading to recurrent frictions with U.S. courts and litigants searching for ways to serve process on, and receive evidence from, German nationals without having to go through the time-consuming and often unproductive letter-of-request procedure*1316 insisted on by Germany. In addition, starting in the late 1980s, German courts began to decide more or less difficult questions of recognition law against U.S. judgment creditors. While a certain liberalization has taken place since, [FN63] these German developments are as striking for what did not happen as for what did. To this day, the regular German exposure to transnational litigation in U.S. courts has not led to an alteration of the traditional German position on judicial cooperation that would even come close, if perhaps only under certain circumstances, to providing litigants in U.S. courts with the evidence they need. It also has not led German authorities to abandon a seemingly outdated interpretation of national sovereignty regarding the service of process and the taking of evidence on and from German territory or at least to modify that interpretation so as not to require the costly, and time-consuming, letter-of-request procedure in most cases. [FN64] And finally, the exposure to U.S. litigation has not led to a recognition practice that would oppose the recognition of U.S. judgments only in the most exceptional of cases. The reasons for these German developments are manifold, including prominently the behavior of transnational litigants and the actions of U.S. courts and governmental authorities in cases involving German nationals and their reactions to the German position just described. A closer analysis suggests that, on the most basic level, the following factors were important: (1) a sustained effort by German industry to achieve protection from mushrooming U.S. litigation that threatened to inflict costs of a magnitude these industries could hardly imagine from their experience with domestic German litigation; (2) a distinct, historically grown view of law and procedure in general and of the mandates of international law and of appropriate approaches to transnational litigation in particular; (3) a lack of understanding of the very different views and approaches in the United States on those subjects; and (4) a perceived need to protect German law and sovereignty from unwarranted intrusions by U.S. courts and litigants. As the following analysis shows, these factors interacted in specific ways to cause what is generally known in Germany as the Justizkonflikt, [FN65] suggesting a number of assumptions about the way the lawmaking process in *1317 transnational litigation works. 3.1.1. Initial Stages From 1955 to 1970, judicial cooperation for litigation in the United States was not much of an issue in Germany. There were few U.S. cases that required the procurement of service or evidence on or from German territory, and in such cases as did occur, acceptable solutions were often available. Not that the German approach was satisfactory from a U.S. point of view. Far from it, not only was it usually necessary to file a letter rogatory with the appropriate German authorities, who would then apply their own law to execute the request, [FN66] but also those authorities who nevertheless refused (and still refuse in the absence of an applicable treaty [FN67] today) to apply any measures of compulsion. [FN68] On the basis of an exchange of diplomatic notes from 1955-56, never published in Germany, U.S. consular officers were allowed to question persons residing in Germany. [FN69] Although the consular officers, too, were prevented from applying any means of compulsion, [FN70] they could at least make needed evidence available in a form that could be used in U.S. court. [FN71] Obviously, this arrangement was both fragile and complicated and therefore could not be expected to work for more frequent or *1318 larger litigation. Not surprisingly, then, even this time period did not remain without frictions. The attempt by the U.S. Justice Department ("DoJ") to break up a cartel in the international shipping

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industry and the DoJ's concomitant order to German and other companies to produce a large number of documents in the United States, for example, elicited a sharp diplomatic protest from Germany in 1960 [FN72] and resulted in a German blocking statute applicable to high seas shipping enterprises. [FN73] However, at the time, this was considered primarily a political incident based on opposing views on economic policy rather than as an elementary issue of judicial cooperation. Thus, it did not interrupt the period in which judicial cooperation for litigation in U.S. courts was a relatively rare, calm, and low-key operation of little interest to courts, government officials, and academics. This changed in the 1970s, when U.S. product liability, private antitrust, and securities litigation came into full swing, engulfing German, [FN74] as well as U.S. companies. [FN75] Grasping the extent of their vulnerability under U.S. procedural rules as applied to foreign defendants, German companies quickly began to ask the German governmental agencies for help while presenting the traditional German approach on judicial cooperation to U.S. courts. [FN76] Yet, their efforts, however determined, largely failed to produce the *1319 governmental support they had hoped for. While the German government did intervene diplomatically or file aidememoires in support of German litigants in those cases in which a violation of German sovereignty, and thus of international law was clearly impending under the traditional German view. [FN77] However, it was not until the early 1980s that concern for German industry began to affect German judicial cooperation for litigation in U.S. courts in the large number of cases in which things were less clear. Why did it take so long for those interests to make a difference? Essentially, we can identify two factors. First, there is a formalist view of the process of law-application by courts and governmental authorities. This view prevented the German government from diplomatically intervening in U.S. litigation simply to support its domestic industry without clear evidence of a violation of international law or German national sovereignty, actual or impending. Second, German authorities lacked any information on U.S. civil procedure and on U.S. approaches to transnational litigation. Initially, this led to the assumption that, however different U.S. procedure may be from its German counterpart, U.S. courts would generally recognize international law and German sovereignty as seen from the point of view of the traditional German approach. Accordingly, German authorities were willing to give the benefit of the doubt to the U.S. legal system, rather than to a German industry that had an apparent interest in protecting itself from exposure to liability litigation in the United States. [FN78] As time wore on, however,*1320 and as incidents of both U.S. court orders and individual attorney behavior in violation of the traditional German view became more frequent, this lack of information allowed German industry representatives, a number of whom had a good grasp of the relevant U.S. law, [FN79] to put their spin on how U.S. procedure was perceived in Germany. The latter development was aided by information gained from newly published decisions and their subsequent scholarly discussion. While German activity in the early U.S. cases against German corporations, including those few that had led to diplomatic interventions, had occurred largely within the confines of the Foreign Office and the justice ministries of the individual Länder governments, [FN80] the published reports of three cases between 1978 and 1981 brought home to a larger audience of German lawyers the perceived realities of some aspects of U.S. law that in-house counsel of German companies had long lamented: large, from German standards virtually inconceivable, damage awards handed down by unpredictable juries; [FN81] expensive, [FN82] party-driven discovery with comparatively immense scope and scant protection of trade and business secrets; [FN83] and a willingness of at least some U.S. courts to *1321 enforce their procedural rules transnationally in the face of sovereignty objections by the foreign governments involved. [FN84] These aspects of U.S. litigation appeared both crude and threatening. *1322 They seemed crude from the point of view of a legal culture that has spent centuries fine-tuning the balance of interests at stake in private law and procedure through the

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promulgation of intricate rules of decision to be applied by judges well schooled in those rules. [FN85] They appeared threatening because of the apparent willingness of U.S. courts to value federal and state procedural rules above than German sovereignty concerns [FN86] in a political and economic environment in which the U.S. courts have had the upper hand and in an equity tradition that provides them with judicial powers and discretion unparalleled in Germany. Aided by a change of the controlling law from a dusty administrative regulation [FN87] to more interesting international conventions, [FN88] these published cases elevated the arcana of judicial cooperation from the monotonous routines of governmental agencies to a topic of primary legal concern, resulting in a sudden onset of scholarly discussion. [FN89] This early academic discussion, in turn, was instrumental in setting the parameters of the debate both for a larger legal public and for future decisions by courts and governmental agencies in a culture in which the published works of scholars are more influential than in the United States. [FN90] Although primarily *1323 engaging in German-style, deductive doctrinal reasoning, these early scholarly articles betray three major concerns in dealing with judicial cooperation under the Hague Service and Evidence Conventions: (1) a felt need to protect German businesses from these disfavored U.S. practices on German territory; (2) closely related, a felt need to protect German law from imports deriving from U.S. legal culture; and (3) a felt need to protect German sovereignty from incursion by U.S. court orders. Not surprisingly, the doctrinal conclusions of these articles, particularly those on the execution in Germany of U.S. letters of request under the Hague Evidence Convention, were less than heartening from the point of view of U.S. litigants. While generally deploring the German government's decision to enter a reservation under Article 23 of the convention, which allows a member state to declare "that it will not execute Letters of Request issued for the purpose of obtaining pre-trial discovery of documents as known in Common Law countries," [FN91] scholars simply noted that such was now the law. [FN92] Moreover, they did not veer far from German requirements in interpreting the convention's provisions regarding the execution of requests to depose witnesses. Most importantly, they concluded that such depositions would have to be conducted by the judge, as is usual in Germany, [FN93] respect the privileges *1324 granted by the German code of civil procedure, [FN94] particularly its far-reaching protection of trade and business secrets, [FN95] and that execution could be refused when the letter of request did not specify lines of questioning sufficiently narrow or sufficiently substantiated as to clearly indicate that the proponent was not merely fishing for evidence. [FN96] *1325 Available data indicates that the relevant German decision-makers largely shared these views. A 1985 survey conducted by Professor Koch among German Central Authorities [FN97] revealed that of the seventyfive letters of request from the United States that had been received under the Hague Evidence Convention between 1979 and 1984, the majority were considered defective under Articles 3 [FN98] or 12(b) [FN99] or inadmissible under Article 23. [FN100] Of those, twelve were refused execution while the rest were executed in a more limited fashion than requested or were executed to the extent that the witness in question participated voluntarily. [FN101] With regard to the Hague Service Convention, the survey showed that the German Central Authorities had received 1,628 requests to effect service of process, of which, about one fifth were refused execution. [FN102] Refusals occurred primarily because requests failed to provide adequate translations of the documents to be served under Article 5(2), [FN103] or because, it was argued, a U.S. attorney was not an "authority or judicial officer" for purposes of requesting service under Article 3(1) of the convention. [FN104] Some of the rejected requests*1326 involved claims by U.S. federal agencies that represented, as the German Central Authorities reasoned, administrative rather than "civil or commercial matters" within the meaning of the Hague Service Convention. [FN105] In addition, much to the displeasure of U.S. courts and litigants, some of the German Central Authorities turned out to be exceedingly formalistic in handling requests for service. [FN106] Fi-

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nally, at about the same time, the German government took the opportunity of a diplomatic protest against a Michigan court's order in violation of the 1955-56 exchange of diplomatic notes [FN107] in order to press hard for a discontinuation of the practice of deposing German individuals before U.S. consular officials under that exchange. [FN108] Subsequently, the U.S. State Department*1327 apparently advised its consular agents to no longer to depose German nationals. [FN109] 3.1.2. The "Judicial Conflict" Emerges To the extent that these developments were the result of a conscious effort to limit the effects of disfavored U.S. procedure on German businesses and on German law and to preserve German sovereignty, [FN110] they turned out to be based on a deficient strategy. Again, German governmental authorities and scholars had made assumptions about U.S. practice on the basis of their own procedural and jurisprudential approaches. Although some scholars had engaged the mechanics of (federal) U.S. procedure, [FN111] their comparative enterprise was relatively limited and thus left them unaware of essential tenets of U.S. procedure as well as of the pragmatism and ingenuity with which U.S. courts and counsel approach new problems. They had also underestimated the willingness of U.S. courts unilaterally to enforce their procedural views in transnational cases, if necessary in the face of diplomatic protests and based on questionable treaty interpretations. This lack of information was crucial for further developments. For from the U.S. perspective, the Hague Service and Hague Evidence Conventions may have brought some improvements over the previous regime governing judicial cooperation in Germany; [FN112] yet, the described German developments imposed severe limitations on the usefulness of the letter-of-request procedure. This was particularly problematic because, following its traditional position,*1328 [FN113] Germany had objected to virtually all forms of serving process and taking evidence in its territory other than by letter of request under the two conventions. [FN114] The effect was most pronounced in the evidence area, where documents would, thus, largely be undiscoverable and both the access to, and the scope of, witness testimony would remain severely restricted. Together with exasperation over the perceived formalism of German Central Authorities [FN115] and with impatience over the expense and delay imposed by the letter-of-request procedure, these German limitations--and related limitations imposed by other civil law countries--led U.S. courts to endorse new interpretations of the two conventions. [FN116] Most importantly, U.S. courts gradually changed from requiring, as a matter of comity, that first resort be the procedures of the Hague Evidence Convention, [FN117] to routinely ordering *1329 foreign individuals under the court's jurisdiction to produce evidence located abroad for inspection in the United States without considering the Convention as helpful or even necessary. [FN118] Some courts concluded that the Convention did not even apply "to the production of evidence in this country by a party subject to the jurisdiction of a district court." [FN119] Similarly, attempts by U.S. plaintiffs to avoid serving foreign defendants abroad by serving their domestic subsidiary as their involuntary agent, although unsuccessful throughout the 1970s and early 1980s, [FN120] were soon held to be acceptable under the Hague Service Convention. [FN121] The Germans reacted with considerable despair. It seemed as if U.S. courts were on a collision course, doing whatever it took to avoid limitations set by international treaty obligations and German sovereignty. To some degree, this was indeed true. In interpreting the Hague Conventions, U.S. courts, particularly federal courts, did not see why an international treaty, without specifically stating so, should limit their jurisdiction and thus their powers under*1330 the Federal Rules (or even state rules) of Civil Procedure ("Federal Rules"), thus providing foreign litigants with significant advantages over domestic litigants. [FN122] This attitude, as Professor Burbank's historical analysis shows, was the result both of decades of neglecting foreign concerns in the federal rulemaking process, [FN123] and of U.S. negotiators at the Hague, who, in their effort to secure the advice

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and consent of the Senate, represented to the American public that the two conve