The European Union’s decision to impose a huge fine and draconian penalties on Microsoft for alleged antitrust violations ought to terrify other U.S. companies engaged in civil litigation with their international rivals. World War in the Courts?
Microsoft’s Transatlantic Divide

With the hundreds of thousands of recent global innovations, from international cellular telephone service to intercontinental jet service to the Internet, our world is truly shrinking. What obviously has not caught up with modern technology, however, is the manner in which our national legal systems handle international civil litigation.

Take, for example, the European Commission’s recent antitrust ruling against Microsoft. The eye-bulging fine levied against Microsoft last month is an unprecedented $613 million — frankly more than the annual gross domestic product of most foreign countries. But what is even more astounding is that the fine was, at least in part, imposed for activities expressly permitted under the agreement that Microsoft reached just three years ago with the U.S. Department of Justice and affirmed just two years ago by a federal district court, on the company’s homeland soil.

The Commission’s decision declaring Microsoft in violation of competition laws imposes enormous restrictions on how Microsoft does business. In addition to requiring Microsoft to produce two versions of Windows for the European market, one with the Windows Media Player (used to watch videos and listen to music) and one without, the ruling also requires Microsoft to give its competitors information about how the Windows operating system interacts with Windows Media Player and with Microsoft’s server software.

The aftershocks of this decision will reverberate far beyond the computer world and will affect how Microsoft designs its software and shares information about its Windows operating system with rivals worldwide. Moreover, the fault lines of this legal tremor may, in fact, spread to our nation’s Supreme Court and shape its legal jurisprudence and judicial foreign policy.

Historically, our American justice system is based on nothing other than the foreign-born English court system, and we have been borrowing ideas from other legal systems since inception. Our courts have routinely recognized that foreign law is relevant to international legal disputes that happen to land in U.S. courts, particularly those that involve treaties entered into between and among foreign countries.

Over the last several years, however, the judicial divide over foreign comparative law has become more apparent. Earlier this month, U.S. Supreme Court Associate Justice Antonin Scalia made headlines for public comments he made in a speech presented to a group of international lawyers when he argued that the discussion of foreign cases in U.S. constitutional opinions is wrong and perhaps even unconstitutional.

Many Court watchers believe Justice Scalia’s comments are a continuing dissent from recent Supreme Court decisions that he maintains wrongly cite to European case law and foreign materials, the most notable example coming last term in Lawrence v. Texas in which the Court favorably referenced foreign law in deciding to strike down a ban on homosexual sodomy.

In most cases involving international comparativism, Justice Scalia is joined by Justice Clarence Thomas in rejecting an approach to American jurisprudence that cites foreign materials. In the words of Justice Scalia, "where there is not first a settled consensus among our own people, the views of other nations, however enlightened the Justices of this Court may think them to be, cannot be imposed upon Americans through the Constitution." Similarly, Justice Thomas has opined that "this Court’s … jurisprudence should not impose foreign moods, fads, or fashions on Americans."

The Microsoft case provides these Justices and others yet another arrow in their quiver as they battle judicial efforts to apply foreign precedent in American courts. After all, U.S. courts and regulatory agencies should not be bound by foreign legal precedent if American judicial and regulatory opinions continue to be ignored or disregarded across the Atlantic and Pacific Oceans.

"Comity" is the entirely voluntary decision to recognize foreign law. Application of the comity doctrine is not new in American courts, with the Supreme Court first espousing its now famous definition of the term "comity" over 100 years ago: "‘Comity,’ in the legal sense, is neither a matter of absolute obligation on the one hand, nor of mere courtesy and good will upon the other. But it is the recognition which one nation allows within its territory to the legislative, executive, or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws."

The Microsoft case highlights the problem vexing both companies and the courts when a cause of action involving the same parties and issues is brought before two nations’ different court systems, with neither willing to give due respect to the other’s foreign laws, regulations or judgments. Under such scenarios, the company faces double jeopardy — and is simply hauled before a different court system in an attempt to get a more favorable ruling or result than was obtained in the first case. Unfortunately, little is done to stop or discourage a litigant from hopping halfway across the world in search of a more sympathetic court.

The European Union’s decision to impose a huge fine and draconian penalties on Microsoft for alleged antitrust violations ought to terrify other U.S. companies engaged in civil litigation with their international rivals. Although there is no "supreme" world court capable of resolving conflicting interpretations of law by the tribunals of different sovereign nations, many countries, including the United States and those in the European Union, have entered into agreements that effectively codify the international comity doctrine. Yet, as evidenced by the European Microsoft case, in the absence of a single authoritative international tribunal to enforce such agreements, international judicial cooperation and deference is uncertain. The result is that American companies are left to fear similar unpredictability in future regulatory actions overseas, regardless of the economic and legal decisions made in their homeland.

Microsoft is engaged overseas in the first round of appeals from the European Commission’s decision, this before the Court of First Instance in Luxembourg. If dissatisfied with the outcome, the company may then go to the European Court of Justice, Europe’s highest court. Hopefully, these courts will recognize what the European regulatory agency did not — that it would clearly be in the best interest of both nations and the businesses they host to render decisions in these cross-border antitrust cases that promote the equitable treatment of corporations, enforce international treaty obligations and recognize well-established legal precedent.

As the world becomes more interconnected, it is unfortunate that the European Commission did not seize the opportunity to decide the Microsoft case in favor of the reciprocal courtesy embodied in the international comity and treaty obligations that brought the world closer together in the first place. Unless and until U.S. laws and rulings are afforded respect and deference by foreign courts and agencies, our American courts at home cannot possibly show anything other than great ambivalence toward affording other nations’ legal systems the respect they are unwilling to give us.

March 6, 2004
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