This put up is posted on behalf of Jason Mitchell, barrister at Maitland Chambers in London and Group 621 in Johannesburg.
In Motorola Options v Hytera Communications Company, the Court docket of Enchantment held {that a} judgment that features a punitive damages element is unenforceable in its entirety (the judgment is offered right here). The punitive element can’t be severed in order that the judgment creditor can implement non-punitive elements.
Motorola sued Hytera within the U.S. One in every of its causes of motion was below the Defend Commerce Secrets and techniques Act, a federal statute that permits for punitive damages of as much as double any compensatory damages. On that reason for motion, the U.S. court docket awarded Motorola compensatory damages of $135 million and punitive damages of $270 million. Motorola tried to implement the U.S. judgment in England.
Enter the Safety of Buying and selling Pursuits Act. Part 5 precludes restoration of “any sum payable” below a “judgment for a number of damages” (later outlined as “a judgment for an quantity arrived at by doubling, trebling or in any other case multiplying a sum assessed as compensation for the loss or injury sustained by the particular person in whose favour the judgment is given”).
Motorola argued that s.5 didn’t preclude enforcement of the compensatory element of the judgment, simply the punitive element. The Industrial Court docket and the Court docket of Enchantment rejected that argument: the language of s.5 “is obvious and unambiguous in barring enforcement of the entire of a number of damages declare together with its compensatory half.”
The Court docket of Enchantment additionally famous that this interpretation of s.5 “acts as a discouragement to the claimant from searching for an award of a number of damages within the first place”. One wonders whether or not that aligns with the standard concern over comity: why ought to an English court docket mission its personal view of public coverage onto international litigants and the way international litigants select to conduct litigation in international courts (and select to ask for cures below international statutes that expressly permit punitive damages). A couple of years in the past, the Fourth Circuit’s Choose Wilkinson didn’t mince his phrases concerning the (in his view, exorbitant) impact of an English anti-suit injunction (right here). An English court docket trying to use English public coverage to create ex ante incentives and disincentives for a way a U.S. litigant litigates below a U.S. statute could once more elevate eyebrows (and ire).
Motorola would have had higher luck if Hytera had had some belongings farther south. The equal statute in South Africa, the Safety of Companies Act, additionally precludes enforcement of a “judgment … directing the cost of a number of or punitive damages”. On its plain textual content, the Act, just like the English equal, appears to bar a judgment in its entirety. Nevertheless, South African courts have successfully interpreted the Act out of existence. The Act says it applies to judgments “linked with the mining, manufacturing, importation, exportation, refinement, possession, use or sale of or possession to any matter or materials, of no matter nature, whether or not inside, exterior, into or from the Republic”, which appears broad. However courts have interpreted that phrase to imply that the Act applies solely to judgments about uncooked supplies used to make different issues: Tradex Ocean Transportation SA v MV Silvergate 1994 (4) SA 119 (D); see additionally Worldwide Fruit Genetics LLC v Redelinghuys 2019 (4) SA 174 (WCC) (right here) (holding that the Act doesn’t even apply to a international judgment a few licensing settlement over grape varieties: grapes are uncooked supplies, however, apparently, they aren’t made to make use of different issues). So it ought to come as no shock that, based on the main practitioner textual content, “there may be the truth is no recorded occasion by which the Act has been efficiently invoked as a defence to enforcement” (C F Forsyth Non-public Worldwide Regulation (fifth ed. 2012). The Act is, nevertheless, exceptional for that reason: if the Act applies, it precludes enforcement of any judgment (not simply judgments that embrace punitive damages) with out the permission of the “Minister of Financial Affairs” (now, presumably, the Minister of Commerce, Trade and Competitors). That’s virtually actually unconstitutional (it in all probability survives solely as a result of the slim interpretation of the Act’s ambit signifies that there has not been any have to problem it—see Worldwide Fruit Genetics, above, noting that the constitutionality of the permission requirement is “questionable”).
With the Safety of Companies Act out of the way in which, the widespread legislation would govern the enforceability of Motorola’s U.S. judgment (South Africa has an Enforcement of Overseas Civil Judgments Act, which sounds promising sufficient, however it applies solely to “designated” international locations: an inventory with simply Namibia on it). There isn’t any appellate authority on this, however Excessive Courts appear to agree that an order for punitive damages is opposite to South African public coverage, however disagree about find out how to characterise damages as punitive (unenforceable) or compensatory (enforceable). In Danielson v Human 2017 (1) SA 141 (WCC) (right here), the Excessive Court docket held (in all probability on shaky floor) that an order for treble damages below RICO shouldn’t be punitive however compensatory (based mostly on professional U.S. proof on how U.S. legislation characterises treble damages below RICO—question why that ought to matter to a South African court docket, and, in that case, question additionally whether or not that ought to have been a matter of U.S. federal or state legislation). Danielson distinguished Jones v Krok 1996 (1) SA 504 (T), which held that an order awarding punitive damages for breach of contract below California legislation was punitive and opposite to public coverage. Jones did, nevertheless, nonetheless implement the compensatory element of the order.
So, Motorola would have two arguments in a South African courtroom. It could possibly be argued that an order for ‘punitive’ damages below the Defend Commerce Secrets and techniques Act, like treble damages below RICO, shouldn’t be punitive however compensatory (Danielson). Or, as a fallback, it may no less than implement the compensatory element of the U.S. judgment even when the punitive element had been unenforceable (Jones).
