It has to be stated that in the United States of America (U.S), there are two kinds of courts and laws, (State and Federal law). Each have their own courts, laws, officers and Judges, further, each has their own State and Federal Systems as well.
The following is a discussion of the key differences between the State and Federal court systems and discussions below, are constructed to assist timeshare consumers in the UK and when understanding the rules on termination U.S timeshare contracts.
The State and Local courts are domiciled in each State and they officiate over the laws passed in each State. As laws vary from State to State the laws enjoyed in one State might be different in another. In timeshare and by way of an example: consumers are afforded a “cooling off” period, however that period can vary from 3 days to 14 and dependant on which State the timeshare is domiciled.
Generally speaking, and in aid of further understanding, the States can be likened to different Countries. In Europe, we have the European Union which can be classed as a Federal Institution and each Country within the E.U are the Member States.
As the E.U have European Courts, so do the Countries and within it each country each applies its own laws. In the U.S there are also Local Courts which are established by cities, counties, and other municipalities, which TESS is including in the general discussions.
The Federal courts are established under the U.S. Constitution and to decide disputes involving the constitution and laws passed by Congress. The States and municipal authorities, therefore, adjudicate over their particular laws.
Jurisdiction of State and Federal Courts
The differences between the Federal and State courts is defined mainly by the jurisdiction which essentially means what kind of cases a court is authorised to hear. The State courts have broad jurisdiction, however, are generally hear cases which involve individuals and are most likely to be such things as robberies, traffic violations, broken contracts, family disputes etc. Therefore, consumer and individual issues are tried in State courts. The only cases State courts are not allowed to hear are lawsuits against the United States and those involving certain specific federal laws: criminal, antitrust, bankruptcy, patent, copyright, and some maritime cases.
Therefore, as timeshare contracts are between consumers and traders in all cases they are governed by and adjudicate in the particular State the contracting parties agreed to. However, if the resort trader violates the federal laws, investigation and prosecution of the alleged wrongdoing will fall under their jurisdiction. In respect to criminal behaviour, the Federal government may insist upon its courts to make the determination. That all explained, when a consumer challenges a timeshare contract, it will be the State courts who retains jurisdiction. Federal court jurisdiction, by contrast, is limited to the types of cases listed in the Constitution and specifically provided for by Congress.
In respect to a timeshare contract (a consumer enters into an arrangement with a trader) in the E.U, consumer protection regulations apply and it has been deemed unfair to litigate in a jurisdiction other than the consumer homeland jurisdiction. In Europe, you are not required to defend a claim a trader brings, if it involved travel to another Country i.e. Spain, Germany etc. If your country is a member of the EU, consumers can hold the Timeshare Companies to account in that the jurisdiction of the claim is the choice of the consumer, not the trader. European Court of Justice (ECJ) says: – Courts must assess consumer contract jurisdiction clauses before it deals with the trial.
When a legal matter involving a dispute between a consumer and a foreign trader, the UK Courts must check that a contract’s jurisdiction clause does not conflict with European rules on unfair contract terms. The European Court of Justice (ECJ) has stated on the 22 Nov 2010 that EU Courts must make the checks regardless of whether or not any party in a dispute has asked them to. The Court said: –
“Contracts that companies ask consumers to sign for the provision of goods or services often have clauses in them which determine which court will be used in the case of a dispute. This is often a court close to or convenient to the business and can be one far from the consumer. This could have the effect of denying the consumer justice”
They also went on to say:–“A contract term which obliges the consumer to submit to the exclusive jurisdiction of a court which may be a long way from his domicile … may make it difficult for him to enter an appearance,” said the ECJ ruling. “In the case of disputes concerning limited amounts of money, the costs relating to the consumer’s entering an appearance could be a deterrent and cause him to forgo any legal remedy or defence.”
As most timeshare consumer contracts are authored by the trader and are presented in whole (for agreement) to a consumer, without negotiations on an individual clauses by clause basis, The European Union fashioned the Unfair Terms in Consumer Contracts Directive, which renders unenforceable any timeshare consumer contract clause that was not negotiated and which is unfair. Affording the consumer protection in Europe should that same protection be extended to Consumer who acquired timeshare in the U.S?
The ECJ explained in its ruling in November 2010, courts did have an express duty in each case to scrutinise the contract clauses in consumer contracts which stipulate a court different to the consumer’s nearby court as the place where the dispute will be heard.
Therefore, the courts must and before hearing the case assess whether the jurisdictional terms fall within the EU rules on unfair terms and then assess if it breaks them in part or whole.
“The national court which hears the claim must investigate of its own motion whether a term conferring exclusive territorial jurisdiction in a contract completed between a seller supplier and a consumer, which is the subject of a dispute before it, falls within the compass of the Directive and, if it does, assess of its own motion whether such a term is unfair,” said the ECJ ruling.
On that issue Mr Ferenc Schneider he took out a car loan in Hungary from VB Pénzügyi Lízing Zrt. When Schneider failed to fulfil his obligations under the contract the company terminated the loan contract and took a case against him in the court identified in the contract.
Hungary’s rules of civil procedure declare that the court with jurisdiction in the dispute ought to have been the one nearby to where Schneider lived. So, the Hungarian court asked the ECJ if it could rule the jurisdiction term in that contract to be unfair, even if Schneider had not asked it to.
The ECJ said that yes it should and that the ECJ had the authority not only to tell the court to do that but to advise it on the criteria to be used in judging a contract term fair or unfair.
“The jurisdiction of the Court of Justice extends to the interpretation of the concept of ‘unfair term’ used in Article 3(1) of the Directive and to the criteria which the national court may or must apply when probing a contractual term in the light of the provisions of the Directive, bearing this in mind, it is for that court to determine, in the light of those criteria, whether a particular contractual term is actually unfair in the circumstances of the case,” alleged the ruling.
So it’s unfair to make a consumer travel to another European Countries to defend proceeding raised by Trader. The interpretations are linked to the cost and as timeshare resorts claims are quite modest claims to other financial claims, equally the opinion of the E.U.J is that the consumer needs protection.
The judgement referred to establishes fully that consumers have rights which need protection. Of course, the E.U has no jurisdiction in the U.S but if and when a US trader tries to assert a money judgement in the UK, they might come headlong into the European legislation and the consumer protection laws.
As no money treaty exists between the States of the United States and the UK any award the courts makes, must be converted by the High Court in London, which in turn will require a hearing to determine if the claimed judgement is fair reasonable and enforceable in the UK.
The U.S and the UK do enjoy close commercial links, however, there is no convention or treaty which provides for the reciprocal enforcement of judgements between the US and UK. Therefore, the statutory schemes for registering judgements handed down by U.S courts are not available.
This asserted the enforcement of U.S State judgements in England is possible can be a relatively simple matter and as set down in the English common law principles.
The method of enforcement of a U.S judgement cannot be enforced directly in the UK Instead, the U.S judgement will be viewed in England as a simple contract debt and between two or more parties to it.
It is this “debt” which can be enforced through the English courts and this is done by way of issuing new proceedings in the UK.
The English court will generally not re-examine the merits of the underlying dispute. Nevertheless, certain criteria must be satisfied for the court to enforce the debt created by the judgement in the U.S. There are a variety of elements for timeshare resorts to consider:
The U.S courts must have had international jurisdiction according to English conflict of laws rules. Broadly this means that the English court will have to be satisfied that either the judgement debtor was either present in the US when the US proceedings were commenced or entered an appearance in the US proceedings or otherwise expressly submitted to the jurisdiction of the US court. Therefore if the consumer does not attend the hearing and does not partake in it the US timeshare resorts may have difficulty.
Judgement for a definite sum
The U.S judgement must be for a definite and ascertainable sum to be enforceable in England. A declaratory judgement would not, for example, be enforceable. Costs orders relating to any proceedings would be enforceable, but only when the final figure is determined. The English courts will not entertain actions to enforce, either directly or indirectly, foreign penal or revenue law. As the maintenance fees are generally at the heart of the judgement and are continuing, again the U.S Timeshare resorts have a battle on its hands.
Final and conclusive judgement
In order to begin enforcement proceedings in England, the existence of the debt must have been pronounced upon finally and conclusively by the U.S court which heard the case. The proceedings could be commenced in England to enforce the judgement. However, where U.S proceedings are or may be subject to an appeal to a higher court, it is likely that the English court will stay enforcement proceedings pending the appeal. If the U.S court has granted a stay of execution pending the hearing of the appeal, enforcement proceedings cannot be commenced in England.
On this issue, as the timeshare contracts are generally in perpetuity a conclusive judgement is difficult to establish.
Enforcing US judgements in England
“Fraud” a U.S judgement which has been obtained by fraud will not be recognised or enforced in England. If the issue of fraud is raised in enforcement proceedings in England, this is one occasion on which the English court will consider re-examining the issues in the underlying action that relate to the alleged fraud, even if those issues have been considered by the US court.
If you the consumer believe that the judgement was concluded as a result of a fraud the entire case will have to be retried in the UK
A U.S judgement will not be recognised or enforced by the English court if this would be contrary to UK public policy. For example, punitive damages awards are not enforceable in England (although the basic award, before the punitive element was added, would be enforceable). Given the similarities between the U.S and English legal systems and values, it will be rare for a U.S judgement to offend UK principles of morality or justice.
Natural or substantial justice
If the English court considers that the proceedings in the U.S were conducted in a manner contrary to natural or substantial justice, it will not enforce a judgement. (i.e unfair contractual terms) One of the most common arguments raised under this heading is that the judgement debtor was not given sufficient and proper notice of the U.S proceedings and therefore did not have an adequate opportunity to defend the action. The English court will consider each case on its merits, but if the proceedings (including provisions as to notice) have been conducted in accordance with the laws of the relevant U.S court, the English court will be reluctant to interfere. If a defence of lack of notice is raised, a judgement debtor must be able to demonstrate that it had a reasonable prospect of successfully defending the action in the U.S. The burden of proof is on the judgement debtor who seeks to oppose the enforcement of a U.S court judgement on the basis of one of the criteria listed.
Posted on: 3rd March 2017