SOCIETY OF LLOYDS, Appellee
457 F.3d 94, 372 U.S.App.D.C. 448, 2006 U.S. App. LEXIS 20239
Background: Overseer of English insurance syndicates brought action against American syndicate member to enforce money judgments obtained in England. Member asserted counterclaims. The United States District Court for the District of Columbia granted summary judgment for plaintiff. Member appealed.
Holdings: The Court of Appeals, Garland, Circuit Judge, held that:
(1) English judgment was not repugnant to public policy of District of Columbia;
(2) English legislation was not repugnant to public policy of District of Columbia;
(3) act of state doctrine prevented consideration of question of whether passage of particular Act in England constituted unlawful delegation of legislative and governmental power to private English overseer under English law;
(4) cause of action was not repugnant to law of District of Columbia;
(5) overseer could invoke forum selection clause to insist upon litigation in United Kingdom of counterclaims asserted by member; and
(6) judgment had not been rendered under system that did not provide impartial tribunals or procedures compatible with requirements of due process of law.
[*95] Appeal from the United States District Court for the District of Columbia (No. 03cv01524)
COUNSEL: Russel H. Beatie argued the cause and filed the briefs for appellants.
JUDGES: Before: SENTELLE and GARLAND, Circuit Judges, and WILLIAMS, Senior Circuit Judge.
DATES: Argued Oct. 28, 2005.
Opinion for the court filed by Circuit Judge GARLAND.
GARLAND, Circuit Judge.
Defendants Gillian and Uwe Siemon-Netto are two among the hundreds of Names whom the Society of Lloyds has [*96] sued for nonpayment of reinsurance premiums. The English High Court of Justice, Queens Bench Division, entered money judgments in favor of Lloyds against the Siemon-Nettos. Lloyds then sued to enforce those judgments in the United States District Court for the District of Columbia. The district court granted summary judgment in favor of Lloyds, and we now affirm.
Eight circuit courts have set forth the background information that is relevant to this appeal. [FN1] Seeing no need to reinvent the wheel, we take our description of the context of this litigation from the Fifth Circuits clear explications in Society of Lloyds v. Turner, 303 F.3d 325 (5th Cir.2002), and Haynsworth v. The Corporation, 121 F.3d 956 (5th Cir.1997). See also Society of Lloyds v. Reinhart, 402 F.3d 982, 988 (10th Cir.2005) (Numerous courts have summarized the basic facts applicable to the underlying litigation, and these facts are not in dispute.).
FN1. See Society of Lloyds v. Reinhart, 402 F.3d 982 (10th Cir.2005); Lipcon v. Underwriters at Lloyds, 148 F.3d 1285 (11th Cir.1998); Richards v. Lloyds of London, 135 F.3d 1289 (9th Cir.1998); Haynsworth v. The Corporation, 121 F.3d 956 (5th Cir.1997); Allen v. Lloyds of London, 94 F.3d 923 (4th Cir.1996); Shell v. R.W. Sturge, Ltd., 55 F.3d 1227 (6th Cir.1995); Bonny v. Soc'y of Lloyds, 3 F.3d 156 (7th Cir.1993); Roby v. Corp. of Lloyds, 996 F.2d 1353 (2d Cir.1993).
The Parliament of the United Kingdom authorized the Society of Lloyds to regulate a London insurance market through a series of Parliamentary Acts, known as the Lloyds Acts, passed between 1871 and 1982. In Haynsworth, the Fifth Circuit explained the structure of the Lloyds market as follows:
Lloyds is a 300-year-old market in which individual and corporate underwriters known as Names underwrite insurance. The Corporation of Lloyds, which is also known as the Society of Lloyds, provides the building and personnel necessary to the markets administrative operations. The Corporation is run by the Council of Lloyds, which promulgates Byelaws, regulates the market, and generally controls Lloyds administrative functions.
Lloyds does not underwrite insurance; the Names do so by forming groups known as syndicates. Within each syndicate, participating Names underwrite for their own accounts and at their own risk . Each syndicate is managed and operated by a Managing Agent, who owes the Names a contractual duty to conduct the syndicates affairs with reasonable care .
Names must become members of Lloyds in order to participate in the market. Prospective members are solicited and assisted in the process of joining by Members Agents, whose duties to the Names are fiduciary in nature. Names must pass a means test to ensure their ability to meet their underwriting obligations, post security (typically, a letter of credit), and personally appear in London before a representative of the Council of Lloyds to acknowledge their awareness of the various risks and requirements of membership, and in particular the fact that underwriting in the Lloyds market subjects them to unlimited personal liability. Participation in the market also requires the execution of a number of contracts and agreements, the most important of which is the General Undertaking, the standardized contract between [*97] Lloyds and the individual Names. Names additionally must enter into a Members Agents agreement, the contract that defines the relationship between the Name and his chosen Members Agent, and one or more Managing Agents agreements, which define the relationships between the Name and the Managing Agents of the syndicates he wishes to join. Under the present version of Lloyds Byelaws, each of these agreements must contain clauses designating England as the forum in which disputes are to be resolved and choosing English law as the law governing such disputes.
Haynsworth, 121 F.3d at 958-59.
The Turner court described the insurance crisis that led to lawsuits like the one now before us:
In the late 1980s and early 1990s, Lloyds underwriters incurred billions of dollars of losses, due in large part to toxic tort cases. Because of the enormity of the outstanding liabilities and because of the Names inability to satisfy their underwriting obligations, the very existence of Lloyds was threatened. To ensure both the survival of the market and the payment of policyholders claims, as well as to protect the Names, Lloyds devised the Reconstruction and Renewal (R & R) plan, which provided reinsurance for all the Names pre-1993 liabilities from an independent company, Equitas Reinsurance Ltd. (Equitas). Equitas was funded, in part, by the reinsurance premiums paid by the Names.
Turner, 303 F.3d at 327-28.
FN2. As the Seventh Circuit explained, Lloyds levied an assessment (the reinsurance premium) against all the names [and then] offered a discount on the assessment to induce the names to go along with this plan voluntarily. Society of Lloyds v. Ashenden, 233 F.3d 473, 478 (7th Cir.2000).
The Turner court further explained the genesis of the referenced contractual[ ] authoriz[ation] that permitted Lloyds to appoint a substitute agent for the recalcitrant Names:
All Names signed a General Undertaking in which they agreed to comply with the provisions of Lloyds Acts 1871-1982, any subordinate legislation made thereunder, [and any] requirement made or imposed by the Council [of Lloyds]. Pursuant to Lloyds Acts 1982, Schedule 2, § (18)(b), Lloyds obtained the power to appoint substitute agents when the Council deemed it necessary. Through a series of bylaws and resolutions under this Act, the Council was authorized to appoint a substitute agent on behalf of Names specifically to execute the Reinsurance Contract for itself and on behalf of the Members in such form as the council may direct . Lloyds Byelaw No. 20 of 1983; Byelaw No. 82 of 1995; AUA9 Resolution of 1996.
Turner, 303 F.3d at 328 n. 3.
Finally, the Fifth Circuit described the English litigation against the recalcitrant Names, upon which the English judgments in this case are ultimately founded:
Lloyds paid the Equitas premiums for those Names, and Equitas assigned its right to collect the premiums to [*98] Lloyds. In late 1996, Lloyds brought collection proceedings in England against the recalcitrant Names .
The lengthy litigation that followed in England took place in a series of test cases. First, the English courts tried the Leighs case, [Society of Lloyds v. Leighs,  C.L.C. 759 (Q.B.) ], to determine whether Lloyds was entitled to appoint substitute agents to bind the non-settling Names to the R & R Plan, to enforce the Equitas contact, and to collect the premiums. The court found for Lloyds, but allowed the plaintiffs to pursue their claims of fraudulent inducement against Lloyds in a separate action. The English Court of Appeal upheld the trial courts decision, [see Society of Lloyds v. Leighs,  EWCA (Civ) 2283], and leave to appeal was denied by the Judicial Committee of the House of Lords, the English equivalent of the United States Supreme Court.
The Names claims for fraud were brought all together in the Jaffray action, [Society of Lloyds v. Jaffray,  EWHC (Comm) 51 (PDF)], [in which] the English courts found in favor of Lloyds .
Lloyds sought summary judgment against the Names for the Equitas premium amount in the Fraser litigation. In this litigation, the Names challenged Lloyds calculation of the reinsurance premium . After lengthy review, the trial court ruled against the Names on this claim, and the English Court of Appeal denied leave to appeal. [See Society of Lloyds v. Fraser,  EWCA (Civ) 1378.]
Turner, 303 F.3d at 328-29.
This brings us to the present litigation. Gillian and Uwe Siemon-Netto were among the Names who neither accepted their settlement offers nor paid the reinsurance premium for their outstanding underwriting liabilities. Nor did they take the opportunity afforded by the English courts to pursue separate fraud claims against Lloyds. See Society of Lloyds v. Siemon-Netto, No. 03-1524, Mem. Op. at 3 (D.D.C. Aug. 20, 2004).
On March 24, 1997, Lloyds sued the Siemon-Nettos in England for breach of their contractual obligations to pay the reinsurance premiums. The Siemon-Nettos counsel entered an appearance on their behalf. The English courts granted summary judgment against the Siemon-Nettos in the Fraser case, see Society of Lloyds v. Fraser,  EWCA (Civ) 1378, and on December 21, 1998, entered individual money judgments against Gillian Siemon-Netto for £280,055.72 and against Uwe Siemon-Netto for £87,109.97, see Society of Lloyds v. Gillian Mary Siemon-Netto, Judgment (J.A. 116); Society of Lloyds v. Uwe Siemon-Netto, Judgment (J.A. 119).
On July 15, 2003, Lloyds filed suit against the Siemon-Nettos in the United States District Court for the District of Columbia, seeking recognition and enforcement of the English judgments under the Districts Uniform Foreign Money Judgments Recognition Act of 1995 (Recognition Act), D.C.Code § 15-381 et seq. Venue was based on the Siemon-Nettos status as District residents and jurisdiction on diversity of citizenship. See Compl. ¶¶ 6, 7. The Siemon-Nettos answered Lloyds complaint and asserted a number of affirmative defenses and counterclaims. Lloyds filed motions to strike the affirmative defenses under Federal Rule of Civil Procedure 12(f) and to dismiss the counterclaims pursuant to Rule 12(b).
The district court granted Lloyds motions to strike and to dismiss. See Society of Lloyds v. Siemon-Netto, No. 03-1524, [*99] Order at 1 (D.D.C. Aug. 20, 2004). Lloyds then moved for summary judgment on its claims for recognition and enforcement of the English judgments, which the district court granted. See Society of Lloyds v. Siemon-Netto, No. 03-1524, Order at 1 (D.D.C. Oct. 28, 2004). The Siemon-Nettos noted a timely appeal.
We consider the Siemon-Nettos affirmative defenses in Part II and their counterclaims in Part III. Because the district court struck the former and dismissed the latter solely on grounds of legal insufficiency, we review those decisions de novo. See Singletary v. District of Columbia, 351 F.3d 519, 523 (D.C.Cir.2003); Fund for Animals, Inc. v. Norton, 322 F.3d 728, 732 (D.C.Cir.2003). The defendants concede that without their affirmative defenses and counterclaims there [would be] no genuine issues of material fact, and that in such event summary judgment would be appropriate. Appellants Br. 28.
Section 15-382 of the Recognition Act provides, in pertinent part, that [e]xcept as provided in section 15-383, a foreign-money judgment is enforceable in the same manner as the judgment of a sister jurisdiction which is entitled to full faith and credit. D.C.Code § 15- 382. [FN3] Section 15-383 contains a list of specific exceptions, only one of which the Siemon-Nettos claim here:
FN3. The Recognition Act is based on the Uniform Foreign Money-Judgments Recognition Act. See UNIF. FOREIGN MONEY-JUDGMENTS RECOGNITION ACT, 13 U.L.A. 261 (1991). The alert reader will note that, for no apparent reason, different authorities cited in this opinion insert a hyphen at different places (or not at all) within the phrase foreign money judgments.
A foreign-money judgment need not be recognized if: (3)[t]he cause of action on which the judgment is based is repugnant to the public policy of the District of Columbia.
D.C.Code § 15-383(b)(3). Concluding that none of the Siemon-Nettos four affirmative defenses came within that exception, the district court struck them all as legally insufficient to bar enforcement of the English judgments. We consider the first defense in subpart A, and the remaining defenses in subpart B.
As their first affirmative defense, the Siemon-Nettos contend that the foreign-money judgment[s] obtained by Lloyds in the courts of the United Kingdom [are] repugnant to the public policy of the District of Columbia and should not be recognized because the cause of action on which [they were] based conflicts with the public policy of the District of Columbia. Am. Answer ¶ 69. The defendants list three grounds for finding repugnancy: (1) a contract cannot be enforced against the party who did not knowingly assent to its terms; (2) the legislation on which the foreign cause of action was based (Lloyds Act 1982) and [the] Reconstruction and Renewal Byelaw were unenforceable and voidable as a result of Lloyds failure to satisfy the conditions imposed on it by the Parliament in exchange for the legislation; and (3) the Lloyds Act 1982 constituted an unlawful delegation of legislative and governmental power to Lloyds, a private business entity. Id.
1. As their first ground, the defendants contend that the English judgments are repugnant to District public policy because they enforce a contract to which they did not assent. The contract at issue, they argue, is the Equitas reinsurance contract. That contract was not signed by them, but [*100] rather by the substitute agent appointed by Lloyds to negotiate and sign for all Names who rejected the Reconstruction and Renewal (R & R) Plan. Recognition of such a contract, they insist, is repugnant to the general contract law principle that a contract requires mutual assent.
Section 15-383(b)(3) of the Recognition Act permits nonrecognition of a foreign judgment only if the cause of action on which [it] is based is repugnant to public policy. D.C.Code § 15-383(b)(3) (emphasis added). A cause of action is the legal authority (here, English contract law) that permits a court to provide redress for a particular kind of claim (here, Lloyds contention that the defendants breached their obligations to pay the reinsurance premiums). See Trudeau v. FTC, 456 F.3d 178, 188 n. 15 (D.C.Cir. July 28, 2006). Accordingly, the dispositive question is whether the core principles of English contract law are repugnant to the public policy of the District of Columbia, not whether any particular application of that cause of action is repugnant. [FN4]
FN4. See Reinhart, 402 F.3d at 995 (reiterat[ing] that we must focus on the cause of action and the claim for relief underlying the English Judgment, not the differences in the bodies of law, because slight differences between Englands and New Mexicos laws do not trigger the public policy exception); Turner, 303 F.3d at 332 (noting that the Texas Recognition Act does not refer to the judgment itself, but specifically to the cause of action on which the judgment is based, and thus that the fact that a judgment offends Texas public policy does not, in and of itself, permit refusal of recognition).
That question is easily answered. As the district court noted, the Siemon-Nettos have not suggested that English contract law principles differ substantively from those in the District of Columbia. Mem. Op. at 7 (Aug. 20, 2004). Indeed, District of Columbia contract law, like American contract law in general, is historically derived from (and similar to) the English common law of contract. [FN5] That being the case, it would be hard to regard the latter as repugnant to the former, and no federal court has done so. See Reinhart, 402 F.3d at 995 (holding that an English breach of contract action is not repugnant to New Mexico public policy); Turner, 303 F.3d at 333 (holding the same with respect to Texas public policy).
FN5. See, e.g., Williams v. Walker-Thomas Furniture Co., 350 F.2d 445, 450 n. 7 (D.C.Cir.1965) (citing English common law in concluding that unconscionable contracts are unenforceable under District of Columbia law); 1 E. ALLAN FARNSWORTH, FARNSWORTH ON CONTRACTS §§ 1.5-1.7 (3d ed.2004) (describing the development of American contract law from its English common law roots); see also North Am. Graphite Corp. v. Allan, 184 F.2d 387, 389 n. 1 (D.C.Cir.1950); Meyer v. Washington Times Co., 76 F.2d 988, 992 (D.C.Cir.1935).
The defendants do not suggest, for example, that English contract law principles permit parties to be bound to a contract without their consent. Rather, they contend only that this is the practical effect of the English judgments holding them responsible for a reinsurance contract they refused to sign. Appellants Br. 18. But even if we were to consider repugnancy on such an as applied basis, we still could not find the judgments repugnant to public policy, because the English court did not bind the Siemon-Nettos to a contract to which they did not assent. To the contrary, it held them to a contract to which they did assent: the General Undertaking.
When the Siemon-Nettos became Names, they (not their agents) personally signed a standardized contract between Lloyds and the individual Names known as the General Undertaking. Haynsworth, 121 F.3d at 959; see J.A. 25-26 (showing the signature of Gillian Siemon-Netto on a copy of the General Undertaking [*101] dated Sept. 9, 1986); J.A. 28-29 (showing the signature of Uwe Siemon-Netto on a copy of the General Undertaking dated Jan. 1, 1988). Under the General Undertaking, the Siemon-Nettos agreed to be bound by the Lloyds Acts 1871-1982, as well as by current and future Lloyds Byelaws. See General Undertaking ¶ 1; Oral Arg. Tr. at 11-12. The Lloyds Act 1982 specifically authorized Lloyds to make Byelaws for the purpose of appointing substitute agents to bind Names, see Lloyds Act, 1982, Sched. 2, § 18(b), and such a Substitute Agents Byelaw was in existence when the defendants signed the General Undertaking, see J.A. 32-33. Thereafter, Lloyds issued another series of Byelaws that authorized the appointment of substitute agent[s] on behalf of Names specifically to execute the Reinsurance Contract for itself and on behalf of the Members. Turner, 303 F.3d at 328 n. 3 (citing Lloyds Byelaw No. 20 of 1983; Byelaw No. 82 of 1995; AUA9 Resolution of 1996).
It was no doubt risky for the defendants to agree to be bound by future Byelaws in this way. But the General Undertaking was no contract of adhesion. The Siemon-Nettos were investors who qualified for status as Lloyds Names under a set of stringent criteria, and who presumably thought the upside potential was worth the downside risk (including the express risk of unlimited personal liability [FN6]). Regardless of whether we would reach the same disposition under District of Columbia contract law, we cannot say that the English courts decision to bind the defendants under these circumstances is repugnant to the public policy of this jurisdiction. [FN7]
FN6. To be more precise: Names bear unlimited liability for their proportionate losses in each syndicate they join. Their liability is several, not joint; no Name is ever responsible for the losses of those fellow Names who comprise the syndicate. Roby, 996 F.2d at 1357.
FN7. See Siemon-Netto, Mem. Op. at 13 (Aug. 20, 2004) (Unequal bargaining power is not a factor in a case like this one, where the Siemon-Nettos, as investors, had the free choice to become Names or not.); see also Reinhart, 402 F.3d at 996-97 (holding that binding the Names to the Equitas reinsurance contract did not violate New Mexico public policy because (inter alia) the Names were highly sophisticated investor[s] who had to pass a means test, the Equitas contract was the implementation of specific provisions to address the unlimited liability undertaken by all Names pursuant to the General Undertaking Agreements broad powers, and the Names were not in a weaker bargaining position nor did Lloyds compel [their] investment); cf. Ashenden, 233 F.3d at 480-81 (ruling that the English court['s] holding that Lloyds was authorized by its contract with the names to appoint agents to negotiate a contract that would bind the names without the names consent . is not so unreasonable that it could be thought a denial of international due process even if international due process had a substantive component).
The defendants press upon us the case of Matusevitch v. Telnikoff, 877 F.Supp. 1 (D.D.C.1995), aff'd, No. 97-7138, 1998 WL 388800 (D.C.Cir. May 5, 1998), in which a district court declined to recognize an English libel judgment on the ground that enforcement would be repugnant to the public policy of the State of Maryland and of the United States. 877 F.Supp. at 4. But in Matusevitch, unlike this case, the district court noted substantial differences between a cause of action for libel in England and in the United States, including differences in both substantive law and burdens of proof. id. at 4-6. Indeed, the subsequent history of that case, which neither the Siemon-Nettos nor Lloyds mention, only sharpens the point. On appeal, this Court certified to the Maryland Court of Appeals the question of whether enforcement of the English judgment would be repugnant to the public policy of Maryland. See [*102] Matusevitch, 1998 WL 388800, at *1. We then affirmed the district courts judgment after receiving the following answer:
A comparison of English and present Maryland defamation law does not simply disclose a difference in one or two legal principles. Instead, present Maryland defamation law is totally different from English defamation law in virtually every significant respect. Moreover, the differences are rooted in historic and fundamental public policy differences concerning freedom of the press and speech. Telnikoff v. Matusevitch, 347 Md. 561, 702 A.2d 230, 248 (1997) (internal citations omitted); see Matusevitch, 1998 WL 388800, at *1. The defendants have noted no similarly substantial differences between England and the District of Columbia with respect to the law of contract. [FN8]
FN8. Among the differences found by the Maryland court were that, in contrast to Maryland law, under English law: it is unnecessary for the plaintiff to establish fault, either in the form of conscious wrongdoing or negligence; defamatory statements are presumed to be false unless a defendant proves them to be true; a qualified privilege can be overcome without establishing that the defendant actually knew that the publication was false or acted with reckless disregard; a statement is presumed to be one of fact, and the burden is on the defendant to prove fair comment ; and there is no special protection for defamation actions arising from critiques of public figures or public officials, [or] involving what American courts would characterize as core political discourse. Telnikoff, 702 A.2d at 247-48.
2. The defendants second ground for claiming that the English judgments are repugnant to District policy begins with their contention that the legislation (the Lloyds Act 1982) that permitted Lloyds to promulgate Byelawsparticularly the Byelaws that authorized Lloyds to appoint substitute agents to execute the reinsurance contract on behalf of the Names—also imposed certain conditions on Lloyds (i.e., the provision of better quality information to Names about the status of the Lloyds market). See Am. Answer ¶ ¶ 40-43. The defendants argue that, because Lloyds assertedly failed to satisfy those conditions, the Byelaws passed pursuant to that legislation were unenforceable and voidable. id. ¶ 69.
But the question of whether the Lloyds Byelaws were valid under English law is itself a question of English—not District of Columbia—law. And it is a question that the English courts have already answered, concluding that the pertinent Byelaws are indeed valid. See Society of Lloyds v. Leighs,  C.L.C. 759 (Q.B.). We cannot reconsider that decision here. See Medellin v. Dretke, 544 U.S. 660, 670, 125 S.Ct. 2088, 161 L.Ed.2d 982 (2005) ([W]here comity of this nation calls for recognition of a judgment rendered abroad, the merits of the case should not be tried afresh upon the mere assertion that the judgment was erroneous in law or in fact. ) (quoting Hilton v. Guyot, 159 U.S. 113, 202-03, 16 S.Ct. 139, 40 L.Ed. 95 (1895)). Certainly the defendants have pointed to nothing about the principles applied by the English courts in reaching that decision that would render repugnant the contractual cause of action on which Lloyds judgments are based.
The third ground advanced by the defendants is their claim that the Lloyds Act 1982 [itself] constituted an unlawful delegation of legislative and governmental power to Lloyds, a private business entity. Am. Answer ¶ 69. But whether the Lloyds Act constituted an unlawful delegation under English law is again a question that only the English courts can answer; in fact, it is a question [*103] that the act of state doctrine bars us from even asking. See World Wide Minerals, Ltd. v. Republic of Kazakhstan, 296 F.3d 1154, 1164 (D.C.Cir.2002) (noting that the act of state doctrine precludes the courts of this country from inquiring into the validity of the public acts a recognized foreign sovereign power committed within its own territory ) (quoting Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 401, 84 S.Ct. 923, 11 L.Ed.2d 804 (1964)). [FN9] Moreover, there is once again nothing in the defendants argument to support the only ground the defendants advance for nonrecognition of Lloyds English judgments: that the contractual cause of action on which those judgments are based is repugnant to District policy.
FN9. As we have further explained:The act of state doctrine . is applicable when the relief sought or the defense interposed would [require] a court in the United States to declare invalid the official act of a foreign sovereign performed within its boundaries. W.S. Kirkpatrick & Co., Inc. v. Envtl. Tectonics Corp., 493 U.S. 400, 405, 110 S.Ct. 701, 107 L.Ed.2d 816 (1990). When it does apply, the doctrine serves as a rule of decision for the courts of this country, id. (quoting Ricaud v. Am. Metal Co., 246 U.S. 304, 310, 38 S.Ct. 312, 62 L.Ed. 733 (1918)), which requires that, in the process of deciding [a case], the acts of foreign sovereigns taken within their own jurisdictions shall be deemed valid, id. at 409, 110 S.Ct. 701.
The district court struck the defendants second, third, and fourth affirmative defenses as well as the first. Because the defendants do not appeal the loss of their second defense, see Appellants Br. 14 n. 10, we address only the third and fourth.
The third affirmative defense states: Lloyds does not have standing to enforce the judgments because neither Lloyds nor Equitas paid the duty required by English law upon the transfer of the supposed R & R debt from Equitas to Lloyds. Am. Answer ¶¶ 91, 93. The defendants contend that any debts they owed for nonpayment of reinsurance premiums were owed to Equitas, not Lloyds. They further assert that, because the transfer tax required to assign those debts to Lloyds has never been paid, the assignment is invalid under English law and Lloyds cannot enforce the judgments against them.
As the district court correctly noted, this challenge to the validity of the assignment comes too late and is made in the wrong court. Mem. Op. at 9 (Aug. 20, 2004). The English judgments that Lloyds seeks to enforce were entered in Lloyds own name as plaintiff, not in the name of Equitas. They order the Siemon-Nettos to pay the Plaintiff, not to pay Equitas. Society of Lloyds v. Gillian Mary Siemon-Netto, Judgment (J.A. 116); Society of Lloyds v. Uwe Siemon-Netto, Judgment (J.A. 119). Moreover, the English complaints on which those judgments were entered expressly asserted that Equitas had assigned its rights to the Siemon-Nettos premiums to Lloyds, and that the premiums were due and owing from the Defendant[s] to Lloyds. E.g., Society of Lloyds v. Gillian Mary Siemon-Netto, Points of Claim ¶ 10 (J.A. 35). Proof of that assignment was thus a part of Lloyds English cause of action and, as we have noted, that cause of action is not repugnant to the law of the District. Nor have the defendants asserted anything about English principles of assignment of claims that would make it so.
Finally, the defendants fourth affirmative defense merely states that the amount alleged by plaintiff as due and owing is incorrect. Am. Answer ¶ 96. *104 The district court struck this defense on the ground that it did not even arguably fit into any of the specific exceptions enumerated in the [Recognition Act] and appear[ed], rather, to be an improper attempt to relitigate the merits of the underlying claims. Mem. Op. at 8-9 (Aug. 20, 2004). The court was obviously correct. The amount due and owing was an element of Lloyds cause of action in contract, and as there is nothing repugnant about that cause of action, the fourth affirmative defense does not state a ground for failing to recognize it.
In sum, we conclude that the district court committed no error in striking any of the Siemon-Nettos affirmative defenses under Federal Rule of Civil Procedure 12(f).
The defendants answer also asserts four counterclaims against Lloyds: negligent misrepresentation, Countercls. ¶ 152; fraud, id. ¶ 155; consumer fraud, id. ¶ 159; and breach of fiduciary duty, id. ¶ 165. Each asserts, in haec verba, that Lloyds failed to disclose and/or concealed the extent of the losses generated by the asbestos and environmental claims, the financial condition of the syndicates, and Lloyds accounting and financial controls for the syndicates. id. ¶¶ 152, 155, 159, 165. The district court dismissed the counterclaims on the ground that the Siemon-Nettos had agreed, by contract, that only English courts could hear such claims. See Mem. Op. at 10-15 (Aug. 20, 2004). We concur.
The General Undertaking, personally signed by each of the Siemon-Nettos, contains the following forum selection clause:
Each party hereto irrevocably agrees that the courts of England shall have exclusive jurisdiction to settle any dispute and/or controversy of whatsoever nature arising out of or relating to the Members membership of, and/or underwriting of insurance business at, Lloyds and that accordingly any suit, action or proceeding arising out of or relating to such matters shall be brought in such courts .
General Undertaking § 2.2 (J.A. 25). Eight circuits have found the clause enforceable, see supra note 1 (citing cases), and the defendants do not contest its validity here, see Appellants Br. 26.
The forum selection clause provides that the English courts shall have exclusive jurisdiction over any dispute of whatsoever nature arising out of or relating to the Members membership of, and/or underwriting of insurance business at, Lloyds. We perceive no room for doubt that the defendants misrepresentation, fraud, consumer fraud, and breach of fiduciary duty counterclaims all fall well within those confines. [FN10] As the district court noted, the Siemon-Nettos central claim [is] that they would not have become Names or renewed their memberships if they had known the truth about Lloyds losses. Mem. Op. at 11 (Aug. 20, 2004). Indeed, at oral argument, the defendants conceded that their counterclaims are compulsory under the Federal Rules, see Oral Arg. Tr. at 15-16, which by definition means that they arise[ ] out of the transaction or occurrence that is the subject matter of *105 the opposing partys claim, FED. R. CIV. P. 13(a). The subject matter of that claim is the debt owed by the defendants arising out of their membership in, and underwriting of insurance business at, Lloyds.
FN10. See, e.g., Haynsworth, 121 F.3d at 961, 970 (dismissing, on the basis of the forum selection clause, suits against Lloyds by Names alleging fraud, breach of fiduciary duty, and violations of the Texas
consumer fraud statute); Bonny, 3 F.3d at 157, 159 (same for suits alleging, inter alia, fraud, negligence, and breach of duty); Roby, 996 F.2d at 1358, 1366 (same for suits alleging violations of federal securities and racketeering laws).
The defendants seek to avoid the effect of the General Undertakings forum selection clause by contending that their counterclaims do not relate to their membership in Lloyds, but rather to Lloyds handling of the Lloyds American Trust Funds (LATF)the funds into which all insurance premiums paid in U.S. dollars are deposited. Appellants Br. 25. But that is simply not the case. Each of the counterclaims expressly repeat[s] and reallege[s], Countercls. ¶¶ 151, 154, 157, 164, the allegation of the defendants second affirmative defense that: Defendants would not have become Names and would not have renewed their memberships if they had known about the losses attributable to asbestos claims, the financial condition of the syndicates, or the lack of proper accounting and financial controls for the syndicates. id. ¶ 85 (emphasis added).
In support of their contention that this case should be governed by the LATF deed, rather than the General Undertaking, [FN11] the defendants cite In re Lloyds American Trust Fund Litigation, 954 F.Supp. 656 (S.D.N.Y.1997). That case involved claims brought by Names against Citibank, the trustee of the LATF. There, the court denied Citibanks motion to dismiss the case based on the forum selection clause of the General Undertaking. The court held that, because Citibank was neither a party to the General Undertaking nor closely related to one, it could not rely upon the clause. 954 F.Supp. at 670. But as the district court in this case correctly noted, unlike Citibank, Lloyds is more than closely related to a signatory to the [General Undertaking]it is itself a signatory. Mem. Op. at 12 (Aug. 20, 2004). Accordingly, it may invoke the forum selection clause to insist upon litigation in the United Kingdom. id.
FN11. The LATF deed contains a choice of law clause (providing that disputes shall be governed by New York law), but does not contain a forum selection clause.
At oral argument, counsel for the defendants made clear that the underlying basis of their defense is their belief that the English courts are biased in favor of Lloyds: that is, that those courts have a bias and prejudice in favor of Lloyds under circumstances which make it impossible for a Name to win. Oral Arg. Tr. at 7. The Recognition Act includes an exception for this kind of defense to a foreign judgment, but it requires proof that the judgment was rendered under a system that does not provide impartial tribunals or procedures compatible with the requirements of due process of law. D.C.Code § 15-383(a)(1).
The defendants do not assert that English courts fall within that category and could not prove it if they did. [FN12] Indeed, the Siemon-Nettos only evidence of the English courts asserted bias and prejudice *106 is that other Names in their positionwhose arguments they believe had meritlost their cases in those courts. But the fact that the Names arguments did not prevail hardly establishes the partiality of the courts that heard them. Indeed, if it did, the fact that Names have lost similar (albeit not identical) cases in eight United States Courts of Appeals, see supra note 1, would require us to reach the same conclusion regarding American courts.
FN12. See Ashenden, 233 F.3d at 476 (Any suggestion that [the English] system of courts does not provide impartial tribunals or procedures compatible with the requirements of due process of law borders on the risible. (internal quotation marks omitted)); Haynsworth, 121 F.3d at 967 (noting that England is a forum that American courts repeatedly have recognized to be fair and impartial); Riley v. Kingsley Underwriting Agencies, Ltd., 969 F.2d 953, 958 (10th Cir.1992) (holding that the courts of England are fair and neutral forums); British Midland Airways Ltd. v. Intl Travel, Inc., 497 F.2d 869, 871 (9th Cir.1974) (United States courts which have inherited major portions of their judicial traditions and procedure from the United Kingdom are hardly in a position to call the Queens Bench a kangaroo court.).
The judgment of the district court is
| Brief of Appellee (Jul. 14, 2005)