INTRODUCTION

Given present trends toward economic globalization in the course of which foreign entities increasingly do business in the United States, significant choice-of-law issues often arise with respect to a foreign entity's liability in U.S. courts. A foreign defendant's exposure to punitive damages undoubtedly ranks among the more difficult and interesting of these issues. Punitive damages aim to punish a defendant's alleged wrongdoing and deter future misconduct. They are largely a peculiarity of U.S. law; most legal systems around the world reject them altogether or at least grant them much less frequently. Given these differences, under what circumstances will U.S. courts find that punitive damages may be appropriately imposed on foreign defendants?

This contribution will endeavor to address the foregoing question in light of the recent aviation decision In re: Air Crash at Belle Harbor, New York, on November 12, 2001, and, in particular, its analysis of the issue of choice of law for punitive damages. This chapter surveys the case law applying two choice-of-law frameworks – the “interest analysis” and Second Restatement of Conflicts of Laws tests – that both assign controlling significance to the place of alleged misconduct and the place of the defendant's incorporation when determining the applicable law of punitive damages. Because both of these factors will tend to point to a foreign jurisdiction when a foreign defendant is involved, courts have on several occasions decided that foreign law should govern the imposition of punitive damages.