Enforcing Foreign Money Judgments

For judgments, decrees or orders issued by non-US courts do any of the following establish a legal basis to require recognition or enforcement by a US court?

1. Treaty? No

2. Federal Statute? No.

3. Constitutional basis? No

4. Letter rogatory (under Title 28 of the US Code)? No

So, what is the legal basis for enforcing a judgment issued by a court outside of the US? State laws.

Which US Courts?

Plaintiffs who want to request enforcement of a foreign judgment need to file suit in either

a) state court; or

b) federal district court (if diversity jurisdiction or other federal subject matter jurisdiction applies).

When filing in federal district courts, however, the federal court is required to use the foreign judgment recognition and enforcement procedures defined in the laws of the state where the court is located. This is required under the Erie doctrine defined by the US Supreme Court (to make things even less clear, federal courts must also follow the federal rules of civil procedure FRCP 69(a), but only to the extent they apply).

What is the basis under state laws for enforcement?

1) Law for enforcing non-US judgments adopted by that state (usually based on one of the “Uniform Acts”); or

2) Principles of Comity

Isn’t There a Treaty or Convention Related to This?

1. Hague Convention on Choice of Court Agreements (“Choice of Court Convention”): In 2009, the US signed, but did not ratify the Choice of Court Convention. This convention establishes rules and standards for recognizing or enforcing judgments for civil or commercial matters. It is meant to apply to situations where the disputing parties have entered into a court agreement or contract specifying an exclusive choice of court clause. Since it is not ratified, this does not apply to the US.

2. Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (“Judgments Convention”): In 2022, the US signed, but did not ratify the Judgments Convention. The Judgements Conventions defines standards and criteria for recognizing and enforcing foreign commercial judgments.

The 2 Uniform Acts: 1961 & 2005.

There is an influential legal organization known as the National Conference on Uniform State Laws (“Conference” or “Uniform Law Commission”). They draft model statutes for state legislatures to use as basis for establishing laws. Their goal is to promote legal uniformity among all 50 states in the US.

In 1962, the Uniform Law Commission enacted the Uniform Foreign Money Judgments Recognition Act (“1962 Act”). Then they revised the 1962 Act by enacting the the Uniform Foreign-Country Money Judgments Recognition Act (2005 Act”).

Most US states have enacted the 2005 Act, while several still rely on the 1962 Act. Here is website for the 2005 Act.

2005 Act [vs 1962 Act]

Ø Clarifies that money judgments issued by other state courts are entitled to full faith and credit under the US Constitution

Ø Party seeking recognition or enforcement of the foreign money judgment has the burden of proof to show the 2005 Act applies.

Ø If a party is trying to establish grounds that the foreign money judgment should not be recognized, then it has that burden of proof

Ø Provides procedure for obtaining recognition of a foreign money judgment; party pursuing enforcement must file a new action in US court; if enforcement is being sought in a pending action, then a counterclaim, cross-claim, or affirmative defense may be filed

Ø Statute of limitations: if foreign judgment could not be enforced in that foreign jurisdiction, it cannot be enforced by a US court. If the foreign jurisdiction does not have a statute of limitation, then a 15 year statute of limitation is imposed on the US courts (starting from the time the judgment was issued in the country of origin).

Requirements for Foreign Money Judgments to be Recognized by US Courts

In order for a foreign money judgment to be recognized or enforced by US court, it must be:

Ø Final (although does not always exclude judgments where appeal is pending or can be appealed);

Ø Conclusive; and

Ø enforceable in the jurisdiction where rendered.

When US Court Must or May Reject Foreign Money Judgments Under the 1962/2005 Acts

According to the Acts, US courts do not have to recognize or enforce foreign money judgments for taxes, fine, or penalties. Also, money judgments for matrimonial or family matters are generally excluded from the Acts. But, some states may permit recognition of those judgments based on a principle of comity.

Also, the Acts prohibits the US courts from recognizing a foreign money judgment if the foreign court or tribunal

1) did not offer due process of law or was not impartial;

2) lacked subject matter jurisdiction; or

3) lacked personal jurisdiction over the defendant;

Proving Personal Jurisdiction. A US court will find that the applicable foreign court or tribunal properly exercised personal jurisdiction if the defendant:

Ø was personally served in the foreign court territory

Ø appeared voluntarily and consented to jurisdiction

Ø was incorporated or domiciled in the foreign country at the start of the action

Ø had a place of business in the forum country and the cause of action was related to the business location.

US courts also have discretion to deny recognition of foreign money judgment in the following situations:

Ø insufficient notice of foreign proceedings

Ø foreign judgment was obtained through fraud

Ø foreign judgment conflicts or goes against state public policy

Ø foreign judgment conflicts with another final and conclusive judgment

Ø parties had an agreement to resolve the dispute somewhere other than the foreign court

Ø foreign judgment is a defamation judgment which denies the defendant the same degree of freedom of speech as provided by US laws

Other Basis for Recognizing Foreign Money Judgments Outside the Acts

Reciprocity

This is a principle whereby a jurisdiction formally recognizes judgments issued by another jurisdiction and vice-versa. While reciprocity is not included in the Acts, several states have included this concept as grounds for non-recognition in their applicable laws.

For example:

Ø Lack of reciprocity as basis for discretionary non-recognition: FL, OH, TX

Ø Lack of Reciprocity as grounds for mandatory non-recognition : MA

What is the Process for Converting a Foreign Money Judgment?

If the legal requirements are all satisfied, then the next step is to domesticate the foreign money judgment into a US court judgment. This next step varies state by state.

Some states also allow the party seeking enforcement to raise the issue as a counterclaim, cross-claim, or affirmative defense.

Other states allow the party seeking enforcement to file an “authenticated” copy of the foreign court money judgment instead of filing a new action.

Enforcing Non-US Judgments Under Principles of Comity

US courts may also apply principles of comity in deciding whether or not to recognize foreign money judgments. Comity is a principle of recognizing foreign laws and judicial acts based on courtesy, mutual respect, convenience and expediency, rather than the existence of mutually reciprocal agreements between the 2 jurisdictions. Broadly speaking, the courts will look to whether or not the foreign court money judgment comports with US concepts of due process.

Here is a list of factors that US courts will weigh when deciding whether a foreign court judgment should be recognized under the principles of comity:

Ø Whether there was an opportunity for a full and fair trial

Ø Did the judicial system provide due process?

Ø Did the court have subject matter jurisdiction?

Ø Did the court’s exercise of jurisdiction over the defendant satisfy the minimum contacts test?

Ø Was there any prejudice in the court or system of laws?

Ø Was there any fraud in obtaining the judgment?

Ø Was the administration of justice between parties of different countries impartial?

Ø Does the foreign judgment violate US policy (although this is a very high standard and difficult to satisfy)

Ø Is the judgment inherently vicious, wicked, or immoral?