Signed into law in January, the new law relates to foreign judgments (except for taxes, fines, or domestic relations) and protects against monetary judgments entered in nations whose courts fail to provide due process.

From the New Jersey Law Revision Commission’s website, the Uniform Foreign-Country Money Judgments Recognition Act “marks the completion of the Commission’s work regarding the enactment of a proposed act by the Uniform Law Commission. The Commission offers its support to the Legislature for the enactment of the bill(s) which updates and improves existing New Jersey law in the area of foreign country money judgment recognition, promoting uniformity and consistency among the states.”

The Act notes that in the role of the state versus the role of federal courts, “[t]he area of foreign country judgment recognition is considered to be largely governed by state law, which is a mix of common law and uniform acts. Those states which have chosen not to enact one of the two existing relevant ULC acts refer to common law principles reflected in the Restatement (Third) of Foreign Relations Law.”

ALI will publish completed portions (Jurisdiction, Sovereign Immunity, and Treaties) of the Fourth Restatement soon. Section 483 below sets forth the grounds for nonrecognition of a foreign judgment.

The below is pre-publications text, which may change slightly as the Official Text is edited and prepared.

§ 483. Mandatory Grounds for Nonrecognition

A court in the United States will not recognize a judgment of a court of a foreign state if:

(a) the judgment was rendered under a judicial system that does not provide impartial tribunals or procedures compatible with fundamental principles of fairness;
(b) the court that rendered the judgment did not have personal or subject-matter jurisdiction; or
(c) the judgment rested on a claim of defamation and the SPEECH Act forbids its recognition or enforcement.

Comment:

a. Mandatory nature. If asserted by a party as a ground for nonrecognition, the establishment of any of the grounds described in this Section requires a court to refuse recognition of a foreign judgment.

b. Impartial tribunals. Courts in the United States will not recognize foreign judgments rendered under a judicial system that does not provide impartial tribunals. Courts that systematically discriminate on the basis of factors such as nationality, race, sex, wealth, political affiliation, or other status may fail to qualify as impartial tribunals. Systematic discrimination by the courts should be distinguished, however, from discrimination within a broader society. Courts that neutrally apply discriminatory laws may meet the standard of an impartial tribunal, although the application of those laws in particular instances may provide a separate ground for nonrecognition of the courts’ judgments, such as repugnancy with public policy. See § 484(c). Courts in the United States rarely find this ground established.

c. Procedures compatible with fundamental principles of fairness. Courts in the United States will not recognize foreign judgments rendered under a judicial system that does not provide procedures compatible with fundamental principles of fairness. Mere departures from procedures accepted as normal in the United States, however, do not necessarily depart from fundamental principles of fairness. For example, the absence of attorney cross-examination of witnesses or a foreign court’s primary reliance on written depositions, rather than oral testimony, does not by itself constitute a fundamentally unfair approach to the presentation of evidence. Courts in the United States rarely find this ground established.

d. Systemic and proceeding-specific challenges to impartiality and fairness distinguished. Section 483(a) is limited to instances in which a foreign legal system as a whole fails to meet minimal standards of impartiality and fairness. Even when a foreign legal system functions adequately, a particular judicial proceeding may represent a serious miscarriage of justice. Sections 484(b), (g), and (h) provide for nonrecognition of a foreign judgment under those circumstances.

e. Personal jurisdiction. Courts in the United States will not recognize a foreign judgment if the court rendering the judgment would have lacked personal jurisdiction under the minimum requirements of due process imposed by the U.S. Constitution. If the foreign court founded its judgment on an impermissible basis of jurisdiction, but another basis of jurisdiction meeting these requirements would have supported the action, a court in the United States will not deny recognition to the foreign judgment for lack of personal jurisdiction.

f. Subject-matter jurisdiction. A court in the United States will not recognize a judgment of a court of a foreign state if the court that rendered the judgment did not have jurisdiction over the subject matter of the dispute. The subject-matter jurisdiction of particular foreign courts is, however, generally a matter of foreign law, and the consequences of an assertion of subject-matter jurisdiction also must depend on foreign law. If, for example, foreign law allows parties to consent to the jurisdiction of a particular court and such consent exists, that court’s assertion of subject-matter jurisdiction would be valid. This would be true notwithstanding comparable U.S. law, which regards a lack of subject-matter jurisdiction of a federal court as never subject to waiver or consent. See § 421, Comment c.

g. SPEECH Act. The federal SPEECH Act, 28 U.S.C. §§ 4101-4105, bars the recognition and enforcement of foreign defamation judgments rendered in jurisdictions that provide less protection to freedom of speech and press than the United States, unless the person opposing recognition of the foreign judgment would have been found liable under the constitutional standards applicable to suits in the United States. The Act does not apply to judgments not based on defamation, but defines defamation broadly to include any legal proceeding that seeks compensation for injury caused by speech. 28 U.S.C. § 4101(1).

REPORTERS’ NOTES

1. Mandatory bases for nonrecognition. The 1962 Uniform Foreign Money-Judgments Recognition Act (1962 Uniform Act) and the 2005 Uniform Foreign-Country Money Judgments Recognition Act (2005 Uniform Act) distinguish between mandatory and discretionary bases for nonrecognition of a foreign judgment. The ALI’s Recognition and Enforcement of Foreign Judgments: Analysis and Proposed Federal Statute (ALI Proposed Statute) similarly distinguishes between judgments that “shall not be recognized,” id. § 5(a)-(b), and those that “need not be recognized,” id. § 5(c) (Am. Law Inst. 2006). The Proposed Statute’s categorization of circumstances that require the mandatory nonrecognition of foreign judgments is more extensive than that of the Uniform Acts, and encompasses those bases addressed in § 484(a)-(c), (e), and (g)-(i) below. The Proposed Statute’s position may coincide with actual judicial practice, as courts generally do not recognize a judgment after finding that one of these bases exists. See § 484, Comment b and Reporters’ Note 1. As a formal matter, however, the distinctions drawn in this Section and § 484 correspond to those delineated in the Uniform Acts.

2. Impartial tribunals. The Supreme Court identified the essential elements of fair procedure as follows:

where there has been opportunity for a full and fair trial abroad before a court of competent jurisdiction, conducting the trial upon regular proceedings, after due citation or voluntary appearance of the defendant, and under a system of jurisprudence likely to secure an impartial administration of justice between the citizens of its own country and those of other countries, and there is nothing to show either prejudice in the court, or in the system of laws under which it was sitting, or fraud in procuring the judgment, or any other special reason why the comity of this nation should not allow it full effect.

Hilton v. Guyot, 159 U.S. 113, 202 (1895). Although these standards still apply, as a matter of practice courts in the United States are exceedingly reluctant to condemn an entire foreign judiciary. See DeJoria v. Maghreb Petroleum Exploration, S.A., 804 F.3d 373, 382 (5th Cir. 2015) (“[A] judgment debtor must meet the high burden of showing that the foreign judicial system as a whole is so lacking in impartial tribunals or procedures compatible with due process so as to justify routine non-recognition of the foreign judgments.”). Absent a total breakdown in civil order or other events tantamount to civil war, courts in the United States have not rejected foreign judgments simply because of the nature of the legal system in which they originate. See, e.g., Chevron Corp. v. Donziger, 833 F.3d 74, 129 (2d Cir. 2016) (“[W]e have no need here to reach any question as to the institutional adequacy of the Ecuadorian judicial system.”); Osorio v. Dow Chemical Co., 635 F.3d 1277, 1279 (11th Cir. 2011) (refusing to affirm lower-court finding that Nicaraguan tribunals were systematically inadequate). The rare cases in which a court has condemned an entire national legal system include Bridgeway Corp. v. Citibank, 45 F. Supp. 2d 276, 287 (S.D.N.Y. 1999) (noting that during Liberian civil war, regular appointment of judges stopped and courts barely functioned). Other instances in which courts invoked the systemic standard as a ground for not recognizing a foreign judgment involved facts particular to the lawsuit that produced the judgment, rather than systemic characteristics. See § 484, Reporters’ Note 9.

3. Fundamental principles of fairness. The Uniform Acts deny recognition to judgments rendered under a judicial system that does not provide “procedures compatible with the requirements of due process of law.” 2005 Uniform Act § 4(b)(1); 1962 Uniform Act § 4(a)(1). As used in the Uniform Acts, “due process” refers to “a concept of fair procedure simple and basic enough to describe the judicial processes of civilized nations.” The Society of Lloyd’s v. Ashenden, 233 F.3d 473, 477 (7th Cir. 2000). It “mean[s] that the foreign procedures are ‘fundamentally fair,’” id., and not that the foreign court conforms “to the latest twist and turn of our courts.” Id. at 476. The court in Ashenden called this standard “the ‘international concept of due process’ to distinguish it from the complex concept that has emerged from American case law.” Id. at 478. The phrase does not, however, refer to a standard of international law. Like § 5 of the ALI Proposed Statute, this Restatement uses the phrase “fundamental principles of fairness” to capture the meaning of “due process” as used in these provisions of the Uniform Acts, as distinguished from “due process” under the Fifth and Fourteenth Amendments to the U.S. Constitution.

4. Lack of fundamental fairness in specific proceeding distinguished. In general, courts in the United States have allowed an attack on a foreign judgment on the ground that the specific foreign proceedings suffered from serious irregularities. In many instances they did so even though the governing statute seemed to confine the inquiry to the general characteristics of the foreign legal system, rather than the specifics of the litigation leading to the foreign judgment. See, e.g., The Society of Lloyd’s v. Ashenden, 233 F.3d 473, 476, 478-481 (7th Cir. 2000) (stating that statute permitted nonrecognition only if entire foreign judicial system were inadequate, but then reviewing and rejecting allegations of particular deficiencies in foreign proceeding); Bank Melli Iran v. Pahlavi, 58 F.3d 1406, 1411-1413 (9th Cir. 1995) (concluding that sister of former Shah could not obtain a fair trial in Iran); Tonga Air Services, Ltd. v. Fowler, 826 P.2d 204, 211-213 (Wash. 1992) (reviewing and rejecting claims that foreign court proceeding was unfair). The 2005 Uniform Act adopted this approach by specifying, as a discretionary ground for nonrecognition of a foreign judgment, flaws in the particular proceeding. This defense is discussed in § 484(g) and (h), as well as in connection with the fraud defense in § 484(b).

5. Personal jurisdiction under U.S. standards. Courts in the United States will not enforce a foreign judgment if the court rendering the judgment would have lacked personal jurisdiction over the person opposing recognition of the judgment under the minimum requirements of due process imposed by the U.S. Constitution. The Uniform Acts list six bases for personal jurisdiction that meet U.S. constitutional requirements and are adequate as a matter of law to establish that the foreign court had jurisdiction: (1) the defendant was served with process personally in the foreign country; (2) the defendant voluntarily appeared in the proceeding other than for the purpose of protecting property or of contesting jurisdiction; (3) the defendant had agreed to submit to the jurisdiction of the foreign court; (4) the defendant was domiciled in the foreign country or was a business organization that had its principal place of business in, or was organized under the laws of, the foreign country; (5) the claim arose out of business done through the defendant’s office in the foreign country; (6) the claim arose out of the defendant’s operation of a motor vehicle or airplane in the foreign country. 1962 Uniform Act § 5(a); 2005 Uniform Act § 5(a). The Uniform Acts make clear that this list is not exclusive and that courts may recognize other bases of personal jurisdiction as sufficient to support a foreign judgment. 1962 Uniform Act § 5(b); 2005 Uniform Act § 5(b). Thus, a court in the United States will not deny recognition for lack of personal jurisdiction if the foreign judgment was “rendered in accordance with American principles of jurisdictional due process.” Bank of Montreal v. Kough, 612 F.2d 467, 471 (9th Cir. 1980). A few cases go further and also assess the foreign court’s jurisdiction against the standards set in the recognition forum’s long-arm statute. See, e.g., Sun Hwan Co., Ltd. v. Rite Aid Corp., 7 N.Y.3d 78, 83 (2006). Some courts also will withhold recognition if the foreign court, under its own law, lacked personal jurisdiction over the party opposing recognition. See Reporters’ Note 6.

6. Personal jurisdiction under the law of the state of origin. Some States also allow a person opposing recognition of a foreign judgment to raise defects in the rendering court’s personal jurisdiction under the local law of the foreign country. See Evans Cabinet Corp. v. Kitchen Int’l, Inc., 593 F.3d 135, 142-143 n.10 (1st Cir. 2010) (reviewing authorities). If the judgment debtor challenged personal jurisdiction in the foreign proceeding, courts in the United States generally will defer to the foreign court’s determination that it had personal jurisdiction under its own law. See Osorio v. Dole Food Co., 665 F. Supp. 2d 1307, 1326 (S.D. Fla. 2009), aff’d sub nom. Osorio v. Dow Chemical Co., 635 F.3d 1277 (11th Cir. 2011) (“Of course, comity will ordinarily require United States courts to defer to foreign courts on the interpretation of their own jurisdictional statutes.”). If the judgment debtor took a default judgment without challenging personal jurisdiction in the foreign proceeding, courts in the United States may scrutinize whether the foreign court had personal jurisdiction under its own law. See Reporters’ Note 8.

7. Subject-matter jurisdiction. The existence of a foreign judgment generally supports a presumption that a foreign court had subject-matter jurisdiction under its own law. See G. Geerlings Export B.V. v. Van Hoekelen Greenhouses, Inc., No. 3:15-CV-1292, 2016 WL 6834033, at *9 (M.D. Pa. Nov. 21, 2016) (“It is generally presumed that foreign courts have subject matter jurisdiction over the disputes they adjudicate.”); Osorio v. Dole Food Co., 665 F. Supp. 2d 1307, 1326 (S.D. Fla. 2009), aff’d sub nom. Osorio v. Dow Chemical Co., 635 F.3d 1277 (11th Cir. 2011) (“Of course, comity will ordinarily require United States courts to defer to foreign courts on the interpretation of their own jurisdictional statutes.”). Thus, courts in the United States generally deny recognition of a foreign judgment for lack of subject-matter jurisdiction only if U.S. law grants exclusive subject-matter jurisdiction to U.S. courts, for example with respect to rights in land in the United States or rights in a U.S. patent, trademark, or copyright. See Fuji Photo Film Co. v. Shinohara Shoji Kabushiki Kaisha, 754 F.2d 591, 599 (5th Cir. 1985) (“[W]hen trade-mark rights within the United States are being litigated in an American court, the decisions of foreign courts concerning the respective trade-mark rights of the parties are irrelevant and inadmissible.” (quoting Vanity Fair Mills v. T. Eaton Co., 234 F.2d 633, 639 (2d Cir. 1956))); Calzaturificio Rangoni S.p.A. v. U.S. Shoe Corp., 868 F. Supp. 1414, 1418 (S.D.N.Y. 1994) (“The use of AMALFI in the United States is governed solely by the trademark laws and decisions of this country. The Italian Judgment, based on Italian law, has no effect on the evaluation of the rights to use AMALFI in the United States.”); cf. Fall v. Eastin, 215 U.S. 1 (1909) (holding that State need not recognize another State’s decree respecting rights to property in the first State).

8. Foreign court’s jurisdictional findings. If the judgment debtor challenged the foreign court’s jurisdiction in the foreign proceedings, the judgment debtor will be bound by that court’s determinations with respect to jurisdiction under foreign law, even if the judgment debtor took no steps to defend the case on the merits. See Insurance Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 706 (1981) (“By submitting to the jurisdiction of the court for the limited purpose of challenging jurisdiction, the defendant agrees to abide by that court’s determination on the issue of jurisdiction: That decision will be res judicata on that issue in any further proceedings.”); see, e.g., Somportex Ltd. v. Philadelphia Chewing Gum Corp., 453 F.2d 435, 441 (3d Cir. 1971). It is only if the judgment debtor took a default judgment without challenging jurisdiction in the foreign proceeding that the judgment debtor may raise lack of personal jurisdiction or lack of subject-matter jurisdiction under foreign law as a ground for nonrecognition in a court in the United States. See Insurance Corp. of Ireland, 456 U.S. at 706 (“A defendant is always free to ignore the judicial proceedings, risk a default judgment, and then challenge that judgment on jurisdictional grounds in a collateral proceeding.”); see also Sprague and Rhodes Commodity Corp. v. Instituto Mexicano del Cafe, 566 F.2d 861, 863 (2d Cir. 1977) (“If [the judgment debtor] did not appear specially, its right to contest the jurisdiction of the Mexican court in an action to enforce the judgment of that court is clear.”).

Whether a foreign court’s exercise of personal jurisdiction meets the minimum requirements of due process imposed by the U.S. Constitution, see Reporters’ Note 5, and whether U.S. law grants exclusive subject-matter jurisdiction to U.S. courts, see Reporters’ Note 7, are questions of U.S. law and a foreign court’s jurisdictional determinations of such issues, if made at all, will not bind a court in the United States. See CIBC Mellon Trust Co. v. Mora Hotel Corp., 296 A.D.2d 81, 93 (N.Y. App. Div. 2002), aff’d, CIBC Mellon Trust Co. v. Mora Hotel Corp. N.V., 792 N.E.2d 155 (N.Y. 2003) (“Since a foreign court’s determination that it has personal jurisdiction does not necessarily comport with the prerequisites of this country’s Constitution for such a finding, an assertion of jurisdiction by a foreign court should not preclude a challenge here.”). In deciding these questions of U.S. law concerning jurisdiction, a court in the United States may give preclusive effect to a foreign court’s determination of a factual issue if that determination meets the requirements for issue preclusion. See § 487, Comment c.

9. SPEECH Act. In 2010, Congress passed the SPEECH Act, 28 U.S.C. §§ 4101-4105, which prohibits the recognition and enforcement of foreign defamation judgments unless the party seeking recognition can show either (1) that the foreign defamation law applied provided at least as much protection for freedom of speech and press as constitutional standards in the United States, or (2) that the person opposing recognition of the foreign judgment would have been found liable under the constitutional standards applicable to suits in the United States. Id. § 4102(a); see, e.g., Trout Point Lodge, Ltd. v. Handshoe, 729 F.3d 481, 486-496 (5th Cir. 2013) (holding that party seeking enforcement had failed to carry its burden of proof). The Act also provides that a declaratory-judgment action is available to establish that a foreign defamation judgment may not be recognized and enforced, although the burden of proof in such an action is on the party seeking the declaratory judgment. 28 U.S.C. § 4104(a). The Act does not apply to judgments not based on defamation. See Ohno v. Yasuma, 723 F.3d 984, 1004 n.22 (9th Cir. 2013) (noting that SPEECH Act did not apply to claim that foreign judgment conflicted with U.S. protections for free exercise of religion). Before the SPEECH Act, courts in the United States had found that foreign judgments inconsistent with U.S. constitutional standards for freedom of speech and press were repugnant to public policy. See, e.g., Sarl Louis Feraud Int’l v. Viewfinder, Inc., 489 F.3d 474, 479-484 (2d Cir. 2007) (remanding to determine whether French copyright law included fair-use standards required by First Amendment); Telnikoff v. Matusevitch, 702 A.2d 230 (Md. 1997) (holding that British libel judgment offended First Amendment and Maryland constitution); Bachchan v. India Abroad Publications Inc., 154 Misc. 2d 228, 585 N.Y.S.2d 661 (N.Y. Sup. Ct. 1992) (holding British libel judgment offended First Amendment); see also § 484(c), Comment e and Reporters’ Note 4 (repugnancy to public policy as grounds for nonrecognition).

10. Previous Restatement. Restatement Third, The Foreign Relations Law of the United States § 482(1) (Am. Law Inst. 1987) listed systemic inadequacy of` the foreign legal system and lack of personal jurisdiction as the only mandatory grounds for nonrecognition. This Section follows the Uniform Acts by additionally listing lack of subject-matter jurisdiction as a mandatory ground. This Section also adds the federal SPEECH Act, which Congress passed in 2010.

 

 

 

Jennifer Morinigo

The American Law Institute

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