Proskauer Rose International Practice Guide Proskauer Rose LLP | Proskauer.com
      Proskauer on International Litigation and Dispute Resolution:
       Managing, Resolving, and Avoiding Cross-Border Business or Regulatory Disputes
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  1. A non-U.S. judgment will not be recognized if:
    1. The judgment was rendered under a system which does not provide impartial tribunals or procedures compatible with the requirements of due process of law, see, e.g., Int’l Transactions, Ltd. v. Embotelladora Agral Regiomotana, S.A., 347 F.3d 589, 594 (5th Cir. 2003) (“Notice is an element of our notion of due process and the United States will not enforce a judgment obtained without the bare minimum requirements of notice.”);
    2. The court did not have personal jurisdiction over the defendant.
    3. The cause of action on which the judgment is based is repugnant to the public policy of this state;
    4. The judgment conflicts with another final and conclusive judgment; or
    5. In the case of jurisdiction based only on personal service, the non-U.S. court was a seriously inconvenient forum for the trial of the action.
    6. Practice Tip: For example, in New York, CPLR § 5304 identifies seven additional discretionary grounds to deny recognition of a foreign judgment where:
  2. In the process of granting or denying recognition of a non-U.S. judgment, the doctrine of comity requires a U.S. court to apprise itself of the nature of a foreign judicial proceeding and whether “fundamental standards of procedural fairness” have been complied with by the foreign court. Cunard Steamship Company Ltd. v. Salen Reefer Servs., 773 F.2d 452, 457 (2d Cir. 1985); In re Treco, 240 F.3d 148, 157-8 (2d Cir. 2001).
    1. Due process is considered to be the basic requisite of “notice and an opportunity to be heard.” Society of Lloyd’s v. Grace, 278 A.D.2d 169, 169 (1st Dep’t 2000) (citing United States v. James Daniel Good Real Prop., 510 U.S. 43, 48-49 (1993)); see Colonial Bank, 550 F. Supp. at 58; Guinness, 955 F.2d at 900 (“The polestar is whether a reasonable method of notification is employed and reasonable opportunity to be heard is afforded to the person affected”) (quoting Somportex, Ltd. v. Philadelphia Chewing Gum Corp., 453 F.2d 435, 443 (3d Cir. 1971)).
      1. Practice Tip: Typically, specific complaints regarding procedural or substantive unfairness are not grounds for non-recognition. For example, in New York, the plain language of § 5304(a)(1) permits non-recognition only if the judgment was rendered under a system that does not provide impartial tribunals and procedures compatible with due process. Society of Lloyd’s v. Ashenden, 233 F.3d at 476, 477. Individualized complaints of unfairness, as opposed to systemic unfairness, within the particular proceedings are not listed among the statute’s nine enumerated grounds for non-recognition.
      2. As a tangential matter, a defendant who elected not to participate in the non-U.S. proceedings will not be heard to complain about the perceived failings in those proceedings. See Ocean Warehousing B.V. v. Baron Metals & Alloys, Inc., 2001 WL 576475, *5-6 (S.D.N.Y. 2001).
  3. It is well established that a U.S. court will, in fact, deny recognition of a non-U.S. judgment where an opposing party can prove that the judgment is repugnant to domestic public policy. Kim v. Coop. Centrale Raiffeisen-Boerenleenbank B.A., 364 F. Supp. 2d 346, 352 (S.D.N.Y. 2005).
    1. Practice Tip: The non-U.S. court need not comply with the exact requirements of the U.S. judicial system. (see section C. supra). For example, English High Court’s use of “Mareva” orders, pursuant to which Netherlands corporations’ assets were frozen during pendency of proceeding upon their failure to comply with discovery orders, did not render English system as a whole incompatible with requirements of due process of law, as would preclude recognition and enforcement of English judgment entered against corporations in favor of investors, under New York’s version of the UFMJRA. CIBC Mellon Trust Co. v. Mora Hotel Corp. N.V., 100 N.Y.2d 215, 222 ( 2003).
      1. According to New York courts, the comity doctrine, as applied to foreign country judgments, embodies “an ordered sense of respect and tolerance for the adjudications of foreign nations, paralleling that commanded among the States by the Full Faith and Credit Clause of the United States Constitution.” Gotlib v. Ratsutsky, 83 N.Y.2d 696, 700 (1994). See also Greschler v. Greschler, 51 N.Y.2d 368, 376 (1980) (comity doctrine is the equivalent of full faith and credit given to state judgments); Feinberg v. Feinberg, 40 N.Y.2d 124, 127 28 (1976) (our courts normally accord foreign country judgments that recognition and effect to which a similar judgment of a sister state would be entitled); Lenchyshyn v. Pelko Elec., Inc., 281 A.D.2d 42, 47 (N.Y. App. Div. 4th Dep’t 2001) (since Ontario is a common law jurisdiction whose procedures comport with due process, “we of course would accord an Ontario judgment the same recognition as a sister state judgment, albeit as a matter of international comity rather than constitutional imperative”).
  4. To be deemed repugnant to public policy, a foreign judgment must be “inherently vicious, wicked or immoral, and shocking to the prevailing moral sense.” Sung Hwan Co. v. Rite Aid Corp., 7 N.Y.3d 78, 82 (2006).
  5. However, as noted above, non-U.S. judgments that impinge on constitutional rights, especially First Amendment rights, are often found to be “repugnant” to public policy. Bachchan v. India Abroad Publ’ns Inc., 585 N.Y.S.2d 661, 662 (Sup. Ct. 1992).
    1. Practice Tip: Generally, in the U.S., foreign judgments that clearly impinge on First Amendment free speech rights, especially in the news gathering context, are considered to be repugnant to public policy.

    2. Recent case law, however, instructs that courts refrain from automatically finding that enforcement of non-U.S. law, as well as the judgment obtained abroad, would be repugnant to a litigant’s First Amendment rights.
      1. For example, before mechanically assuming that a news magazine, or similar entity, has an absolute First Amendment protection in “deciding whether the foreign judgments are repugnant to the public policy” courts of first instance will “first determine the level of First Amendment protection required by . . . public policy [domestically] when a news entity engages in the unauthorized use of intellectual property” before they“determine whether the [foreign legal] regime provides comparable protections." Sarl Louis Feraud Int’l v. Viewfinder Inc., 2007 WL 1598057 *5 (2d Cir. 2007).
  6. Typically, the party asserting that the non U.S. laws or procedures are contrary to U.S. policy bears the burden of proving these discretionary grounds for non-recognition of the foreign judgment. CIBC Mellon Trust Co. v. Mora Hotel Corp., 743 N.Y.S.2d 408, 423 (App. Div. 1st Dep’t 2002).
    1. Practice Tip: A federal trial court sitting in New York has ruled that the burden of proof is on the defendant to show the lack of due process that it claims, Browne v. Prentice Dry Goods, Inc., 1986 WL 6496, *2 (S.D.N.Y. 1986), while two other federal trial judges have taken the view that plaintiff must show the non-applicability of the two § 5304(a) grounds for non-recognition (while the defendant must show that a discretionary ground in § 5304(b) applies). Dresdner Bank AG v. Haque, 2001 WL 363034, *3 (S.D.N.Y. 2001); Bridgeway Corp. v. Citibank, 45 F. Supp. 2d 276, 286 (S.D.N.Y. 1999).
    2. Putting the burden on defendants to prove the applicability of an exception to recognition is consistent with the New York Court of Appeals’ admonition that “a departure from settled comity principles can be justified only as a rare exception.” Gotlib v. Ratsutsky, 83 N.Y.2d 696, 699 (1994).
    3. In the parallel context of enforcing sister state judgments (domestically), the burden is on the party challenging the judgment to show that it is invalid for lack of jurisdiction. See Manasseri v. Manasseri, 121 A.D.2d 697, 698 (2d Dep’t 1986); Collins v. Collins, 17 A.D.2d 304, 306 (1st Dep’t 1962).
      1. Putting the burden of proof on the defendants is also consistent with the general rule that a defendant bears the burden of proof on its affirmative defenses. Goncalves v. Regent Int’l Hotels, Ltd., 58 N.Y.2d 206, 217 (1983); Brignoli v. Balch Hardy & Scheinman, Inc., 178 A.D.2d 290, 290 (N.Y. App. Div. 1st Dep’t 1991).
      2. Similarly, a New Jersey appellate court has recently applied similar reasoning in ruling that the burden of proof is on the party asserting the subdivision (a) ground as a defense to recognition. Kam-Tech Sys. Ltd. v. Yardeni, 340 N.J. Super. 414, 423-34 & n.4 (N.J. App. Div. 2001) (citing Dart v. Balaam, 953 S.W.2d 478, 480 (Tex. Ct. App. 1997)). The New Jersey appellate court noted that putting the burden on the party opposing recognition would “foster the entirely sensible policies of the [UFMJRA]” and would accord with the state’s general rule regarding the burden of proving affirmative defenses.
  7. Practice Tip: The recognition of non-U.S. judgment calculus pays close attention to whether enforcement would trigger U.S. law. For example, in section VI infra, in Multicanal, the Court refused to grant comity to a restructuring plan that had been approved under Argentine law because the plan called for distribution of securities in the U.S. in violation of the U.S. securities laws.

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