Proskauer Rose International Practice Guide Proskauer Rose LLP |
      Proskauer on International Litigation and Arbitration:
       Managing, Resolving, and Avoiding Cross-Border Business or Regulatory Disputes
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  1. There is no treaty between the U.S. and any other country requiring the recognition of judgments, decrees, or orders (collectively “judgments”) in the U.S. rendered by non-U.S. courts. Moreover, there is neither a constitutional basis nor federal statute requiring a non-U.S. court judgment to be given full faith and credit. Nor can enforcement be accomplished by means of a letter rogatory in the U.S. under 28 U.S.C. §§ 1781, 1782.
  2. In Hilton v. Guyot, 159 U.S. 113 (1895), the Supreme Court treated the enforceability of non-U.S. judgments as a matter of “comity of nations,” and concluded that comity called for enforcement of judgments rendered in another state in favor of a citizen of that state against a non-citizen on the basis of reciprocity.
    1. Justice Gray set forth the foundation for modern law by stating that:

      “[W]here 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, the merits of the case should not, in an action brought in this country upon the judgment, be tried afresh . . . .

      Id. at 202-03.

    2. However, in Hilton, the Supreme Court declined to enforce the judgment of a French court in favor of a French citizen against two U.S. citizens, on the ground that French courts, if the facts were reversed, would not enforce the judgment of a court in the U.S. Id.
    3. Notwithstanding that decision, the great majority of courts in the U.S. have since rejected the requirement of reciprocity. The reciprocity requirement has long been viewed as unfair because the judgment holder is effectively being punished for a policy of his or her national government. Also, the requirement was thought to hinder the effort to have other nations recognize U.S. judgments. De la Mata v. American Life Ins. Co., 771 F. Supp. 1375 (1991), not followed on State law grounds, (NO. CIV.A. 90-173 MMS); abrogated by McCord v. Jet Spray Intern. Corp., 874 F. Supp. 436 (1994) (D. Mass.) (NO. C.A. 93-11375-JLT); disagreement recognized by In re Joint Eastern and Southern Dist. Asbestos Litigation, 129 B.R. 710 (1991) (E.D.N.Y.); Biggelaar v. Wagner, 978 F. Supp. 848 (1997) (N.D. Ind.); Hilkmann v. Hilkmann, 579 Pa. 563 (2004);
  3. Because the U.S. has not enacted any federal legislation with respect to enforcing non-U.S. judgments, and because the U.S. has not acceded to any treaties with other nations concerning judgment-recognition or enforcement, the recognition and enforcement of judgments issued by non-U.S. courts in the U.S. is governed by the laws of the various states. See Restatement (Third) Foreign Relations Law § 481a (1987). Accordingly, a party seeking to enforce such a judgment in the U.S. must file suit before a competent court and seek enforcement under state law. That court will determine whether to give effect to the judgment.
    1. Federal courts in diversity cases apply state law for recognition and enforcement under the Erie doctrine. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938) (“[e]xcept in matters governed by the Federal Constitution or by Acts of Congress, the law to be applied in any case is the law of the State.”)
  4. In determining to what extent to recognize and enforce a non-U.S. court judgment, U.S. courts follow the principle of international comity. In Hilton, the Supreme Court described comity as “the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens, or of other persons who are under the protection of its laws.” Hilton, 159 U.S. at 164.
  5. If a U.S. court is reasonably convinced that the non-U.S. judgment comports with the U.S. concept of due process, comity will be afforded. See, e.g., Kohn v. American Metal Climax, Inc., 458 F.2d 255, 303-05 (3d Cir.), cert. denied, 409 U.S. 874 (1972).
    1. Factors suggesting that a U.S. court will recognize and enforce a non-U.S. court judgment (see Hilton, 159 U.S. at 202):
      1. Demonstrated opportunity for a full and fair trial abroad;
        1. Defendant has to have been provided adequate notice of the suit See Koster v. Automark Industries, Inc., 640 F.2d 77 (7th Cir. 1981); Mata v. American Life Insurance Co., 771 F. Supp. 1375 (D. Del. 1991).
        2. However, U.S. courts do not require adherence to the Federal Rules of Civil Procedure (“Fed. R. Civ. P.”)
      2. Trial conducted before a court of competent jurisdiction;
      3. Court engaged in regular proceedings;
      4. Jurisdiction over the defendant established by “minimum contacts” test (see Koster v. Automark Industries, Inc., 640 F.2d 77 (7th Cir. 1981)); and
      5. System of jurisprudence likely to secure the impartial administration of justice between litigants of different countries, no showing of prejudice in the court or the system of laws, and no fraud in procuring the judgment.
    2. Where U.S. courts have no experience with non-U.S. court’s procedures or proceedings, reasonable discovery should be provided to party seeking to avoid comity being followed.
    3. Judgments rendered by a judicial system that fails to provide due process are not enforceable. See Int’l Transactions, Ltd. v. Embotelladora Agral Regiomontana, S.A., 347 F.3d 589, 593-97 (5th Cir. 2003).
    4. A non-U.S. court judgment will not be enforced if it violates U.S. public policy. The “standard is high, and infrequently met.” Ackerman v. Levine, 788 F.2d 830, 841 (2d Cir. 1986).
  6. Default judgments. The rationale underlying the Full Faith and Credit Clause of the U.S. Constitution, Article IV, Section 1, which guarantees that judgments rendered in one state of the U.S. will be enforced in other States of the U.S., has led most courts in the U.S. to enforce default judgments rendered by non-U.S. courts, provided basic jurisdictional requirements have been met. If, however, the exercise of jurisdiction by the state of origin was unreasonable, the judgment will be denied recognition. In general, recognition of default judgments is effective only between the parties, and no collateral estoppel or other preclusive effect is accorded to a default judgment. See Restatement, Second, Judgments § § 27 and 28.

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