Proskauer on International Litigation and Arbitration:
Managing, Resolving, and Avoiding Cross-Border Business or Regulatory Disputes
- The U.S. is not a party to any international convention or treaty governing the recognition and enforcement of foreign judgments.
- In the absence of an applicable bi- or multi-lateral agreement or convention, recognition and enforcement of U.S. judgments abroad is determined in accordance with the domestic law of the “recognizing” country.
- There is no uniformity of practice among nations in regard to recognition of judgments of other states.
- Common requirements for recognition and enforcement:
- proper notice;
- subject matter and personal jurisdiction;
- final and binding judgment; and
- no violation of “recognizing” country’s public policy.
- Common obstacles to recognition and enforcement of U.S. judgments abroad:
- Lack of jurisdiction. For example, Brazil, Switzerland and France will not enforce a judgment against their nationals unless there is a “clear indication” that the national intended to submit to the foreign court’s jurisdiction.
- Special notice procedures. Some countries require that the foreign litigant serve the “local” party in accordance with procedures not commonly employed in the U.S.
- Treaty requirements. Several states, including most of the Nordic countries, the Netherlands and Saudi Arabia, will not recognize a foreign judgment absent to existence of a convention or treaty covering judgments between the “rendering” and “recognizing” jurisdictions.
- Public Policy Concerns. Some foreign courts view certain features of U.S. law – including jury awards, punitive damages, treble damages, long-arm jurisdiction – as contrary to their own public policy.
- Reciprocity. A number of nations require reciprocity of treatment of their courts’ judgments in the courts of the nation that rendered the judgment to be enforced. For some nations, (e.g., Belize and Singapore) the requirement may be met only where its government has formally concluded that reciprocity exists between the courts of the two nations, creating a bar to enforcement where no such finding has been made.
- Anti-suit injunctions to protect US Judgment from being challenged in action outside the US
- The topics of anti-suit injunctions and enforcement of arbitration awards in the US under the New York Convention are treated in Chapters 18 and 23, respectively. But in preventing challenges to US judgments in proceedings abroad, practitioners should take note of the recent decision handed down by the US Court of Appeals for the Second Circuit in Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 500 F.3d 111 (2d Cir. 2007). In that case, the Second Circuit upheld a so called “China Trade” injunction (see China Trade & Development Corp. v. M.V. Choong Yong, 837 F.2d 33 (2d Cir. 1987)) enjoining a judgment debtor from pursuing an action outside the US to prevent collection on a Swiss arbitral award that had been confirmed by a Texas state court and was enforced by a federal district court in New York. The Second Circuit held that the district court that entered the Texas state court order enforcing the Swiss arbitration award retained jurisdiction to enjoin the judgment debtor from pursuing an action in the Cayman Islands, even though the federal judgment against the judgment debtor had been satisfied. A petition for review of this decision by the US Supreme Court is pending.
- The Second Circuit’s decision in Kahara Bodas disagreed with a decision from the Eighth Circuit Court of Appeals earlier in 2007, which held that, once satisfied, a judgment cannot form the basis for jurisdiction in a US federal court. Goss Int’l Corp. v. Man Roland Druckmaschinen Aktiengesellschaft, 491 F.3d 355 (8th Cir. 2007) (in the context of Japanese claw back statute). A petition for review of this Eighth Circuit decision by the US Supreme Court is also pending.
- Practice Tip: Counsel should retain and consult with a local lawyer in the jurisdiction in which the US ruling is to be enforced. If it is known beforehand that the judgment will have to be enforced outside the US, US counsel should consult beforehand with the an attorney from that nation to ensure that the US judgment aligns with the requirements of the nation in which the judgment is to be enforced.
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