Enforcing Foreign Money Judgments in New York

By: Brian C. Dunning, Esq.
J. Cullen Howe, Esq.

Introduction

A money judgment rendered by a court in a foreign country will generally be enforceable in New York, provided that the judgment is a final and enforceable one and that the foreign court had jurisdiction over the matter and over the party against whom the judgment is to be enforced.¹ There are, nevertheless, a number of grounds which can prevent enforceability of such judgment if the facts so avail.

Choosing a Judicial Forum

Depending on the amount at issue, a foreign-country judgment can be enforced in either New York state court or New York federal court. If a person chooses to file in state court, an action can be filed in the Supreme Court of the county in which defendant's real estate or other property is located. Briefly, the Supreme Court is a court of general jurisdiction, meaning that there are no requirements that must be met before a party can file an action in such a forum.

Alternatively, in some instances, a person can file an action in federal court in one of the four districts in New York. Federal courts are courts of limited jurisdiction and parties can only file an action there if they meet certain requirements. In a case where a person is attempting to enforce a judgment from a foreign country, he or she must meet the requirements necessary to establish "diversity" jurisdiction.² First, there must be complete diversity of citizenship between all plaintiffs and all defendants (although the plaintiffs and defendants, as amongst themselves, can be citizens of the same state or country). If this is not the case, then diversity is destroyed and the action must be brought in state court. Second, the amount in controversy must exceed $75,000 exclusive of interest and costs. If the judgment is not over this amount, then diversity is destroyed and the action must be brought in state court. Both requirements must be met to establish jurisdiction based on diversity of citizenship.

New York law governs whether a party proceeds in state or federal court. Therefore, the discussion below applies to whichever judicial forum is chosen.

Discussion

The requirements for the recognition and enforcement of a foreign money judgment in the United States are codified by statute in the Uniform Foreign Money-Judgments Recognition Act, which is codified in Articles 53 and 54 of the New York Civil Practice Law and Rules. New York has a long-standing tradition of recognizing and enforcing foreign country money judgments. Generally, New York courts will recognize foreign country judgments absent a showing of fraud in the procurement of the foreign judgment or unless recognition of the foreign judgment would offend a strong public policy of New York.

Prerequisites to Enforceability

There are three key prerequisites to enforceability of a foreign country money judgment, without any one of which the judgment would not be enforceable. They are as follows:

First, the judgment must be final, conclusive and enforceable where it was rendered, although the process of enforcement can be begun even if the judgment remains subject to possible appeal and even if an appeal is pending.³ Upon the request of a party, the court may stay the enforcement proceedings pending the time to appeal or pending the full course of the appeal if an appeal is taken in the foreign country.⁴

Second, the judgment must have been rendered under a system which provides impartial tribunals and procedures compatible with the requirements of due process of law.⁵ Whether this requirement can be satisfied generally depends upon whether United States courts have found that the legal system of the country in which the judgment has been obtained meets the minimal due process standards applicable in this country.

Third, the foreign court that rendered the judgment must have had personal jurisdiction over the defendant.⁶ New York gives its courts discretion whether to require that the foreign court had subject matter jurisdiction over defendant.⁷

Recognizing that what constitutes valid personal jurisdiction over a defendant may vary among countries of differing judicial systems, New York law provides generally that a foreign country judgment will not be refused recognition for lack of personal jurisdiction if the defendant was personally served in the foreign country, if the defendant voluntarily appeared in the foreign country proceeding (other than for the purpose of protecting property seized or for contesting the jurisdiction of the court), if the defendant had agreed to submit to that country's jurisdiction prior to commencement of proceedings, or if the defendant is domiciled in the foreign country, had acquired corporate status in the foreign country or had a business office there and the suit arose from activities from that office.⁸

Grounds For Non-Recognition

A foreign country judgment may be refused enforceability under New York law in certain extraordinary circumstances which include the following: the defendant did not receive notice of the proceedings in sufficient time to defend, the judgment was obtained by fraud, the cause of action is repugnant to the public policy of the state in which the judgment is sought to be enforced, the judgment conflicts with another final and conclusive judgment, the proceeding in the foreign court was contrary to an agreement between the parties under which the dispute was to be settled otherwise than by proceedings in that court, and jurisdiction was based only on personal service and the foreign country court rendering the judgment was a seriously inconvenient forum for trial of the action.⁹

Procedure

A. State Court. The primary procedure to procure enforcement of a foreign country judgment in state court is a motion for summary judgment in lieu of complaint, an expedited method that is available when an action is based on an instrument for the payment of money only, which includes money judgments.¹⁰

This procedure begins with the filing of a summons in the court and service of the summons on the judgment debtor accompanied by a notice of motion for summary judgment and supporting papers (affidavit with relevant documents and a legal memorandum if appropriate). The summons will require the judgment debtor to answer the motion within the time period provided in the notice, normally 20 days depending on the method of service. The judgment debtor may appear and contest the motion, raising any appropriate defenses or grounds for non-recognition of the judgment. The judge may or may not decide the motion on the papers. If the court determines that there are issues of fact to be resolved, the procedure will be converted to a regular litigation for the resolution of the factual issues. Court fees for the state procedure are $245.

If the judgment debtor chooses not to answer or appear, a default judgment can be entered against it after the hearing date.¹¹

B. Federal Court. This procedure begins with the filing of a summons and complaint in the court and service of these papers on the judgment debtor. Like state court, the summons will require the judgment debtor to answer the complaint within a certain amount of time, normally 20 days. After the expiration of 20 days from the commencement of the action, a motion for summary judgment with supporting papers can be filed with the court, which must be served at least 10 days before the hearing date. Court fees for the federal procedure are $150.

Execution of the Judgment

Once the foreign judgment is recognized as enforceable by a New York court, the money judgment can be enforced against the property of the judgment debtor. This typically includes any cash, securities, bank accounts and other choses in action, personalty, real estate, etc. owned by or owing to the debtor located within the jurisdiction.

If necessary, a judgment creditor may compel disclosure of information from the judgment debtor or any other person in a position to provide information relevant to the satisfaction of the judgment. New York has procedures to compel discovery in aid of execution of a judgment. Often a judgment creditor will retain the services of a private investigator to discover reachable assets so as to expedite the process.

If defendant has real estate located in New York State, the primary method used in enforcing such a judgment is to execute a lien on the property or assets of the judgment debtor. This is normally accomplished by the issuance of an execution by the judgment creditor, which acts as an order to the sheriff to attach or seize the property and levy upon it or a portion of it to satisfy the judgment debt.

It is difficult to estimate the length of time such a process will take. There is probably no advantage, in terms of length of time, between filing an action in state or federal court. Assuming that the defendant appears and contests the action, obtaining an enforceable judgment in New York could take several months, and possibly longer. However, assuming the defendant has real estate in New York, once a judgment has been obtained, executing a lien on the property is a fairly quick and uncomplicated procedure.

Footnotes

¹ It is also a requirement that the defendant either be located here either in person or by having property located in the state.

² The other way to bring an action in federal court, not relevant here, is by "federal question" jurisdiction, where the court is called on to interpret a federal statute, regulation, or rule.

³ NY CPLR § 5302.

⁴ NY CPLR § 5306.

⁵ NY CPLR § 5304(a)(1).

⁶ NY CPLR § 5304 (a)(2).

⁷ NY CPLR § 5304(b)(1).

⁸ NY CPLR § 5305.

⁹ NY CPLR § 5304(b)(2)-(7).

¹⁰ NY CPLR § 5303.

¹¹ NY CPLR § 3215.