A Guide To Enforcing Foreign Country Money Judgments In New York State

               Given its status as a global financial center and the continued popularity of Manhattan real estate among foreign investors, New York presents an attractive opportunity for those looking to enforce judgments obtained outside of the United States.[1]  Fortunately for judgment creditors, the Court of Appeals has stated, “New York has traditionally been a generous forum in which to enforce judgments for money damages rendered by foreign courts.”  CIBC Mellon Trust Co. v. Mora Hotel Corp., N.V., 100 N.Y.2d 215 (2003). 

                The recognition of foreign country money judgments is governed by Article 53 of the C.P.L.R., which is New York’s version of the Uniform Foreign Country Money Judgments Act.  Under this act, most foreign court judgments granting or denying the recovery of a sum of money can be enforced in New York.[2]  C.P.L.R. § 5301While this section sets forth a procedure that is somewhat more intricate than the process for recognizing a sister-state judgment, enforcing eligible foreign judgments is relatively straightforward.

    A.  Requirements and Procedure

                In general, unless one of the defenses discussed in the next section applies, a foreign country judgment can be enforced in New York if it is final, conclusive and enforceable in the country it was rendered in.  C.P.L.R. § 5302Such a decision can be enforced even if it is subject to appeal, though a  New York court can, in its discretion, stay enforcement proceedings until a foreign court appeal is resolved.  C.P.L.R. § 5306.

                Enforcing foreign country money judgments is probably most typically done via a motion for summary judgment in lieu of complaint pursuant to Section 3213 of the C.P.L.R., due to the expedited procedures that section provides for, though initiating any procedurally proper action on the judgment will suffice.  Additionally, foreign country money judgments can also be recognized in a pending action by asserting a cross-claim, counterclaim or affirmative defense.  C.P.L.R. § 5303.

                As in any action, service on the defendant must be properly made pursuant to the C.P.L.R. and the Hague Convention (for defendants not present in the United States). See, e.g., Imax Corp. v. E-City Entertainment (I) Pvt. Ltd, 2014 N.Y. Slip. Op. 31710(U) (Sup. Ct., N.Y. Cty., July 2, 2014).  

Notably, however, it is not necessary for a New York court to have personal jurisdiction over the defendant.  See Abu Dhabi Comm. Bank PJSC v. Saad Trading, 986 N.Y.S.2d 454 (1st Dep’t 2014).  Additionally, it is also not necessary for the defendant to have assets in New York when a judgment enforcement proceeding is brought, as the creditor is perfectly within its rights to put a marker down in anticipation of a defendant bringing assets into New York at some later point. Id. 

                It should also be noted that, once recognized by the New York courts, a foreign money judgment is treated as if it were a New York judgment. Therefore, among other things, a judgment creditor with such a judgment can utilize New York’s post-judgment discovery and judgment enforcement procedures.  In addition, the newly domesticated judgment[3] begins to accrue interest at New York’s statutory 9% post-judgment interest rate from the date of domestication.  Id.

    B.  Defenses

               While New York is generally welcoming to foreign money judgments, there are some defenses available to the judgment debtor.

1.  Mandatory Defenses

                First, Section 5304(a) of the C.P.L.R. provides two grounds for finding a judgment to be not conclusive, and therefore per se unenforceable: (a) the judgment was the product of a system that did not provide for an impartial court or procedures compatible with due process or (b) the foreign court did not have personal jurisdiction over the defendant.  Id

               The "no impartial court” defense has been construed narrowly by the New York courts, which have only been willing to apply it in situations where the foreign country’s court system was seriously compromised and generally incapable of providing a fair trial.  See, e.g., Bridgeway Corp. v. Citibank, 45 F.Supp.2d 276 (S.D.N.Y. 1999) aff’d 201 F.3d 134 (2d Cir. 2000) (refusing to enforce judgment issued by Liberian Supreme Court when judiciary was barely functioning due to a civil war in that country); Chevron Corp. v. Donziger, 974 F. Supp.2d 362 (S.D.N.Y. 2014) (Ecuadorian judgment unenforceable when judgment creditor bribed and coerced judges and ghostwrote decision).  

                As for the defense of lack of personal jurisdiction, Section 5305 lists six bases for finding that the foreign court had personal jurisdiction: (a) the defendant was personally served in the foreign country; (b) the defendant voluntarily appeared in the proceedings (for purposes other than contesting jurisdiction or the seizure of property); (c) the defendant agreed to submit to the foreign court’s jurisdiction prior to the commencement of proceedings against him; (d) the defendant was domiciled or (if a corporation) incorporated in the foreign state; (e) the defendant had a business office in the foreign state and the proceeding arose out of business being done by the defendant out of that office; and (f) the defendant operated a motor vehicle or airplane in that country and the proceedings arose from that.  C.P.L.R. § 5305(a).  In addition, even if none of these bases for personal jurisdiction applied, the New York court could still find that personal jurisdiction existed if there were sufficient contacts between the defendant and the foreign country.  C.P.L.R. § 5305(b).

2.  Discretionary Defenses

                Second, a New York court has the discretion not to recognize a judgment if (a) the foreign court did not have subject matter jurisdiction, (b) the defendant did not have adequate notice of the foreign proceeding, (c) the judgement was the product of a fraud upon the foreign court, (d) the foreign judgment is repugnant to New York public policy, (e) the judgment conflicts with another final and conclusive judgment, (f) New York would be an inconvenient forum, if jurisdiction was based solely on personal service, and (g) the judgment is based on a defamation claim, unless the New York court first determines that the foreign court gave the defendant freedom of speech protections comparable to those available here.              

                Most of these defenses are fairly self-explanatory, but some have been the subject of controversy in recent years.  For example, in situations where a defendant was not properly served under the Hague Convention, questions of notice can arise. See, e.g. Baker & McKenzie Zurich v. Frisone, 2015 N.Y. Misc. Lexis 2037 (Sup. Ct., Nassau Cty., June 2, 2015) (summary judgment in lieu of complaint denied where service not properly made).  Similarly, as the Chevron/Donziger saga illustrates, questions whether the underlying judgment was procured by fraud can greatly delay enforcement if the defendant can make out a prima facie case, and can bar enforcement altogether if proved.  See generally Chevron, 974 F. Supp.2d at 557-564.  Finally, it should be noted that even in intellectual property cases that do not involve defamation, First Amendment concerns can act as a bar to enforcement since holding otherwise would be contrary to public policy.  See S.A.R.L. Louis Feraud Int’l v. Viewfinder, Inc., 489 F.3d 474 (2d Cir. 2007).

               The topic of enforcement of foreign (including out-of-state) judgments is vast.  This post can only scratch the surface.  If I can provide further assistance or information, please do not hesitate to contact me.


[1] Technically, judgments obtained in another state of the United States are also referred to as “foreign judgments;” however, we will call those judgments “out-of-state judgments” for purposes of this post. The enforcement of “out-of-state judgments” is a topic for another day.

[2] Article 53 does not apply to non-money judgments (such as those for injunctive relief), as well as matrimonial or child support obligations or to tax judgments, fines and penalties.

[3] An out-of-state or foreign judgment that is made enforceable in New York is referred to as a “domesticated judgment.”