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Posted: May 30, 2014

Lack of Personal Jurisdiction not a Defense to Domestication of a Foreign Judgment

On May 27, 2014, the First Department entered a decision in Abu Dhabi Commercial Bank PJSC v. Saad Trading, 2014 NY Slip Op. 03767, holding that lack of personal jurisdiction is not a defense to an action to domesticate a foreign judgment.

In Abu Dhabi Commercial Bank, the plaintiff sought to “domesticate and enforce” the judgment of an English court. The defendant moved to dismiss “on the grounds of lack of personal jurisdiction in New York and forum non conveniens.” The First Department affirmed the trial court’s denial of the motion, explaining:

New York has traditionally been a generous forum in which to enforce judgments for money damages rendered by foreign courts. Historically, New York courts have accorded recognition to the judgments rendered in a foreign country under the doctrine of comity absent some showing of fraud in the procurement of the foreign country judgment or that recognition of the judgment would do violence to some strong public policy of this State.

In accordance with this tradition, New York adopted the Uniform Foreign Country Money-Judgments Recognition Act as CPLR article 53, which was intended to codify and clarify existing case law applicable to the recognition of foreign country money judgments based on principles of international comity, and, more importantly, to promote the efficient enforcement of New York judgments abroad by assuring foreign jurisdictions that their judgments would receive streamlined enforcement here.

Generally, a foreign country judgment is conclusive between the parties to the extent that it grants or denies recovery of a sum of money unless a ground for nonrecognition under CPLR 5304 is applicable. CPLR 5304(a) provides that a foreign country judgment is not conclusive if the judgment was rendered under a system which does not provide impartial tribunals or procedures compatible with the requirements of due process of law or the foreign court did not have personal jurisdiction over the defendant. CPLR 5304(b) permits nonrecognition on eight other grounds. Significantly, in proceeding under article 53, the judgment creditor does not seek any new relief against the judgment debtor, but instead merely asks the court to perform its ministerial function of recognizing the foreign country money judgment and converting it into a New York judgment.

In the present action, defendant has actual notice of the enforcement action and does not argue that the English judgment fails to meet the requirements of CPLR 5303 or that any grounds for nonrecognition of a foreign country money judgment exist. Nor does defendant provide a reason why the judgment should not be recognized as a matter of substance. Under these circumstances, a party seeking recognition in New York of a foreign money judgment (whether of a sister state or a foreign country) need not establish a basis for the exercise of personal jurisdiction over the judgment debtor by the New York courts, because no such requirement can be found in the CPLR, and none inheres in the Due Process Clause of the United States Constitution, from which jurisdictional basis requirements derive. Although CPLR 5304(a) provides that the trial court may refuse recognition of the foreign country judgment if the foreign country court did not have personal jurisdiction over the judgment debtor, it does not provide for non-recognition on the ground that the New York court lacks personal jurisdiction over the judgment debtor in a CPLR article 53 proceeding.

Nor does the CPLR require the judgment debtor to maintain property in New York for New York to recognize a foreign money judgment. While CPLR 5304 provides a list of specific reasons why the trial court may refuse recognition of the foreign country judgment, the lack of property in the state is not one of them. Thus, even if defendant does not presently have assets in New York, plaintiff nevertheless should be granted recognition of the foreign country money judgment pursuant to CPLR article 53, and thereby should have the opportunity to pursue all such enforcement steps in futuro, whenever it might appear that defendant is maintaining assets in New York, including at any time during the initial life of the domesticated English money judgment or any subsequent renewal period.

The procedural differences between CPLR articles 53 and 54 do not imply additional jurisdictional requirements in foreign country money judgment proceedings. Rather, they exist because sister-state judgments must be given recognition under the Full Faith and Credit Clause of the United States constitution and sister-state courts are presumed (rebuttably) to be impartial and to apply procedures compatible with due process of law. Thus, the Legislature placed the burden of staying or vacating a registered sister-state judgment on the judgment debtor. In contrast, judgments of foreign countries are accorded recognition only through comity. The inquiry turns on whether exercise of jurisdiction by the foreign court comports with New York’s concept of personal jurisdiction, and if so, whether that foreign jurisdiction shares our notions of procedure and due process of law. If the above criteria are met, and enforcement of the foreign judgment is not otherwise repugnant to our notion of fairness, the foreign judgment should be enforced in New York under well-settled comity principles without microscopic analysis of the underlying proceeding. Accordingly, the Legislature reasonably placed the burden on the proponent of a foreign judgment of showing that the foreign court was impartial and followed basic principles of due process.

(Internal quotations and citations omitted) (emphasis added).

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