Can a Court Enforce a Foreign Money Judgment If It Lacks Personal Jurisdiction Over the Defendant?

by Mike Mintz on June 11, 2012 · 2 comments

in Litigation

Recently, a New York court wrestled with the issue of whether it can recognize foreign money judgments where it does not have personal jurisdiction over the defendant in the case entitled Abu Dhabi Commercial Bank PJSC v Saad Trading, 2012 NY Slip Op 22134 (N.Y. Sup. Ct, N.Y. Co. 5/15/12), Index No.: 652191/11.

Plaintiff sought to collect a money judgment in New York that was originally rendered in England for over $33,000,000 from defendant Saad Trading pursuant to  CPLR sections 3213 and 5303 on a breach of contract cause of action.  Defendant never appeared for the trial in England and upon plaintiff’s proof of its case on the merits, the English court issued the money judgment.  Defendant never appealed the judgment.

When plaintiff sought to enforce the judgment in New York, defendant opposed the motion, claiming that the New York court lacked personal jurisdiction as well as forum non conveniens.

BACKGROUND

The plaintiff is incorporated under the laws of the U.A.E. and conducts business in Abu Dhabi.  Saad is a limited partnership organized under the laws of Saudi Arabia, and it conducts its business there as well.  There was no evidence that Saad has any contact with New York.  Defendant argued that since the court lacked personal jurisdiction over it, it would violate due process if the court were to grant plaintiff’s motion to recognize the foreign money judgment.  Saad also argued that New York was forum non conveniens.  Plaintiff countered by pointing out that personal jurisdiction was not necessary to enforce a foreign money judgment.  It also discounted defendant’s argument regarding plaintiff’s choice of forum.

DISCUSSION

Personal Jurisdiction

The court first noted the paucity of authority, on the issue. There was only one Appellate Division case discussing the issue and that court noted that the judgment debtor does not have to be subject to personal jurisdiction in New York for the judgment creditor to obtain recognition of the foreign judgment and its enforcement.  The judgment creditor only has to satisfy the requirements of Article 53 of the C.P.L.R.

The rationale behind this is that the judgment creditor is not seeking new relief against the judgment debtor.  Instead he is requesting that the court merely perform a ministerial function, i.e. recognizing a foreign money judgment.  Since all the issues have already been litigated in a foreign court, there is nothing for the current court to do other than to “rubber stamp” the foreign money judgment.  Hence, there is no need for personal jurisdiction.

Forum Non Conveniens

The court also threw out Saad’s forum non conveniensclaim.  First of all, whether a court decides if a forum is inconvenient is totally discretionary.  The rule of forum non conveniens is a flexible one which aims to promote fairness, justice and convenience.

Second, the party challenging the forum carries the burden of proving that it is inconvenient.  Some of the facts taken into account include: (1) defendant’s hardship in defending the action in New York; (2) whether an alternate forum is available; (3) the parties’ residence; and (4) the jurisdiction in which the subject transaction occurred.

Going through these factors, the court first noted that Saad will not bear any hardship because there are no issues left to defend.  All of the merits of the case were fully decided in England.  Plaintiff does not seek new relief in New York.  No witnesses are going to be called to testify so witnesses will not suffer any inconvenience by appearing in court.  The other factors in the test are irrelevant.  Plaintiff is simply seeking to recognize a foreign money judgment in order to collect a judgment it already obtained elsewhere pursuant to international comity.  If the court were to grant defendant’s motion based on forum non conveniens it would have the opposite result of the one the doctrine was set up to promote.  It would create intense hardship for the parties, and it would unnecessarily delay the final resolution of the case.

The court consequently granted plaintiff’s summary judgment motion and the clerk was directed to enter judgment in plaintiff’s favor for the amount of the foreign money judgment.

{ 2 comments… read them below or add one }

Alaa Elemary wrote onJune 11, 2012 at 5:38 pm

This is a very interesting case.

I however disagree with the court line of analysis or reasoning on the first part, namely on the personal jurisdiction. As briefly elaborated at the end of this brief, recognition and enforcement of foreign judgments can only be validated under or through the comity doctrine. Under that doctrine, the role of NY court or any other court is not however that of a rubber stamp or a ministerial function. Of course, it has no jurisdiction to reevalute the facts or to amend the judgment, still it has to make sure that the due process of the law i.e. the procedural and substantive rights of the defendant has not been violated.

Within the kind of information provided on this, the court has not done so however.

On the other hand, it is also clear that the defendant never attended, or was legally represented, in the litigation proceedings in England. We do not even know if he was properly notified?

In brief, we simply do think that the competent court’s role in such cases is not limited to that referred to above as that of the rubber stamp or I do not know what.

Let me give you a stronger case, even if there were a bilateral enforcement agreement between the issuing country & the country at which the recoginition & enforcement is sought, the role at the latter jurisdiction far excceds that under the said “rationale”.

I hope this could be of benefit.

Reply

Mike Mintz Mike Mintz wrote onJune 19, 2012 at 12:10 pm

Alaa: thanks for reading and commenting. You seem to be troubled by a few things here. You say that the court has to make sure that due process of law is rendered in the collecting of the money judgment. Based on the facts presented, I am not sure where you see error. The court’s analysis here addresses two concerns of the defendants: (a) that the court lacks personal jurisdiction over the defendant and (b) that NY is an inonvenient forum for the defendant to defend himself in. As I wrote above, the basis of the money judgment was a trial in England which the defendant didn’t even show up for. The plaintiff proved his case on the merits. It is only now when the plaintiff seeks to collect through the NY court that the defendant is using geography to escape his now legally binding obligation. The significance of the NY decision is the finding by the court that personal jurisdiction is not needed since all of the issues are litigated – the court is being used as means to an appropriate end – if anything their involvement minimizes the potential for a failure of due process.

Perhaps a better question is why not enforce this through the court that issued the judgment? In all likelihood there are facts present that make the defendant want to keep their NY channels clear. I have not looked fully into this but I’m interested if anyone wants to comment on this further.

Reply

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