International Domestication of Judgments
In a recent case an attorney I was working with was seeking overseas assets to satisfy a judgment. I asked him if the judgment had the necessary elements to domesticate in a foreign jurisdiction — including the elements of fraud. The answer was a resounding yes — but when it came to domesticating the judgment, we found it had some hair on it. The vernacular is sufficient to understand we had issues that, while overcome, could have been avoided.
All jurisdictions and courts differ — so this is only a primer on where the landmines might be located.
Typically the judgment is against a person or company personam, as opposed to an item in rem.
In personam is against a person or a company, such as against Bank of the World, or it’s Chairman Miss Ignomoney. In rem is against an asset such as a ships cargo for crew’s wages, or a forfeited property action — an in rem action does not follow a person but the thing.
Did the court where the judgment was obtained have jurisdiction over the defendant? The tests for this might include, were they were present in the foreign jurisdiction when the proceeding were initiated, did they submit to that courts jurisdiction, or voluntary appear in the proceeding and participated in a defense
Smith sues Jones, Jones does not answer the suit, and Smith obtains a default judgment. This is an example of a judgment that is unlikely to be successfully domesticated in a foreign jurisdiction.
Smith sues Jones, Jones answers and participates in the process, loses, and a judgment is entered against Jones. This judgment is likely to be admitted in a foreign jurisdiction.
Smith files for arbitration with Jones, Jones participates in the arbitration and loses. The arbitration ruling is than converted to a judgment — without Jones objecting or appearing. I have seen this type of judgment both admitted and excluded in foreign jurisdictions.
I have also seen courts — for whatever reasons — time bar actions, estop litigants, place severe limits on the introduction of evidence, or entertain abstract procedural challenges – all resulting in the failure to domesticate a foreign judgment.
The judgment is not impeachable, thus it could not have been obtained through a fraud. The jurisdiction has some issues with natural law and the enforcement would not be contrary to that countries public policy, or too divergent from its culture. The judgment should be beyond any time permitted for an appeal, and the form of the judgment sought for domestication should be final and conclusive.
Smith sued Jones, and obtained a judgment. The court allowed the case to move forward when it should have been time barred. The judgment would not be eligible in most cases.
Smith sued Jones, a judgment was entered against Jones, but Jones has six months to appeal the ruling. The judgment would not be eligible in most cases until after the appeal process had been either exhausted or excluded.
Many acts are permissible in one jurisdiction and prohibited in another — by custom, culture, procedure, law, or a combination of all. The myriad of considerations regarding process must be anticipated and addressed. There are several legal systems, Common Law, Civil Law, Dutch Civil Code, Cannon Law, and Sharia Law — just to name the big ones. There are about 196 countries in the world, including several that are physically real, but “faux” jurisdictions, and many failed or failing states. Rulings from a Trasnistrian Court or a Somali Puntland Court are unlikely to be accepted in any developed nation — and vice versa. I have also seen foreign courts take another court or judge’s reputation into consideration. In one case the court was known to be friendly to plaintiffs, and the judge had been president of the state trail lawyers association as well as a lobbyist (i.e., rent seeker). The court and the judge were both viewed by the foreign court as prejudiced and incapable of rendering an unbiased decision. This perception prevented the judgment from being domesticated in the foreign jurisdiction.
The judgment must not exceed the statute of limitations in the country where it is to be domiciled.
Smith attempts to domesticate a ten-year old judgment awarded in Zedland, where, unless renewed, judgments expire after seven years.
A notice needs to be served on the defendant-judgment creditor that the judgment is being petitioned for domestication in a foreign jurisdiction. The creditor in almost every case will be given the right to object to the domestication based upon whatever legal theory they believe the court may entertain. Thus, the plaintiff’s lawyer must be ready to clearly document to the court that all of the jurisdictional requirements have been met. In most cases proof is submitted with the petition to domesticate the judgment.
While this process is a matter for counsel — and sophisticated counsel at that – it’s important for those of us who work in asset recovery teams to understand international obligations and to raise our awareness of these issues.