Enforcing Foreign Judgments In The United States

United States law provides legal remedies to enforce judgments issued by courts outside the U.S. As will be discussed, the key to recovering funds usually begins with identifying where the debtor has a residence and where assets might be found. Additionally, there will be a brief observation about filing lawsuits based on loan documents if no foreign judgment has been issued.

A judgment entered outside of the U.S. in states such as Florida, New York and California will usually be recognized so long as some basic procedures are followed. Like most states in the U.S., these states follow the Uniform Foreign Money Judgments Recognition Act (The Recognition Act) which provides that a foreign monetary judgment can be enforced, by the same methods as a U.S. judgment so long as the foreign case meets several requirements.[1]

If the foreign judgment provides for recovery of a sum of money and it is “final, conclusive, and enforceable” under the laws of the foreign country, it can become, in effect, a U.S. judgment. If presented correctly to the U.S. court, recognition will ordinarily be granted unless the foreign judgment was issued under circumstances that violated due process, lacked impartiality or integrity, was without jurisdiction, was without notice, was in conflict with another judicial order or violates the public policy of the state where recognition is requested. In many instances, the party opposing enforcement of the U.S. judgment will insist that the foreign court never had proper jurisdiction when it entered the foreign judgment. Another issue that can delay recognition in the U.S. arises if a party defending against the foreign judgment establishes that an appeal from a foreign judgment is pending or will be taken in that country. If an appeal is pending, the U.S. court may postpone any proceedings with respect to the foreign judgment until the appeal is concluded.

Unless an exception applies, recognition is essentially automatic. Once the U.S. court finds that a foreign-country money judgment is entitled to U.S. recognition, it is conclusive between the parties to the same extent as other U.S. judgments. As a result, U.S. courts have found that out-of-country judgments act are “enforceable in the same manner and to the same extent as a judgment rendered in th[at] state.”  See Hyundai, 155 Cal. Rprtr. 3d 678 (discussing California law); Attorney Gen. of Canada v. Gorman, 769 N.Y.S.2d 369, 371 (N.Y. Civ. Ct. 2003) (stating that under the New York Act, the recognition of a foreign country money judgment “convert[s] it into a New York Judgment”). Most importantly, once a foreign judgment is turned into a U.S. judgment, the creditor can apply U.S. law to seize assets of the debtor in order to collect the judgment.

Florida

Florida procedures are among the easiest to apply in winning recognition of a foreign judgment.  Florida does not require that a new lawsuit be brought. Instead, the party seeking recognition begins the process by filing a certified copy of the foreign judgment with the clerk of court and then recording it in the public records in the county where enforcement is sought.  The court’s clerk then mails a notice of the judgment’s recording to the judgment debtor who has thirty days after service of the letter “to file a notice of objection with the clerk of the court specifying the grounds for nonrecognition or nonenforceability.”  If the debtor objects to enforcement of the foreign country’s judgment, then a hearing before the judge is conducted to decide the validity of any objections. If no objections are filed within the thirty day period, then the clerk of court may file a certificate that entitles the judgment creditor to immediate enforcement of the judgment without further action by the judge.

California and New York

California and New York also apply principles that favor recognition but require the creditor to pursue a litigation process to enforce the foreign judgment.  In California, the creditor needs to file and prosecute a lawsuit in order to obtain a judgment in that state. In New York, a foreign country judgment “is enforceable by an action on the judgment, a motion for summary judgment in lieu of complaint, or in a pending action by counterclaim, cross-claim or affirmative defense.” N.Y. C.P.L.R. 5303 (McKinney).

Enforcing Obligations in the U.S. If There is No Foreign Judgment

If no foreign judgment has been entered, a new lawsuit can be brought against the debtor in the U.S. based on the loan documents or other evidence of the debt.  Usually, such lawsuits should be brought in the state where the debtor has a residence and is believed to have assets.  The length of time for U.S. court proceedings based on documents can vary significantly depending upon the strength and effectiveness of the creditor’s efforts, the circumstances of the court’s schedule, and the defenses, if any, of the debtor. In general, such proceedings have the potential to last months longer than the process of gaining recognition for an already existing foreign judgment.

Locating Assets and Seizing Assets

It should be emphasized that once a judgment is served in the U.S., whether to enforce a foreign judgment or to enforce loan documents without a foreign judgment, it is still necessary to locate assets that can be seized by the court’s procedures. There are some differences among the procedures in each state but, in general, the remedies include freezing bank accounts, seizing personal property such as automobiles or jewelry, or attaching real estate of the debtor. Once a judgment has been obtained in the U.S. most of these remedies can be used by making applications to police officers as well as court employees and do not require any further decisions by a judge.

Where to Begin

Because locating the debtor and possible assets is the starting point, it is often helpful to begin any efforts with an examination of public records and even a limited confidential investigation before initiating legal procedures. These preliminary steps not only help identify the best location to find the debtor, it may help in finding assets. In some instances, assets that can be moved quickly by the debtor, such as bank accounts, can be frozen even before the debtor learning that legal proceedings are being commenced. Acting before the debtor has an opportunity to remove certain assets can be important in some cases.

Many times, lenders already have some information about the debtor. Getting additional details is often no expensive due to the availability of computerized research and can be a helpful first step on the road to successful recovery efforts.

[1] California, Florida and New York have enacted versions of the Act, and each version is discussed in detail below.  SeeCal. Civ. Proc. Code §1713 et seq.; § 55.507 et seq., Fla. Stat. (2013) ; N.Y. C.P.L.R. 5301 et seq. (McKinney)