United States

Unlike foreign arbitral awards, foreign court judgments are decided at the state-law level as there is no overarching federal law which addresses the recognition and enforcement of judgments rendered in foreign countries. As such, a party seeking to enforce a foreign judgment in the US should explore the specific state law of the place in which they seek to enforce the judgment, and if the party has options for where to enforce, should choose the state with the laws most advantageous to their position.

However, there are two “uniform acts” (laws which are drafted by an independent commission which states often adopt to advance interests of uniformity across the US) which most US states have adopted. Twenty-nine states and the District of Columbia have adopted the 2005 Uniform Foreign-Country Money Judgments Recognition Act (the “2005 Act”), including the major commercial states of New York, Texas, California, and Illinois. Nine states have adopted the predecessor uniform act, the 1962 Uniform Foreign-Money Judgments Recognition Act (the “1962 Act”), including Pennsylvania, Florida, Ohio, and Massachusetts. Twelve remaining states have not adopted either act, including Louisiana, Wisconsin, and South Carolina.

The 2005 Act and 1962 Act are largely identical, with the 2005 Act being a modernized version with clearer definitions.

The states which have not adopted either the 1962 or 2005 Acts rely instead on either codified state laws, or common law, which often mirrors aspects of the 1962 and 2005 Acts. Enforcement of foreign judgments in these states usually hinges on principles of comity and due process. However, because these states can differ substantially in their approach to the recognition and enforcement of foreign judgments, and because they are in the minority, this section will focus on the 1962 and 2005 Acts.

While there is no overarching federal law, there are some federal laws which address specific kinds of foreign judgments. For example, the SPEECH Act (28 U.S.C. § 4102) requires that in order to be enforceable, foreign judgments for defamation must satisfy the free speech and due process requirements of the US Constitution.

What are the main international treaties or conventions that apply?

The US is not a party to any international treaties or conventions concerning the recognition and enforcement of foreign judgments.

What legal principles apply if there is no applicable international treaty or convention?

There are generally three legal frameworks under which foreign judgments are assessed: (1) the 2005 Act; (2) the 1962 Act; and (3) state law principles of comity which may be codified or common law.

Under both the 1962 and 2005 Acts, proof that a foreign judgment is covered within the scope of the Acts requires it to be shown that the judgment is, in the rendering country: (1) final; (2) conclusive; and (3) enforceable. If these requirements are met, the foreign judgment is presumed to be recognizable and enforceable.

However, there are several bases under which the foreign judgment may be found unrecognizable and unenforceable. These bases, or defenses, can be split into two categories — mandatory and discretionary. If a mandatory defense is established, the court must not enforce the judgment. If a discretionary defense is established, the court has discretion whether or not to enforce the judgment.

Mandatory defenses:

• Systemic lack of impartial tribunals or due process — due-process is a requirement under the US Constitution, so all states must consider this defense in some fashion. Furthermore, this defense exists under both the 1962 and 2005 Acts.
• Lack of personal jurisdiction over the defendants — this defense is also a requirement under the US Constitution and exists under both the 1962 and 2005 Acts. The 1962 and 2005 Acts both list explicit circumstances that satisfy personal jurisdiction, including personal service in the foreign country or consent to the foreign jurisdiction such as a forum-selection clause in a contract.
• Lack of subject matter jurisdiction — this defense is not explicitly included in either the 1962 or 2005 Acts but is a requirement for any federal court to hear a case, as well as certain state courts. For federal courts, there must be either diversity jurisdiction or federal question jurisdiction. For state courts, subject matter jurisdiction issues will usually arise when a proceeding is filed in the wrong court (i.e. municipal court, county court).

Discretionary defenses:

• Lack of integrity in the rendering court or lack of due process in the specific proceeding— the 2005 Act expands the defenses in the 1962 Act to arguments that the individual proceeding in which the judgment was rendered was unfair, instead of needing to show systemic unfairness.
• Insufficient notice to defend — this defense is available under the 1962 and 2005 Acts and generally requires a showing that the party against whom the judgment was rendered did not receive adequate notice to defend themselves in the foreign proceeding.
• Other discretionary defenses under the 1962 and 2005 Acts include:
  • fraud;
  • public policy;
  • conflict with another final judgment;
  • failure to comply with statutes of limitations;
  • lack of jurisdiction in the foreign court (usually regarding personal jurisdiction); and
  • judgment in violation of a valid agreement to resolve disputes elsewhere.

In the states that do not follow the 1962 or 2005 Acts, the requirements and defenses are similar to those that have adopted the acts, and, generally, a foreign judgment rendered by a competent court, with due process, may be treated as enforceable unless a specific ground to deny recognition exists (e.g. fraud or lack of jurisdiction).

Finally, while the 1962 and 2005 Acts are very similar, there are two particularly notable differences:

• Unlike the 1962 Act, which leaves burdens of proof to the court’s discretion, the 2005 Act uniformly places the burden of proof on the party seeking to enforce the judgment to show that the 2005 Act applies to the given judgment, but once it is shown the act applies, the burden of proving a ground for nonrecognition is placed on the party resisting recognition.
• The 1962 Act did not include any statute of limitations for the recognition and enforcement of judgments. The 2005 Act provides that an action to recognize a foreign judgment must be brought within the time period that the judgment is effective in the country it was rendered in or within 15 years, whichever is earlier. Note that some states have changed this 15-year fixed limitation to be either longer or shorter.

In contrast to foreign court judgments, foreign arbitral awards are governed by federal law — primarily, the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) (9 U.S.C. §§ 201-208) and the Federal Arbitration Act (FAA) (9 U.S.C. §§ 1-16). The FAA and the New York Convention operate together and can substantively overlap in scope, collectively covering most commercial agreements to arbitrate and the resulting arbitral awards. The New York Convention also has wide applicability, with 172 member countries.

The New York Convention and FAA together provide a streamlined and uniform process for recognizing and enforcing foreign arbitral awards. The laws explicitly provide for federal subject-matter jurisdiction, broad venue provisions, easy removal from state to federal court, and a uniform three-year statute of limitations.

The defenses to a foreign arbitral award are narrow and are enumerated in Article V of the New York Convention. These defenses include:

• incapacity of one of the parties;
• lack of proper notice of the arbitration;
• failure to conduct the arbitration according to the agreement to arbitrate or the laws of the country in which the arbitration took place; and
• where enforcement of the award would be contrary to the public policy of the enforcing country.

Note that awards rendered by the International Centre for Settlement of Investment Disputes (ICSID) are governed by separate provisions of federal law (22 U.S.C. § 1650a and the ICSID Convention), which affords them broad enforceability.

Foreign court judgments can be enforced in state or federal courts, with federal courts being more common because parties to a foreign court judgment are often diverse. Most foreign arbitral awards are enforced in a federal court pursuant to the New York Convention, which provides for federal question jurisdiction and includes a broad removal provision if a case is brought in state court.

Both state and federal courts, regardless of whether a party is seeking to enforce a foreign court judgment or arbitral award, have a wide variety of court fees and timelines. As for filing fees, they will rarely exceed USD 1,000. The length of time it takes to obtain recognition and enforcement varies widely and depends on factors such as the busyness of the court, complexity of the arguments for and against enforcement, and the difficulty of tracking down assets of the party enforcement is sought against. A conservative estimate is that recognition alone can often be obtained within several months to a year, assuming there are no material jurisdictional or due process challenges. Where the recognition is contested, or where extensive discovery or motion practice is required, the process can extend beyond a year.

In practice, the recognition phase is typically faster than the more important part — finding the assets and executing on them. There are many cases where the party seeking enforcement is able to make lightning-quick strikes, including obtaining ex parte pre-judgment relief while waiting for a judgment to be recognized. But in complex cases, where debtors have secreted their assets, the timeline can significantly extend until satisfaction can be obtained.

The Full Faith and Credit Clause of the US Constitution requires state courts to recognize the judgments of other state courts, which is particularly helpful in the event a judgment creditor discovers that the assets of the judgment debtor are not located in the state in which the creditor has obtained a domesticated judgment. In federal court, 28 U.S.C. § 1963 provides a simple process for filing a judgment domesticated in a federal court in other federal courts.

Appealing a US court decision regarding the recognition and enforcement of either a foreign court judgment or arbitral award is the same as any other case in a US court. In federal court, a party has a right to appeal to the Court of Appeals and then a discretionary right to appeal to the Supreme Court. Most state courts have a similar system, whereby an appeal to the state’s intermediate-level court is automatically granted, and an appeal to the highest court is discretionary.

In general, an appeal does automatically stay enforcement for a short period of time; however, state courts may differ in this regard. In federal court, Federal Rule of Civil Procedure (FRCP) 62 provides that, after entering an appeal, enforcement of the judgment is automatically stayed for 30 days. If the appealing party wishes to extend that stay, they must post a bond or other security to ensure the assets remain available pending the outcome of the appeal. Many states have similar procedures for staying enforcement pending appeal.

In federal court, FRCP 69 allows a party to conduct post-judgment discovery, which allows the party to seek information from the judgment debtor and third parties (such as banks) to assist the party in tracing the assets of the debtor. If a party refuses to comply with discovery requests, FRCP 37 permits a court to issue sanctions including finding the party in contempt of court and issuing monetary penalties.

State courts will differ on what discovery is permitted and the sanctions available, however most states permit post-judgment discovery and allow sanctions to enforce discovery requests.

In federal court, FRCP 64 allows a court to exercise any remedies that the state law in which the federal court sits would allow, as well as specific remedies such as attachment of assets, garnishment of accounts, sequestration, and appointment of a receiver, if specific grounds are met. The US does not recognize general freezing orders on assets (and instead allows for remedies to attach particular assets where statutory or equitable requirements are met) and recognizes a greater distinction between pre- and post-judgment remedies than many jurisdictions. In order to freeze assets pre-judgment, a party must demonstrate a specific legal or equitable interest in a particular asset, such as a security interest, and not just a general claim for damages.

Similarly, a federal court’s territorial reach is limited by the remedies available under state law. Some states allow for property outside the state to be brought into the action. A general practice tip is to consider where the party’s assets are and bring the enforcement action wherever the majority of assets are located to limit these territorial issues.

Bank accounts

Garnishment is the most common procedure for obtaining assets from bank accounts. In general, the court issues an order requiring a bank to pay some or all of the assets the bank holds to the judgment creditor. Bank accounts may also be obtained via turnover orders.

Shares

Turnover orders are the most common procedure for obtaining shares. A turnover order is a court order requiring a party to remit property to another party.

Debts due to the judgment debtor from third parties

Debts owed to the judgment debtor by third parties can be reached by garnishment proceedings, or by specialized third-party debt orders or third-party levies.

Real estate

Real estate is usually collected upon by recording a judgment lien with the county recorder in the county the property is located. Then the creditor requests a writ of execution from a court with jurisdiction over the place the property is located, which permits the county sheriff to seize the property and sell it, with the proceeds going to satisfy the debt.

Movable property

Movable property can be reached by levy and sale procedures, similar to real property, but without the need to record a judgment lien with the county.

Yes, but the creditor will need to show that the debtor has an interest in the assets. In cases where a debtor is attempting to avoid paying a judgment by dispersing assets, many states have adopted uniform fraudulent transfer and voidable transactions laws which will allow the creditor to recover on the moved assets.

It depends on the type of co-ownership that the assets are subject to. Tenancy by the entirety is a co-ownership type that is available in many states for married couples and is usually shielded from a creditor of only one spouse. More common forms of co-ownership, however, such as joint tenancies or tenancies in common, allow a creditor to reach jointly owned assets up to the extent of the debtor’s interest.