Recognizing Foreign Judgments

Image by Mariusz Matuszewski from Pixabay

When cocktail party conversations turn to foreign judgments—as they often do—it is common to hear people speak of “recognizing and enforcing” such judgments. This is unsurprising because the typical case involves both recognition and enforcement of a foreign judgment. In some cases, however, a U.S. court may be called upon to recognize a judgment but not to enforce it.

This post explores the distinction between recognition and enforcement. It first defines the relevant terms. It then examines a recent federal case from Washington State in which a litigant sought recognition but not enforcement. It concludes with a discussion of how the ratification of the Hague Judgments Convention would (and would not) alter U.S. practice in this area.

Recognition vs. Enforcement

The terms “recognition” and “enforcement” are often used interchangeably. As a formal matter, however, each term has a distinct legal meaning.

When a court recognizes a foreign judgment, it  “accepts the determination of the legal rights and obligations made by the rendering court.” The act of recognition amounts to a judicial decision that the foreign judgment should be accorded preclusive effect in the United States.

When a court enforces a foreign judgment, it applies “the legal procedures of the state to ensure that the judgment debtor obeys the foreign-country judgment.” Enforcement authorizes the state to use its coercive power to bring about compliance with the foreign judgment. In the overwhelming majority of cases, this involves a court ordering a judgment-debtor to pay damages awarded to a judgment-creditor in a prior judgment.

It goes without saying that a court must recognize a foreign judgment before it may be enforced. Enforcement is not, however, the only legal consequence that may flow from the act of recognition. After a judgment is recognized, a court may rely on that judgment to hold that an issue previously decided in the foreign proceeding may not be re-litigated in the United States. In such cases, the foreign judgment is not being used offensively to collect money owed pursuant to a foreign judgment. Instead, it is being used defensively to prevent the party who lost in the foreign proceedings from getting a second bite at the apple.

With these definitional issues settled, let us now examine a recent case where a court recognized a judgment without enforcing it.

Baylis v. Valve Corporation

In Baylis v. Valve Corporation, a case decided in the U.S. District Court for the Western District of Washington (Judge Ricardo S. Martinez), the plaintiff was a citizen of the United Kingdom and a resident of Finland. The defendant was a video game distributor based in Washington State. In 2017, the plaintiff sued the defendant in Finland. He sought a declaration that he was one of several authors of a film, Iron Sky, and that he was the co-owner of the copyright for the entire film. He also asserted copyright ownership in certain 3D models and animations in Iron Sky. After reviewing the evidence submitted the plaintiff, the Finnish court held that he was not the owner of the copyright with respect to the film, the models, or the animations. This decision was affirmed on appeal.

In 2023, the plaintiff filed an application to register copyrights for these same materials with the U.S. Copyright Office. Shortly thereafter, he filed an infringement action against the defendant in federal court in Washington. The defendant argued that it was entitled to summary judgment because the plaintiff “cannot establish copyright ownership in Iron Sky or its 3D models and animation because a Finnish court—in an action Baylis brought as plaintiff—has already ruled on these exact copyright ownership issues and found, after a full evidentiary hearing in which Baylis participated, that he does not own the copyrights.”

To determine whether the Finnish judgment precluded the plaintiff’s claims for copyright infringement in the United States, the court looked to federal rules relating to the recognition of judgments. The basis for this invocation of federal (as opposed to state) law is not spelled out in the opinion, but the Uniform Foreign-Country Money Judgments Recognition Act only applies to money judgments and no damages were sought in the Finnish action. Federal law also generally governs the preclusive effect of foreign judgments with respect to claims—like copyright—that are based on federal law.

In any event, the court applied the factors identified by the U.S. Supreme Court in Hilton v. Guyot to assess whether the Finnish judgment was entitled to recognition in the United States as a matter of international comity. In Hilton, the Court held that a foreign judgment should be recognized in cases where:

there has been opportunity for a full and fair trial abroad before a court of competent jurisdiction, conducting the trial upon regular proceedings, after due citation or voluntary appearance of the defendant, and under a system of jurisprudence likely to secure an impartial administration of justice between the citizens of its own country and those of other countries, and there is nothing to show either prejudice in the court, or in the system of laws under which it was sitting, or fraud in procuring the judgment, or any other special reason why the comity of this nation should not allow it full effect.

The Baylis ultimately concluded that the Finnish judgment should be recognized because the plaintiff’s allegations that the Finnish court was “biased” and “incompetent” were not supported by the record.

Having concluded that the Finnish judgment was entitled to recognition, the court then considered whether the plaintiff was collaterally estopped from relitigating the issue of ownership in a U.S. court. It held that he was:

The Finnish decision was final, Baylis was a party to that action, and he had a full opportunity to participate. He is thus properly estopped here from pursuing copyright infringement claims that require copyright ownership in the underlying material.

Accordingly, the court granted the defendant’s motion for summary judgment.

The Hague Judgments Convention

In 2019, the United States signed the Hague Judgments Convention. Although the United States has yet to ratify this treaty, the wheels of government seem to be spinning—albeit slowly—in that direction. In light of this fact, it is worth asking how Baylis would have been decided if the Convention had been in force.

The short answer is Baylis would have been decided in precisely the same way. The Convention, by its terms, does not apply to judgments relating to intellectual property. Since the dispute between Baylis and Valve related to the ownership of copyrights, the Convention would have been inapplicable, and the Washington court would have engaged in the same analysis—discussion of the Hilton factors followed by principles of collateral estoppel—to resolve it. This same approach would also be used if the judgment related to family law, insolvency, contracts of carriage, defamation, privacy, antitrust, or any other matter falling outside the scope of the Convention.

If the judgment had been within the scope of the Convention, the court’s analysis would have proceeded somewhat differently. Instead of applying the Hilton factors to determine whether the foreign judgment was entitled to recognition, the court would have applied the factors laid down in the Convention. In most cases, this doctrinal shift will not produce a different result. The factors in the Convention are broadly similar to those laid down in Hilton. The court’s eyes would, however, be focused on an international instrument—the Convention—rather than a U.S. Supreme Court decision.

If the court were to conclude that the foreign judgment was entitled to recognition under the Convention, it would then have to determine whether the plaintiff was collaterally estopped from relitigating the issue in the United States. In Baylis, the court applied federal principles of collateral estoppel to answer this question. However, as Bill Dodge recently pointed out, Section 487 of the Restatement (Fourth) of Foreign Relations Law says: “A foreign judgment will not be given greater preclusive effect in the United States than the judgment would be accorded in the state of origin.” In a perfect world, the court would have applied Finnish principles of collateral estoppel to ascertain whether plaintiff was precluded from relitigating the issue of copyright ownership in the United States. Since neither party appears to have argued for this outcome, however, they waived the choice-of-law issue and (tacitly) agreed to apply U.S. principles of collateral estoppel to the exclusion of their Finnish counterpart.