A Primer on Foreign Judgments
March 25, 2022
In the United States, the recognition and enforcement of foreign-country judgments is generally governed by state law. Nevertheless, the law on foreign judgments is fairly uniform throughout the United States because most states have adopted one of two Uniform Acts. These Acts establish a presumption that final, conclusive, and enforceable foreign judgments are entitled to recognition subject to certain enumerated grounds for nonrecognition.
Recognizing a foreign judgment means accepting a foreign court’s determination of the parties’ rights and obligations. Once a foreign judgment has been recognized, it may be enforced against the judgment debtor’s assets, or it may serve as the basis for claim preclusion (res judicata) or claim preclusion (collateral estoppel).
Foreign country judgments are not covered by the Full Faith and Credit Clause of the U.S. Constitution or by the Full Faith and Credit Act that Congress passed to implement this clause. In Hilton v. Guyot (1895), the U.S. Supreme Court articulated a common-law presumption favoring the recognition of foreign judgments based on international comity, along with several grounds for nonrecognition including lack of reciprocity. Because Hilton was decided under general common law, state courts did not treat it as binding during the period before Erie Railroad Co. v. Tompkins (1938). After Erie, it has been accepted that state law governs the recognition and enforcement of foreign judgments even in federal court.
In 1962, the National Conference of Commissioners on Uniform State Laws (known today as the Uniform Law Commission) recommended adoption by the states of the Uniform Foreign Money-Judgments Recognition Act and issued an updated version in 2005 known as the Uniform Foreign-Country Money Judgments Recognition Act. As of March 2022, twenty-eight states and the District of Columbia have adopted the 2005 Uniform Act, while the 1962 Uniform Act remains in force in an additional nine states. The Acts are largely similar, although the 2005 Act adds two grounds for nonrecognition not found in the 1962 Act. In the remaining thirteen states, the recognition of foreign judgments is governed by state common law, which has also been heavily influenced by Hilton.
In 2010, Congress passed the federal SPEECH Act to govern the recognition and enforcement of foreign defamation judgments. Under the SPEECH Act, federal and state courts may not recognize or enforce a foreign defamation judgment unless the person opposing recognition would have been found liable under the constitutional standards applicable to suits in the United States. Outside the defamation context, however, the recognition and enforcement of foreign judgments is governed by state law.
Requirements for Recognition
The Uniform Acts apply only to judgments that grant or deny recovery of a sum of money, although courts in the United States regularly recognize non-money judgments as a matter of comity. The Uniform Acts do not apply, however, to certain categories of money judgments: tax judgments, judgments for fines and penalties, and family law judgments. To be eligible for recognition under the Uniform Acts, a foreign judgment must be final, conclusive, and (if money was awarded) enforceable under the laws of the country where the judgment was rendered. A foreign judgment that is subject to appeal may be considered final if the foreign country treats it that way. But both Uniform Acts give U.S. courts discretion to stay a suit seeking recognition of a foreign judgment pending appeal. Foreign judgments that meet these requirements are entitled to recognition under the Uniform Acts unless a ground for nonrecognition is established.
Grounds for Nonrecognition
Both Uniform Acts set forth grounds for nonrecognition that are nearly identical, with two exceptions discussed below. The Acts distinguish between mandatory and discretionary grounds for nonrecognition. Even when a ground is discretionary, however, courts will generally deny recognition unless the court finds that the ground should have been raised in the foreign legal system. For example, one court has held that a party who failed to raise a contract’s arbitration clause during a foreign proceeding cannot resist recognition of a foreign judgment on the ground that it conflicts with the arbitration clause.
Systemic Lack of Due Process
Under the Uniform Acts, a court may not recognize a foreign judgment if the foreign legal system “does not provide impartial tribunals or procedures compatible with the requirements of due process of law.” This ground looks at the foreign judicial system as a whole, and only a few decisions in the United States have ever denied recognition to a foreign judgment on this basis.
Lack of Jurisdiction
A court may not recognize a foreign judgment if the foreign court lacked personal or subject-matter jurisdiction. Personal jurisdiction is judged by U.S. constitutional standards, so foreign judgments rendered on a basis that the United States considers inappropriate (like jurisdiction based on the nationality of the plaintiff) will not be recognized. In each of the Uniform Acts, Section 5 contains a nonexclusive list of bases for personal jurisdiction that are considered to meet the Acts’ standards.
The subject-matter jurisdiction of the rendering court is generally a question of foreign law that U.S. courts will not second-guess. When U.S. law gives U.S. courts exclusive subject-matter jurisdiction, however, recognition will generally be denied on this basis.
Lack of Notice
A foreign judgment need not be recognized if the defendant did not receive notice of the proceeding in sufficient time to defend. This ground focuses on the substantive adequacy of the notice rather than the technical details of service. A U.S. court may treat a failure to challenge the adequacy of notice in the foreign procedure as a waiver of the claim.
A foreign judgment need not be recognized if it was obtained by fraud that denied the losing party an adequate opportunity to present its case. If the fraud could have been uncovered and corrected in the foreign legal proceeding or on appeal, however, a court may exercise its discretion to recognize the judgment despite the fraud.
A court will not recognize a foreign judgment that is “repugnant” to federal or state public policy. The standard is a high one. The fact that foreign law differs from U.S. law is not sufficient. On the other hand, judgment rendered under a foreign law that irrebuttably presumes causation in a tort suit may be denied recognition on this basis.
Conflict with Another Final Judgment
A foreign judgment need not be recognized if it conflicts with another final judgment. Generally, courts in the United States give effect to the judgment that is last in time on the theory that the last-in-time court has considered the preclusive effect of the earlier judgment. But courts need not follow the last-in-time rule when the last-in-time court “departed from normal res judicata principles.”
Conflict with a Dispute Resolution Clause
U.S. courts need not recognize a foreign judgment that was rendered in violation of a forum-selection clause or arbitration clause between the parties. Nevertheless, a court may find that the clause has been waived if the party resisting recognition did not raise it in the foreign proceeding.
Seriously Inconvenient Forum
A foreign judgment need not be recognized when jurisdiction is based only on personal service (tag jurisdiction) and the foreign court was a “seriously inconvenient” forum. This combination is rare. Courts will often find that jurisdiction rested on an additional basis, that the foreign court was not seriously inconvenient, or both.
Lack of Integrity or Due Process in the Specific Proceeding
Two grounds for nonrecognition found in the 2005 Uniform Act but not in the 1962 version are “substantial doubt about the integrity of the rendering court with respect to the judgment” and lack of due process in the specific proceeding. The first refers to corruption, whereas the second refers to procedures that were fundamentally unfair. Unlike the systemic lack of due process ground discussed above, these grounds focus on serious defects in the specific proceeding.
Although the Supreme Court in Hilton denied recognition of a French judgment because France did not give reciprocity to U.S. judgments, lack of reciprocity is not a ground for nonrecognition under the Uniform Acts. Six states, however, have added lack of reciprocity as a basis for nonrecognition of foreign judgments: Arizona, Florida, Maine, Massachusetts, Ohio, and Texas. New Hampshire also lists reciprocity as a basis for declining to recognize judgments rendered by courts in Canada. These states do not require that the foreign country has previously recognized one of their judgments but rather look at how the country generally treats U.S. judgments or whether it would be likely to enforce a similar U.S. judgment. Legal scholars disagree as to whether U.S. states should treat lack of reciprocity as a basis for non-recognition.
Tax and Penal Judgments
Under longstanding common-law rules, U.S. courts do not enforce foreign tax and penal judgments. These rules are sometimes referred to as the “public law taboo.” These rules are reflected in the exclusion of tax and penal judgments from the Uniform Acts. There are a few tax treaties that provide for the enforcement of foreign tax judgments, and a number of Mutual Legal Assistance Treaties (MLATs) that provide for the enforcement of fines. Many state laws also take account of foreign penal judgments for other purposes, such as repeat-offender or double-jeopardy statutes.
The United States is not currently a party to any treaties for the recognition and enforcement of foreign judgments. The United States has signed but not yet ratified the 2005 Hague Convention on Choice of Court Agreements and the 2019 Hague Judgments Convention.