Foreign-Country Judgments and Full Faith and Credit
September 21, 2023
Article IV, section 1 of the U.S. Constitution begins by stating: “Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State.” Congress has extended this principle to judgments from U.S. territories and possessions too, providing in the Full Faith and Credit Act that such judgments “shall have the same full faith and credit in every court within the United States and its Territories and Possessions as they have by law or usage in the courts of such State, Territory or Possession from which they are taken.” But the law has been settled since at least Aetna Life Insurance Co. v. Tremblay(1912) that no similar right “is conferred by the Constitution or by any statute of the United States in respect to the judgments of foreign states or nations.”
The recognition of foreign country judgments is instead governed by state law. Twenty-nine states and the District of Columbia have adopted the 2005 Uniform Foreign-Country Money Judgments Recognition Act(2005 Uniform Act), while, in nine more states, the earlier 1962 Uniform Foreign Money-Judgments Recognition Act (1962 Uniform Act) remains in effect. (Today, the only federal statute addressing foreign-country judgments is the so-called SPEECH Act, which is limited to prohibiting the recognition of foreign defamation judgments unless they meet First Amendment standards.)
But what if a court in the United States recognizes a foreign-country judgment? Is the decision recognizing the foreign judgment entitled to full faith and credit in other states? Or what if the foreign-country judgment conflicts with another U.S. judgment? Does full faith and credit break the tie in favor of the U.S. judgment?
U.S. Decisions Recognizing Foreign-Country Judgments
In 2011, Standard Chartered Bank brought an action in New York state court to recognize a Bahrain court judgment. That judgment awarded Standard Chartered more than $25 million in damages against a Saudi partnership. The New York court recognized the Bahrain judgment under New York’s version of the 1962 Uniform Act, and New York’s Appellate Division affirmed.
Standard then sought to enforce the New York judgment in Pennsylvania. In Standard Chartered Bank v. Ahmad Hamad Al Gosaibi & Bros. Co. (2014), the Pennsylvania Superior Court acknowledged that the Constitution’s Full Faith and Credit Clause “does not extend to judgments of foreign nations.” In this case, however, Standard sought enforcement of the New York judgment recognizing the Bahrain judgment. “Pursuant to the U.S. Constitution, the Full Faith and Credit Act, and the [Pennsylvania’s Uniform] Enforcement [of Foreign Judgments] Act,” the court reasoned, Standard’s “New York judgment is, as a matter of law, entitled to full faith and credit in Pennsylvania as with any other judgment issued by a New York court.” The fact that “the New York judgment recognized a foreign nation judgment is of no moment.”
Standard also sought to enforce the New York judgment in the District of Columbia, but the D.C. Court of Appeals disagreed with the Pennsylvania court. In Standard Chartered Bank v. Ahmad Hamad Al Gosaibi & Bros. Co. (2014), issued two weeks after the Pennsylvania decision, the District of Columbia’s highest court held that the same New York judgment was not entitled to full faith and credit. “[W]hen a state does nothing more than recognize a foreign country judgment,” the court reasoned, “it lacks the type of interest that drives full faith and credit jurisprudence.” Giving full faith and credit to such a judgment would promote “forum shopping,” the court noted, encouraging judgment creditors “to seek recognition in whichever state offers the most lax standards.” In New York, there were “fewer statutory grounds for withholding recognition” than in D.C. because D.C. had adopted the 2005 Uniform Act, whereas New York adhered to the 1962 version until 2021. “In reality,” the court concluded, “the judgment at issue here is a foreign country judgment…. The constitutional command to give full faith and credit does not apply in these circumstances, and it therefore does not override the policy decisions embodied in [D.C.’s] local statutes.”
The few other decisions to have addressed this question are similarly split. A Delaware court has sided with Pennsylvania, holding that the Full Faith and Credit clause requires courts in the United States to give effect to sister-state judgments recognizing foreign-country judgments. By contrast, a 1998 Texas decision held that a state court judgment from Louisiana recognizing a Canadian judgment was not entitled to full faith and credit. (For a scholarly exchange, inspired by the Texas case, between Greg Shill and Chris Whytock, see here, here, and here.)
The Restatement (Fourth) of Foreign Relations Law (2018) takes the position in comment h to § 481 that neither the Full Faith and Credit Clause nor the Act “require[s] a court in the United States to regard as conclusive the decision of another court in the United States to recognize, or not to recognize, a foreign judgment.” (Disclosure: I served as a reporter for the Restatement (Fourth).)
Reporters’ Note 9 offers two reasons for taking this position. First, technically, a sister-state’s decision addresses only whether a foreign judgement is entitled to recognition under the law of that state and not under the laws of other states. In other words, New York’s decision to recognize a Bahrain judgment decides only that the judgment is entitled to recognition under the law of New York and not under the laws of Pennsylvania or D.C. Second, denying preclusive effect to sister-state judgments in this context discourages judgment creditors from forum shopping for the most generous recognition law.
Conflicts Between U.S. and Foreign Judgments
Another situation in which the Full Faith and Credit Clause may come into play is when a foreign judgment conflicts with a U.S. judgment. Under both the Uniform Acts, a court need not recognize a foreign-country judgment if “the judgment conflicts with another final and conclusive judgment.” When two sister-state judgments conflict, the Supreme Court has held that the later judgment should prevail, on the theory that the winning party in the first case should have raised the preclusive effect of that judgment in the second case and that any error of the second court in not granting preclusive effect should be corrected on appeal. Although not required by the Full Faith and Credit Clause, courts in the United States have extended this last-in-time rule to foreign-country judgments as well.
When the U.S. judgment comes second, there is no conflict between the later-in-time rule and the Full Faith and Credit Clause. But what if the U.S. judgment comes first? Should the Full Faith and Credit Clause prevail over the later-in-time rule and bar recognition of the foreign-country judgment?
This was the situation in Ackerman v. Ackerman (SDNY 1981). An ex-wife sued her former husband in England for breach of a separation agreement. The former husband argued that the case should be dismissed because a California court had dismissed an earlier claim for breach of the agreement with prejudice. The English court held that the California dismissal was not preclusive and awarded damages against the former husband. When the ex-wife sought to enforce the English judgment in New York, the former husband argued that the court should deny recognition because the English judgment conflicted with the California one.
Judge Sofaer disagreed. First, he concluded that the California dismissal was not preclusive. He then continued: “Even if the California dismissal were res judicata under California law and entitled to full faith and credit under New York law, it would be superceded [sic] by the English judgment, which must be enforced pursuant to the principles of comity and the New York last-in-time rule.” Judge Sofear noted that “[t]he English court gave extensive and intelligent consideration to the res judicata effect of the California dismissal, under both California and English law” and that the former husband “did not even attempt to pursue an appeal of the English judgment.” Under these circumstances, the reasons for giving effect to the later judgment applied with full force.
The few other courts to have address this question have agreed. But not everyone does. In 1969, then-Professor Ruth Bader Ginsburg argued that the later-in-time rule depended on the applicability of the Full Faith and Credit Clause and should not be extended to foreign judgments. The American Law Institute’s Proposed Federal Statute for the Recognition and Enforcement of Foreign Judgments (2006) similarly took the position in § 5, comment j, that courts in the United States should deny recognition to a foreign-country judgment that conflicts with a U.S. judgment even if the foreign judgment was later-in-time. But because Congress never acted on the ALI’s proposed federal statute, state law continues to govern, and the constitutional demands of the Full Faith and Credit Clause remain an open question.
The Full Faith and Credit Clause does not apply to the recognition of foreign-country judgments. Perhaps that should be equally true when a court in the United States recognizes the foreign judgment and when the foreign judgment conflicts with an earlier U.S. judgment.