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Enforcing Foreign Judgments in California
The volume of international commerce grows nearly every year, and with it the problem of how a party in one country may obtain and enforce court judgments against a party in another country. Imagine that a plaintiff has successfully litigated against an American party in a court in a foreign country (not merely in another American state). That plaintiff now has a judgment against the American defendant for a certain amount of money, and he wants to enforce the judgment here in the U.S., where the defendant has financial assets. The United States is not a party to any international treaty for enforcement of foreign judgments.
Therefore, American courts are not required by any international treaty to enforce judgments from any foreign country. However, California, along with more than half the states in the U.S., has adopted the Uniform Foreign-Country Money Judgments Recognition Act. Under the Act, a party who has obtained a foreign judgment may seek to have it enforced in a California court by either filing a new lawsuit for that purpose or by raising the issue in an ongoing suit in California, even if the judgment comes from a country where courts would not enforce California judgments. However, various requirements must then be met.
First, the foreign judgment must grant or deny the recovery of money, and it must be final under the law of the foreign country. Further, even a final judgment may not be enforced by California courts if it was issued by a judicial system that does not provide impartial tribunals or afford due process of law, if the foreign court did not have jurisdiction over the defendant or the subject matter of the litigation, or did not provide fair notice or opportunity for provision of evidence. The Act also lists various other factors which a Court may consider in its discretion.
If a plaintiff knows in advance of seeking a judgment abroad that he may have to seek enforcement of that judgment in the U.S., the Act provides guidance for maximizing the chances of enforcement. For example, even if a foreign court happened to have lax rules allowing a plaintiff to sue a defendant without providing notice to that defendant of the lawsuit, there would be little point in taking advantage of that rule, because a judgment obtained without providing the defendant fair notice and the opportunity to provide evidence in its defense would not be enforceable in California. Some issues can also be addressed by contract before a conflict ever develops. For instance, a foreign judgment for a certain amount of money would likely be stated in the foreign court’s local currency. A California court enforcing a foreign judgment rendered in foreign currency must ordinarily convert the foreign currency award to American dollars using the exchange rate that was in effect when the foreign judgment was issued. However, contracting parties can agree that one party in particular will bear the risk of post-judgment currency fluctuations, so that a California court could convert a foreign award to U.S. dollars using the current exchange rate.
Finally, one must be aware of the time limitations involved in enforcing foreign judgments. For example, in California the action must be filed before the judgment itself expires under the foreign country’s law, or before the judgment has become 10 years old -whichever comes earlier.
Dr. Dariush Adli
Adli Law Group P.C