Recognition of Foreign Judgments Now More Difficult in New Jersey

Recognition of Foreign Judgments Now More Difficult in New Jersey

Prior to leaving office, Gov. Chris Christie signed legislation into law that may make it more difficult for judgment creditors to enforce foreign judgments without additional litigation and expense.

Recognition of Foreign Judgements Under Prior Law

Foreign country money judgments are enforceable in the same manner as the judgment of a sister state, which is entitled to full faith and credit in New Jersey courts. Under the prior version of the law, the Foreign Country Money-Judgments Recognition Act, an authenticated copy of a foreign judgment, decree, or order could be directly filed with the Clerk of the Superior Court of New Jersey, along with a supporting affidavit from the judgment creditor. Thereafter, the clerk was required to “treat the foreign judgment in the same manner as a judgment of the Superior Court of New Jersey.”

While the former process was extremely straightforward, it was not without its critics. In 2015, the Appellate Division suggested that the New Jersey Legislature reconsider the recognition of foreign judgments. While the court upheld the prior version of the law in Enron (Thrace) Expl. & Prod. BV v. Clapp, 378 N.J. Super. 8, 15 (App. Div. 2005), it also raised concerns:

We note that concerns about the constitutionality of the filing . . . of judgments from nations that do not adhere to basic principles of due process of law may be addressed by amending the FCMJRA to require prior judicial approval of judgments of foreign countries by way of motion or a separate enforcement proceeding. We suggest that the Legislature consider such a change to avoid potential claims that the filing of judgments of certain foreign nations, without prior notice and the opportunity to be heard, may result in an unconstitutional taking of property without due process of law.

The Foreign Country Money-Judgments Recognition Act of 2015  

More than decade later, the Legislature incorporated the Appellate Division’s advice when amending the law. The Foreign Country Money-Judgments Recognition Act of 2015 replaces existing statutes concerning the recognition of foreign country money-judgments. Like its predecessor, it does not apply to a foreign-country judgment to the extent that the judgment is: a judgment for taxes; a fine or other penalties; or a judgment for divorce, support, or maintenance, or other judgment rendered in connection with domestic relations.

Most notably, the amended law mandates that when creditors seek recognition of a foreign judgment as an original matter, they must file a legal action seeking recognition rather than simply filing the judgment with the clerk. It further provides that a party resisting recognition of a foreign-country judgment has the burden of establishing that a ground for nonrecognition exists. A court may not recognize a foreign-country judgment if: the judgment was rendered under a judicial system that does not provide impartial tribunals or procedures compatible with the requirements of due process of law, as determined by the court using standards developed by the American Law Institute and the International Institute for the Unification of Private Law to govern resolution of transnational disputes; the foreign court did not have personal jurisdiction over the defendant; or the foreign court did not have jurisdiction over the subject matter.

In addition, a New Jersey court may determine, in its discretion, not to recognize a foreign-country judgment if:

• The defendant in the proceeding in the foreign court did not receive notice of the proceeding in sufficient time to enable the defendant to defend;
• The judgment was obtained by fraud that deprived the losing party of an adequate opportunity to present its case;
• The judgment or the cause of action on which the judgment is based is repugnant to the public policy of New Jersey or of the United States;
• The judgment conflicts with another final and conclusive judgment;
• The proceeding in the foreign court was contrary to an agreement between the parties under which the dispute in question was to be determined otherwise than by proceedings in that foreign court;
• In the case of jurisdiction based only on personal service, the foreign court was a seriously inconvenient forum for the trial of the action; 
• The judgment was rendered in circumstances that raise substantial doubt about the integrity of the rendering court with respect to the judgment; or
• The specific proceeding in the foreign court leading to the judgment was not compatible with the requirements of due process of law, as determined by the court using standards developed by the American Law Institute and the International Institute for the Unification of Private Law to govern resolution of transnational disputes.

In contrast, where a foreign-country judgment has been rendered in default of appearance of the defendant, the party seeking recognition has the burden of establishing certain factors, such as jurisdiction and service of process.

The Foreign Country Money-Judgments Recognition Act of 2015 also provides for circumstances in which a foreign-country judgment may not be refused recognition for lack of personal jurisdiction. In addition, it provides that the New jersey may recognize bases for personal jurisdiction other than those listed in the bill as sufficient to support a foreign-country judgment, as long as the exercise of personal jurisdiction in the foreign country is compatible with the Due Process Clause of the United States Constitution.

The new law expressly provides that if the court in a proceeding finds that the foreign-country judgment is entitled to recognition then, to the extent that the foreign-country judgment grants or denies recovery of a sum of money, the foreign-country judgment is conclusive between the parties to the same extent as the judgment of a sister state entitled to full faith and credit in New Jersey would be conclusive and is enforceable in the same manner and to the same extent as a judgment rendered in the state.

Finally, the Foreign Country Money-Judgments Recognition Act of 2015 provides that an action to recognize a foreign-country judgment may not be commenced before the foreign-country judgment becomes effective in the foreign country, or after 15 years from the date that the foreign-country judgment became effective in the foreign country.

Bottom Line for New Jersey Businesses

Under the new procedures, judgment debtors will have a new avenue to delay and challenge foreign judgments. For businesses seeking to enforce a foreign judgment, it is imperative to work with an experienced New Jersey litigation attorney.

Do you have any questions? Would you like to discuss the matter further? If so, please contact me, Robert Levy, at 201-806-3364.