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Foreign Judgments Recognition Law Due for Update

The Commonwealth's policy regarding the recognition and enforcement of money judgments rendered by foreign courts has suffered from lack of clarity, as shown in the current version of the Uniform Foreign Money-Judgments Recognition Act, Mass. Gen. Laws ch. 235, sec. 23, (the "UFMJRA").  A corrective bill pending in the Massachusetts legislature, the Uniform Foreign-Country Money Judgments Recognition Act, if adopted, would promote both predictability and sound public policy with respect to the enforcement of foreign judgments in the Commonwealth. The new foreign judgments recognition legislation was promulgated in 2005 by the Uniform Law Commission and has been adopted by eighteen states.

The current and proposed versions of the uniform foreign money judgments acts contain similar provisions. They provide for the recognition of foreign money judgments by a Massachusetts court, if the foreign judicial system that rendered the judgment provides impartial tribunals and due process procedures, and if it properly exercised jurisdiction over the case. They additionally allow a court to refuse to enforce a foreign judgment for reasons including lack of notice, fraud, violation of public policy, or conflict with another judgment. The proposed act adds two defenses, allowing a judgment debtor to show that the foreign court lacked integrity or violated due process in the specific proceedings leading to the judgment. Under current law, litigants are required to prove that these defects exist in civil justice system of the foreign court as a whole.

The proposed legislation would improve the current law in several respects. First, the law clarifies which foreign cases it governs; it explicitly states that it only applies to judgments rendered in foreign countries. In several cases, Massachusetts courts have mistakenly applied the UFMJRA to judgments from other states within the U.S., allowing defendants to challenge other states' judgments for alleged defects such as lack of jurisdiction or proper notice. However, the Full Faith and Credit Clause of the U.S. Constitution, accompanying federal law and another uniform state law (which is not adopted in Massachusetts) govern the enforcement of a sister state's judgment. States have far more discretion to refuse to recognize a judgment rendered by a foreign country than another state. The proposed act clarifies its limited application to money judgments of foreign countries.

The new legislation establishes a statute of limitations for bringing actions to enforce foreign money judgments, a provision not included in the current law. Under the proposed form, the statute of limitations is established as the earlier of (a) the date the judgment is no longer enforceable in the jurisdiction it was rendered, or (b) fifteen years from the date of the judgment. Massachusetts could either adopt the proposed statute of limitations or implement its own.

Ideally, the legislature would also specify which country's law governs whether jurisdiction was properly exercised in the foreign proceedings. The current law does not state whether the foreign court's exercise of jurisdiction should be judged according to the jurisdiction laws of the foreign court or of Massachusetts.  Filling this void is important because lack of jurisdiction is one of the commonly raised defenses to the recognition of a foreign judgment, and a finding of lack of jurisdiction mandates non-recognition. The courts of Massachusetts have often looked to the laws of both the nation rendering the judgment and Massachusetts -- and have found that the same result is required under each. However, because some nations' jurisdictional laws vary substantially from Massachusetts law, the new statute should eliminate uncertainty and specify which country's law governs determinations of whether jurisdiction was proper in a foreign proceeding.

It should be noted that the passage of the proposed act gives Massachusetts the opportunity to eliminate its ineffectual reciprocity requirement for the recognition of foreign judgments.  When Massachusetts passed the UFMJRA in 1966, it inserted a non-uniform clause stating that if courts of the foreign state do not recognize judgments of Massachusetts courts, then Massachusetts will not recognize judgments from those countries. The aim of the reciprocity requirement was to encourage the recognition and enforcement of United States judgments in other nations. However, it has been criticized as an ineffective way of doing so. 

Reciprocity takes an oversimplified approach to a complex problem by instituting a tit-for-tat recognition scheme.  Foreign courts generally refuse to recognize U.S. judgments for specific substantive reasons. For example, U.S. judgments are frequently not recognized where a U.S. court exercises jurisdiction over a foreign defendant based on its minimum contacts with a state. Our minimum contacts approach does not comport with more restrictive notions of jurisdiction found abroad. Similarly, punitive damage awards are considered contrary to the public policy of many foreign nations. A reciprocity requirement is unlikely to encourage foreign courts to recognize U.S. judgments when non-recognition is predicated on deeply rooted policy grounds. 

Courts have responded to foreign nations' mixed treatment of U.S. judgments by interpreting the reciprocity requirement liberally. Massachusetts courts have found that the reciprocity requirement is met even when foreign courts reserve the right to review United States judgments on the merits or allow parties to raise substantive defenses to their enforcement. Even so, the reciprocity requirement can needlessly prolong recognition proceedings by necessitating an inquiry into foreign countries' treatment of Massachusetts judgments. Having to prove reciprocity can be difficult, as there are frequently no known cases of a Massachusetts judgment being recognized in the foreign country. If that is the case, the court must then interpret the foreign country's laws or rely on expert testimony provided by the parties. 

Repeal of the reciprocity requirement would keep the focus in these cases where it should be - that is, on the integrity of the foreign judgment. The uniform defenses in the Recognition Act focus on the parties' procedural rights.  If these rights have not been violated, then Massachusetts should accept the ruling of the foreign court on the merits. The reciprocity defense sacrifices the parties' right to finality for foreign policy reasons wholly unrelated to their claim. 

Finally, we note that the Hague Convention on Choice of Court Agreements should be implemented within the next year; it will overlap, partially preempt, and thus require amendment to the current state recognition law.  The Convention is the first international treaty the United States has entered concerning the reciprocal enforcement of judgments. The treaty will apply to international commercial agreements with dispute resolution clauses providing that a specific court will hear disputes regarding the agreement.  The treaty requires that any other court shall not hear the case and the courts of other signatory countries must recognize and enforce a judgment rendered by the parties' chosen court.  Though limited in scope and by the number of signatory countries, the Convention represents progress in the recognition of Massachusetts judgments abroad. The Uniform Law Commission has drafted a uniform state statute that harmonizes the provisions of the Convention with the existing uniform state law on recognition and enforcement of foreign judgments.

In sum, it is apparent that the Massachusetts version of the Uniform Foreign Money-Judgments Recognition Act is due for updating.  The legislature should adopt the new uniform act, including its amendments and the additions suggested above, and thereby express a clear policy on the recognition and enforcement of money judgments rendered in other countries. 

A form of this article, written by Jonathan W. Fitch and Faith A. Hill, originally appeared in Massachusetts Lawyers Weekly at 41 MLW 159.

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