Article 53 of the New York Civil Practice Law and Rules (CPLR)—New York’s version of the Uniform Foreign Country Money-Judgments Recognition Act (the Recognition Act)—was enacted to “promote the efficient enforcement of New York judgments abroad by assuring foreign jurisdictions that their judgments would receive streamlined recognition here.”1 In an Article 53 action, the Court of Appeals has noted, the holder of a money judgment rendered abroad “merely asks the court to perform its ministerial function of recognizing the foreign country money judgment and converting it into a New York judgment,”2 and thereby making the CPLR’s full arsenal of enforcement methods available to the judgment creditor in a New York state or federal court.

One section of the statute, CPLR §5304, creates exceptions to the general rule that foreign country money judgments are liberally recognized and enforced here. Section 5304 lists two situations in which a court must not recognize the foreign country money judgment and eight in which a court may, in its discretion, choose not to recognize such a judgment. This article addresses the first ground for mandatory non-recognition—that “the judgment was rendered under a system which does not provide impartial tribunals or procedures compatible with the requirements of due process of law.”3 Courts rarely deny recognition under this “due process” exception, which applies only to judgments produced by a foreign system that is fundamentally flawed; judgment debtors may not avoid New York recognition based on claimed defects in a foreign court’s handling of a particular case. In addition, CPLR §5304(a)(1) is construed to incorporate the flexible “international concept of due process,” which does not require strict adherence to “due process” as understood in domestic constitutional law.

This article also considers which party bears the burdens of persuasion and proof on the “due process” issue, and the related practical question of what evidence a party should present in order to convince a New York court that the foreign system complies (or fails to comply) with the “international concept of due process.”

Think ‘Wholesale,’ Not ‘Retail’

In light of the statutory language and the legislature’s intention to promote the recognition and enforcement of foreign judgments, a court considering a judgment debtor’s “due process” objection focuses on whether the foreign “system as a whole” is compatible with due process, rather than on whether the judgment debtor was denied due process in the case at bar.4 As the Court of Appeals held in CIBC Mellon Trust v. Mora Hotel,5 the question is “the overall fairness” of the relevant foreign legal system.

In considering this issue, both the Court of Appeals and the Appellate Division, First Department,6 have approvingly cited the Seventh Circuit’s influential decision in Society of Lloyd’s v. Ashenden.7 In that case, concerning the Recognition Act as then in effect in Illinois,8 Judge Richard Posner explained that a case-specific “retail” approach is inconsistent with both the statute’s language—which focuses on the foreign legal system in general—and its purpose of “providing a streamlined, expeditious method for collecting money judgments by courts in other jurisdictions.”9 The Seventh Circuit warned that employing a “retail” approach risks converting “every successful multinational suit for damages” into two actions.10 In Article 53 actions, courts have consistently adopted a “wholesale” approach, refusing to closely examine particular foreign proceedings or to re-evaluate the merits of cases adjudicated abroad.11

What Process is ‘Due’ Under Article 53?

What, then, does CPLR §5304(a)(1) mean by “procedures compatible with the requirements of due process of law”? Although the case law contains stray references to “our notions of procedure and due process of law,”12 a close reading of the relevant decisions makes clear that New York courts do not measure foreign proceedings against the due process clauses of our federal and state constitutions.

In CIBC Mellon, the Court of Appeals affirmed the recognition of $330 million in English default judgments based on asset-freezing orders under the Mareva doctrine, which the Court of Appeals had previously rejected. The court held that “CPLR 5304(a)(1) does not demand that the foreign tribunal’s procedures exactly match those of New York.”13 In Ashenden (approvingly cited in CIBC Mellon), the Seventh Circuit explained that the Recognition Act’s reference to “due process of law” did not mean the same process as is “due” here. The statute incorporates “the international concept of due process,” rather than “the complex concept that has emerged from American case law.”14 Echoing Judge Benjamin N. Cardozo’s famous observation that “[w]e are not so provincial as to say that every solution of a problem is wrong because we deal with it otherwise at home,”15 Posner wrote that it was “a fair guess that no foreign nation has decided to incorporate our due process doctrines into its own procedural law.”16 Accordingly, the “international concept of due process” requires only procedures that are “fundamentally fair” and “do not offend against ‘basic fairness.’”17

This liberal standard accommodates a wide variety of procedures employed by tribunals around the world. Courts applying the Recognition Act have recognized and enforced judgments from countries (often civil law countries) whose systems have features far different from ours. Thus, a system does not fail to comport with the “international concept of due process” merely because it employs different evidentiary standards than ours,18 fails to provide for cross-examination and limits a party’s opportunity to present live testimony,19 or does not require a party’s presence at every hearing.20 So long as the system provides parties with ample notice and an opportunity to be heard by an impartial tribunal before a judgment was rendered, the “international concept of due process” is likely to be satisfied.

In only a handful of cases have courts applying the Recognition Act refused to recognize and enforce a foreign judgment on “due process” grounds; these cases illustrate how far from “fundamentally fair” a system must be for its judgments not to be accorded comity under the statute. Thus, in Bridgeway v. Citibank,21 the Second Circuit affirmed a judgment denying recognition to a Liberian judgment because that country’s courts were “barely functioning” during a civil war in which hundreds of thousands of people were killed and the constitution was suspended, and because judges were not independent and impartial; they served at the will of and were subject to the influence of rival warring factions. In Bank Melli Iran v. Pahlavi,22 the Ninth Circuit affirmed an order denying recognition under California’s enactment of the Recognition Act to an Iranian default judgment obtained by state-owned banks against the sister of the deposed Shah, because Iran’s revolutionary courts were highly politicized and denied fair treatment to members of the former royal family. And in Osorio v. Dole Food,23 a U.S. district court in Florida denied recognition to a Nicaraguan default judgment under the Florida Recognition Act because Nicaragua’s judicial system discriminated against foreign litigants and the law under which defendant was sued created an irrebuttable legal presumption (at odds with scientific fact) that defendants’ conduct caused plaintiffs’ injury; defendants therefore had no fair opportunity to litigate the issues in Nicaragua.24

Whose Burden?

The “due process” ground for non-recognition of a foreign judgment is an affirmative defense to an action under Article 53.25 One would therefore expect the defendant to bear the burdens of persuasion and proof, consistent with general principles of New York law.26 That is the norm in other states that have enacted the Recognition Act.27 New York law, however, is unsettled. There is Appellate Division authority going both ways.28 The Second Circuit stated in one case that the burden is on the plaintiff to “establish prima facie” systemic due process,29 but in a later case declined to express an opinion on the burden issue.30

‘Due Process’ Evidence

Where the issue of systemic “due process” is contested, it is usually decided on a motion for summary judgment,31 including a motion for summary judgment in lieu of complaint.32 Whichever party bears the burdens of persuasion and proof, both parties’ respective counsel will have to consider what evidence to present concerning the relevant attributes of the foreign judicial system at issue.

A litigant in an Article 53 action will typically submit an expert affidavit or declaration of a qualified practitioner or academic, addressing these matters and providing support for the argument that the foreign system does (or does not) provide for procedures that are “fundamentally fair.” Such an affidavit will usually address, among other things: the structure of the foreign judicial system; the nature and composition of the tribunal; constitutional or statutory provisions guaranteeing the independence of the judiciary and protecting litigants’ rights (including the rights of all litigants to equal treatment); and statutes or rules pertaining to litigants’ rights to receive notice and an opportunity to be heard on the merits. Treaties to which both the United States and the relevant foreign country are parties may also bolster an argument that the foreign system’s procedures are fundamentally fair.33

Although foreign constitutional and statutory provisions and treaties may indicate the fairness of a foreign system of justice,34 such formal indications of fairness are not dispositive where they are contradicted by evidence of actual systemic unfairness. Thus, in Bridgeway, the evidence showed that the Liberian constitution and government were formally modeled on those of the United States, but at the relevant time Liberia’s judicial system was in a state of disarray and the provisions of the Constitution concerning the judiciary were no longer followed.35 Evidence of actual conditions in a foreign country’s judicial system may be furnished by affidavits or declarations of knowledgeable lawyers or academics and/or external reports, provided they are admissible in evidence.36

Conclusion

Consistent with Article 53′s text and purpose, cases in which recognition is denied for lack of systemic due process are few. In most cases raising the issue, it is resolved, in favor of enforcing the judgment, at summary judgment. Practitioners should, however, consider carefully what evidence can be summoned on the question whether the foreign system’s procedures are “fundamentally fair.”

Marc Gottridge is a partner at Hogan Lovells in New York. He is co-head of the firm’s global financial services litigation practice.

Endnotes:

1. CIBC Mellon Trust v. Mora Hotel, 100 N.Y.2d 215, 221 (2003).

2. Id. at 222.

3. CPLR §5304(a)(1). The second mandatory ground for non-recognition is that the foreign court lacked “personal jurisdiction over the defendant.” Id. §5304(a)(2).

4. CIBC Mellon, 100 N.Y.2d at 222.

5. 100 N.Y.2d 215, 222 (2003); see also Downs v. Yuen, 298 A.D.2d 177, 178 (1st Dept. 2002) (“The question is not whether defendant was denied due process, but whether the Hong Kong judicial system as a whole comports with due process.”).

6. CIBC Mellon Trust v. Mora Hotel, 296 A.D.2d 81, 89 (1st Dept. 2002), aff’d, 100 N.Y.2d 215 (2003).

7. 233 F.3d 473 (7th Cir. 2000).

8. The Recognition Act was drafted in 1962 by the National Conference of Commissions on Uniform State Laws (Commission). The New York enactment provides that it “shall be so construed as to effectuate its general purpose to make uniform the law of those states which enact these provisions.” CPLR §5308. In 2005, the Commission proposed a revised version of the statute, modifying certain features of the original Recognition Act, but not the “due process” exception. New York and 15 other states that enacted the original Recognition Act have not adopted the revised version; 17 states and the District of Columbia have done so.

9. Id. at 477.

10. Id.

11. See, e.g., Pariente v. Scott Meredith Literary Agency, 771 F. Supp. 609, 617 (S.D.N.Y. 1991) (declining to undertake a “microscopic review” of the French system that produced the judgment in question); Blacklink Transp. Consultants Pty. v. Von Summer, 18 Misc. 3d 1113(A), 2008 WL 89958 at *6 (Sup. Ct. N.Y. Cnty. 2008) (“On a motion seeking recognition and enforcement of a foreign country money judgment, it is not for the New York court to question the underlying merits of the judgment.”). By contrast, the 2005 revision to the Recognition Act, which has not been adopted in New York (see supra note 8), grants courts discretion to refuse recognition and enforcement of a foreign country money judgment on the ground that “the specific proceeding in the foreign court leading to the judgment was not compatible with the requirements of due process of law.”

12. Sung Hwan v. Rite Aid, 7 N.Y.3d 76, 83 (2006).

13. 100 N.Y.2d at 222.

14. 233 F.3d at 477.

15. Loucks v. Standard Oil of New York, 224 N.Y. 99, 111 (1918).

16. Ashenden, 233 F.3d at 476.

17. Id. at 477.

18. Pariente, 771 F. Supp. at 617.

19. Ingersoll Milling Mach. v. Granger, 833 F.2d 680, 687 (7th Cir. 1987).

20. Downs, 298 A.D.2d at 178.

21. 201 F.3d 134 (2d Cir. 1999).

22. 58 F.3d 1406 (9th Cir. 1995).

23. 665 F. Supp. 2d 1307 (S.D. Fla. 2009).

24. Id. at 1327-45.

25. Chevron v. Naranjo, 667 F.3d 232, 240 (2d Cir. 2012), cert. denied, 2012 WL 1932210 (Oct. 9, 2012).

26. See, e.g., Young v. Supervisor of Town of Lloyd, 159 A.D.2d 828 (3d Dept. 1990); Flatau v. Fairchild Camera & Instrument, 40 A.D.2d 990 (2d Dept. 1972).

27. See Flame v. Industrial Carriers, 777 F. Supp. 2d 717, 719 & n.4 (collecting cases).

28. Compare Wimmer Canada v. Abele Tractor & Equip., 299 A.D.2d 47, 49 (3d Dept. 2002) (plaintiff had the burden of making a showing that the mandatory grounds for nonrecognition do not exist), with Downs, 298 A.D.2d at 178 (defendant had the burden of offering evidence as to whether Hong Kong judicial system provided procedures comporting with due process).

29. Ackermann v. Levine, 788 F.2d 830, 842 n.12 (2d Cir. 1986).

30. Bridgeway, 201 F.3d at 141.

31. See, e.g., Wimmer Canada, 299 A.D.2d at 49.

32. See, e.g., Abu Dhabi Commercial Bank PJSC v. Saad Trading, 948 N.Y.S.2d 533 (Sup. Ct. N.Y. Cnty. May 15, 2012).

33. See S.C. Chimexim v. Velco Enters., 36 F. Supp. 2d 206, 214 (S.D.N.Y. 1999) (relying in part on a trade relations treaty between the United States and Romania according the nationals of each country “national treatment with respect to access to all courts and administrative bodies in the territory of the other”).

34. See id. at 214 (discussing relevant provisions of the Romanian constitution).

35. Bridgeway, 201 F.3d at 142-44 & n.3.

36. See id. at 143-44 (relying on U.S. State Department Country Report on Human Rights Practices); Bank Melli Iran v. Pahlavi, 58 F.3d 1406, 1411-12 (9th Cir. 1995) (same). In Bridgeway, the Second Circuit rejected the judgment creditor’s argument that a particular State Department report was inadmissible hearsay falling outside the public records exception of Fed. R. Evid. 803(8). However, the court suggested that where (unlike in Bridgeway) such a report is shown to have been motivated by the United States’ enmity or alliance with a particular country, its reliability and thus its admissibility may be called into question. Bridgeway, 201 F.3d at 144 n.4.