Originally from:
The Practice of International Litigation - 2nd Edition - Looseleaf
The Practice of International Litigation - 2nd Edition - Electronic
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Enforcement of Money Judgments Abroad
Lawrence W. Newman and Michael Burrows
This chapter discusses the enforcement of judgments and arbitral awards
against foreign debtors, both from the point of view of the creditor and
from the point of view of a debtor seeking to avoid enforcement of a
judgment against it. Opportunities exist for judgments to be enforced
against foreign debtors both in this country and abroad, depending on the
location of the debtor’s assets. It is therefore important that creditor’s
counsel be aware of such opportunities as well as the types of constraints
imposed by foreign countries’ laws on recognition and enforcement of
foreign judgments.
The initial decision with which a foreign debtor is faced is whether to
make a special appearance to contest jurisdiction, to make a general
appearance to contest the merits or to accept a default judgment in the
United States and then try to contest the enforceability of the judgment in
his home territory. Which of these alternatives a debtor will select will
depend on the laws relating to the enforcement of judgments in whatever
country the debtor may have assets.
There are obvious advantages for a creditor in the United States if he
obtains a prejudgment attachment of the debtor’s assets in this country.
Unfortunately for the creditor, United States law does not permit the
separation of proceedings for attachment from proceedings on the merits
themselves. As a result, a creditor may discover that its debtor possesses
assets located in the United States, but that the creditor is unable to attach
those assets because of an inability to obtain personal jurisdiction over the
debtor-defendant. As a result, obtaining security for judgments through
prejudgment attachments presents problems for creditors in the United
States if there are insufficient contacts between the defendant and the
location of the asset sought to be attached.
In many foreign countries, however, attachment proceedings are
separate from proceedings on the merits and it is thus not necessary for
liability to be determined in the same country where the attachments are
obtained. Moreover, in some of those countries there is sufficient basis for
jurisdiction to obtain an attachment if the defendant possesses assets
located there. Among the countries where there is jurisdiction for obtaining
an attachment solely on the basis of the presence of assets are the Federal
Republic of Germany, France, The Netherlands, Italy, Japan and
Switzerland.
If prejudgment attachments are not available or advisable in certain
circumstances, one should give consideration in the early stages of any
litigation to the enforceability abroad of judgments and arbitral awards
obtained against foreign defendants. This consideration should be also
given when attachments are obtained abroad because those attachments will
be of no value if the expected judgments or arbitral awards which they
secure are not enforceable under local foreign law.
Lawrence W. Newman has been a partner in the New York office of Baker & McKenzie since 1971, when, together with the late Professor Henry deVries, he founded the litigation department in that office. He is the author/editor of 4 works on international litigation/arbitration.
Michael Burrows, Formerly, Of Counsel, Baker & McKenzie, New York.
