Bill Dodge has a new post about the interesting and longstanding question of how a US court should treat the judgment of a sister-state court recognizing a foreign country judgment. Everyone agrees that the foreign country judgment is not itself entitled to full faith and credit. But is a US judgment recognizing the foreign country judgment entitled to full faith and credit?
The cases are split. The most dramatic split involves the case of Standard Chartered case, where a Pennsylvania court gave full faith and credit to a New York judgment in this situation and a DC court did not. (I wrote about the Pennsylvania case and the DC case back in 2014, and about the underlying New York case in 2013).
Bill, who served as a reporter on the Restatement (Fourth) of the Foreign Relations Law of the United States, points to § 481, cmt. h, which takes the position that courts are not required to give full faith and credit to sister-state judgments recognizing foreign country judgments. The Restatement gives two reasons. First, a state judgment recognizing a foreign award only holds that the award is entitled to recognition under the law of that state, not entitled to recognition generally. Second, requiring full faith and credit encourages forum-shopping.
I understand the second reason. I’m not an expert in the Full Faith and Credit Clause, but if, as a general matter, you think that avoiding forum shopping is a reason not to apply the Clause to a particular kind of case, then I think that reasoning applies in the context of foreign country judgment recognition. I am not sure it applies especially in that context, but I get the point. I would note that there is another forum-shopping problem, perhaps just as serious, pointing in the other direction. If I am a judgment debtor with assets in one state, I have an incentive to move the the assets to the state with the strictest judgment recognition statute in order to avoid my judgment creditors or to force my creditors to pursue more than one case.
I am not sure I really understand the first reason. Suppose that State A and State B have different conflict of laws rules, and that a plaintiff brings a tort claim in State A. Suppose that under State A’s conflict of laws rules, the court of State A will apply the law of State A to an issue in the case, which leads to a judgment for the plaintiff. Suppose that the courts of State B would apply the law of State B to that issue, which would have led to a judgment for the defendant. Leaving aside any general public policy exception to the rule of full faith and credit, it seems pretty clear that the courts of State B have to give effect to the judgment of State A, even though the courts of State A were technically only deciding that the claim was good under the law of State A. I am not sure I see why this is any different than the case of a recognizing a foreign country judgment.
There might also be a broader point to be made, along the lines of “a judgment is a judgment,” but I don’t think you even have to go there unless you have a real explanation for why the case of foreign judgment recognition isn’t just a typical case of the truism that courts in different states can apply different law and come to different conclusions.
Perhaps there is a difference if the action in State A was only for recognition of the judgment and not for enforcement, or in other words, if the action in State A does not lead to a money judgment. But that wasn’t the case in the Standard Chartered case, which led to a New York money judgment, nor is it likely to be a common occurrence. I actually am engaged now in a case seeking defensive recognition of a foreign judgment, in order to get the case dismissed on grounds of claim preclusion. Recognition of that judgment will not lead to a money judgment. But it will lead to a judgment holding that the foreign litigation precludes the US lawsuit, and I think the case for requiring other states to come to the same conclusion is pretty strong.
Of course, the best answer to this is to make the law of foreign judgment recognition uniform, which reduces the incentives for forum-shopping. But I digress!
Photo credit: University of Mississippi