Friend of Letters Blogatory Bill Dodge had an interesting post at the Transnational Litigation Blog on Estate of Ke v. Yu, a new Fourth Circuit case suggesting that forum non conveniens should never be a defense in an award or judgment recognition case. I agree with that view 100%, because an enforcement case is (or should be) always about reaching assets in the place where you bring the enforcement case. Allowing an FNC defense thus gives judgment or award debtors a path to shield assets from enforcement that to me makes little sense.

But the case has another interesting point. The underling arbitral award was denominated in renminbi, but the district court entered judgment in dollars. What is the right rule for currency conversion? Bill was one of the reporters for the Restatement (Fourth) of the Foreign Relations Law of the United States, so he has something to say about this.

Bill notes that the Fourth Circuit cited § 823 of the Restatement (Third), which opines that courts have discretion to issue a judgment in foreign currency, and he writes that this provision was “superseded by § 490 of the Restatement (Fourth),” which expressly prefers judgments in the currency of the award being confirmed. The Restatement (Fourth) position is in line with the Uniform Foreign-Money Claims Act, but that uniform act has only been adopted in a minority of states, mostly in the west. While it’s right to say that the new Restatement supersedes the old Restatement as a statement of the views of the ALI, it’s important to remember that the Restatement is not a statute. It’s not as simple as saying that Restatements should reflect the law as it is rather than as it ought to be. But I think that particularly on cutting-edge issues like the rule of currency conversion in enforcement cases, it’s important to recognize that in practice, there may not be very many cases on point, and it’s perfectly okay for a court to rely on an earlier Restatement view that it thinks makes good sense. (Of course, the court should at least acknowledge and come to grips with a new Restatement view, and the Fourth Circuit didn’t do that here).

Now, what about the merits? I think there are lot of reasons to say that the default rule should always be that American courts enter judgments in dollars, even when the underlying obligation is in another currency. I want to focus just on one here. Bearing in mind that the ultimate point of an enforcement action is collection, issuance of judgments in a foreign currency seems to me to be super impractical. Let’s say you have a judgment in renminbi. Is the writ of execution (the ordinary means of enforcing a money judgment) going to be in renminbi, too? If so, what is the sheriff or the marshal supposed to do with it? Suppose you want the sheriff to take some land and auction it off to satisfy the judgment debt. Won’t the auction be conducted in dollars? The same thing goes for seizures of personal property.

In short, while there may be justifications for issuing judgments in the foreign currency, I see real practical problems that, if anything, are more rather than less pronounced in the enforcement context, where the whole case is really about enforcement, where the rubber meets the road.

Photo Credit: Wazouille (Public Domain)