Does one have to worry about jurisdiction and forum non conveniens when enforcing a foreign arbitral award in the United States under the New York Convention? Does the doctrine of forum non conveniens apply under such circumstances? Does it matter if the Foreign Sovereign Immunities Act is implicated because a foreign state is a defendant? A recently decided case in the Southern District of New York dealt with issues implicated by these questions.

Judgments and Arbitral Awards

As discussed in an earlier column,1 courts have ruled that personal jurisdiction over the defendant in the traditional sense is irrelevant to the enforcement of judgments. What matters is that the merits have already been finally decided in another forum that had jurisdiction over the defendant. The proceeding to enforce the judgment of the foreign court is therefore solely for the purpose of obtaining recognition and enforcement through execution against assets within the jurisdiction of the domestic court.

Arbitral awards are similar to judgments in that they are also the embodiments of final determinations of controversies on the merits. But unlike judgments — concerning which the United States has entered into no treaties or conventions — foreign arbitral awards have been made easier to enforce because of the adoption, in 127 countries (as of October 15, 2001), of the United Nations Convention for the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the “New York Convention”), 21 U.S.T. 2517 (1970).

Proceedings to enforce foreign judgments or arbitral awards generally involve two phases or elements: first, recognition as a locally enforceable judgment; and second, the enforcement of the judgment against assets of the judgment debtor. Recognition proceedings — “exequatur” proceedings in civil law countries — seldom involve a review of the merits of the dispute underlying the dispute. In the United States, the Uniform Foreign Money Judgments Recognition Act (e.g., CPLR §§ 5301 - 5309) mandates non-recognition of foreign judgments in only two kinds of situations: where there was, under local U.S. standards, no jurisdiction over the defendant in the foreign court and when the judgment was rendered in a judicial or legal system that does not provide impartial tribunals or tribunals that accord procedures compatible with due process of law. Neither of these grounds implicates the merits of the underlying case — although the court may accept a description of the circumstances underlying the judgment as background for its obtaining an understanding of the procedural (and jurisdictional) side of the case or of the relationship of the process by which the foreign judgment was obtained to the foreign country’s judicial system.

The discretionary grounds for denying recognition of a foreign judgment are also generally procedurally related. Failure to notify the defendant is one example. A judgment obtained by fraud may be a basis for non-recognition, but courts have held that the kind of fraud that would give rise to non-recognition is that which is extrinsic to the presentation of the merits of the case – bribery of a judge, for example. See Altman v. Altman, 150 A.D.2d 304, 542 N.Y.S.2d (1st Dept. 1989).