Jurisdiction to Enforce Foreign Judgments - Part 4 Chapter 10 - The Practice of International Litigation - 2nd Edition
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.
First-year law students learn that a lawsuit may only proceed if the court in which it is brought has jurisdiction over the subject-matter of the case and jurisdiction over the person of the defendant. It is less clear, however, whether the same standards must be met when the dispute has already been adjudicated and jurisdiction previously exercised over the defendant. That is, must the same jurisdictional standards, including those of Constitutional Due Process, be met when a party seeks to have a judgment from a foreign country enforced?
As wireless communication and other developments make it increasingly easy for a person to have assets — including bank and brokerage accounts — in New York without having any physical contact with New York, the question of a New York court's jurisdiction to enforce foreign judgments against these assets becomes increasingly significant. A recent decision from the Appellate Division, Fourth Department says that traditional standards for personal jurisdiction need not be satisfied where no more than enforcement of a judgment is sought. A Second Circuit decision, however, looked at the applicability of Due Process principles in a different way in a case involving enforcement of a foreign judgment against a foreign state.
Shaffer v. Heitner
In 1977, the Supreme Court decided Shaffer v. Heitner, 433 U.S. 186, 97 S.Ct. 2569, 53 L.Ed. 2d 683 (1977), holding that the mere presence of a defendant's assets in the forum state, in the absence of Due Process factors connecting the defendant with that State, fails to provide a basis for personal jurisdiction over that defendant. Prior to Shaffer, it was not unusual for jurisdiction to be obtained over foreign defendants - including foreign states - solely on the basis of the presence of die defendant's assets in the forum state. In Shaffer, however, the Supreme Court concluded that "all assertions of state-court jurisdiction must be evaluated according to the standards set forth in International Shoe and its progeny." Id. at 212.
Shaffer v. Heitner did not, however, render the presence of property in the jurisdiction irrelevant to issues of personal jurisdiction. Instead, the presence of property remained one of the factors to be considered in determining whether a court could exercise jurisdiction over a defendant — particularly if the property present in the forum state was real estate or property connected to the dispute. Moreover, in footnote 36 of the Schaffer opinion, the Supreme Court specifically referred, in connection with a mention of the full Faith and Credit Clause, to the difference between jurisdiction with respect to lawsuits on the merits and jurisdiction for purposes of enforcing judgments, stating, "Once it has been determined by a court of competent jurisdiction that a defendant is a debtor of the plaintiff, there would seem to be no unfairness in allowing an action to realize on that debt in a State where the defendant has property, whether or not that State would have jurisdiction to determine the existence of the debt as an original matter." Id. at 210 (n. 36).
The Supreme Court's statement constituted notice that "enforcement jurisdiction" — jurisdiction to enter and enforce a judgment against a judgment debtor on a case already adjudicated elsewhere - may be a different concept with a different theoretical basis and different standards than "original personal jurisdiction" permitting the prosecution of a lawsuit against a defendant on the merits.