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.