NY Law May Remain Best Bet For Enforcing Foreign Awards

September 11, 2019Articles Law360

As a practical matter, a monetary judgment rendered by a court can be enforced and collected in a jurisdiction where the judgment-debtor has assets. For this reason, it is common — particularly in the cross-border transactions realm — for the judgment-creditors to look beyond the country where they obtained a money judgment in order to actually enforce and collect on that judgment.

However, until recently, the matter of foreign judgment enforcement was, for the most part, governed by local laws and not by any set of international rules.[1] 

Recognizing this critical issue, this July, the Hague Conference on Private International Law adopted its latest treaty in an attempt to provide a uniform process to HCCH member states to enforce civil judgments in other countries throughout the world, through the July 2, 2019, Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters.

The convention provides that contracting states will recognize and enforce certain civil or commercial judgments rendered by courts of other contracting states, obviating the need for a review of the underlying judgment on its merits.

The principal tenet of the convention is Article 4, which provides that “a judgment given by a court of a contracting state (state of origin) shall be recognized and enforced in another contracting state (requested state) in accordance with [chapter 2 of the convention].”

So far, Uruguay is the first and only contracting state to the 2019 convention, having signed at the adoption ceremony on July 2. The convention will be ratified and come into full force and effect once one more country signs it.

What country will be the next signatory to the convention? Could it be the United States? It is possible — the United States is already a contracting state to seven other Hague Conventions. However, many states throughout the United States already have relatively exhaustive processes to recognize and enforce foreign country judgments by way of the Uniform Foreign-Country Money Judgments Recognition Act.

One such state is New York — “the center of finance and commerce for the entire country, and even much of the globe”[2] — which has had its Foreign-Money Judgments Recognitions Act, or Article 53, of the New York Civil Practice Law and Rules on the books since 1970. How does the convention compare to New York’s Article 53? In this article, we examine the framework of the convention in comparison to Article 53 of the CPLR.

Similarities and Differences Between the 2019 Convention and New York’s Article 53

The 2019 Convention’s Regime is More Limited than New York’s Article 53

New York’s Article 53 is relatively broad, allowing for recognition and enforcement of “any foreign country judgment which is final, conclusive and enforceable where rendered.”[3]

The convention, on the other hand, is more limited.[4] The convention has a broad list of subject matter exclusions to which it cannot apply, such as judgments arising from or related to, among others:

  • Wills and succession;
  • The carriage of passengers and goods;
  • Defamation;
  • Privacy;
  • Intellectual property; and
  • Certain anti-trust and insolvency matters.[5]

Some of these areas significantly limit the kinds of judgments that can be enforced through the convention. As evidenced by Article 53 and New York case law, Article 53 does not have these restrictions.

Grounds for Nonrecognition of Judgments Under the 2019 Convention and Article 53

Both the convention and New York’s Article 53 provide for certain grounds for nonrecognition of a judgment. On comparison, the grounds for nonrecognition under both regimes are similar, such as if:

1. The judgment-debtor did not receive sufficient notice of the proceedings in the judgment court;

2. The judgment was obtained by fraud;

3. The judgment was inconsistent with the public policy of the enforcing state, or the judgment-country’s procedures are not compatible with the enforcing country’s principles of procedural fairness or due process;

4. The judgment-country proceedings were contrary to an agreement between the parties with regard to where the proceedings were to be settled; or

5. The judgment conflicts or is inconsistent with another judgment.

However, under New York case law, most of the grounds for nonrecognition under Article 53 are discretionary,[6] whereas the convention does not draw distinctions between mandatory and discretionary grounds for nonrecognition. Therefore, nonrecognition might be a bigger risk under the convention regime.

Jurisdictional Considerations Under the 2019 Convention and New York’s Article 53

Both the convention and New York’s Article 53 provide that, with respect to jurisdiction over the judgment-debtor in the original proceeding, at least one of certain jurisdictional prerequisites must be present in order for a judgment to be subject to enforcement in another country. Some of the jurisdictional bases for enforcement are the same under both regimes, including:

1. If the person or entity against whom recognition is sought was a resident or had their principal place of business in the judgment-country; or

2. If the defendant agreed to submit to the jurisdiction of the judgment-country’s court.

The convention provides for a number of additional jurisdictional bases that are not set forth in Article 53:

1. If the person against whom recognition or enforcement is sought is the person that brought the claim, other than a counterclaim, on which the judgment is based; or

2. If the judgment ruled on a contractual obligation and it was given by a court in which performance of that obligation took place, or should have taken place; or

3. If the judgment ruled on a lease of immovable property and it was rendered by a court of the state in which the property is situated.

However, while the convention appears to have a broader set of jurisdictional bases than New York’s Article 53, Article 53 does provide that “the courts of this state may recognize other bases of jurisdiction.” Moreover, under New York law, a party seeking recognition of a foreign money judgment need not establish a basis for the exercise of personal jurisdiction over the judgment debtor by the New York courts.[7]

Damages Available Under the Convention are Potentially More Limited Than Under New York’s Article 53

One of the most critical differences between the convention and New York’s Article 53 is the types of damages that you can, by right, have recognized and enforced. Under New York’s Article 53, there is no explicit limitation on what categories of foreign money damages a judgment creditor can have recognized and enforced.

To the contrary, the convention has a potential significant limitation: Under Article 10 of the convention, “recognition or enforcement of a judgment may be refused if, and to the extent that, the judgment awards damages, including exemplary or punitive damages, that do not compensate a party for actual loss or harm suffered.”

This limitation of damages is significant, because it is very common for damages to be far in excess of actual loss or harm suffered. In addition to exemplary or punitive damages, there are also consequential damages, incidental damages and liquidated damages.[8] Under the convention, these categories of damages may not be enforceable. As a result, this provision may be used as a sword for those challenging the enforcement of foreign judgment.


The convention shares many similarities with New York’s Article 53, but has some significant differences. Most notably, the convention’s scope is more limited with respect to what kinds of judgments can be enforced, and there is the possibility of substantial restrictions on the types of damages that can be enforced and recovered upon compared to Article 53.

It is evident that the Article 53 framework is more favorable on several issues to those attempting to enforce a foreign judgment in New York. It begs the question: Is it prudent for the U.S. to become a signatory, being that it already has robust recognition and enforcement mechanisms throughout several states, which might be in conflict with the convention’s framework? However, being a signatory to the convention might be useful for those seeking to enforce the United States court judgments in foreign countries with less robust judgment enforcement mechanisms. 

Only time will tell the scope and utility of the Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters. Until then, we wait to see which country becomes the second signatory.

Reprinted with permission from the September 11 issue of Law360. (c) 2019 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.