On his
last day in office, Governor Christie enacted new legislation that will change
the way foreign-country judgments are recognized in New Jersey. The Foreign
Country Money-Judgments Recognition Act of 2015 (the “FCMJRA”) amends the
statutory basis for enforcing judgments of other nations in New Jersey. Under
the prior version of the FCMJRA, a copy of any authenticated foreign judgment
could be filed in the office of the clerk along with an affidavit from the
judgment creditor, and the clerk would be required to “treat the foreign
judgment in the same manner as a judgment of the Superior Court of this State.”
See Enron (Thrace) Expl. & Prod. BV v. Clapp, 378 N.J. Super.
8, 15 (App. Div. 2005). Although the judgment debtor would receive notice of
the domestication, this would not occur until after the judgment was filed, and
there was no provision requiring courts to approve the foreign-country judgment
beforehand. Additionally, the burden of establishing grounds for a judgment’s
non-enforceability was on the judgment debtor. See Kam-Tech Sys.
Ltd. v. Yardeni, 340 N.J. Super. 414, 423 (App. Div. 2001). Thus, in Enron,
the Appellate Division suggested that the New Jersey Legislature amend the
FCMJRA:

We note that concerns about the constitutionality of the filing .
. . of judgments from nations that do not adhere to basic principles of due
process of law may be addressed by amending the FCMJRA
to require prior judicial approval of judgments of foreign countries
by way of motion or a separate enforcement proceeding. We suggest that the
Legislature consider such a change to avoid potential claims that the filing of
judgments of certain foreign nations, without prior notice and the opportunity
to be heard, may result in an unconstitutional taking of property without due
process of law.

Enron, 378 N.J. Super. at 20. The Appellate Division’s suggestions were
incorporated into this recently-passed amendment.

In the newly-amended version of the FCMJRA, the judgment creditor
seeking to have the foreign-country judgment recognized may no longer simply
file it with the clerk, but must file a complaint seeking recognition. In
the event the creditor already is engaged in a pending action with the judgment
debtor, the creditor may seek recognition of the judgment by counterclaim,
cross-claim, or affirmative defense. The creditor also now carries the burden
of establishing that the judgment is final, conclusive and enforceable under
the foreign country’s laws, and that it is not a judgment for taxes, fines, or
rendered in connection with a domestic relations action. Additionally, if the
judgment was entered by default, the creditor has the burden of establishing
the foreign court’s jurisdiction.

Because the judgment creditor must now bring an action to
domesticate the judgment, the judgment debtor will have the opportunity to
argue at that time that the judgment should not be recognized based on
number of possible objections, most of which existed under the prior version of
the FCMJRA. The FCMJRA provides that New Jersey courts “shall not” recognize a
foreign-country judgment if: (i) the judgment is “rendered under a judicial system
that does not provide impartial tribunals or procedures compatible with the
requirements of due process of law, as determined by the court using standards
developed by the American Law Institute and the International Institute for the
Unification of Private Law to govern resolution of transnational disputes;”
(ii) the foreign court lacked personal jurisdiction over the defendant; or
(iii) the foreign court lacked jurisdiction over the subject matter. Moreover,
the law gives courts the discretion not to recognize a foreign judgment in
certain situations, including if the foreign court failed to give adequate
notice to the debtor, the judgment was obtained by fraud that deprived the
losing part of an adequate opportunity to present its case, or if the judgment
or cause of action on which the judgment is based is repugnant to the public
policy of New Jersey or the United States. Additionally, the amended version of
the FCMJRA now allows the court the discretion to deny recognition when “the
judgment was rendered in circumstances that raise substantial doubt about the
integrity of the rendering court with respect to the judgment,” an
unquestionably ambiguous standard. The burden shifts to the debtor to prove one
of these exceptions applies.

The newly-amended version of the FCMJRA will have a dramatic
effect on the domestication of foreign-country judgments in New Jersey. Parties
can no longer file the judgment and affidavit with the clerk, and will now be
required to initiate new actions seeking recognition and deal with adversaries
potentially intent on relitigating issues from foreign courts here in New
Jersey. This could result in protracted litigations focusing on foreign court
procedures and whether they, for example, “raise substantial doubt about the
integrity of the rendering court with respect to the judgment.” Additionally,
although many of the provisions remain the same, the creditor now has the
burden of proving its prima facie entitlement to the judgment before the
judgment can be recognized. Accordingly, parties seeking recognition of
foreign-country judgments must be mindful of these new provisions.

For a copy of the statute, please contact Michael O’Donnell at modonnell@riker.com or Sarah Heba-Escobar at sheba@riker.com.