The Powerful Prospects for Enforcing Foreign Judgments Against New York-Based Judgment-Debtors

05-May-2015

Last month, a New York appellate court sent an implicit – yet powerful – message to New York-based persons who do business with foreign companies; namely, that, among other things, the fact that a foreign judgment-creditor is not formally authorized to do business in New York will not necessarily operate to disallow that creditor from maintaining an action to enforce its foreign judgment.

In Gemstar Canada, Inc. v. George A. Fuller Co., 2015 WL 1448129 (2d Dep’t Apr. 1, 2015), plaintiff, the supplier of stone materials headquartered in Ontario, Canada, had commenced an action in the Ontario Superior Court of Justice, alleging that the defendant, a New York construction company, had breached an agreement by failing to pay for certain materials delivered to the defendant’s project site in White Plains, New York.  After securing a judgment from the Canadian court against the defendant, the plaintiff commenced an action to enforce the Canadian judgment by filling a summons with notice of motion for summary judgment in lieu of a complaint, pursuant to CPLR 3213.  The trial court granted the plaintiff’s motion, rendering a judgment against the New York-based defendant in the amount of $139,792.28.  See id. at *1.

On appeal, after explaining that “[u]nder CPLR article 53, a judgment issued by the court of a foreign country is recognized and enforceable in New York State if it is final, conclusive and enforceable when rendered,” id. (quotations omitted), the Appellate Division observed that “a foreign country judgment is not conclusive, and thus may not be recognized, if (1) it was rendered under a system which does not provide impartial tribunals or procedures compatible with the requirements of due process of law or (2) the foreign court did not have personal jurisdiction over the defendant,” id. (quotations and citations omitted).

After rather easily recognizing that “[t]he Ontario Superior Court of Justice is part of a judicial system that provides impartial tribunals and procedures compatible with due process of law,” the Appellate Division observed that the Canadian court “had a valid basis for exercising jurisdiction over the defendant, as the defendant purposefully transacted business in Ontario.”  Id. (citations omitted).  The Appellate Division also explained that “[a]lthough the plaintiff failed to establish that the defendant was properly served with process in the Canadian action, the plaintiff nonetheless demonstrated that the Ontario Superior Court of Justice had personal jurisdiction over the defendant, as the defendant ‘voluntarily appeared’ in the Canadian action (CPLR 5305(a))” and “did more than it had to do to preserve a jurisdictional objection.”  Id. (quotations and citations omitted).

Accordingly, the Appellate Division held that the plaintiff met its burden of “making a prima facie showing that the mandatory grounds for nonrecognition do not exist.”  Id . (quotation and citations omitted).  Nonetheless, the Appellate Division’s analysis did not end there.

The defendant had argued that the plaintiff’s action was “barred by Business Corporation Law § 1312, which generally prohibits a foreign corporation doing business in New York without a certificate of authority from the New York Secretary of State from maintaining an action in the New York courts.”  Id. at *2.  The Appellate Division rejected this argument, ruling that “[t]he defendant failed to demonstrate that the plaintiff’s activities are so systematic and regular as to manifest continuity of activity in New York.”  Id. (quotation and citations omitted).  As the Appellate Division put it, “the defendant did not rebut the presumption that the plaintiff, as a foreign corporation without such a certificate of authority, did not do business in New York.”  Id. (citations omitted).

The Appellate Division’s decision in Gemstar Canada, Inc. reinforces the notion that a foreign corporation or individual doing business with a New York-based person generally can enforce a foreign judgment, provided that the judgment was rendered under a system that does provides impartial tribunals and procedures compatible with the requirements of due process of law and that the foreign court had personal jurisdiction over the defendant.  Unless the New York-based judgment debtor can prove more, the mere fact that the judgment creditor is not certified to do business in New York State will not bar enforcement of the foreign judgment in New York.

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Aldous PLLC is a law firm located in mid-town Manhattan and Westchester (New York), dedicated to providing quality and cost-effective legal services to its clients.  The Firm works with global companies and individuals to avoid legal problems and to resolve the ones they have.  Aldous PLLC’s founding member, Kenneth E. Aldous, is an experienced lawyer, qualified to practice in both the U.S. and UK, who has represented a broad range of diverse interests in complex litigation before various federal and state courts, as well as in domestic and international arbitration.

With the right experience, an unwavering dedication to client needs, and a strong commitment to quality – not to mention a strategic network of outside legal professionals in a variety of specializations and geographic locations – Aldous PLLC offers its clients an attractive alternative.  Whatever your legal needs, Aldous PLLC is well situated to help you and your business find your way through a complex and fast-paced world.

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