On his final day in office, Governor Christie signed into law a dramatic change in how judgments obtained in foreign countries are domesticated in New Jersey. First introduced in 2015, the Foreign Country Money-Judgments Recognition Act of 2015 (the “Act”) repeals the 1997 Act of the same name and fundamentally alters the process for recognizing foreign judgments in New Jersey.
Under the old regime, a holder of a foreign judgment was able to enforce that judgment in New Jersey simply by filing the foreign judgment with the Clerk of the Court. Any effort to vacate the judgment or stay the enforcement of the judgment could only be made after the foreign judgment was filed with the Clerk. For foreign judgment holders, the process was simple and straightforward.
However, there have always been those who advocated for a process which required judicial approval before New Jersey would recognize a foreign judgment. In 2005, the Appellate Division enforced the existing recognition procedure but suggested “that the Legislature consider . . . a change [in the foreign judgment recognition process] to avoid potential claims that the filing of judgments of certain foreign nations, without prior notice and opportunity to be heard, may result in an unconstitutional taking of property without due process of law.” See Enron (Thrace) Exploration & Production BV v. Clapp, 378 N.J. Super. 8, 20 (App. Div. 2005).
More than ten years later, the Act adopts the Appellate Division’s guidance and now requires that when recognition of a foreign judgment is sought as an original matter, it must be accomplished through the filing of a legal action seeking recognition. In that action, the party resisting recognition of the foreign judgment has the burden of establishing a basis for nonrecognition. The Act identifies bases for nonrecognition, which include findings that the judgment was rendered by a judicial system that does not have in place procedures “compatible with the requirements of due process of law,” there was a lack of personal or subject matter jurisdiction, the judgment was obtained through fraud, there was lack of notice of the foreign proceeding, or the judgment is “repugnant to the public policy” of this country. In essence, the Act insures that a foreign judgment will not be enforced in this State if it could not have been obtained here in the first place.
The new law, which goes into effect immediately, will likely lead to increased litigation from judgment debtors seeking to avoid the enforcement of foreign judgments entered against them. In addition to opportunities to challenge the judgment itself, judgment debtors also now have the ability to seek a stay of enforcement of the judgment pending appeals in the foreign country. Although the Act provides judgment debtors the ability to delay and challenge foreign judgments, New Jersey courts are still bound to honor judgments from outside the State, both foreign and domestic, that are subject to the limited exceptions outlined in the Act.