Enforcement in the United States of Foreign Judgments that Incorporate Monetary “Penalty” Provisions

Mainbrace | October 2017 (No.4)

W. Cameron Beard

While the United States is a party to an international convention on the enforcement of foreign arbitral awards,  it is not a party to any similar instrument regarding the enforcement of foreign court judgments. Nevertheless, foreign court judgments providing civil as opposed to criminal relief can be enforced in the United States, generally pursuant to the laws of individual states where judgment enforcement is sought. State statutes allow for enforcement of most final foreign court judgments awarding money damages, subject to certain basic requirements not relevant to the discussion here. And, while such statutes generally do not address foreign court judgments awarding equitable as opposed to monetary relief, equitable remedies may still be enforceable in the United States under principles of international comity incorporated in the various states’ common law.

An open question, however, is whether a foreign judgment awarding a monetary “penalty” or similar remedy can be enforced. While the general rule is that foreign penal laws cannot be enforced in the United States,  the reality is that there may be situations where arguably penal remedies can in fact be successfully recovered in the context of a civil enforcement proceeding in the United States. Such quasi-penal remedies include so-called “astreinte” or similar coercive remedies, most often granted by courts in civil law countries.

Astreinte and Similar Remedies
Judges in many civil law countries may be empowered to impose coercive remedies, intended to encourage a party to perform or refrain from actions specified in the judgment. For example, a foreign civil law judgment may require one party to transfer possessions of property to another party or to terminate certain activities by a date certain, with a perdiem charge or “penalty” to be paid for every day thereafter during which the defendant fails to comply.4  And, from time to time, parties in possession of a foreign judgment that includes an astreinte or similar remedy have sought to enforce their judgments in the United States. The degree of success such parties have achieved has been varied, but certain trends in recent case law can be discerned, and those trends suggest that it may be possible to enforce astreinte remedies under appropriate circumstances.

In an important case issued in 2016, the United States Court of Appeals for the Ninth Circuit reversed the decision of the trial court and ordered enforcement of an astreinte remedy included in a judgment entered by a French court.  In that case, the plaintiff’s French judgment prohibited the defendant from using certain copyrighted material and entitled the plaintiff to payment of a specified sum, or astreinte, for every day that the defendant continued to use the copyrighted material after a specified date. Of particular interest is that the U.S. court enforced the astreinte as a “money judgment” under the applicable California state foreign money judgment statute, rejecting the argument that the remedy constituted an unenforceable penalty.

Applying California state law, the federal appellate court held that whether a remedy constitutes an unenforceable penalty must be determined by an analysis of whether the remedy serves primarily to “punish an offense against the public justice of the state” or instead serves to “afford a private remedy to a person injured by [a] wrongful act.” Recognizing that an astreinte remedy can be considered something of a hybrid penal/civil remedy, the court found it to be enforce- able in the case before it because the astreinte was intended to compensate the complaining party for the violation of its copyright by the defendant. Among the factors relied upon by the court was the fact that the astreinte was payable to the complaining party rather than to the state, and that the remedy was awarded in the context of a civil rather than criminal proceeding. The court distinguished the astreinte remedy before it from an astreinte remedy that the same court had refused to enforce in a case decided a decade earlier,  noting that the astreinte in the earlier case had been payable to the French government for violations of a French penal law prohibiting the exhibition of Nazi emblems, and thus had been intended to protect the public good rather than to enforce a private right.

Enforcement: Factors for Consideration
Current case law suggest that whether an astreinte or similar remedy can be enforced in the United States will turn on numerous factors. First, it must be stressed, as mentioned above, that enforcement of foreign court money judgments (as opposed to foreign arbitral awards) is governed not by U.S. federal law, but by the law of the state where the judgment is to be enforced, and both enforcement statutes and common law jurisprudence may vary significantly from state to state. Second, as the decisions discussed above suggest, the facts will have to be examined carefully in order to determine whether the remedy granted in a particular case can best be characterized as civil or penal in nature. Third, pertinent state enforcement statutes, as well as common law principles, generally allow for enforcement only of “final judgments,” and a judgment calling for a perdiem payment may not be considered final before the foreign court has “liquidated” the penalty or reduced it to a sum certain. Stated differently, it may or may not be possible to convince a state court in the United States itself to perform the calculations necessary to reduce the astreinte to a specific and final sum. Indeed, in order for the foreign judgment to be deemed final, not only may prior liquidation of the astreinte by the court abroad be required, but, depend- ing on the legal system in place in the foreign country, it may also be a prerequisite that appellate relief in the foreign country have been either denied or waived.

Ultimately, whether a foreign court judgment including an astreinte or similar coercive remedy can be enforced in the United States is a question that will depend on the location within the United States where enforcement is sought, the facts of the given case, and the status of that case before the foreign court. Accordingly, before seeking enforcement of such a foreign judgment, it is strongly recommended that advice be taken from competent U.S. counsel

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