Foreign Judgments – What You Need to Know

Foreign Judgments

Getting a judgment might seem like a victory, but it’s hollow if your client doesn’t get paid.  When judgment is in a foreign country and the judgment debtor has assets in Colorado, you’ll have to domesticate the judgment before you can execute.  Unfortunately, your client and their local counsel can screw up your chances at a successful domestication before they even reach trial.  That’s why plaintiffs must investigate avenues of recovery before filing suit and proceed with that recovery in mind.

Colorado allows the domestication of foreign-country money judgments pursuant to the Colorado Foreign-Country Money Judgments Recognition Act.^[1]  Under the act, Colorado courts generally lean toward recognition of foreign-country judgments so long as they meet certain due process standards.  If, for example, the foreign court did not properly obtain personal jurisdiction over the defendant, Colorado courts are not obligated to recognize the judgment.

But, what if the foreign court authorizes service in a manner not acceptable under Colorado rules and finds personal jurisdiction?  A difference in law or practice in a foreign country does not, in and of itself, prevent a Colorado court from recognizing a judgment.^[2]  However, an unfamiliar rule or procedure in the foreign court may offend the Colorado court’s notion of due process.

Colorado rules contemplate various forms of service, if they are “appropriate under the circumstances and reasonably calculated to give actual notice to the party upon whom service is to be effective.”^[3]  Would a Colorado judge feel comfortable recognizing a judgment when the foreign court obtained personal jurisdiction by serving a defendant’s nephew at a home in the foreign country the defendant owned but hadn’t lived in for years?  What if a defendant was served via email to a Chinese email address – generally a string of numbers rather than Hanzi – and there is no evidence the defendant owns the email address or ever received service?  Or, as in a case I argued at the Colorado Court of Appeals, what if plaintiff simply mails service to the defendant?^[4]  When do international service of process treaties come into play and when are they inapplicable?

When foreign counsel knows a defendant has Colorado assets prior to filing a case, he or she can enlist the help of local counsel to ensure that a domesticating Colorado court will find that service of the underlying action comports with due process.  Colorado counsel can guide foreign counsel to a service option that the Colorado courts will accept.  Those options may look differently depending on whether the defendant is in a foreign jurisdiction or in Colorado.

Once judgment enters in the foreign country, both the Colorado Rules of Civil Procedure and international treaties regarding service of process come into play again when it becomes time to serve the domestication action upon the judgment debtor.

Setting Up Easy Domestication of a Foreign Country Judgment

Perhaps the foreign defendant has property in Colorado upon which the plaintiff would like to execute the judgment she obtains.  When the defendant is in the foreign jurisdiction where the lawsuit will be filed, whether an individual there physically or an entity with sufficient presence, Colorado counsel’s goal should be to help foreign counsel accomplish service in a manner that a Colorado court will recognize.  For example, in Hong Kong, the rules of civil procedure authorize a mail drop – similar to gutter service (service by refusal) in Colorado, but without the need for the person being served to actively refuse service.^[5]

In Colorado, gutter service is acceptable because the Courts understand that a defendant is receiving notice.^[6]  But, gutter service requires the process server knowing or being able to identify the person being served, telling them what they’re being served with, offering the documents to them, and leaving the documents in a conspicuous place after the person refuses the documents.^[7]  In Hong Kong, service may be accomplished by simply leaving a summons and complaint in the mailbox at the last known address of the defendant.^[8]  A Colorado court may not find that acceptable.  Local counsel should guide foreign counsel to an alternative at which a Colorado court won’t balk.

Personal service is always the best option and is easy for a Colorado court to recognize.  Many foreign countries allow service by registered mail.  Process in Ontario, Canada, for example, “may be made by sending a copy of the document together with an acknowledgment of receipt card . . . by mail to the last known address of the person to be served.”^[9]  Service is then considered good when the sender receives the receipt card.^[10]  Colorado likewise authorizes service by mail in certain situations.

A Colorado court, if satisfied that counsel followed local rules regarding service by registered mail and that the person being served is the same as the one who signed the acknowledgment of receipt card, might recognize service.  But that’s a risk.  A Colorado court may not be satisfied with service by mail, even with a return receipt, if counsel cannot demonstrate who actually signed for the mail.  If personal service is an option, best practice is to advise foreign counsel to diligently attempt it.

International Service of Process – the Basics

When the defendant is local but the action is foreign, a Colorado attorney can prove invaluable by guiding foreign counsel through service of process.  Proper advice at the start of the case prevents later issues with a Colorado court recognizing the foreign judgment after the foreign court enters it.

The first step Colorado counsel should take is to see if the foreign country is part of one of the international compacts governing service of process to which the United States is also a signatory.  There are two to look at: The Hague Service Convention^[11] and the Inter-American Service Convention.^[12]  If the originating jurisdiction is party to one of the treaties, those treaties outline the process by which the Colorado defendant must be served process in the foreign action.

The Hague Service Convention has seventy-three signatories as of April, 2018, including the United States and Canada.  However, most South and Central American countries have not adopted the Hague Convention.  Rather, seventeen of them, along with Spain, are parties in some form to the Inter-American Service Convention.  Note that countries must adopt both the Inter-American Service Convention and the Additional Protocol^[13] to have a treaty relationship with the United States regarding service.

Both the Hague Convention and the Inter-American Convention contemplate serving process through a central authority.    In the United States, the central authority is the Department of Justice, Office of International Judicial Assistance.v[14]  Other nations have parallel agencies that serve as central authorities.^[15]  The Hague Convention places responsibility for serving or arranging service directly upon the central authority.^[16]  Once service is transmitted to the central authority pursuant to the Inter-American Convention, the central authority is required to transmit service to the appropriate judicial or administrative authority for processing according to local law.

Prior to transmitting process to a central authority, most nations require the documents to be translated to the official language of the receiving country.^[17]  For example, pertinent to the Inter-American Convention, El Salvador includes requirements for legalization and translation of foreign letters rogatory in their Code of Civil Procedure.^[18]  The United States made reservations at the time of ratification of the Inter-American Convention that “letters rogatory to be executed in the United States must be translated into the English Language.”^[19]

Some countries do not require translation or offer multiple official languages into which documents may be translated.  If English is one of those languages, you may think you can skip translation.  However, consider the implications of due process to attach to the translation requirement. If you meet the technical requirements of service but the defendant doesn’t understand the documents, a court may find he has not received due process.

By way of example, Hong Kong, owing to its 156 years as a British colony, authorizes legal documents in both English and Chinese.^[20]  In fact, the entire proceeding we domesticated from Hong Kong was conducted in English, with English-speaking litigants, and the final judgment was in English.  However, if the defendant you are serving in Hong Kong does not speak English, it is likely that a Colorado court would find that the defendant was not afforded due process because he was not served with documents he could comprehend.

Service of the Domestication 

When the foreign judgment is final, it’s finally time to domesticate the action in Colorado.  Whether a judgment debtor is located in Colorado or in the original judgment jurisdiction, he must be served with process to initiate the domestication.  Service of the domestication action can be just as tricky as was service in the underlying action. This is especially the case if the judgment debtor is physically located outside of Colorado.

C.R.C.P. 4(d) offers four avenues for accomplishing service in a foreign country: “according to any internationally agreed means reasonably calculated to give notice, [pursuant to] the law of the foreign country, or as directed by the foreign authority or the court if not otherwise prohibited by international agreement.”^[21]  Service of a domestication action may require personal service on the judgment debtor in a foreign country, which could implicate the terms of the Hague Convention or the Inter-American Convention. ^[22]  In those cases, service must be accomplished via the procedures outlined in those conventions, through the central authority of the country in which the judgment debtor is located.

However, there may be ways to avoid the need for personal service through a foreign central authority.  An application for substitute service may be appropriate if the defendant or judgment debtor has sufficient connections to the proposed substitute to give the court confidence that the defendant will receive actual notice.^[23]  If substitute service can be accomplished without transmitting documents abroad, one can avoid implicating international conventions entirely.^[24]

In Willhite v. Rodriguez-Cera, the Colorado Supreme Court reasoned that C.R.C.P. 4(d) did not require service upon an individual located in a foreign country to be accomplished in that foreign country.^[25]  Rather, the court found that C.R.C.P. 4(f) offered a valid alternative to personal service in a foreign country “when a plaintiff has attempted, but is unable to accomplish, personal service.”^[26]  The Willhite court wrote that personal service must be attempted prior to a motion for substitute service, but that in certain cases, where, for example, a lack of international agreement prevents personal service, a judgment creditor may be unable to personally serve.^[27]

Conclusion

Colorado counsel can assist foreign clients and their attorneys both on the front and back end of foreign country litigation.  On the front end, Colorado attorneys can help structure service of process so that a Colorado court will recognize that due process occurred when originating the foreign case.  After the foreign judgment enters, Colorado counsel can run point on domesticating and enforcing the judgment.  Both tasks require knowledge of the Colorado Rules of Civil Procedure, international treaties, and the domestic rules in the foreign country.  With the consolidation of corporate and property ownership, expect to see more foreign judgments coming to Colorado.

Sources:

^[1] §13-62-101, et seq., C.R.S.

^[2] Milhoux v. Linder, 902 P.2d 856, 861 (Colo.App. 1995).

^[3] C.R.C.P. 4(f) and e.g. C.R.C.P. 4(g).

^[4] Ledroit Law v. Kim, 360 P. 3d 247 (Colo. App. 2015).

^[5] Rules of the High Court, Order 10, Rule 1 (2)(a); retrievable at https://www.elegislation.gov.hk/hk/cap4A?xpid=ID_1438403275124_001

^[6] C.R.C.P. 4(k).

^[7] Id.

^[8] Rules of the High Court, Order 10, Rule 1 (2)(a); retrievable at https://www.elegislation.gov.hk/hk/cap4A?xpid=ID_1438403275124_001

^[9] Rules of Civil Procedure, RRO 1990, Reg 194, 16.03(4).

^[10] Id.

^[11] Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, 658 UNTS 163; 20 UST 361; retrievable at https://www.hcch.net/en/instruments/conventions/full-text/?cid=17

^[12] Inter-American Convention on Letters Rogatory, 1438 UNTS 288; OASTS No. 43; 14 ILM 339 (1975); retrievable at http://www.oas.org/juridico/english/treaties/b-36.html

^[13] Additional Protocol to the Inter-American Convention on Letters Rogatory, 1438 UNTS 332; OASTS No. 56; 18 ILM 1238 (1979); retrievable at http://www.oas.org/juridico/english/treaties/b-46.html

^[14] https://www.justice.gov/civil/office-international-judicial-assistance-0

^[15] For Hague Convention parties: https://www.hcch.net/en/instruments/conventions/authorities1/?cid=17; for Inter-American parties: http://www.oas.org/juridico/english/sigs/b-36.html.

^[16] 658 UNTS 163; 20 UST 361, Article 5.

^[17] Pursuant to Article 5 of the Hague Convention, “the Central Authority may require the document to be written in, or translated into, the official language or one of the official languages of the State addressed.” 658 UNTS 163; 20 UST 361, Article 5.  Article 5 of the Inter-American Convention mandates that treaty parties execute letters rogatory if they are translated into the official language of the destination state, but the Convention allows for parties to execute documents in the language of the transmitting state as well.  1438 UNTS 332, Articles 5, 18.

^[18] Cód. Proc. Civ. art. 261 (El Sal. 1971); El Salvador also cites to the Código de Derecho International Privado (Código Bustamante).  Cód. Der. Int. Priv. art. 388-392; retrievable at https://www.oas.org/juridico/spanish/mesicic3_ven_anexo3.pdf

^[19] 1438 UNTS 332; Reservations; retrievable at http://www.oas.org/juridico/english/sigs/b-36.html.

^[20] China’s Hong Kong S.A.R. declaration to the Hague Convention; retrievable at https://www.hcch.net/en/instruments/conventions/status-table/notifications/?csid=393&disp=resdn

^[21] C.R.C.P 4(d); see Willhite v. Rodriguez-Cera, 274 P. 3d 1233, 1238 (Colo. 2012).

^[22] Judgment debtors physically located in Colorado may be served pursuant to C.R.C.P. 4.  See, e.g. O’Brien v. Eubanks, 701 P. 2d 614, 616 (Colo. App. 1984), citing International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945) and Pennoyer v. Neff, 95 U.S. (5 Otto) 714, 24 L.Ed. 565 (1877).

^[23] C.R.C.P. 4(f).

^[24] Willhite v. Rodriguez-Cera, 274 P. 3d at 1237.

^[25] Id.

^[26] Id. at 1239

^[27] Id. at 1241-1242 (“Because Mexico has objected to all alternative methods of service and only consents to service requests to its central authority, personal service was not available to serve Rodriguez-Cera in Mexico.”)