The thirty-seventh annual survey on choice of law in the American courts is now available on SSRN. The survey covers significant cases decided in 2023 on choice of law, party autonomy, extraterritoriality, international human rights, foreign sovereign immunity, adjudicative jurisdiction, and the recognition and enforcement of foreign judgments. So, on this leap day, we thought we would leap into the new month by looking back at the old year.
Written by NIE Yuxin, Wuhan University Institute of International Law
1. Background
China’s Civil Procedure Law was enacted in April 1991 by the Fourth Session of the Seventh National People’s Congress. Since then, it had undergone four revisions in 2007, 2012, 2017, and 2021. However, no substantial revisions were made to the provisions concerning foreign-related civil litigation. The latest amendments to the Civil Procedure Law in 2023, referred to as the new CPL, involve 26 amendments, including 14 modified articles and 15 new additions. Notably, 19 changes deal with the special provisions on cross-border procedures.
Creditors in international business transactions need to follow a three step plan in order to secure the satisfaction of their claims: Secure an enforceable judgment in their jurisdiction; declare the latter enforceable in the country of the judgment debtor; and proceed swiftly or at least timely to execution measures. Practice shows that the problems are usually appearing in steps 1 or 2. A recent ruling of the Greek Supreme Court demonstrates that potential pitfalls are to be expected even beyond.
THE FACTS
The parties are a Greek [GR] and an American company [US]. Following litigation before the courts of Baltimore, Maryland, US was in possession of an enforceable money judgment against G issued in October 1999. US moved to recognize the above judgment in Greece. Its application was successful, and no appeal was lodged by GR against the judgment of the Athens Court of 1st instance [Nr. 4138/2002, unreported].
For reasons not clarified in the ruling, US entered the enforcement stage only in June 2013, i.e. nearly 14 years after the Baltimore court had issued its judgment. Soon afterwards, i.e. early July same year, US rushed to the Baltimore court’s clerk, requesting the judgment’s renewal. The clerk granted the request late July. January 2014 GR filed an application to revoke the renewal which was sustained. In particular, the Baltimore court considered the request for renewal as inadmissible, because it was not filed timely, i.e. within 12 years following the judgment’s date of entry, in accordance with Rule 2-625 Maryland Rules, Title 2. Civil Procedure–Circuit Court.
Nevertheless, US moved ahead with enforcement in Greece. As it was to be expected, GR applied for stay of execution, which was however dismissed by the Athens 1st Instance Court [Nr. 6235/2015, unreported]. US appealed successfully [Athens CoA Nr. 3074/2016, unreported].
THE RULING
The reasoning of the Supreme Court’s ruling may be summarized as follows:
AREIOS PAGOS Nr. 767/2019, unreported.
COMMENTS
I start with the provision which was the game-changer in the ordinary process of execution:
RULE 2-625. EXPIRATION AND RENEWAL OF MONEY JUDGMENT: A money judgment expires 12 years from the date of entry or most recent renewal. At any time before expiration of the judgment, the judgment holder may file a notice of renewal and the clerk shall enter the judgment renewed.
US showed negligence and paid for it. It is somehow questionable, why the clerk at the Baltimore court decided to grant renewal: The wording of the rule is clear and the maths could be done easily even by a child in elementary school.
The ruling of the Supreme Court is in line with standard case law in the country, which covers all foreign judgments irrespective of their origin.
The long-running litigation between the United States and a group of defendants who operated a cross-border telemarketing business selling Canadian and foreign lottery tickets to Americans has reached another mile-post with the decision of the Court of Appeal for Ontario in United States of America v. Yemec, 2010 ONCA 414 (available here). The defendants were likely riding high before this decision, having done quite well in resisting the enforcement of the judgment of an Illinois court finding them liable for $19 million and permanently enjoining them from telemarketing any product or service to anyone in the United States. But the tables are now turned, with the Court of Appeal for Ontario ordering enforcement of the Illinois judgment.
The most notable jurisprudential issue in the case concerns the scope of the defences at common law to an action to recognize and enforce a foreign judgment. At common law there are three central defences: fraud, denial of natural justice, and public policy. However, the Supreme Court of Canada indicated in Beals v. Saldanha, [2003] 3 S.C.R. 416 that this was not a closed list and in the appropriate circumstances a new defence might be created. In Yemec the motions judge of the Superior Court of Justice hearing the case was persuaded that there was a genuine issue requiring a trial on the question of a “fourth defence”, namely “denial of a meaningful opportunity to be heard”. The Court of Appeal has now held that there is no such defence: that concerns of this nature fall comfortably within the scope of the denial of natural justice defence. Further, on the facts, the appellate court found that the defendants were not denied an opportunity to be heard in the courts of Illinois (paras. 26-29).
The case is one of several in the wake of Pro Swing Inc. v. Elta Golf Inc., [2006] 2 S.C.R. 612 to enforce a foreign non-monetary order, namely the permanent injunction. The Court of Appeal found the criteria for enforcement set out by the Supreme Court of Canada in Pro Swing were met in this case (paras. 45-53).
The case raises one other interesting issue. The United States had, at the outset of the litigation in Illinois and Ontario, obtained a freezing order (Mareva) and a civil seizure order (Anton Piller). These interlocutory orders were subsequently dissolved, in part for failure of the United States to make full disclosure when moving ex parte to obtain the orders. The defendants then insisted on a damages inquiry under the undertaking in damages the United States had provided as a condition of obtaining the orders. The plaintiff argued that such an inquiry should not proceed, given that in effect the defendants were seeking to recover lost profits from a business the Illinois court had concluded was illegal. The Court of Appeal for Ontario held that the damages inquiry should proceed, stressing the importance of enforcing the general undertaking in damages (paras. 69-72). It did note, though, that there was evidence that the defendants had violated both Canadian and American law (paras. 78-83) and that accordingly it would be difficult for them to establish compensable damages. But they were entitled to try (paras 85-86).