connections with that country to justify
being required to defend itself there. In
addition, courts will seek to confirm that
the defendant was given adequate notice
of the allegations against it and afforded
a fair opportunity to defend itself against
those allegations before a reasonably
impartial court. Critically, the standard
differs from jurisdiction to jurisdiction
sometimes considerably most notably
in the minority of states that require or
permit courts to consider reciprocity.
In essence, this is an inquiry into
whether the issuing court would (or has)
domesticated similar judgments from
U.S. courts. In practice, reciprocity
can encompass a very broad and highly
subjective analysis, with the inevitable
unpredictability implied. A number of
states will not domesticate a default
judgment (where the party subject
to the order did not appear). In such
circumstances, the only option may
be to start a completely new action for
contractual remedies in the U.S.
A common misconception of non-U.S.
parties is that they will be permitted
to remove proceedings into a federal
court. In fact, this is much less likely in
contract matters than it would be for a
U.S. party in a similar dispute. Unless
the party from which recovery is sought
is a unit of the federal government, state
court jurisdiction is the default rule.
The most commonly used exception to
this default position in contract matters
is through "diversity jurisdiction."
Intended to preclude local bias in
disputes across state lines, this can only
be invoked if all entities on one side
of a dispute are citizens of states and
no adverse party is a citizen of any of
those states (corporations and organs
of government have citizenship for
such purposes). The amount in dispute
counterintuitively, non-U.S. parties may
be deemed citizens of all states or to
share citizenship with another party to
the contract. Since diversity must be
complete, any party that shares state
citizenship with an opposing party
precludes diversity federal jurisdiction.
Opponents may also be able to "destroy"
diversity by naming additional parties.
In short, one cannot rely on federal court
jurisdiction being available. The great
majority of contract-related matters are
heard in state courts.
Consequently, the selection of the
jurisdiction in which to commence a
domestication action can have significant
ramifications. (This is a separate
question from choice of law; courts in the
U.S. regularly apply the law of another
state or country if contractual language
clearly calls for it, whereas contractual
specifications of jurisdiction are subject
to wider legal and policy considerations.)
For a state court to accept jurisdiction, it
must find that that state has a sufficient
interest in, or connection to, the matter
and that it is fair to the defending party
that jurisdiction be exercised over
that party. Since the party instigating
an action has the burden of providing
a plausible basis for jurisdiction, it
is not an unfettered choice only a
small number of jurisdictions may be
available, and a mistake can be costly.
Jurisdictional determinations can be
complex, requiring a skill set unique
to U.S. legal practice. Not only can
the right choice of jurisdiction greatly
impact the outcome of proceedings,
but a poor choice can spur expensive
secondary litigation.
Once a judgment is domesticated,
it can be enforced in that state.
However, with the mobility of assets
that characterizes the U.S. economy,
adequate assets may not be in that state.
account requires enforcement in the
state in which the account is held at the
time enforcement is attempted. If assets
are in different states, the judgment
must be re-domesticated (in as many
states as effective enforcement requires).
Unfortunately, while judgments of a court
in one state are constitutionally accorded
great deference by courts in another,
in practice, variations in public policy,
law and local interpretation mean that
enforcement of a judgment from a court
in one state is neither automatic nor
guaranteed. In the majority of states, this
secondary process is more streamlined.
However, a defendant can also elect to
challenge the propriety of the original
judgment at this stage.
Enforcement is also a state law
matter and varies by state. Different
states offer different post-judgment
collection remedies. For example, some
do not allow bank or wage garnishments,
while others do. Some states have
procedural hurdles (such as requiring a
creditor to post monetary bonds before
enforcement procedures commence) that
make collection actions burdensome or
risky. Enforcement is a different area
of expertise from litigation (such as
securing domestication) that is founded
on securing accurate information on the
location of assets and the enforcement
laws of the relevant state(s). In the
real world, there are not always
sufficient identified assets to satisfy the
judgment in full immediately. In such
circumstances, your counsel's ability to
leverage available information to secure
legally enforceable concessions from the
debtor (in the form of additional security
or liability for interest and costs) may be
critical to securing recovery.