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Where one foreign nation's judgment conflicts with judgment from another nation, New York Court of Appeals interprets its version of Uniform Foreign Money Judgments Recognition Act as granting its courts discretion either to enforce latest judgment, or earlier judgment or neither judgment.

Byblos Bank Europe, S.A. is a Belgian bank (Plaintiff) and Sekerbank Turk Anonym Syrketi (Defendant) is a Turkish bank. According to Plaintiff, in 1988, it issued two $2.5 million loans to Defendant. An employee of Defendant apparently obtained the loans by issuing a fraudulent loan guaranty to Plaintiff and ultimately made off with the money. After paying some interest due on the first transfer at the outset, Defendant refused to make further payments.

Plaintiff filed attachment proceedings and actions for breach of the loan agreements in the courts of Belgium, Turkey and Germany, nations where Plaintiff believed that Defendant held assets. In 1992, the Turkish court of first instance entered judgment dismissing the action on the merits, and a Turkish appellate court upheld that judgment in 1994.

Thereafter, in the German and Belgian proceedings, Defendant sought recognition of the Turkish judgment dismissing Plaintiff's claims. In March 1996, the German court of first instance granted Defendant's application for recognition of the Turkish judgment; a German court of appeal affirmed that judgment the following year. [246]

Meanwhile, in August 1996, the Tribunal de Commerce de Bruxelles (the Belgian court of first instance) ruled that res judicata barred the relitigation of Plaintiff's claims and dismissed the complaint. On Plaintiff's appeal, the Cour d'Appel de Bruxelles, the intermediate appellate court, reversed the judgment of the Tribunal de Commerce in October 2003 and declined to accord the Turkish judgment preclusive effect. The court relied upon a now-repealed section of the Belgian Judicial Code which required review of foreign judgments on the merits before deciding whether or not to recognize them. The Cour d'Appel concluded that substantial error "affected" the Turkish judgment. Upon its own review of the facts, it ruled in Plaintiff's favor on the merits and entered judgment awarding Plaintiff $5 million, plus interest. In September 2005, the Cour de Cassation de Belgique denied Defendant's petition for cancellation of the judgment.

Plaintiff then tried to enforce the Belgian judgment in the New York state courts based on its belief that Defendant had assets in the state. In March 2006, Plaintiff moved ex parte for an order of attachment pursuant to C.P.L.R. 6201(5) seeking to attach up to $12,140,518.32 of Defendant's New York assets. This sum represented the principal and accumulated interest of the Belgian judgment as of January 2006.

The N.Y. Supreme Court issued the attachment order and directed Plaintiff to confirm the attachment within five days after the levy. Plaintiff also filed an action for summary judgment in lieu of complaint pursuant to C.P.L.R. 3213 seeking recognition and enforcement of the Belgian judgment.

Plaintiff timely moved for an order confirming the attachment; it argued that it would probably succeed on the merits of its cause of action because the Belgian judgment was entitled to recognition under C.P.L.R. Article 53 pursuant to the last-in-time rule, i.e., [that] among conflicting sister state judgments, the last judgment handed down generally prevails.

Defendant cross-moved to vacate the attachment. It urged , inter alia, that the Supreme Court should have exercised its discretion under C.P.L.R. 5304(b)(5) to deny recognition of the Belgian judgment because it conflicted with the prior Turkish judgment. Defendant also argued that the New York courts did not have to apply the last-in-time rule where the conflicting judgments came from foreign courts.

The New York Supreme Court denied Plaintiff's motion to confirm the attachment and granted Defendant's cross motion. After concluding that it did not have to recognize the Belgian judgment pursuant to the last-in-time rule, the court, in the exercise of its discretion under C.P.L.R. 5304(b)(5), declined to recognize the Belgian judgment because it did conflict with the earlier Turkish judgment.

The Appellate Division modified this judgment to the extent of dismissing the C.P.L.R. 3213 complaint but otherwise affirmed. The court rejected Plaintiff's primary contention that New York law required application of the last-in-time rule. It its view, that rule "lacks any justification where, as here, the foreign country court that rendered the last judgment [did] not give the party against whom enforcement is sought any kind of opportunity to argue the binding effect of the earlier judgment."

The Appellate Division further held that Defendant had demonstrated its entitlement to nonenforcement of the Belgian judgment under C.P.L.R. 5304(b). Defendant had done so "by showing that the ... judgment was issued in contravention of the principles of comity pursuant to a [Belgian] statute that has since been repealed and superseded by a statute directly to the contrary".

After granting Plaintiff leave to appeal further, the New York Court of Appeals unanimously affirms.

"As we recently reiterated, 'New York has traditionally been a generous forum in which to enforce judgments for money damages rendered by foreign courts' See, e.g., Sung Hwan Co., Ltd. v. Rite Aid Corp., 7 N.Y.3d 78, 82, 817 N.Y.S.2d 600, 850 N.E.2d 647 (2006), ... New York courts have historically recognized foreign country judgments 'under the doctrine of comity ... [a]bsent some showing of fraud in the procurement of the foreign country judgment or that recognition of the judgment would do violence to some strong public policy of this State'."

"The doctrine of comity 'refers to the spirit of cooperation in which a domestic tribunal approaches the resolution of cases touching the laws and interests of other sovereign states' Societe Nationale Industrielle Aerospatiale v. United States Dist. Court, 482 U.S. 522, 543 n. 27 (1987); see also Hilton v. Guyot, 159 U.S. 113, 163-164 (1895). Comity, in the legal sense, is neither a matter of absolute obligation, on the one hand, nor of mere courtesy and good will, upon the other. But it is the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens, or of other persons who are under the protection of its laws."

"Our State's recognition of foreign judgments is governed by C.P.L.R. Article 53, the Uniform Foreign Country Money-Judgments Recognition Act, which was enacted in 1970 'to codify and clarify existing case law on the subject and, more importantly, to promote the efficient enforcement of New York judgments abroad by assuring foreign jurisdictions that their judgments would receive streamlined enforcement here' CIBC Mellon Trust, 100 N.Y. 2d at 221, 762 N.Y.S. 2d 5, 792 N.E. 2d 155 (2003)." [248]

"This statute 'applies to any foreign country judgment which is final, conclusive and enforceable where rendered' (C.P.L.R. 5302). C.P.L.R. 5304(a), however, makes clear that a foreign judgment is 'not conclusive,' and thus not entitled to recognition, where the foreign country fails to provide impartial tribunals or due process or where the tribunal lacked personal jurisdiction over the defendant. C.P.L.R. 5304(b) contains the discretionary grounds for refusing foreign court judgment recognition. As relevant here, C.P.L.R. 5304(b)(5) states that '[a] foreign country judgment need not be recognized if ... the judgment conflicts with another final and conclusive judgment.'"

"Here, the Belgian court judgment which Plaintiff seeks to enforce conflicts with an earlier Turkish judgment in Defendant's favor, and a German judgment granting that judgment reciprocity. Under C.P.L.R. 5304(b)(5), New York courts may, in the exercise of discretion, refuse to enforce a foreign judgment that 'conflicts with another final and conclusive judgment.'"

"It should be noted, however, that the statute does not specify which, if any, of the two conflicting foreign judgments is entitled to recognition. Rather, under C.P.L.R. 5304(b)(5), the court may recognize the earlier judgment, the later judgment or neither of them. The last-in-time rule, applicable in resolving conflicting sister state judgments under the Full Faith and Credit Clause of the Constitution, see Treinies v. Sunshine Mining Co., 308 U.S. 66, 76-78 (1939), [added cite], need not be mechanically applied when inconsistent foreign country judgments exist. Rigid application of the rule would conflict with the plain language of C.P.L.R. 5304(b)(5) vesting New York courts with discretion to decide whether a foreign judgment that conflicts with another judgment is entitled to recognition."

"Specifically, the last-in-time rule should not be applied where, as here, the last-in-time court departed from normal res judicata principles by permitting a party to relitigate the merits of an earlier judgment. In the present case, the Belgian court declined to accord recognition to an earlier Turkish judgment that had been previously recognized by a German court and in so doing departed from generally-accepted principles of res judicata and comity. Thus, [the court below] properly exercised its discretion under C.P.L.R. 5304(b)(5) to deny recognition of the Belgian judgment, which disregarded B and conflicted with B a previously rendered Turkish judgment." [248-49]

Citation: Byblos Bank Europe, S.A. v. Sekerbank Turk Anonym Sirketi, 10 NY3d 243, 2008 WL 731029 (N.Y.C.A. 2008).
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Publication:International Law Update
Geographic Code:1USA
Date:Apr 1, 2008
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