Enforcement of Foreign Money Judgment. New York court grants enforcement of $25 million judgment entered in the Kingdom of Bahrain, finding that the proceedings in the Bahrain Chamber for Dispute Resolution comported with fundamental due process.
Plaintiff Standard Chartered Bank sued Defendants, a Saudi Arabian partnership and its partners (all residents and citizens of Saudi Arabia), in New York state court to enforce a $25 million judgment entered in the Kingdom of Bahrain. Defendants moved to dismiss the complaint, arguing that the Bahraini proceedings did not comport with fundamental due process and that Bahrain was an inconvenient forum. In response, Plaintiff cross-moved for summary judgment. After considering the various arguments, the court denied the motion to dismiss and granted the cross-motion to enforce the judgment.
The court began its analysis by describing the operation of Article 53 of the New York Civil Practice Law and Rules ("CPLR"), which addresses the recognition and enforcement of foreign country money judgments. Under CPLR §§ 5302 and 5303, a party seeking to enforce a foreign judgment bears the initial burden of proving it has obtained a final, conclusive and enforceable foreign judgment. Once a conclusive judgment is established, CPLR § 5304 then provides certain grounds for non-recognition. In particular, § 5304(a)(1) provides a defense to enforcement where "the judgment was rendered under a system which does not provide . . . procedures compatible with the requirements of due process of law."
Defendants did not dispute that Plaintiffs had obtained a final and conclusive judgment in Bahrain. Rather, Defendants' principal contention was that the underlying proceeding in the Bahrain Chamber for Dispute Resolution ("BCDR") was the functional equivalent of compulsory arbitration, and thus violated due process, because the decision makers were not professional judges, evidence was unreasonably restricted, and rights of appeal were virtually nonexistent. The court disagreed with Defendants.
Regarding the first point, the court noted that the composition of the BCDR tribunal -- two judges at the High Court of Appeals, and one non-judge selected from a list prepared by the BCDR who possessed specialized knowledge of the subject matter -- was commonplace in trials in civil law regimes such as Bahrain, and did not in itself undermine the fairness of the proceeding. With regard to the conduct of the trial, the court likewise found that the tribunal had reasonably exercised its discretion in receiving evidence from expert witnesses appointed by the tribunal and in issuing evidentiary and procedural rulings.
Finally, the court rejected Defendants' contention that their rights of appeal were unfairly limited. Defendants argued that because appeals from BCDR tribunals are taken directly to the Court of Cassation, whereas appeals from ordinary judgments are taken first to an intermediate appellate court, this lack of an intermediate stage of appeal denied them due process. The court rejected this argument, finding that Defendants failed to demonstrate how the lack of an intermediate appeal denied them any meaningful rights of appeal. The court also noted that under applicable Bahraini law, Defendants could have appealed the BCDR judgment on the ground that they were "not enabled to present [their] defense," but had failed to do so.
Defendants also moved for dismissal on the ground of forum non conveniens. Under CPLR § 5304(b)(7), a defendant may resist enforcement of a foreign judgment if it can show that the foreign court was a "seriously inconvenient forum" and if jurisdiction in the foreign court was based only on personal service. In this case, however, Defendants were served with process in Saudi Arabia, not in Bahrain. Accordingly, the court ruled that the statutory forum non conveniens defense did not apply.