Enforcement strategy is often an afterthought in litigation, but you can save time and costs by developing your enforcement strategy at the start.

The USA and Australia have long enjoyed a close relationship, so it is somewhat surprising that they have not made a bilateral arrangement for the enforcement of each other's judgments. Countries with weaker connections to Australia have made bilateral arrangements allowing them to enjoy the benefits of the Foreign Judgments Act 1991 (Cth) when it comes to enforcing judgments of their domestic courts in Australia.

A party seeking to enforce a US judgment in Australia must instead rely on the common law principles for recognition and enforcement of foreign judgments. The good news is that the common law requirements are at least reasonably settled.

What US judgments can be enforced in Australia?

To be capable of enforcement in Australia, a US judgment must satisfy six requirements:

  • it must be final and conclusive;
  • there must be an identity of the parties;
  • if it is a judgment in personam, it must be for a fixed debt or readily calculable sum;
  • the US court must have exercised jurisdiction in the international sense as recognised by Australian courts;
  • it must not be wholly satisfied; and
  • it must have been obtained within the last 12 years.

Final and conclusive

To be "final and conclusive" the US judgment must end not only the proceedings between the parties, but also the dispute which led to the proceedings in the first place (Nouvion v Freeman (1889) 15 App Cas 1). The fact that an appeal may be pending against a judgment or it may still be subject to appeal will not ordinarily affect this.

US judgments obtained by default are generally considered to be final and conclusive judgments unless and until steps are taken to set it aside (Ainslie v Ainslie (1927) 39 CLR 381, Schnabel v Lui [2002] NSWSC 15, Re Teape (unreported, SCQ, Ryan J, No. 1125/1992, 26 February 1993)).

Identity of the parties

The parties to the proceedings to enforce the US judgment in Australia must be identical to the parties to the original US proceedings. For example, a US judgment made against a partnership cannot be enforced against a single partner in Australia – it must be enforced against the partnership as a whole.

Judgment for a fixed debt

Judgments in personam can only be enforced at common law if they are for a fixed or readily calculable sum.

However, in certain limited circumstances judgments involving remedies which do not necessarily involve the payment of money such as injunctions may be enforceable in Australia under equitable principles.

Jurisdiction recognised by Australian courts

To enforce a US judgment in Australia the plaintiff must prove that the US court exercised jurisdiction over the judgment debtor which is recognised by Australian courts. This is often called "jurisdiction in the international sense".

Under Australian common law rules a US court will be deemed to have exercised the relevant jurisdiction if:

  • the defendant voluntarily submitted to the court's jurisdiction; or
  • the defendant was ordinarily resident or present in the US at the time that he or she was served with the originating process.

While these are the two most common grounds for establishing jurisdiction in the international sense, there is an emerging line of authority which says international jurisdiction will be recognised where the defendant was a citizen of the country of the foreign court and the defendant actively used his or her citizenship.

For example in Federal Finance & Mortgage Ltd v Winternitz (unreported 9 November 1989, Sully J) the court held that a Hawaiian judgment was enforceable in Australia because at the time of the Hawaiian proceedings, the defendant was a US citizen and on that basis the Hawaiian court had jurisdiction over him in the international sense. In reaching this decision the presiding judge emphasised that the defendant continued to actively "use" his US citizenship by maintaining his registration as a voter in Hawaii. It has been suggested that had the defendant not maintained his voter registration and his US citizenship had been dormant then the Hawaiian court would not have had the relevant jurisdiction (Nygh's Conflict of Laws in Australia 8th ed. at [40.24]).

Are there any defences?

Provided each of the elements discussed above are satisfied then the US judgment will be enforceable under Australian common law, except if the defendant can establish one of the defences discussed below.

A defendant cannot resist the enforcement of a foreign judgment by challenging the merits of the US decision.[1] This is the case even where it is apparent that the US court made an error in applying the law in the original hearing.[2] A corollary of this proposition is that the defendant is also estopped from raising any defence which was or could have been raised in the original US proceedings.[3]

In light of the above, the only defences which a defendant can seek to rely on to resist enforcement of a US judgment are arguments that:

  • it was obtained by fraud;
  • the US court acted contrary to natural justice; or
  • the US judgment is contrary to public policy.

If it is apparent that the defendant has no grounds for relying on any of the abovementioned defences then the plaintiff may be able to move for summary judgment.[4]

Conclusion

Although there is no treaty between the USA and Australia concerning the enforcement of judgments, US money judgments can be enforced in Australia under the common law procedure.

To maximise the prospects of being able to enforce a US judgment in Australia, US attorneys may wish to consider obtaining legal advice from Australian lawyers at an early stage in the US proceedings. Enforcement strategy is often an afterthought in litigation, but in our experience you can save time and costs by developing your enforcement strategy at the beginning of a case.