JPMorgan Chase Bank, N.A. v. PT Indah Kiat Pulp and Paper Corp. Tbk, 02 C 6240 (N.D. Ill. Apr. 5, 2012)

The district court issued a judgment in favor of Plaintiff against three Indonesian Defendants.  When a federal court has entered a judgment, the procedure in supplementary proceedings for execution of such judgment must accord with the procedural law of the state where the court is located.  Plaintiff thus initiated collection proceedings by serving upon each of them a “citation to discover assets” – a post-judgment mechanism that, under Illinois law, enables a judgment creditor to initiate discovery to identify a judgment creditor’s available assets to satisfy the judgment.  Defendants moved to stay enforcement of the citations on the basis that an injunction issued by an Indonesian court several years before, in connection with a judgment against them in a lawsuit brought by a third party, prohibited Defendants from revealing their assets to anyone and thus prohibited compliance with the citations in the instant case. 

A magistrate judge, to whom the district court referred the issue, denied Defendants’ motion to stay.  Defendants sought relief from the magistrate’s ruling by filing objections to it in the district court, while Plaintiff filed a motion to compel Defendants’ compliance with the citations.

The district court upheld the magistrate’s ruling, finding it neither clearly erroneous nor contrary to law.  The district court agreed with the magistrate that Defendants had failed to prove that the Indonesian injunction against them created a conflict of laws that would prevent Defendants from complying with the citation in the United States.  The Indonesian injunction expressly stated that it applied “temporarily during the examination process of th[e] case” and therefore might no longer be effective.  And, even if the injunction were still in effect, the Defendants had not carried their burden of proving that, in the event they complied with the citation, they would be subject to sanctions in Indonesia.  The sole evidence of such potential sanctions was a written declaration of an expert stating that Defendants would face monetary fines.  The court found this evidence unpersuasive, given that it was written by an “advocate” retained by Defendants and given that the declaration cited no Indonesian law in support of its claims.

Second, the district court agreed with the magistrate that even if the Indonesian injunction created a conflict of laws, comity principles did not necessitate a stay of the citation proceedings. Even if Defendants could face the prospect of sanctions by complying with the citation, that did not preclude the court from compelling Defendants to comply with the citation.  Rather, in that instance, the court was required to conduct a “balancing” test, considering such factors as the importance of the information requested, whether the requests were sufficiently specific, whether the information originated in the United States, whether the information sought was available through alternative means, and the interests of the state where the information was located.  Applying these factors, the court held that the information sought was critical to permitting collection on the U.S. judgment and deemed Indonesia’s interests in maintaining the injunction – which was already several years old – to be minimal.

The district court thus overruled Defendants’ objections to the magistrate’s order denying the stay.  The district court also granted Plaintiff’s motion to compel compliance with the citations within 25 days on threat of several-thousand-dollar-per-day penalties in the event of noncompliance.