Recognition and Enforcement of Foreign Judgments

• Author: Stephen G.A. Pitel/Nicholas S. Rafferty
• Profession: Faculty of Law, University of Western Ontario/Faculty of Law, University of Calgary
• Pages: 157-196

157

CHAP TER 8

RECOGNITION AND

ENFORCEMENT OF

FOREIGN JUDGMENTS

A. I NTRODUC TION

The third central question in t he conf‌lict of laws is whether a court will

recognize and enforce a decision of a court in another jurisdiction. The

previous three chapters have focused on t he f‌irst central question, that

of jurisdiction. So it may seem odd to now take up the third quest ion

rather than the second. However, as will be developed, there are strong

connections between the question of jurisdiction and the question of

recognition and enforcement. They have more in common with each

other than either does with the second central question, choice of law.

As a result, it makes s ense to exami ne these topics in thi s order.

Under the principle of territorial sovereignty, the judgment of a

court only has effect inside the territory with in which the court is lo-

cated. Consider an Ontario court order requiring a defendant to pay

money. The plaintiff i s entitled to enforce that order against the defend-

ant in Ontario. For example, the defendant’s asset s in Ontario ca n be

seized by the sheriff and sold, and the proceeds paid to the plaintif f.

This makes emi nent sense; the order would be of little value otherw ise.

But that same order cannot simply be applied in the same way to t he de-

fendant’s assets outside Ontar io. If the defendant has assets in Alberta

or New York, the plaintiff cannot present the Ontar io order to the local

sheriff in the foreign jur isdiction and expect him or her to act on it. The

Ontario order is not operative beyond Ontar io’s borders.

CONFLICT OF LAWS

158

Modern commerce makes it imperative that these territorial lim-

itations are overcome. While a defendant may have suff‌icient as sets to

satisfy a plaintiff’s clai m, those assets m ay be spread across several dif-

ferent jurisdictions. It would be very ineff‌icient to require t he plaintiff

to bring separate substa ntive proceedings against the defendant in each

such jurisdiction. In addition, it is i ncreasingly easy for certain ty pes of

assets to be moved across borders. Even if the defendant has suff‌icient

assets in the forum where the dispute is to be resolved, there is often

no guarantee those assets will remain there at the conclusion of the

litigation. It is therefore important that the eventual judgment be useful

outside the forum.

Similar considerat ions arise for injunctive relief. If the plai ntiff

seeks an injunction again st a defendant who is not present in the forum,

and who has no assets t here, then the injunction could end up being of

little value. The plaintiff wi ll not be able, in the forum, to enforce the

injunction against either the person or the assets of the defendant. As

with money judgments, it is important to consider whether the judg-

ment could become enforceable beyond the forum.

The main way the limitations of territorial sovereignty h ave been

overcome is through jurisd ictions accepting that when certain condi-

tions are satisf‌ied they will recognize and enforce the judgment of a

foreign court. This is a sovereignty compromise: a foreign court’s order

ends up having an extraterritoria l effect, but each jurisdiction gets to

establish its own conditions for when this will occur.

At the outset we should distinguish bet ween recognition and en-

forcement, even though the two terms are often loosely used inter-

changeably. Recognition is the f‌irst step, and is the process by which

the court accepts the validit y of the decision on its merits and th at it

has resolved the issue between the parties. En forcement is the second

step, and involves lending assista nce to a party to follow through on the

judgment. The seizure and sale process, for example, is an enforcement

mechanism. A decision must be recognized before it can be enforced.

However, not all decisions need to be enforced: recognition is often

enough. Sometimes the defendant might pay the plainti ff once the de-

cision is recognized i n a jurisdiction where he or she has as sets, so the

plaintiff does not need to move to enforcement. In quite a different typ e

of case, the defendant might be seek ing to have the court recogni ze a

foreign judgment in which the plaintiff ’s claim was dismissed. The de-

fendant seeks to use this earlier judgment as the ba sis for a defence of

res judicata or issue estoppel. If the court recog nizes the foreign judg-

Recognition a nd Enforcement of Foreign Judgments 159

ment, the defendant does not need to have it enforced: he or she simply

relies on it in support of these defences.1

B. THE TEST FOR RECOGNITION AND

ENFORCEMENT

The common law gives the plaintiff who has obtained a foreign judg-

ment two options. First, the plaintiff can bring an action on the foreign

judgment. While this is a separate action, requiring all the procedural

steps of an action, it is based not on the origi nal claim the plaintiff

had pursued against t he defendant but rather on the obligation created

by the foreign judgment, typical ly a debt obligation.2 This remains the

standard common law method for hav ing a foreign judgment recog-

nized and enforced.3

The second option is for the plaintiff to bri ng an action on the original

cause of action. This has noth ing to do with recognition and enforcement

of the foreign judgment. Rather, the plaintiff si mply sues the defendant

again on the same cause of action. The doctrine of merger provides that

once a plaintiff ha s been successful in an action against t he defendant the

original cause of action merges into the resulting judgment. It prevents

the plaintiff f rom suing the defendant again. But the doctr ine of merger

does not apply to foreign judgments, so that it is always open for the

successful plaintiff to re-litigate the origin al case in a di fferent forum.

While available, this optio n is very un popular. It ra ises lim itation-pe riod

problems, is time-consuming and expensive, and raises the possibility of

inconsistent results on the same underlying facts.

Because an action on the foreign judgment is a new legal proceedi ng,

issues of jur isdiction, as d iscussed in Chapter 5, must be considered at

the outset. If the defendant is re sident in the country i n which recogni-

tion and enforcement is sought, it will be easy to e stablish jurisdiction.

But in many cases t he defendant will not be resident there: he or she

will only have assets there, which the plaintiff is going after to en-

force the judgment. Typically the presence of assets in a province i s an

insuff‌icient basis for taking jurisd iction over a foreign defendant. But

1 See also the u se made of a foreign judgment by the pla intiff in Monteiro v. To-

ronto Dominion Bank (2008), 89 O.R. (3d) 565 (C.A.).

2See Schibsby v. Westenholz (1870), L.R. 6 Q.B. 155.

3Nouvion v. Freeman (1889), 15 App. Cas. 1 (H.L.) [Nouvion], relying on Williams

v. Jones (1845), 13 M. & W. 628 at 633.