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The Money Judgments Recognition Act Can Only Be Used as a Shield Not a Sword

In the case of Chevron Corp. v. Donziger, the U.S. Court of Appeals for the Second Circuit found that New York's Uniform Foreign Country Money-Judgments Recognition Act does not provide a potential judgment debtor a cause of action to challenge foreign judgments before enforcement of those judgments is sought. Thus, putative judgment debtors have no standing to bring such preemptive suits against the holders of judgments.

Following about 30 years of oil extraction in the Ecuadorian Amazon, Ecuadorians brought a variety of claims against the company and obtained judgment in Ecuador. Chevron, a potential judgment-debtor, brought action under New York’s Uniform Foreign Country Money-Judgments Recognition Act, N.Y. C.P.L.R. 5301-5309, which allows judgment-creditors to enforce foreign judgments in New York courts, seeking a global anti-enforcement injunction against the Ecuadorians and their attorney to prohibit attempts to enforce the allegedly-fraudulent judgment entered by the Ecuadorian court. The district court granted the injunction. The Second Circuit reversed, vacating the injunction. The Recognition Act does not grant putative judgment-debtors a cause of action to challenge foreign judgments before enforcement of those judgments is sought. Judgment-debtors can challenge a foreign judgment’s validity under the Act only defensively, in response to an attempted enforcement.

A copy of the entire decision can be viewed at => http://law.justia.com/cases/federal/appellate-courts/ca2/11-1150/11-1150-2012-01-26.html.

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