Opinion ID: 548964
Heading Depth: 2
Heading Rank: 1

Heading: Recognition of the Abu Dhabi Judgment

Text: 12 The Bank argues that the district court erred when it refused to recognize the Abu Dhabi Judgment. The question arises as to whether federal or state law governs this question. Since the jurisdiction of this court is based on diversity of citizenship, we apply Texas law regarding the recognition of foreign country money-judgments. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938) (In a diversity action, a federal court must apply the law of the forum state.) Courts have frequently held that state law governs the recognition and enforcement of foreign country judgments. 1 Hunt v. BP Exploration Co. (Libya), Ltd., 492 F.Supp. 885 (N.D.Tex.1980); see also Somportex, Ltd. v. Philadelphia Chewing Gum Corp., 318 F.Supp. 161 (E.D.Pa.1970), aff'd, 453 F.2d 435, 440 (3d Cir.1971), cert. denied, 405 U.S. 1017, 92 S.Ct. 1294, 31 L.Ed.2d 479 (1972). 13 The Bank argues that the district court abused its discretion when it declined to recognize the Abu Dhabi Judgment, finding that Abu Dhabi does not recognize judgments rendered by Texas courts or other courts of the United States. In Texas the Uniform Foreign Country Money-Judgment Recognition Act (the Texas Recognition Act) controls this issue. Tex.Civ.Prac. & Rem.Code Secs. 36.001-36.008 (Vernon 1986 & Supp.1990). The Texas Recognition Act provides that a foreign country money-judgment which is final, conclusive and enforceable where rendered is enforceable in Texas in the same manner as a judgment of a sister state that is entitled to full faith and credit. Sec. 36.004. Historically foreign country judgments have not been entitled to full faith and credit, but only to comity. Hilton v. Guyot, 159 U.S. 113, 163-64, 16 S.Ct. 139, 143, 40 L.Ed. 95 (1895); Schacht v. Schacht, 435 S.W.2d 197 (Tex.Civ.App.--Dallas 1968, no writ). See also Bishop, Obtaining Recognition and Enforcement of Foreign-Country Judgments in Texas, Mar. 1982 Tex.B.J. 287 [hereinafter Bishop]. Comity has been defined as the recognition which one nation extends within its own territory to the legislative, executive, or judicial acts of another. Somportex, 453 F.2d at 440. Although comity is not a rule of law, it is more than mere courtesy and accommodation. Id. Under the Texas Recognition Act the rules relating to the recognition of foreign country money-judgments are statutory and therefore more predictable. 14 Section five of the Texas Recognition Act contains mandatory and discretionary grounds for non-recognition of a foreign country money-judgment. The three criteria listed in section 36.005(a) are mandatory in nature. 2 In comparison, a court need not recognize a foreign country money-judgment if any of the seven grounds listed in section 36.005(b) are proven. 3 15 Section five of the Texas Recognition Act specifically provides that a court need not recognize a foreign country money-judgment if it is established that the foreign country in which the judgment was rendered does not recognize Texas judgments. Tex.Civ.Prac. & Rem.Code Ann. Sec. 36.005(b)(7). Since the Texas Recognition Act clearly gives judges discretion in deciding whether to refuse to recognize foreign judgments due to lack of reciprocity, the decision not to recognize the Abu Dhabi Judgment can only be set aside upon a clear showing of abuse of that discretion. Westbrook v. General Tire and Rubber Co., 754 F.2d 1233, 1241 (5th Cir.1985). 16 The Bank argues that Khreich should be bound by the Abu Dhabi Judgment because he chose to pursue his claim in that court. In support of this argument, the Bank asserts that the Texas Recognition Act is essentially a codification of the leading Supreme Court decision regarding recognition and enforcement of foreign judgments, Hilton v. Guyot, 159 U.S. 113, 16 S.Ct. 139, 40 L.Ed. 95 (1895). In Hilton, the Supreme Court refused to give conclusive effect to a French judgment. In that case suit was brought in federal court in New York on a judgment rendered against an American citizen by a French court of competent jurisdiction. The Supreme Court held that a foreign judgment would not be given conclusive effect unless the courts of the rendering country would give the same effect to a comparable judgment of an American court. Hilton, 159 U.S. at 210, 16 S.Ct. at 139. 17 Citing dicta in the Hilton opinion, the Bank argues that Khreich should be bound by the Abu Dhabi judgment because he sued in an Abu Dhabi court and judgment was rendered in favor of the Bank. See Hilton, 16 U.S. at 170, 16 S.Ct. at 146 ([I]f a[n American] citizen sues a foreigner, and judgment is rendered in favor of the latter, both may be held equally bound.). This argument is unpersuasive for several reasons. First, the reciprocity portion of the Hilton decision is essentially no longer binding law. Most decisions since Hilton have rejected or ignored the Hilton reciprocity requirement. See, e.g., Carl Zeiss Stiftung v. V.E.B. Carl Zeiss, Jena, 293 F.Supp. 892 (S.D.N.Y.1968), modified on other grounds, 433 F.2d 686 (2d Cir.1970), cert. denied, 403 U.S. 905, 91 S.Ct. 2205, 29 L.Ed.2d 680 (1971); Johnston v. Compagnie Generale Transatlantique, 242 N.Y. 381, 152 N.E. 121 (1926). See also von Mehren & Patterson, Recognition and Enforcement of Foreign-Country Judgments in the United States, 6 Law & Pol'y in Int'l Bus. 37, 46 (1974). Second, the Bank has not cited any authority, nor has this court been able to locate any, which indicate that the Texas legislature intended to adopt this exception to the reciprocity requirement. 18 At trial Khreich had the burden of proving non-reciprocity. Section five of the Texas Recognition Act provides that a foreign country judgment need not be recognized if certain conditions exist. These conditions are phrased as affirmative defenses. Therefore, the burden of non-recognition rested with Khreich. Hennessy v. Marshall, 682 S.W.2d 340, 344 (Tex.App.--Dallas 1984), disapproved on other grounds, Don Docksteader Motors, Ltd. v. Patal Enters., Ltd., 794 S.W.2d 760 (Tex.1990); see also Bishop, supra, at 290. 19 Khreich argues that the district court correctly refused to recognize the Abu Dhabi Judgment on the grounds of non-reciprocity. 4 Khreich met his burden of proof by providing the district court with the affidavit of Gary R. Feulner, an American attorney practicing in Abu Dhabi. Feulner testified that he, as well as members of his firm who had practiced in the U.A.E. since 1974, were unaware of any Abu Dhabi courts enforcing United States' judgments. Feulner also pointed out, however, that he was likewise unaware of any actual attempts to enforce such judgments. Based on his experience in neighboring Arabic countries and his experience with the local judicial treatment of foreign choice of law clauses and choice of jurisdiction clauses, Feulner testified that local courts favor resolution of disputes in a local forum and under local law. The Bank attempted to refute this affidavit by providing the court with a translation of Abu Dhabi law relating to the recognition of foreign judgments. 5 This portion of the Abu Dhabi Civil Code provides for the recognition of foreign judgments, apparently at the Abu Dhabi court's discretion. 20 Although the Bank cited the district court to relevant Abu Dhabi law regarding the enforcement of foreign judgments, Feulner's affidavit states that in his experience valid concerns exist whether Abu Dhabi courts would actually exercise their discretion to recognize an American judgment. Feulner indicates that Abu Dhabi courts demonstrate a certain skepticism towards the unquestioning application of legal principles adopted from the developed Western nations, at least where these appear to work to the disadvantage of local parties. R. at 573-74. Given this evidence, the district court's refusal to recognize the Abu Dhabi Judgment does not constitute an abuse of discretion. Therefore we affirm the district court's refusal to recognize the Abu Dhabi Judgment.