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  • Noam Schreiber

From the esoteric to the practical: enforcing foreign default judgments

In most jurisdictions, a prerequisite to enforcing a foreign judgment is that the judgment was issued by a court of competent jurisdiction. Israel is no different. Israel's Enforcement of Foreign Judgments law ("FJ Enforcement law") makes clear that a foreign judgment must have been issued by a court that had jurisdiction to do so.

Default judgments naturally raise interesting and sometimes complicated questions about their enforceability. A defendant against whom a foreign judgment is being enforced against will inevitably and reflexively challenge the enforceability of a default judgment on the grounds that he/she was not served properly or was unaware of the foreign proceeding.

The question becomes how to categorize these types of challenges. One way to look at them is as a challenge targeting the jurisdiction of the foreign court. Under this theory, the defendant is essentially claiming that because the service-of-process was defective, the foreign court never attained jurisdiction to issue the judgment in the first place.

However, a defendant may also cast this type of service-based challenge as an equitable argument, e.g., because the service was defective, the defendant was not afforded reasonable opportunity to present arguments or offer evidence in the foreign proceeding. Israeli law specifically provides for such a challenge under under article 6(a)(2) of Israel's FJ Enforcement law.

This inquiry may seem a bit esoteric at first, but it has important practical implications. If the issue is one of jurisdiction, the burden of proof is on the movant to prove that the service of process was perfected; if the issue is one of fairness and equity -- i.e. the opportunity to defend -- then it would appear that the movant/plaintiff has no initial burden to make any assertions as to service.

Yet another implication may be the flexibility a court may have in determining whether proper service was effected. If defective service is connected to the jurisdiction of the foreign court, the Israeli court will need to determine whether, under the foreign law, service was proper. However, if the issue is one of fairness and equity, there may be room for flexibility and an Israeli court may very well find that the defendant had sufficient notice of the lawsuit even though he may not have been properly served under the foreign law.

Israeli law seems to indicate that, as a general rule, defective service is not a defect in jurisdiction of the foreign court. Nava v. Sardes, Civ. Act. 1010-07 (Mag. Ct. Rishon L'tzion, March 31, 2010). According to this view, the proper rubric for analyzing service-of-process claims is article 6(a)(2) of Israel's FJ Enforcement law.

However, in a decision rendered this last summer from the Tel-Aviv District Court, the court created some confusion. In Biton v. Flock, the movant/plaintiff requested the Israeli court to enforce a judgment against the defendant issued by a court in Sierra Leone. In opposition, the defendant claimed that he was not effectively served with the complaint in accordance with the applicable law and, therefore, the foreign Sierra Leone court, did not have jurisdiction to issue the judgment. Biton v. Flock, Civ. Act. 20092-06-16 (Tel Aviv Dist. Ct., June 14, 2020).

The court considered this argument and rejected it. According to the Israeli court:

Defective service does not necessarily mean that the foreign court does not have jurisdiction to issue the judgment or that section 3(1) of the FJ Law does not exist.

So far so good. This is consistent with previous case law.

The Israeli court, however, went on to make an important distinction between foreign countries that view a judgment issued as a result of defective service as "void" and countries that view such judgments as "voidable."

When a judgment is "void", that means that the foreign court lacked jurisdiction to issue the judgment. When the judgment is "voidable," however, the foreign court had jurisdiction and the judgment is valid and enforceable under section 3(1) of the FJ Law. However, a foreign judgment that is "voidable" due to defective service may not be enforceable under the grounds that the defendant was not provided with the opportunity to properly defend under section 6(a)(2) of Israel's FJ Enforcement law.

The Israeli court in Biton v. Flock did not draw a fine line between "void" and "voidable." However, it appears that when the laws of a country provide for a specific procedure for challenging the default judgment due to lack of proper service, the judgment will be considered "voidable" and not "void."

As a result of this decision (and assuming it is good law), defective service-based challenges can no longer automatically be categorized as an equitable-article 6(a)(2) challenge. Depending on the circumstances, defective service may affect the jurisdiction of the foreign court to issue the judgment in the first place. Practitioners should be aware of this otherwise rather esoteric issue. Counsel for those seeking to enforce a foreign default judgment should look carefully in reviewing the foreign country's rules regarding default judgments and make an assessment whether the service-of-process was defective or not. Counsel for defendants upon whom a foreign judgment is being enforced against should also review this matter carefully. Only after making that initial inquiry will the practitioner be able to properly implement a plan of enforcement (or challenging enforcement) and draft the motion accordingly.

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