Enforcement of Out-of-State or Foreign Judgments/Arbitration Awards

The U.S. Constitution at Article IV, Section I, states: …

“Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State.  And the Congress may by general Laws prescribe the Manner in which such Acts, Records and Proceedings shall be proved, and the Effect thereof.”

In 28 U.S.C. § 1738, Congress provided further that authenticated court records from any state, territory, or possession are entitled to Full Faith and Credit throughout the United States and its territories and possessions.  Accordingly, Texas, like every other state, is required to recognize authenticated judgments issued by courts from other states throughout the nation (but note that tribal courts within the United States may not fall in that category).

Judgments issued by courts in foreign nations are different since Full Faith and Credit does not apply in that instance and the United States is not a party to any bilateral treaty or multilateral convention regarding reciprocal recognition and enforcement of judgments (as opposed to enforcement of arbitration awards, which is addressed at the bottom of this article).  Rather, the recognition and enforcement of a judgment issued in a foreign nation remains governed entirely by state law; indeed, a case brought in federal court to enforce a foreign judgment would for that reason be decided according to the law of the state in which the court sits.

Two statutes in Texas address the enforcement of judgments through a process called “domestication”:

  • The Uniform Enforcement of Foreign Judgments Act: the “UEFJA,” found at Chapter 35 of the Texas Civil Practice & Remedies Code, provides for the recognition of judgments from other territories, states, and federal courts that are entitled to Full Faith and Credit (historically referred to as a “foreign judgment”).
  • The Uniform Foreign Country Money-Judgment Recognition Act: the “UFCMJRA,” found at Chapter 36A of the Texas Civil Practice & Remedies Code, provides a process for recognizing most types of money judgments from places that are not otherwise covered by the UEFJA (distinguished as a “foreign-country judgment”).  

Once a foreign or foreign-country judgment is recognized by a Texas court, it becomes fully domesticated and can be enforced or challenged in the same manner and with the same procedures as any other judgment rendered by a Texas court in the first instance.

Under the UEFJA, an authenticated copy of a foreign (another state court’s) judgment is prima facie valid upon filing in accordance with the statute.  The burden is then on a judgment debtor (the person subject to the judgment) to demonstrate it should not be entitled to Full Faith and Credit, which can be done only by a collateral attack – i.e., a jurisdictional reason that does not consider the merits of the underlying dispute.  To succeed in a collateral attack and void a foreign judgment, courts in Texas have stated that the judgment debtor must demonstrate by clear and convincing evidence that the out-of-state court which rendered the judgment either:

  1. Lacked jurisdiction over the parties or property;
  2. Lacked jurisdiction over the subject matter;
  3. Lacked jurisdiction to enter the particular judgment;
  4. Lacked capacity to act as a court; or
  5. The judgment was procured by fraud or is penal in nature. 

The statute also provides a mechanism to stay enforcement of a foreign judgment if an appeal is pending in the other jurisdiction’s courts.

The UFCMJRA provides for recognition of a foreign-country judgment requiring the payment of money so long as it does not constitute a tax, fine, penalty, or domestic relations matter (e.g., divorce, alimony, or other support) if it is “final, conclusion, and enforceable” where rendered.  A pending appeal in the foreign country does not mean the judgment is not final and enforceable though. However, a Texas court is barred from enforcing a foreign court’s judgment if:

  1. The judgment was rendered in a place lacking impartial tribunals and due process of law;
  2. The foreign court did not have personal jurisdiction over the defendant; or
  3. The foreign court lacked subject matter jurisdiction. 

Further, a Texas court has discretion not to recognize and enforce a foreign-country judgment if:

  1. The defendant did not receive notice in sufficient time to defend the proceeding;
  2. The judgment was obtained by fraud;
  3. The judgment violates Texas public policy;
  4. The judgment conflicts with another final and conclusive judgment;
  5. The foreign proceeding was contrary to an agreement between the parties to resolve their dispute in a different forum (such as arbitration);
  6. The foreign court was a seriously inconvenient forum;
  7. There is substantial doubt about the integrity of the rendering court;
  8. The proceeding in the foreign court was not compatible with due process of law; or
  9. It is established that the foreign country would not recognize a Texas judgment of the same type (i.e., there would be no reciprocity). 

The UFCMJRA also provides additional detail on what qualifies for purposes of appropriate personal jurisdiction, provides for a stay of enforcement if a foreign appeal is pending, and establishes a limitations period for an action to enforce a foreign-county judgment that is tied to whether the judgment is enforceable in the foreign country, up to a maximum of 15 years after issuance though.

There is also a separate non-statutory (or “common law”) method of enforcing judgments in Texas.

In other words, the UEFJA/UFCMJRA are not the sole and exclusive means to obtain recognition and enforcement of a judgment.  A lawsuit can be filed with the judgment creditor (the plaintiff) immediately moving for summary judgment against the judgment debtor (the defendant) based on claim preclusion, res judicata, comity, and Full Faith and Credit when it is applicable.  This common law method may be more preferable in some instances because it allows a plaintiff to name and serve additional defendants as well—such as affiliated companies or individuals subject to personal jurisdiction in Texas who were not in the original suit—in order to further prosecute claims of fraudulent transfer, alter ego, or otherwise.

Keep in mind all judgments in Texas go dormant after 10 years.

Regardless of the method used, it is important to realize that a judgment which is domesticated is then subject to all other Texas laws. Section 16.066 of the Texas Civil Practice & Remedies Code specifically bars any action to enforce an out-of-state or foreign-country judgment in Texas if: (a) it would be time barred in the place where the judgment was rendered or (b) the judgment is more than 10 years old and the defendant has resided in Texas for more than 10 years.  Like all domestic judgments in Texas, one that has been dormant for 10 years or more is generally no longer valid.

Arbitration awards may be confirmed and enforced in Texas, but that is governed by federal law.

Notably, unlike foreign country judgments, the United States is a party to two treaties concerning foreign arbitration awards which are binding on all states as the “supreme law of the land”: (i) the Convention on the Recognition and Enforcement of Foreign Arbitral Awards and (ii) the Inter-American Convention on International Commercial Arbitration.  Both treaties are codified into federal law by way of the Federal Arbitration Act (9 U.S.C. §§ 1, et seq.), with Sections 201-208 implementing the first treaty and Sections 301-307 implementing the second.

Contact Wright Commercial Litigation to request a free consultation on enforcing your judgment in Texas.

****Please note the information above is a brief summary that may not reflect all current legal developments and does not constitute legal advice.  Legal advice can be given only with knowledge of all the specific facts and circumstances applicable to your situation and a current review of all legal standards. The statements on this website are thus for general informational use only and should not be relied upon in any way as legal advice or taken as an indication of future results.  By putting information on this website, Wright Commercial Litigation does not intend to warrant the accuracy of any statements or create an attorney-client relationship with anyone. ****