In an increasingly interconnected global economy, overseas countries or companies may seek overseas monetary judgments in unexpected places like Arizona. To address this situation, the Arizona legislature passed its own version of the Uniform Foreign Country Money Judgments Recognition Act (Act), which allows mutual enforcement of monetary judgments abroad. This act provides assurances for long supply chain contracts that contain dispute settlement clauses that support foreign choice of laws and venues. With the anticipated increase in the domestication of foreign judgments as a result of the law, companies should consider reviewing submission terms and conditions and ensure that they fully understand the consequences of breaching a contract with a foreign company.

By law, a “foreign country” is a different government than “the United States”. a state, district, commonwealth, territory or island of the United States, or any other government, in respect of the determination in that state whether a judgment of the courts of the government should be recognized, is first subject to the provision in the clause above the full faith and creditworthiness of the United States Constitution. “In general, the law“ applies to a judgment abroad that grants or refuses to reclaim a sum of money ”and is“ final, final and enforceable ”under foreign law. The law contains exceptions for circumstances that do not deserve recognition of a monetary judgment abroad, such as: B. Lack of personal responsibility.

Unlike many overseas monetary decisions laws, Arizona law includes a reciprocity requirement. In particular, the law does not apply to monetary judgments abroad from countries that have not “passed or enacted a mutual law” similar to the law. Until recently, the scope of the “mutual law” requirement was unclear.

The Arizona Supreme Court recently resolved this issue in the context of a Dutch judgment against a private company. The Court upheld the lower court’s decision, finding that Dutch case law, not the legal framework, met the reciprocity requirement as it was reasonably similar to the law. In particular, the Court rejected the company’s argument that only statutes – not case law – can be considered “mutual laws”.

As a result of this ruling, overseas countries and companies can expect a greater likelihood of success in enforcing an overseas monetary judgment in Arizona – especially if the jurisdiction in the country where the judgment was received contains established principles that recognize US monetary judgments would. On the other hand, parties wishing to exclude the enforcement of a monetary judgment abroad may have to rely on the exceptions to the law and other process-based arguments. When enforcing or defending against a foreign judgment, countries and companies (and their attorneys) should carefully review all requirements and exceptions to the law.

While the Arizona Supreme Court has clarified the Arizona parameters for the recognition of overseas monetary judgments, effective dispute resolution with overseas corporations remains an unpredictable, time-consuming, and expensive process. Given the complications involved in resolving international trade disputes, companies should incorporate arbitration or litigation clauses in their contracts. In addition, companies may want to reconsider using expensive arbitration if an assessment of the applicable laws reveals a faster, cheaper alternative.

The parties may agree to a clause allowing a dispute to be brought before the court of a specific city, state, or country to ensure an impartial decision. However, even determined litigation has limitations. For example, some courts may not have jurisdiction to resolve the dispute, or a foreign country may not recognize or enforce a judgment from an American court. In addition, judges in some jurisdictions may lack the expertise to resolve international disputes effectively and appropriately.

In some cases, arbitration clauses can therefore be a more effective method of dispute resolution. In contrast to litigation, the United States is a party to a number of treaties – the New York, Washington, and Panama Conventions – in which member states have agreed to enforce arbitral awards. Another benefit of arbitration is that the parties can choose an arbitrator with relevant expertise. Accordingly, arbitration clauses can provide more predictability, neutrality, enforceability, confidentiality, finality, and expertise in the dispute resolution process. On the other hand, the cost of the arbitrator and the lack of expediency under current models often result in a procedural clause that prescribes a banking procedure.

For these reasons, companies should evaluate dispute settlement clauses in their contracts with overseas companies and ensure that the appropriate mechanism fits the transaction. For Arizona businesses, the law and recent Supreme Court interpretation will increase the practice of foreign judgments in Arizona.