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September 14, 1990


The opinion of the court was delivered by: Dearie, District Judge.


In this action, plaintiff, Nippon Emo-Trans Co., Ltd. ("NET"), seeks recognition of a judgment it obtained against defendant, Emo-Trans, Inc. ("ETI"), in the Tokyo District Court of Japan. Currently before the Court are (i) NET's motion to confirm an attachment pursuant to Sections 6211 and 6212 of the New York Civil Practice Law and Rules, N.Y.Civ.Prac.Law & R. §§ 6211, 6212 (McKinney 1980) and (ii) ETI's cross-motion to vacate or modify the attachment and to stay this action pursuant to Section 5306 of the New York Civil Practice Law and Rules, N.Y.Civ.Prac.Law & R. § 5306 (McKinney 1978).


NET is a Japanese corporation with its principal operations in Japan; ETI is a New York corporation with its principal place of business in New York City. Since the Court's jurisdiction is based on diversity of citizenship, this action is governed by New York law, including New York principles of conflict of laws. Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941).

NET and ETI are freight forwarders; their business involves assembling goods from various sources for shipment, arranging shipment, and arranging to have the shipments broken down and delivered to the ultimate recipient. Between August 1982 and February 1986, NET and ETI had a contractual relationship pursuant to which each would act as the receiving end for shipments assembled by the other. At some point in 1985, a dispute arose as to the allocation of profits between the two companies in connection with freight charges collected from consignees. NET claimed that ETI had failed to remit approximately $354,000 due to NET. ETI claimed that NET's calculation was based on a misinterpretation of the contract.

In June 1986, NET filed an action (the "Japanese Action") in the District Court of Tokyo (the "Tokyo Court"), seeking to recover the money it claimed was owing from ETI. In April 1988, ETI filed a parallel action in this court entitled Emo Trans, Inc. v. Nippon Emo-Trans Co., Ltd., CV-88-1332 (RJD); that action was stayed pending the outcome of the Japanese Action. In the Japanese Action, ETI initially contested the Tokyo Court's jurisdiction over it; that Court ruled on December 8, 1988, that it had personal jurisdiction over ETI. Thereafter, ETI appeared and defended in Japan. A trial was conducted, and on November 14, 1989, the Tokyo Court issued a decision awarding NET $51,331,204 (approximately $354,000) plus interest and costs (the "Japanese Judgment"). On November 28, 1989, ETI filed an appeal with the Tokyo High Court; that appeal is pending.

On February 1, 1990, NET commenced the present action by filing an application for an ex parte order of attachment which would permit it to attach any property of ETI found in New York, up to a limit of $400,000. The application was granted and the order of attachment was signed on February 2, 1990.*fn1 In accordance with New York law, NET was required to make a motion to confirm the attachment within five days after levy was first made.*fn2 Notices of levy were served on various banks and on the Queens County Clerk on February 5, 1990; NET timely moved to confirm the attachment on February 9, 1990.

In order to prevail on the motion to confirm, NET must show (i) that there is a cause of action, (ii) that it is probable that NET will succeed on the merits, (iii) that one or more grounds for attachment exist, (iv) that the amount demanded from ETI exceeds all counterclaims known to NET, and (v) the need for continuing the levy.*fn3

In this case, the question whether to confirm the attachment turns on two issues. The first is whether the Tokyo Court had in personam jurisdiction over ETI. If so, then a cause of action arises under New York's version of the Uniform Foreign Money-Judgments Recognition Act, N.Y.Civ.Prac.Law & R. §§ 5301-5309 ("Article 53"), NET will probably succeed on the merits (barring a reversal on appeal in Japan), and the Japanese Judgment would provide a basis for the attachment. The second issue is whether there is a need to continue the attachment. ETI argues that because it is a substantial company with unencumbered assets far in excess of the judgment, no such need can be established; NET responds that the fact that the Japanese Judgment remains unsatisfied is sufficient to establish a need to continue the attachment. With regard to the sole remaining criterion on the motion to confirm, NET asserts that the amount claimed exceeds any known counterclaims; other than pointing out that its appeal of the Tokyo Court's decision has not yet been decided, ETI does not seriously contest this assertion.


A.  Background of Article 53

New York had a long-standing liberal tradition regarding recognition of foreign country judgments prior to the passage of Article 53. In the late 1960's, the Judicial Conference of the State of New York commissioned Professor Barbara Kulzer to conduct a study on the desirability of enacting the Uniform Foreign Money-Judgments Recognition Act (the "Uniform Act"); Professor Kulzer generally supported passage of the Uniform Act, while recommending minor changes to bring the statute closer to New York caselaw.*fn4

In 1970, when the Uniform Act was enacted as Article 53, a brief commentary on the bill was included in the New York State Legislative Annual — 1970. The commentary indicated that its primary purpose was "to procure for New York judgments in foreign countries much better reciprocal treatment at the hands of foreign courts than they now receive." Id. at 10. It indicated further that the legislation was intended to "incorporate [the Uniform Act] in New York law." The commentary explicitly recognized that the Uniform Act mandated recognition of foreign judgments "at a level below that presently accorded to them by New York courts," but indicated that "New York courts will be free to exceed Article 53 in liberality if they so choose." Id. The commentary did not discuss particulars of the legislation. It did, however, specifically reference Professor Kulzer's report; thus in cases where fine points of interpretation are called for, it is appropriate to look to Professor Kulzer's work as well as any clarifications which can be drawn from the history of the Uniform Act itself. Since its passage, Article 53 "has received `scant judicial attention.'" D. Siegel, Practice Commentaries C5301:1, N.Y.Civ.Prac.Law & R. § 5301 (McKinney's 1978) at 486.

B.  "Voluntary Appearance"

Although ETI lost its jurisdictional challenge in the Tokyo Court and was ordered to proceed on the merits, it has preserved its jurisdictional objection on appeal in Japan. ETI contends that under Japanese Law it is not deemed to have voluntarily appeared, and thus cannot be precluded from raising the jurisdictional issue here under Section 5305(a)(2). NET argues that it is error under Japanese law to equate the notion of preserving an objection on appeal with that of involuntary appearance. The parties support their arguments with affidavits from Japanese attorneys and impressive citations to Japanese legal authorities.

The Court is of the view that it need not decide which of these arguments is correct as a matter of Japanese law, for there is no indication in Section 5305 that the question whether a party has "voluntarily" appeared was intended to turn on the law of another jurisdiction.*fn5 If anything, Article 53 was meant to simplify the task of a court in determining what effect to give to the judgments of foreign courts, often based on legal principles vastly different from the common-law and constitutional traditions familiar to New York judges and attorneys. To introduce, even potentially, a difficult legal issue requiring the pleading and proof of the law of another jurisdiction would magnify the cost and effort required beyond reasonable bounds. While Japanese law is relevant to the jurisdictional inquiry in other ways, without some firm indication in the statute pointing the Court to the law of the foreign country, it appears eminently more reasonable to view this as a question of New York law.*fn6

Of course, New York law also provides that a party who, after losing on a jurisdictional objection, proceeds to defend the merits, will not be deemed to have submitted to the court's jurisdiction by virtue of appearance, unless the jurisdictional objection "is not ultimately sustained". N.Y.Civ.Prac.Law & R. § 320(c)(2) (McKinney 1990.). ETI argues, in effect, that in view of prevailing New York practice and the obvious intent to permit a defendant to make a special appearance in the foreign court without waiving its jurisdictional objection, see Judicial Conference Report at 220, it ought not be deemed to have "voluntarily" appeared at all.

This argument cannot be sustained. Section 320(c)(2), on which ETI relies, deals with the question of the circumstances under which an appearance, by itself, confers jurisdiction. In the larger sense, this is also the concern of Section 5305(a)(2), and if that provision attained its end by treating every voluntary appearance as conferring jurisdiction, then there would be much greater appeal to ETI's argument. However, the statute proceeds by categorizing, without defining, appearances as "voluntary" or otherwise; it then lays down the rule that, with certain exceptions, including appearances for "the purpose of . . . contesting the jurisdiction of the court over him", a voluntary appearance will preclude the party from later challenging jurisdiction. For present purposes it is sufficient to say that, as used in Section 5305(a)(2), a "voluntary" appearance must be taken to be any appearance not under irresistible compulsion;7 thus ETI's appearance to challenge jurisdiction should be considered "voluntary". Of course, this conclusion does not of itself preclude ETI from challenging the jurisdiction of the Tokyo Court in this action.

  (C) The Scope of the Exception for Special

NET argues that Section 5305(a)(2)'s exception for voluntary appearances is intended to apply only where "a foreign court's assertion of jurisdiction [is] based solely upon the defendant's appearance to contest its jurisdiction." See Plaintiff's Reply Memorandum at 10. Although NET does not stress the point, if its argument is correct, then the exception would not apply here even without regard to ETI's presentation of a defense on the merits, since the Tokyo Court did not base its jurisdiction on ETI's special appearance.

As between sister states, there would be no constitutional objection to New York's adopting such a rule. The Supreme Court has held that it does not violate due process if, when a defendant makes an appearance solely to contest jurisdiction, a court asserts its jurisdiction on the basis of that appearance. York v. Texas, 137 U.S. 15, 11 S.Ct. 9, 34 L.Ed. 604 (1890). While this rule might well be considered "unfortunate", see Everly Aircraft Co. v. Killian, 414 F.2d 591, 599 n. 10 (5th Cir. 1969), and, indeed, while every sister state currently refrains from exercising such jurisdiction, Restatement (Second) of Conflict of Laws § 33 comment e, § 81 (1969), York v. Texas has never been overruled.*fn8 A fortiori, once a defendant appears in a sister state for purposes of contesting that state's jurisdiction and the court finds that it has jurisdiction on some basis other than the defendant's appearance, another sister state may, consistent with constitutional principles, choose to give preclusive effect to the first state's determination of a jurisdictional question; See Restatement (Second) of Conflict of Laws § 81 comment 3, § 96 comment b (1969); indeed, this outcome may be constitutionally mandated. See, e.g., Vander v. Casperson, 12 N.Y.2d 56, 58-60, 187 N.E.2d 109, 110, 236 N.Y.S.2d 33, 34-35 (1962). York v. Texas involved a Texas judgment, and the jurisdictional issue did not arise in the context of a suit to enforce the judgment of another state; there might be grounds on which to distinguish York v. Texas from the facts before this Court. However, in a case where the defendant submits the jurisdictional question to the foreign court, and that court bases its jurisdiction on grounds other than the defendant's appearance, it could hardly be said to offend "traditional notions of fair play and substantial justice", International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945), quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940), to hold the defendant to the foreign court's determination.

It is clear that Article 53 does not require that a foreign court's determination of a jurisdictional challenge be given preclusive effect in all cases where due process would so permit. A defendant who appears solely for purposes of contesting jurisdiction will not, by such appearance, waive any jurisdictional objection in a subsequent suit to enforce the foreign judgment.*fn9 It is less clear whether Article 53 allows a defendant, after having raised and lost a jurisdictional objection on grounds other than appearance, to re-litigate the jurisdictional issue in a subsequent action to enforce the foreign judgment. The language of the exception in Section 5305(a)(2) is broad enough to cover any special appearance, regardless of the basis on which the foreign court bases its jurisdiction; in such a case, the defendant would not have appeared "other than for the purpose of . . . contesting the jurisdiction of the court over him." Further, as noted above, Professor Kulzer primarily analyzed this section in terms of the distinction between general and special appearances; this suggests that any special appearance would fall within the scope of the exception. It is true that in connection with the above statement, Professor Kulzer relies on discussion in the Restatement (Second) of Conflict of Laws of York v. Texas and the states' reaction to it; however, she nowhere indicates that the statute should be taken to refer solely to such situations. Rather, immediately following the passage quoted earlier, Professor Kulzer notes that

  a voluntary appearance made under the conditions
  described is generally regarded as binding the
  defendant to the court's jurisdiction over him.

Judicial Conference Report at 220.

If the exception were intended to cover only certain types of special appearances, it would have been appropriate to mention this fact here.

It has been said that Article 53 was intended to codify prior New York case-law;*fn10 although the Court is unaware of any New York cases specifically addressing the effect of a special appearance in a foreign court,*fn11 as is discussed in greater detail below, the caselaw shows a clear reluctance to blindly accept a foreign court's assertion of jurisdiction without an examination of the bases therefor. See, e.g., Dunstan v. Higgins, 138 N.Y. 70, 33 N.E. 729 (1893); Martens v. Martens, 284 N.Y. 363, 31 N.E.2d 489 (1940). At the very least, this Court is of the view that in such circumstances a New York court would look to see if the foreign court's exercise of jurisdiction comported with the requirements of due process, Cf. Falcon Manufacturing (Scarborough) Ltd. v. Ames, 53 Misc.2d 332, 278 N.Y.S.2d 684 (Civ.Ct. N.Y. County 1967), or if under corresponding facts a New York court would take jurisdiction, Porisini v. Petricca, 90 A.D.2d 949, 456 N.Y.S.2d 888 (4th Dept. 1982). As a general rule, any appearance in which a defendant merely challenges the jurisdiction of the foreign court should qualify under the exception found in Section 5305(a)(2), regardless of the basis on which the foreign court upholds its jurisdiction.

D.  ETI's Defense on the Merits

NET argues that by presenting a defense on the merits after losing its jurisdictional objection, ETI has made a voluntary appearance not falling within any of the exceptions described in Section 5305(a)(2). As noted above, ETI contends that Section 5305(a)(2), properly interpreted, allows a defendant to contest the merits after losing a jurisdictional challenge, and still raise the jurisdictional issue in a later suit to enforce the judgment. See Defendant's Memorandum in Opposition at 14-15.

The question, in the words of the statute, is whether ETI "voluntarily appeared . . . other than for the purpose of . . . contesting the jurisdiction of the court." NET argues that this means that a defendant who takes any action in the foreign court other than challenging the court's jurisdiction falls outside the exception. The only readily apparent textual interpretation in ETI's favor focuses on the defendant's "purpose"; if a colorable claim could be made that the purpose was genuinely to contest jurisdiction — if, for example, it was procedurally necessary to address the merits in order to maintain a jurisdictional objection on appeal — arguably the exception might still apply.

ETI bases its argument on Professor Kulzer's discussion of this section, quoted above. At best, however, Professor Kulzer implies that the language should be taken to turn on the dichotomy between general and special appearances; and, while this lends support to the view that any special appearance falls within the exception of Section 5305(a)(2), Professor Kulzer's discussion as a whole implies that any defense on the merits will be treated as a general appearance, and thus deemed to be a waiver of jurisdictional objections. Of particular significance is the fact that after noting that "a voluntary appearance made under the conditions described is generally regarded as binding the defendant to the court's jurisdiction,"*fn12 Professor Kulzer cited to two documents: the Model Act Respecting the Recognition and Enforcement of Foreign Money-Judgments, promulgated by the International Law Association in 1964 (the "Model Act"), and Article 18 of The Preliminary Draft Convention Relating to the Jurisdiction of Courts, the Recognition and Enforcement of Decisions in Civil and Commercial Matters, and the Enforcement of Public Documents (the "Draft Convention"), subsequently ratified as the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, Sept. 27, 1968, 3 Common Mkt. Rep. (CCH) ¶ 6003 (the "Brussels Convention"). The relevant provision of the Model Act reads as follows:

  (1) For the purposes of this Act the original
    court has jurisdiction when:
    (a) the judgment debtor has voluntarily
    appeared in the proceedings for the purpose of
    contesting the merits and not solely for the
    purpose of
      (i) contesting the jurisdiction of the
    original court. . . .

The English language version of Article 18 of the Draft Convention is ...

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