Vol 2 (2005) - Issue 2

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Thinking Outside the Box: International Judgment Enforcement

Most US litigators are accustomed to contending with the multitude of legal and procedural issues that arise at the outset of any civil litigation. When the case is closed and the verdict has been rendered, however, many of these same attorneys lack the expertise to actually turn their clients’ judgments into cash. There are few reported cases on issues surrounding the enforcement of judgments in and outside of the US; therefore, in order to effectually enforce an obtained judgment, counsel must be familiar with certain methods and procedures that may be non-traditional or non-domestic - outside a lawyer’s usual problem-solving ‘tool box’. Such methods are especially apposite when enforcement of US judgments may be carried out overseas, where it is often easier for defendants to hide assets and/or make them unavailable through fraudulent conveyances to controlled trusts and nominees.

A plaintiff with a reasonable expectation of a judgment for damages in the US can take steps in anticipation of enforcement of the judgment by obtaining an attachment of the defendant’s assets, which could include those assets kept in and outside of the United States. Many countries, in Europe and elsewhere, permit separate proceedings for these prejudgment attachments (or the functional equivalent thereof) to be brought in their courts for the purpose of holding the assets as security. Both the British and Commonwealth jurisdictions and Switzerland afford creditors opportunities to make use of attachments and obtain information for the enforcement of judgments.

Weapons in the litigants armory

A comprehensive investigation is often required to locate assets to be included in a prejudgment attachment or used to satisfy a judgment. Professional investigative firms employ various tactics and resources to conduct such investigations.

The first step toward recovering stolen and/or undisclosed assets begins with research. The quickest and most cost-effective way to approach an investigation is to first examine all the information available in the public domain. Researchers should access worldwide databases that allow them to comb the public record for clues and intelligence. All leads should be followed up with a field investigation.

The next step in the investigative process is to take a close look at the lifestyle of the subject, including an examination of his or her spending habits, relationships, investments, property, and other financial dealings. To start, investigators examine how well a subject meets his or her monthly financial obligations. If a person is spending money, but appears to have no source of income, chances are the funds are hidden in offshore bank accounts. In addition, investigators search for litigation history involving the subject or his or her businesses. Often, assets may be found attached to other judgments that would not be listed elsewhere. Assets belonging to a subject’s family, or corporations associated with the subject, are also inspected. The techniques described above and other investigative tools allow investigators to piece together the whereabouts of undisclosed assets. In order to circumvent any obstacles, investigative firms work simultaneously with attorneys and turn to the legal weapons at their disposal. British and Commonwealth courts provide plaintiffs with certain legal remedies which may aid in the investigative process.

Discovery techniques such as search orders and third-party disclosure orders can be useful while an investigation is still under way. Search orders (formerly known as ‘Anton Piller’ and ‘Mini-Anton’ orders in England can be obtained in order to preserve property and determine the location of assets. Third party disclosure orders (formerly know as ‘Norwich Pharmacal/Bankers Trust’ applications) are requests for discovery against persons who are not directly involved in an investigation or litigation, but may have become mixed up in the wrongdoing of another. They may be issued, for example, to require an innocent recipient of assets (i.e. a bank) to disclose where the funds were subsequently transferred.

The English rules for ‘tracing’ of assets may also assist in the judgment collection process. Tracing is the legal process by which the owner of property may identify assets as representing the owner’s original property. It is possible to make a request for the return of fraudulently obtained assets if the claimant has a ‘proprietary claim’ and can establish that the original property has been misappropriated.