Second Circuit Extends Federal Admiralty Jurisdiction to Foreign Judgment

D’Amico Dry Ltd. v.  Primera Mar. (Hellas) Ltd., — F.3d —- (2d Cir. 2014).

This case comes before the United States Second Circuit Court of Appeals on appeal from a decision of the United States District Court for the Southern District of New York.  In a decision dated August 1, 2011, the District Court dismissed plaintiff’s suit for lack of subject matter jurisdiction and denied reconsideration.  The District Court refused to enforce jurisdiction over the action which involved a claim to enforce a monetary judgment rendered by the English High Court of Justice.  In so deciding, the District Court determined that an action to enforce a foreign judgement is a separate civil action which imposes independent jurisdictional requirements; a suit to enforce a judgment rendered on a maritime claim is not in and of itself maritime in nature.  The Court rejected Plaintiff’s argument that enforcement of the English judgement is considered admiralty in nature because the claim on which judgment was originally rendered would have come within federal admiralty jurisdiction if brought within the United States.  Ultimately, the District Court determined the suit did not come within federal admiralty jurisdiction, 28 U.S.C. § 1333, because the English judgment was not rendered in an English admiralty court and the claim was not maritime under English law.

Plaintiff appealed the decision of the District Court, asserting that the maritime character of the underlying claim should be appraised under United States law.  The Second Circuit, on June 12, 2014, vacated and remanded the decision of the District Court.  Agreeing with Plaintiff’s argument, the Court determined that a United States court has jurisdiction to enforce a judgment of a foreign non-admiralty court if the claim underlying that judgment would be deemed maritime under United States law.

The Court was guided by historical concepts forming the basis of admiralty jurisdiction. Citing Penhallow v. Doane’s Administrators, 3 U.S. (3 Dall.) 54, 1 L.Ed. 507 (1795), the Second Circuit noted that a court of Admiralty can carry decrees of foreign admiralties into execution.  Over the years, this concept came to include the proposition that federal admiralty jurisdiction should also accommodate suits to enforce foreign judgments based on claims of maritime character.  The classification of the suit under foreign law, therefore, did not take precedent.  Allowing accommodation of so-called maritime claims shapes substantial policies: preference of specialized admiralty courts for the resolution of maritime disputes; promotion of uniformity in international trade; promotion of international comity by facilitating recognition of foreign judgments; and reflection of a constitutionally endorsed distribution of power between state and federal courts.  The Second Circuit reasoned that the underlying policies take priority over the classification of the court which rendered the original judgement.

Further, a final judgment of a foreign court serves as validation of the underlying claim.  This concept differs from enforcement of a settlement, which was the basis of the District Court’s relied-upon precedent.  The enforcement of a settlement doesn’t involve maritime service or maritime transaction.  A final judgment of a maritime claim, on the other hand, validates the maritime nature of the underlying claim.  Accordingly, there was good reason to hear the claim under the admiralty jurisdiction of the federal court.

Finally, the Second Circuit decided that in consideration of its prior rationale, strong theoretical and practical reasons are present for allowing the United States court to asses the maritime nature of the claim as opposed to reliance on a foreign classification.  First, the Constitution provides federal courts with exclusive jurisdiction over maritime matters; matters deemed maritime under United States laws should have access to federal courts.  An alternate nation’s definition and scope of “maritime” should not become an obstacle to this well-founded principle and guarantee.  Second, pursuant to the principles of choice of law, the decision whether a claim belongs in one court or another is jurisdictional and procedural; the law of the forum state is utilized for such a question.  Third, applying a “golden rule” approach, principles of comity favor reciprocal enforcement of foreign judgements in the hopes the same would be done for a judgement of the United States.  And finally, United States maritime classification and the importance that follows such classification, should not be hampered or threatened if a foreign nation chooses not to recognize such classifications.

In further support of its position, the court set forth practical reasoning why domestic classification of the claim is preferred.  Subject matter jurisdiction should be an area of quick resolve- “if the characterization of the claim under foreign law is controlling, the parties will be compelled in many cases to carry on expensive, cumbersome litigation involving dueling experts on foreign law, merely to determine whether the suit belongs in federal or state court.”  Federal courts are tasked with the task of confirming their jurisdiction, even if the parties do not bring it to their attention.  Ensuring this within the purview of United States law would obviate the need to inquire into the intricacies of the foreign judicial system, which could potentially extend the underlying litigation to an unnecessary level.

In conclusion, the Court held that a suit to enforce a foreign judgement may be heard under federal admiralty jurisdiction if the claim underlying the judgment would be deemed maritime under United States law.  The instant claim was remanded to determine whether the underlying claim is deemed maritime under the law of the Untied States.