In 2001, the Netherlands National Police Services entered into a contract to purchase helicopters from the subsidiary of an Arizona-based helicopter manufacturing company. The contract provided a “penalty” clause for delays as well as actual damages if those damages exceeded the penalty damages. After delays, alleged failure to deliver, and alleged breaches of new contracts regarding loans of other helicopters, the Netherlands Police secured two judgments in Dutch courts against the manufacturing company. The Hague Court of Appeal upheld both judgments. Under Dutch law, this decision functioned as a final judgment.
In August 2015, the Netherlands, as assignee of the Dutch final judgment filed suit in Maricopa County Superior Court. After reviewing motion to dismiss and summary judgment briefing, the trial court held that the Dutch final judgment could be domesticated under Arizona’s version of the Uniform Foreign-Country Money Judgments Recognition Act, A.R.S. §§ 12-3251 to -3254 (the “Act”) and entered judgment against the manufacturing company. The manufacturing company appealed.
The Arizona Court of Appeals affirmed, after first surveying Dutch law regarding domestication of foreign judgments and concluding that Dutch common law was “similar to” the Act, as required by the Act. The Court of Appeals focused on the similarities between Dutch common law and the Act as to (1) requirements to file an action to domesticate the judgment, (2) due process requirements, (3) restrictions on judgments against public policy, and (4) efficacy of the judgments once domesticated. The Court of Appeals rejected the manufacturing company’s argument that only statutory law, as opposed to court-made law, could be similar to the Act.
The Court of Appeals also rejected an argument by the manufacturing company that the Dutch final judgment was a “penalty,” not allowed by the Act’s prohibition of a judgment that is a “fine or other penalty.” See A.R.S. § 12-3252(B)(1)(b). The Court of Appeals held that the prohibition on fines and penalties was meant to restrict judgments that seek to satisfy wrongs perpetrated against the general public, as opposed to individual claims based in contract or tort. The Court of Appeals upheld the domestication of the Dutch final judgment as an individual contract claim judgment, even if it was based on a “penalty” clause in the contract.
Judge McMurdie authored the opinion in which Judges Campbell and Cattani joined.
Posted by: Travis Hunt