Case of the Day: Active Way Int'l Ltd. v. Smith Elec. Vehicles Corp., 2018 U.S. Dist. LEXIS 29764 (N.D. Cal. Feb. 23, 2018)

Summary:

Judgment debtor Smith Electric Vehicles Corp. contested the motion for preliminary injunction to transfer certain stock and credit bid to the judgment creditor, based on a Missouri judgment which was originally a Hong Kong judgment.

The court granted the motion, rejecting the judgment debtor's argument that the Hong Kong judgment was invalidly obtained, as "Smith presents no case suggesting the Court may look behind the Missouri judgment to the underlying Hong Kong judgment."

Takeaway:

This is the correct statement of law, but the true significance of this decision is the implication upon the judgment enforcement strategy. Remember the cardinal lesson: possession is more than half of the battle. Facing a recalcitrant debtor, the best way is to start seizing the assets to smoke out the debtor. In this sense, a foreign judgment often can be more advantageous, because litigating in the United States takes more time and cost. Once converted into a U.S. judgment through recognition, the challenge to the underlying foreign judgment becomes available only at the forum in which the recognition was given--which means executing against properties located in a different jurisdiction becomes quite easy, putting you halfway toward victory.