On June 4, 2009, the New York Court of Appeals, in response to a certified question presented by the United States Court of Appeals for the Second Circuit, issued an opinion in Koehler v. The Bank of Bermuda that will significantly impact the enforcement of foreign judgments in New York. Specifically, the Court held that a New York court with personal jurisdiction over a defendant and/or a garnishee holding a defendant’s property may be ordered to turn over out-of-state property (including property located abroad) regardless of whether the defendant is a judgment debtor or a garnishee.

In reaching its decision, the Court looked to the Civil Practice Law and Rules of the State of New York (CPLR) Article 52, specifically § 5225, which provides that a New York Court may issue a judgment ordering a party to deliver property in which the judgment debtor has an interest to a judgment creditor for payment of the debt. The Court noted that unlike the pre-judgment remedy of attachment, post-judgment enforcement requires only jurisdiction over persons – notover property. CPLR article 52 contains no express language limiting its application to property contained within the State, leading the Court to conclude that “the Legislature intended CPLR article 52 to have extraterritorial reach.”

The full effect of this decision are yet to be seen. However one thing is clear: the NY Court of Appeal’s holding permits any party with an unsatisfied arbitration award or judgment (for any claim, including both maritime and non-maritime matters) to seek to enforce that award against a judgment debtor that is registered to do business in New York or otherwise has property in the possession of a garnishee which is subject to personal jurisdiction in New York. In Koehler, the Bank of Bermuda was ordered to send property from Bermuda to NY to satisfy a judgment, despite lack of jurisdiction over both the Plaintiff and Defendant in the underlying claim matter.

To read a copy of NY Court of Appeals decision in Koehler v. The Bank of Bermuda, click here.

For more information concerning this decision and its potential application in any particular matter, please do not hesitate to call on us at info@chaloslaw.com.