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The US-Israel Legal Review 2019 79
states have adopted this provision in modified
form. For example, in California, the recognition
action must be brought within the shorter of ten
years or the relevant foreign period. Federal courts
apply the limitations period of the state in which
the court is based, unless a federal statute provides
a different period.
Under the Federal Arbitration Act, a three year
limitations period applies for recognition of foreign
arbitration awards.
In Israel, there is a five year limitations period
to commence an enforcement proceeding, absent
a special agreement between Israel and the state
where the judgment was rendered or “special
reasons justifying the delay.”
See
Foreign Judgments
Enforcement Law art. 5.
IS ANY INTERIM RELIEF AVAILABLE
PRE-JUDGMENT TO PREVENT THOSE
SUSPECTED OF INVOLVEMENT IN THE
FRAUD FROM DISSIPATING THEIR ASSETS?
WHAT METHODS ARE AVAILABLE TO
OBTAIN INFORMATION FROM THEM?
Rule 65 of the Federal Rules of Civil Procedure
permits a party to seek a temporary restraining
order (TRO) or preliminary injunction where the
party fears thedissipationof assets before judgment.
In assessingwhether to grant a TRO or a preliminary
injunction, courts generally look at whether: (i) the
plaintiff will be irreparably harmed if the injunction
is not issued; (ii) the defendant will be harmed if
the injunction is issued; (iii) public interests will
be served by the injunction; and (iv) the plaintiff is
likely to prevail on the merits.
Judgment creditors can also seek pre-judgment
attachment - that is, bring suit to secure the
property of the defendant before obtaining a final
judgment, in order to prevent a defendant from
selling, transferring, encumbering, or hiding
property. New York law, for example, expressly
permits pre-judgment attachment in support of a
foreign judgment recognition action, although the
creditor will need to post a bond and demonstrate
(among other things) an identifiable risk that if
the assets are not secured the debtor will not be
able to pay the judgment. New York law similarly
provides for the pre-judgment attachment in
support of an arbitration that is ongoing or is yet to
be commenced.
Most US states have enacted a version of the
Uniform Fraudulent Transfers Act (UFTA), which
allows a creditor to bring suit against a debtor
or a transferee that has received assets from a
debtor where there is a concern that the debtor
fraudulently transferred assets. The UFTA typically
requires a showing of (i) an intent to hinder, delay,
or defraud a creditor or (ii) that the debtor was
insolvent when it made the transfer.
US courts permit broad discovery in US
proceedings prior to the rendering of a judgment
itself. Rule 45 of the Federal Rules of Civil Procedure
allows a party to issue subpoenas for testimony and
documents to be served upon third parties, well
in advance of any judgment. Some states, such as
New York and Texas, allow persons to ask a court
for permission to seek documents or depositions
for investigative purposes, before the filing of an
action, in order to evaluate the viability of potential
claims – although the permissible scope of such
pre-action discovery tends to be very limited.
In addition, under 28 US § 1782, a party may
seek discovery from a person or entity located in
the US in support of a foreign proceeding. Although
this statute is not intended to be an asset tracing
tool, under certain circumstances it can be used to
gather evidence, including information about assets
or the debtor’s control over assets, in support of a
foreign enforcement proceeding, even where there
is no action to enforce the judgment in the United
Creditors can use a number of
tools to prevent the dissipation
of assets pre-judgment,
including temporary restraining
orders, pre-judgment
attachment, and discovery.