CARL E. STEWART, Chief Judge:
This appeal arises from the district court's grant of Plaintiff-Appellee's motion for non-recognition of a Moroccan judgment under Texas's Uniform Foreign Country Money-Judgment Recognition Act (the "Texas Recognition Act" or "Act"). The district court determined that Morocco's judicial system failed to provide impartial tribunals and procedures compatible with due process as required by the Texas Recognition Act and that the Moroccan judgment was thus unenforceable domestically. Because we conclude Plaintiff-Appellee has not met his burden under the Act, we REVERSE.
John Paul DeJoria ("DeJoria") was a major investor in an American company called Skidmore Energy, Inc. ("Skidmore"), which was engaged in oil exploration and technology projects in Morocco. In pursuit of its goals, Skidmore formed and capitalized a Moroccan corporation, Lone Star Energy Corporation ("Lone Star") (now Maghreb Petroleum Exploration, S.A., or "MPE"). Corporations established under Moroccan law are required to have a "local" shareholder. For Lone Star, that local shareholder was Mediholding, S.A., owned by Prince Moulay Abdallah Alaoui, a first cousin of the Moroccan King, King Mohammed VI.
In March 2000, Lone Star entered into an "Investment Agreement" obligating it to invest in hydrocarbon exploration in Morocco. King Mohammed assured DeJoria that he would line up additional investors for the project to ensure adequate funding. Armadillo Holdings ("Armadillo") (now Mideast Fund for Morocco, or "MFM"), a Liechtenstein-based company, agreed to make significant investments in Lone Star. In the negotiations leading up to this agreement, Skidmore represented to Armadillo that Skidmore previously invested $27.5 million in Lone Star and that
On August 20, 2000, King Mohammed gave a nationally televised speech to announce the discovery of "copious and high-quality oil" in Morocco. Three days later, then-Moroccan Minister of Energy Youssef Tahiri, accompanied by DeJoria and DeJoria's business partner Michael Gustin, traveled to the site and held a press conference claiming that the discovered oil reserves would fulfill Morocco's energy needs for decades. Moroccans celebrated this significant news, as the King's announcement was the only stimulus likely to revive Morocco's sluggish economy. The Moroccan stock market soared.
There was one major problem: the oil reserves were not as plentiful as announced. The "rosy picture" of Moroccan energy independence did not materialize, damaging both the Moroccan government's credibility and Lone Star's viability. As a result, the business relationship between MFM and Skidmore/DeJoria suffered. Lone Star replaced DeJoria and Gustin on Lone Star's Board of Directors.
Unhappy with the return on its initial investment in Lone Star, MFM sued Skidmore, DeJoria, Gustin, and a number of other Skidmore officers in their individual capacities in Moroccan court. MFM asserted that Skidmore fraudulently induced its investment by misrepresenting Skidmore's actual investment in Lone Star. MPE later joined as a plaintiff in the suit and claimed that Skidmore's fraudulent misrepresentations deprived Lone Star of necessary capital. In response, Skidmore filed two quickly-dismissed lawsuits against MPE, MFM, and other parties in the United States.
After nearly seven years of considering MPE and MFM's suit, the Moroccan court ruled against DeJoria and Gustin but absolved five of their co-defendants — including Skidmore — of liability. The court entered judgment in favor of MPE and MFM for approximately $122.9 million.
DeJoria sued MPE and MFM in Texas state court, challenging domestic recognition of the Moroccan judgment under Sections 36.005(a)(1), (a)(2), (b)(3), (b)(6), and (b)(7) of the Texas Recognition Act. MPE and MFM removed the action to federal district court based on diversity of citizenship. After reviewing the evidence presented by the parties on the state of the Moroccan judicial system and the royal interest in this particular suit, the district court granted DeJoria's motion for non-recognition, concluding that DeJoria had not been provided with procedures compatible with due process as required under Section 36.005(a)(1) of the Act. The district court did not address the remaining grounds for non-recognition that DeJoria asserted. MPE and MFM timely appealed.
Because federal jurisdiction in this case is based on diversity of citizenship, we apply Texas law regarding the recognition and enforcement of foreign judgments. Banque Libanaise Pour Le Commerce v. Khreich, 915 F.2d 1000, 1003 (5th Cir.1990) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938)). The enforcement of foreign judgments in Texas is governed by the Texas
We first consider the standard of review applicable to the district court's recognition decision. This court has previously applied both de novo review and abuse of discretion to evaluate a district court's recognition decision. Compare Derr v. Swarek, 766 F.3d 430, 436 (5th Cir.2014) (recognizing inconsistency but applying abuse of discretion in Mississippi recognition case), with Sw. Livestock & Trucking Co. v. Ramon, 169 F.3d 317, 321 (5th Cir. 1999) (applying de novo review under Texas Recognition Act). In Derr, we looked to Mississippi law in deciding that abuse of discretion review applied. 766 F.3d at 436 n. 2. Thus, we similarly look to Texas law to determine the applicable standard of review here.
The Texas Recognition Act establishes three mandatory grounds and seven discretionary grounds for non-recognition of a foreign judgment. See Beluga Chartering B.V. v. Timber S.A., 294 S.W.3d 300, 304 (Tex.App.-Houston [14th Dist.] 2009). Whether the judgment debtor established that one of these non-recognition provisions applies is a question of law reviewed de novo.
In Texas, the recognition of foreign judgments is governed by the Texas Recognition Act. Tex. Civ. Prac. & Rem.Code Ann. §§ 36.001-36.008. Under the Act,
The party seeking to avoid recognition of a foreign judgment has the burden of establishing one of these statutory grounds for non-recognition. Presley, 370 S.W.3d at 432; see also Diamond Offshore (Bermuda), Ltd. v. Haaksman, 355 S.W.3d 842, 845 (Tex.App.-Houston [14th Dist.] 2011) ("Unless the judgment debtor satisfies its burden of proof by establishing one or more of the specific grounds for nonrecognition, the court is required to recognize the foreign judgment."). DeJoria asserts, as mandatory grounds for non-recognition of the Moroccan judgment, that the Moroccan judicial system does not provide due process and that the Moroccan court lacked personal jurisdiction. DeJoria also asserts, as a discretionary ground for non-recognition, that the Moroccan judgment should not be recognized because Moroccan courts do not recognize Texas judgments.
DeJoria contends that the Moroccan judgment is unenforceable because the Moroccan judicial system does not meet due process standards. Under the Texas Recognition Act, a foreign judgment is not conclusive and is thus unenforceable if "the judgment was rendered under a system that does not provide impartial tribunals or procedures compatible with the requirements of due process of law." Tex. Civ. Prac. & Rem.Code Ann. § 36.005(a)(1). "[T]he statute requires only the use of procedures compatible with the requirements of due process[. T]he foreign proceedings need not comply with the traditional rigors of American due process to meet the requirements of enforceability under the statute." Soc'y of Lloyd's v. Turner, 303 F.3d 325, 330 (5th Cir.2002) (internal quotations omitted). That is, the foreign judicial system must only be "fundamentally fair" and "not offend against basic fairness." Id. (internal quotations omitted); see also Ingersoll Milling Mach. Co. v. Granger, 833 F.2d 680, 688 (7th Cir.1987) (evaluating a similar provision of the Illinois Recognition Act and noting
The court's inquiry under Section 36.005(a)(1) focuses on the fairness of the foreign judicial system as a whole, and we do not parse the particular judgment challenged. See Turner, 303 F.3d at 330. The plain language of the Texas Recognition Act requires that the foreign judgment be "rendered [only] under a system that provides impartial tribunals and procedures compatible with due process." Id. (internal quotations omitted); see also Soc'y of Lloyd's v. Ashenden, 233 F.3d 473, 477-78 (7th Cir.2000) (emphasizing that a similar provision of the Illinois Recognition Act does not allow the reviewing court to evaluate "particular judgments"). Accordingly, we now consider whether Morocco's judicial system as a whole is "fundamentally fair" and inoffensive to basic notions of fairness.
To justify non-recognition of the Moroccan judgment, DeJoria argues that Morocco's judiciary is made up of judges beholden to the King and therefore lacks independence. Under the Moroccan Constitution, Morocco is an executive monarchy headed by a King who serves as the supreme leader. As described in a 2003 World Bank publication (the "World Bank Report"), the King has the final authority over the appointment of judges. A United States Agency for International Development report (the "USAID Report")
Azzedine Kabbaj, a Moroccan attorney who has been practicing for thirty-five years, testified that Moroccan judges must pass an admissions test and complete two years of judge-specific training. Kabbaj noted that the Moroccan system "places great emphasis" on providing "actual notice" of lawsuits to defendants, allows for numerous challenges to the appointments of experts, and gives defendants a de novo appeal after an initial judgment. Abed Awad, an adjunct professor at Rutgers University
The Texas Recognition Act does not require that the foreign judicial system be perfect. Instead, a judgment debtor must meet the high burden of showing that the foreign judicial system as a whole is so lacking in impartial tribunals or procedures compatible with due process so as to justify routine non-recognition of the foreign judgments. See Turner, 303 F.3d at 330. DeJoria has not met this burden. Based on the evidence in the record, we cannot agree that the Moroccan judicial system lacks sufficient independence such that fair litigation in Morocco is impossible.
Even under DeJoria's characterization, the Moroccan judicial system would still contrast sharply with the judicial systems of foreign countries that have failed to meet due process standards. For example, in Bank Melli Iran v. Pahlavi, the Ninth Circuit refused to enforce an Iranian judgment and concluded that the Iranian judicial system did not comport with due process standards. 58 F.3d 1406, 1411-13 (9th Cir.1995). The court relied on official reports advising Americans against traveling to Iran during the relevant time period and identifying Iran as an official state sponsor of terror. Id. at 1411. Further, the court noted that Iranian trials were private, politicized proceedings, and recognized that the Iranian government itself did not "believe in the
Similarly, in Bridgeway Corp. v. Citibank, the Second Circuit declined to recognize a Liberian judgment rendered during the Liberian Civil War. 201 F.3d 134, 144 (2d Cir.2000). There, the court observed that, during the relevant time period, "Liberia's judicial system was in a state of disarray and the provisions of the Constitution concerning the judiciary were no longer followed." Id. at 138. Further, official State Department Country Reports noted that the Liberian judicial system — already marred by "corruption and incompetent handling of cases" — completely "collapsed" following the outbreak of fighting. Id. Because the court concluded that there was "sufficiently powerful and uncontradicted documentary evidence describing the chaos within the Liberian judicial system during the period of interest," it refused to enforce the Liberian judgment. Id. at 141-42.
Pahlavi and Bridgeway thus exemplify how a foreign judicial system can be so fundamentally flawed as to offend basic notions of fairness.
The Texas Recognition Act's due process standard requires only that the foreign proceedings be fundamentally fair
As alternative grounds for non-recognition, DeJoria asserts that Morocco does not recognize judgments rendered by Texas courts and that the Moroccan court lacked personal jurisdiction.
Under the Texas Recognition Act, a court may refuse to enforce a foreign judgment if "it is established that the foreign country in which the judgment was rendered does not recognize judgments rendered in this state that, but for the fact that they are rendered in this state, conform to the definition of `foreign country judgment.'" Tex. Civ. Prac. & Rem.Code Ann. § 36.005(b)(7). This "reciprocity" ground for non-recognition is discretionary. Beluga Chartering B.V., 294 S.W.3d at 304 & n. 1. Even if reciprocity is lacking, a reviewing court may still elect to recognize the foreign judgment. See Royal Bank of Canada v. Trentham Corp., 665 F.2d 515, 518-19 (5th Cir.1981) ("Even though ... the trial court [has] discretion to recognize the judgment despite nonreciprocity by the foreign forum, ... the clear message ... is that foreign judgments which would not be reciprocally recognized if made in Texas are not favored."). The party seeking non-recognition has the burden of establishing non-reciprocity. Khreich, 915 F.2d at 1005; Presley, 370 S.W.3d at 432. The central question is whether the foreign country would enforce a Texas judgment "to the same extent" that it would enforce a judgment rendered within its own borders. Reading & Bates Constr. Co., 976 S.W.2d at 710.
In Khreich, we affirmed the district court's refusal to recognize an Abu Dhabi judgment for lack of reciprocity. 915 F.2d at 1006. There, the party seeking non-recognition provided the affidavit of an American attorney practicing in Abu Dhabi. Id. at 1005. This testimony provided that no Abu Dhabi courts had previously enforced United States judgments, that there had been no attempts to enforce United States judgments in Abu Dhabi courts, that Abu Dhabi courts preferred to resolve disputes under local law, and that it was doubtful that Abu Dhabi courts would exercise their discretion to actually enforce an American judgment. Id. at 1005-06. The only contrary testimony offered was a translation of Abu Dhabi law relating to recognition of foreign judgments. Id. We concluded that this evidence
DeJoria contends that his showing on lack of reciprocity is "at least as strong" as the showing we found sufficient in Khreich. This argument, however, fails to consider MPE and MFM's rebuttal evidence. In contrast with the minimal showing in Khreich, MPE and MFM have identified the relevant statutory provisions under Moroccan law and offered expert testimony that Moroccan courts would recognize American judgments and have routinely recognized other foreign judgments. Thus, MPE and MFM have done more than merely point to a "translation of [Moroccan] law" or simply identify a relevant statutory provision. See Khreich, 915 F.2d at 1005-06; see also Karim v. Finch Shipping Co., 265 F.3d 258, 272 (5th Cir. 2001) (finding that, in the context of determining foreign law, the party seeking recognition in Khreich "did not call any expert witnesses" and provided only "a copy of a statute and general materials").
Further, Moroccan law specifically allows for the recognition of foreign judgments.
DeJoria asserts that MPE and MFM cannot demonstrate reciprocity because "Morocco never has [recognized a Texas judgment], and what it might do in the future is sheer speculation." The Texas Recognition Act, however, gives the court discretion to not recognize a judgment if "it is established that the foreign country in which the judgment was rendered does not recognize judgments rendered in [Texas] that, but for the fact that they are rendered in [Texas], conform to the definition of `foreign country judgment.'" Tex. Civ. Prac. & Rem.Code Ann. § 36.005(b)(7). The plain language of this provision requires the judgment debtor to demonstrate that the foreign country does not recognize Texas judgments because they were rendered in Texas. Therefore, MPE and MFM are not required to prove that Morocco has previously recognized Texas judgments. Instead, the burden is on DeJoria to show that Morocco would not recognize an otherwise enforceable foreign judgment only because the judgment was rendered in Texas. See id. 36.005(b)(7); Khreich, 915 F.2d at 1005. DeJoria provides no evidence that this is the case. Thus, the mere fact that a Moroccan court has not previously recognized a Texas judgment is insufficient to establish non-reciprocity.
We conclude that DeJoria has not established, as required by the Texas Recognition Act, that Morocco would refuse to recognize an otherwise enforceable foreign judgment simply because it was rendered in Texas.
Under the Texas Recognition Act, a court cannot enforce a foreign judgment if the foreign court did not have personal jurisdiction over the defendant. Tex. Civ. Prac. & Rem.Code Ann. § 36.005(a)(2); see Haaksman, 355 S.W.3d at 850. The party seeking non-recognition must prove lack of personal jurisdiction. See The Courage Co. v. The ChemShare Corp., 93 S.W.3d 323, 331 (Tex.App.-Houston [14th Dist.] 2002). Personal jurisdiction consists of two components: service of process and amenability to jurisdiction. DeMelo v. Toche Marine, Inc., 711 F.2d 1260, 1264 (5th Cir.1983).
We turn first to service of process, which is "simply the physical means by which ... jurisdiction is asserted." Id. We apply Moroccan law to determine whether service of process was proper. See, e.g., Naves v. Nat'l W. Life Ins. Co., No. 03-08-00525-CV, 2009 WL 2900755, at *2 (Tex.App.-Austin 2009) (evaluating service of process under Brazilian law). One expert explained that service of process under Moroccan law is proper if it is carried out through "means that ensure the recipient receives actual notice." There is no dispute that DeJoria had actual notice of the Moroccan lawsuit. DeJoria, however, argues that service could not be proper under Moroccan law until Morocco became a signatory to the Hague Convention in 2011. Article 37 of the Morocco Code of Civil Procedure, which was in effect at the time of the suit, provides: "If the recipient resides in a foreign country, [the notification of the suit must be] transmitted through the hierarchy to be sent through the diplomatic channel, subject to the provisions of the diplomatic conventions." Because there was no convention or treaty governing service on a foreign defendant, DeJoria contends there was no statutory means to ensure actual notice and that this situation "falls squarely" within the Seventh Circuit's decision in Koster v. Automark
In Koster, the Seventh Circuit, in dicta, explained that the Dutch statute governing service of process did not require that service on a foreign defendant be made by certified mail or any other reasonable means; instead, the method of service was left up to the discretion of the Dutch Department of Foreign Affairs. 640 F.2d at 81 n. 3. The court determined that this method of service violated due process. Id. Because DeJoria received actual notice, we conclude that his reliance on Koster is misplaced. The Koster court noted that the issue of service was of "particular significance" because the defendant claimed it never received notice of the foreign lawsuit. Id. In contrast, DeJoria received a copy of the Moroccan lawsuit, even though the process server's access to DeJoria's property was allegedly obtained deceptively. DeJoria assumed that the documents were "related to the Moroccan lawsuit" and turned them over to his attorneys. In addition, Skidmore filed an anti-suit injunction against the Moroccan lawsuit and included an affidavit from DeJoria. Though DeJoria disputes whether service was technically proper, it is evident from the record that DeJoria had actual notice of the Moroccan lawsuit.
Regardless, foreign courts are not required to adopt "every jot and tittle of American due process." Ashenden, 233 F.3d at 478. Instead, only "the bare minimum requirements" of notice must be met. Int'l Transactions, Ltd. v. Embotelladora Agral Regiomontana, SA de CV, 347 F.3d 589, 594 (5th Cir.2003). The Supreme Court has emphasized that a basic requirement of due process is "notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections." Mullane v. Cent. Hanover Bank & Tr. Co., 339 U.S. 306, 314, 70 S.Ct. 652, 94 L.Ed. 865 (1950). Thus, while due process requires only "reasonably calculated" notice, DeJoria had actual notice of the Moroccan lawsuit, which "more than satisfie[s]" his due process rights and meets the bare minimum requirements of notice sufficient to enforce a judgment. United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 272, 130 S.Ct. 1367, 176 L.Ed.2d 158 (2010); see also Int'l Transactions, Ltd., 347 F.3d at 594; Ma v. Cont'l Bank N.A., 905 F.2d 1073, 1076 (7th Cir.1990) ("[N]ot all of the technical requirements of service are sufficient grounds for a collateral attack. Service is designed to produce knowledge....").
Finally, DeJoria challenges his amenability to jurisdiction. "Amenability to jurisdiction means that a defendant is within the substantive reach of a forum's jurisdiction under applicable law." DeMelo, 711 F.2d at 1264. Courts generally apply the standards of the rendering court to determine jurisdiction. See, e.g., Naves, 2009 WL 2900755, at *2 (applying Brazilian law to determine personal jurisdiction).
DeJoria argues that the Moroccan court lacked jurisdiction because no curator was appointed. Under Article 39 of the Morocco Code of Civil Procedure, "[i]n all cases where the domicile and residence of a party are unknown, the judge appoints, in the capacity as curator, an officer of the court to whom the summons is notified." Expert testimony revealed that under Moroccan law, the failure to appoint a curator where required violates due process and can result in nullification of a judgment. However, expert testimony further clarified that a "Moroccan court would never appoint a curator for a defendant with a known address." The Moroccan court was
Under Moroccan law, if the defendant is not domiciled in Morocco, jurisdiction is proper at the domicile or place of residence of the plaintiff. Article 27 of the Morocco Code of Civil Procedure provides: "If the defendant has no domicile or residence in Morocco, [a suit] may be brought before the court of the domicile or residence of the applicant or one of them if there are several." Thus, jurisdiction was proper in Morocco, where MPE was domiciled.
Further, jurisdiction is proper even under the stricter requirements of American due process. "Texas courts may exercise personal jurisdiction over a non-resident if (1) the Texas long-arm statute authorizes the exercise of jurisdiction, and (2) the exercise of jurisdiction is consistent with federal and state constitutional due-process guarantees." Moncrief Oil Int'l, Inc. v. OAO Gazprom, 414 S.W.3d 142, 149 (Tex.2013) (internal quotations omitted). "The long-arm statute allows the exercise of personal jurisdiction over a nonresident defendant who `commits a tort in whole or in part in this state.'" Id. (quoting Tex. Civ. Prac. & Rem.Code Ann. § 17.042(2)). "Asserting personal jurisdiction comports with due process when (1) the nonresident defendant has minimum contacts with the forum state, and (2) asserting jurisdiction complies with traditional notions of fair play and substantial justice." Id. at 150.
Applying the Texas standard as if it were the standard applied by Moroccan courts, we conclude that Morocco obtained personal jurisdiction over DeJoria. "[A]llegations that a tort was committed in [the forum] satisfy [the] long-arm statute...." Id. at 149. Here, MPE and MFM alleged that DeJoria committed torts in Morocco related to his investment in Skidmore and its relationship with Lone Star. Specifically, MFM alleges that DeJoria made fraudulent misrepresentations regarding his investment in Lone Star, and MPE alleges that DeJoria's misrepresentations deprived it of necessary capital. These allegations are sufficient to satisfy the long-arm statute.
"A defendant establishes minimum contacts with a state when it `purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws.'" Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333, 338 (Tex.2009) (quoting Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958)). DeJoria voluntarily started a Moroccan corporation to explore for oil reserves in Morocco through Lone Star. DeJoria's investment activity was in Morocco. DeJoria visited Morocco in connection with his relationship with Lone Star, including a visit to a drilling site with Morocco's then-Energy Minister. Nearly all of the alleged acts and omissions in the underlying case occurred in Morocco. DeJoria thus has sufficient, purposeful contacts with Morocco to render jurisdiction reasonable.
"In addition to minimum contacts, due process requires the exercise of personal jurisdiction to comply with traditional notions of fair play and substantial justice." Moncrief Oil, 414 S.W.3d at 154. "If a nonresident has minimum contacts with the forum, rarely will the exercise of jurisdiction over the nonresident not comport with traditional notions of fair play and substantial justice." Id. at 154-55. While litigation in Morocco would have
DeJoria has not established that the Moroccan court lacked personal jurisdiction, and non-recognition is thus not justified under Section 36.005(a)(2) of the Act.
For the foregoing reasons, the judgment of the district court is REVERSED and this matter is REMANDED for further proceedings consistent with this opinion.
Section 36.005(b) provides the discretionary grounds: "(1) the defendant in the proceedings in the foreign country court did not receive notice of the proceedings in sufficient time to defend; (2) the judgment was obtained by fraud; (3) the cause of action on which the judgment is based is repugnant to the public policy of this state; (4) the judgment conflicts with another final and conclusive judgment; (5) the proceeding in the foreign country court was contrary to an agreement between the parties under which the dispute in question was to be settled otherwise than by proceedings in that court; (6) in the case of jurisdiction based only on personal service, the foreign country court was a seriously inconvenient forum for the trial of the action; or (7) it is established that the foreign country in which the judgment was rendered does not recognize judgments rendered in this state that, but for the fact that they are rendered in this state, conform to the definition of `foreign country judgment.'" Tex. Civ. Prac. & Rem.Code Ann. § 36.005(b).