Recently, in Kim v. Park and Globuil Holdings, No. 15-0131-CV (N. Mar. I. Commw. Super. Ct. Sept. 27, 2019), the Superior Court for the Commonwealth of the Northern Mariana Islands relied on the Restatement of the Law Fourth, The Foreign Relations Law of the United States, as required by Commonwealth law, 7 N. Mar. I. Code § 3401, “in the absence of written law or local customary law to the contrary,” in declining to recognize a Korean appellate court’s criminal conviction on the ground that doing so would violate the common-law “penal law rule,” which prohibited courts in the United States from recognizing and enforcing the penal laws of another country.
In Kim, the seller of shares in a hotel sought a declaratory judgment and damages against an individual buyer and a company that later purchased the shares from the buyer based on allegations that the shares never transferred to the buyer because the buyer did not pay the balance of the purchase price. The company filed a motion for summary judgment, arguing that the issues were precluded by the doctrines of res judicata and collateral estoppel because they had already been litigated. Before this instant action, the seller had attempted to bring a criminal action in the Republic of Korea against the buyer, but the Korean authorities instead brought a criminal action against the seller for making a false report against the buyer. After the Korean trial court found the seller not guilty, the appellate court, “using only the documentary record, overturned the trial court’s not guilty verdict based on [] de novo findings of fact and convicted [the seller] without a new trial”; the seller was subsequently sentenced to six months in prison, which he served, and the judgment became final.
The Superior Court for the Commonwealth of the Northern Mariana Islands noted that, under Restatement of the Law Fourth, The Foreign Relations Law of the United States § 481, generally, “a final, conclusive, and enforceable judgment of a court of a foreign state granting or denying recovery of a sum of money, or determining a legal controversy, [was] entitled to recognition by courts in the United States.” The court explained, however, that there were exceptions to that general rule, including under § 483(a), which provided that U.S. courts would not recognize a foreign state’s judgment if “the judgment was rendered under a judicial system that [did] not provide impartial tribunals or procedures compatible with fundamental principles of fairness,” and § 484(h), which provided that U.S. courts were permitted to not recognize a foreign state’s judgment if “the specific proceeding in the foreign court leading to the judgment was not compatible with fundamental principles of fairness.”
Rejecting the company’s argument that the court could recognize the criminal judgment because the penal law rule only prevented the court from enforcing foreign criminal judgments, the court explained that § 489 “prohibit[ed] courts in the United States from recognizing and enforcing foreign penal judgments” and that the court had to “adhere to § 489’s interpretation of the penal law rule.” The court explained that, “in the absence of written or local law, as [was] the case here, ‘the rules of the common law, as expressed in the restatements of the law approved by the American Law Institute and, to the extent not so expressed as generally understood and applied in the United States, shall be the rules of decision in the courts of the Commonwealth,”’ (quoting 7 N. Mar. I. Code § 3401).
Declining to recognize the criminal judgment and denying the company’s motion for summary judgment, the court found “(1) that recognizing the Korean criminal judgment would violate the penal law rule as defined by Restatement (Fourth) of the Foreign Relations Law of the United States § 489; and (2) that the subsequent criminal conviction of [the seller] by a Korean appellate court even after an acquittal by a Korean trial court [did] not comport with the Commonwealth’s heighten[ed] protection against double jeopardy and [was] not compatible with ‘fundamental principles of fairness’ and United States public policy.”