New York Court Recognizes Foreign Criminal Judgment in Case of First Impression

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On April 1, 2014, a New York state appellate court held that a judgment rendered by a foreign criminal court that required the defendant to make a payment of money to victims of his fraud was capable of domestication under Uniform Foreign Money Judgments Act (set forth at Article 53 of the N.Y. Civil Practice Law and Rules (“CPLR”)), and ordered the attachment of New York-based assets under Article 62 in aid of that judgment. Harvardsky Prumyslovy Holding, A.S.,-V Likvidaci v. Kozeny1 involved a dispute arising out of the privatization of formerly state-owned companies in the Czech Republic in the early 1990’s. During this transition, many Czech citizens purchased shares in designated companies or relied upon investment privatization funds (“IPFs”) to manage their investments. A group of Czech investors alleged that one such IPF, Harvard Capital and Consulting (“Harvard”), was used by Viktor Kozeny to solicit investments, which were later diverted by Kozeny to a series of shell companies in Cyprus. Kozeny relocated to the Bahamas and was prosecuted in absentia after the Bahamian government refused extradition. A judgment of the Municipal Court in Prague rendered a judgment on July 9, 2010 finding Kozeny guilty of gross fraud and sentencing him to a term of 10 years. One of the Harvard investment funds involved in the scheme, Harvardsky Prumyslovy Holding, A.S ,-V Likvidaci (“Harvardsky”), as well as approximately 250,000 shareholders, joined in the action as injured parties, and Kozeny was directed to pay compensation in the sum of CZK 8,289,933,074.05 (approximately $410 million) to Harvardsky as “compensation for damage to the victim” under section 228(1) of the Czech Code of Criminal Procedure.

Harvardsky brought an action in the Supreme Court of the State of New York, New York County, seeking to recognize the Czech judgment pursuant to Article 53 of the CPLR and to attach certain funds belonging to defendant Landlocked Shipping Company (“Landlocked”), a company that Harvardsky alleged Kozeny secretly controlled. The trial court denied the attachment, expressing doubt as to the likelihood of success on Harvardsky’s application to recognize the Czech judgment, as the judgment was penal in nature, and further due to a lack of evidence that Kozeny was properly served with the summons and complaint. The trial court also dismissed the complaint as against Landlocked and vacated a prior temporary restraining order that had been entered against Landlocked.

On appeal, the Appellate Division granted a temporary stay of the trial court’s order and ultimately reversed...

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Topics:  CPLR, Criminal Prosecution, Foreign Judgments, Foreign Jurisdictions

Published In: Civil Remedies Updates, Criminal Law Updates, International Trade Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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