USA Law and Practice Contributed by: Stelios Saffos, Dan Seale, Peter Sluka and Alfred Xue, Latham & Watkins
consideration such as releases and/or residual equity, etc. 6.2 Foreign Law and Jurisdiction The United States consists of multiple states’ jurisdictions and any agreement must specify the state law that will apply (as opposed to federal law). The law of the State of New York is typically chosen as the governing law for sophisticated debt financing transactions in the United States, particularly for acquisition financings. This is the most common governing law for private debt unitranche deals, broadly syndicated deals and capital markets transactions, including bond financings. It is also common for State of New York law to govern acquisition financings of non- US acquisitions. While the laws of California and Illinois were historically used for lower middle market jurisdictions, the overwhelming majority of sophisticated debt documents are currently governed by State of New York law in practice. Subject to limitations and qualifications, courts in the State of New York generally permit parties to choose the substantive laws of another juris - diction to govern a contract, including the sub - stantive laws of other states and/or jurisdictions outside the US. A few other states permit the choice of their law to govern a contract even in the absence of any contacts if the contract sat - isfies certain dollar thresholds. However, some US states may not respect this choice of law if litigated in such US states in the absence of a reasonable relationship to the chosen govern - ing law. 6.3 Foreign Court Judgments The US is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral awards, which has been incorporated as Chapter 2 of the Federal Arbitration Act, 9 USC. Section 200 et seq. The US is not a party
to any treaties for reciprocal recognition of for - eign judgments. Foreign judgments are there - fore enforced pursuant to applicable state stat - utes, which generally follow the Uniform Foreign Money-Judgments Recognition Act, the Uniform Foreign-Country Money Judgments Recognition Act, or common law principles of international comity. Final and binding money judgments that are enforceable in the country where they were rendered are generally enforceable. Subject again to limitations and qualifications, courts in the State of New York generally rec - ognise: • judgments from other states in the US, under Article 54 of the New York Civil Practice Law & Rules; and • some international money judgments from outside the US, under Article 53 of the New York Civil Practice Law & Rules. In the latter case, there are fraud and public pol - icy exceptions. Courts in the State of New York will reject a foreign country judgment rendered under a judicial system that does not provide impartial tribunals or procedures compatible with the requirements of due process of law or a judgment rendered where the foreign court did not have personal jurisdiction over the defendant or where the foreign court did not have jurisdic - tion over the subject matter. 6.4 A Foreign Private Credit Lender’s Ability to Enforce Its Rights Special rules may apply depending on the spe - cific industry and asset in question. However, typical areas of regulatory approval for acquisi - tions (or financings thereof) include US antitrust regulations, foreign direct investment laws appli - cable to the industry and asset (for example, CFIUS approvals), along with customary sanc -
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