People get divorce outside of the U.S. but have a retirement plan based in the U.S. Courts are often confused on how to handle this issue. This article highlights key issues of greatest concern for most people regarding what needs to occur in this situation. The process involves registering a foreign judgment for purposes of implementing retirement division with a QDRO in the United States. There is no perfect way to allocate retirement benefits but the following are the tools that are used so a former spouse is able to receive retirement benefits directly from a retirement plan.
The following is most common reason to register a Foreign Judgment in the United States to divide a retirement plan:
1. Parties obtain a Foreign Divorce Judgment outside the U.S. which orders a retirement plan governed by U.S. laws to pay the nonparticipant spouse a share of the retirement plan. This comes up most often (1) when a party works for a multinational corporation where the parties live abroad but are accruing benefits in the U.S. and divorce or (2) when the parties were living and accruing benefits in the U.S. and then move abroad and then divorced.
2. To effectuate the terms of the Foreign Judgment, a Qualified Domestic Relations Order (QDRO) must be entered in a U.S. “State.” Under federal law, the term “State” includes any State of the United States, the District of Columbia, Puerto Rico, the Virgin Islands, American Samoa, Guam, Wake Island, and the Canal Zone.” See the Employee Retirement Income Security Act of 1974, as amended ("ERISA") 29 U.S.C §1056 (d)(3)(B)(ii)(II) and § 29 U.S.C. § 1002(10). See also U.S. Department of Labor Opinion Letter 2011-03A , 02/02/2011 regarding what is a “State” under ERISA.
QDROCounsel is unaware of any state law that directly addresses registering a Foreign Divorce Judgment in the U.S. for purposes of implementing a QDRO. When this situation occurs, states apply the Uniform Foreign-Country Money Judgments Recognition Act and the Doctrine of Comity.
Any family law court in the U.S. has the jurisdiction to register a Foreign Judgment for purposes of entering a QDRO based on any state’s Uniform Foreign-Country Money Judgments Recognition Act and/or the Doctrine of Comity especially if both parties submit to that state’s jurisdiction when filing an “Application For Registration of a Foreign Judgment to Enter a QDRO and Order Theron.” Residence of either party is not a requirement. For California see CCP §1717(a)(2).
All U.S. states have laws that allow the registration of a sister-state judgment for purposes of filing a QDRO in a state different from where the divorce occurred. Likewise, Uniform Foreign-Country Money Judgments Recognition Act and/or the Doctrine of Comity allow the registration of a Foreign Judgment for purposes of filing a QDRO in any U.S. state. Under California law, this is codified under CCP §1719.
Courts routinely apply Uniform Foreign-Country Money Judgments Recognition Act and/or the Doctrine of Comity as a means to implement what was ordered by a divorce court in a foreign country.
The following provides more detail regarding this issue including examples of applicable California law. In California, legal authority is found under the California Code of Civil Procedure, Chapter 2. Foreign-country Money Judgments. The following are relevant parts of CCP §1713 - §1724 [with underlined emphasis added]:
§1715(b)(3)(B): “A judgment for divorce, support, or maintenance, or other judgment rendered in connection with domestic relations may be recognized by a court of this state pursuant to Section 1723.”
§1717(a): “A foreign-country judgment shall not be refused recognition for lack of personal jurisdiction if any of the following apply: (1) The defendant was served with process personally in the foreign country. (2) The defendant voluntarily appeared in the proceeding, other than for the purpose of protecting property seized or threatened with seizure in the proceeding or of contesting the jurisdiction of the court over the defendant….”
§1717(b): “The list of bases for personal jurisdiction in subdivision (a)is not exclusive. The courts of this state may recognize bases of personal jurisdiction other than those listed in subdivision (a) as sufficient to support a foreign-country judgment.”
§1718(a): “If recognition of a foreign-country judgment is sought as an original matter, the issue of recognition shall be raised by filing an action seeking recognition of the foreign-country judgment.”
§1719. “If the court in a proceeding under Section 1718 finds that the foreign-country judgment is entitled to recognition under this chapter then, to the extent that the foreign-country judgment grants or denies recovery of a sum of money, the foreign-country judgment is both of the following: (a) Conclusive between the parties to the same extent as the judgment of a sister state entitled to full faith and credit in this state would be conclusive. (b) Enforceable in the same manner and to the same extent as a judgment rendered in this state.”
§1723. “This chapter does not prevent the recognition under principles of comity or otherwise of a foreign-country judgment not within the scope of this chapter.”
What is the Doctrine of Comity?
1. The doctrine or principle of comity is a legal principle dealing with the mutual recognition and respect given by one jurisdiction to the laws and decisions of another jurisdiction. It is based on the idea of reciprocal courtesy and cooperation among different legal systems.
2. Under the doctrine of comity, a court or government entity in one jurisdiction may show deference and give effect to the laws, judgments, and actions of another jurisdiction, even though they may have different laws or policies. This recognition is based on the understanding that different jurisdictions have legitimate interests and sovereignty, and that cooperation and respect for each other's legal systems are generally beneficial.
3. The doctrine of comity is often applied in situations involving conflicts of laws in different countries allowing courts to consider and weigh decisions made by foreign courts.
These conditions typically include:
a. Mutual Respect of each other's legal systems and decisions. This means recognizing the authority and legitimacy of the other jurisdiction's courts.
b. Reciprocity such that one jurisdiction expects its laws and decisions to be recognized and respected by others and it is expected to reciprocate by recognizing and respecting the laws and decisions of those jurisdictions.
c. Consistency with Public Policy such that courts are not required to blindly accept foreign laws or decisions if contrary to public policy.
d. No conflicts requiring a jurisdiction to give effect to foreign laws or decisions if those laws conflict with its own laws or sovereignty.
The ONLY WAY for a retirement plan in the U.S. to pay a nonparticipant spouse his/her court ordered share of a retirement benefit that is subject to the laws of the U.S. is to apply a state law’s codification of Uniform Foreign-Country Money Judgments Recognition Act and/or the Doctrine of Comity.