A declaratory judgment is a binding judgment from a court defining the legal relationship between parties and their rights in a matter before the court. When there is uncertainty as to the legal obligations or rights between two parties, a declaratory judgment offers an immediate means to resolve this uncertainty. However, because a declaratory judgment is often sought prior to the full development of a lawsuit, courts are sometimes hesitant to issue declaratory judgments, as they would prefer to see the case develop more before issuing a judgment. In typical civil actions, plaintiffs seek damages or injunctive relief to remedy an injury. In other words, there generally must be an injury for which the court can grant relief prior to a party bringing a lawsuit. Declaratory judgment actions are an exception to this rule and permit a party to seek a court judgment that defines the parties' rights before an injury occurs. A declaratory judgment differs from other judgments because it does not provide for any enforcement or order a party to take any action or pay damages. Essentially, it states the court's authoritative opinion regarding the exact nature of the legal matter and whether the parties would be entitled to relief without actually requiring the parties to do anything. For example, a declaratory judgment action could be brought to determine party rights and obligations under a contract or to establish the validity of a patent.
Under Article III of the U.S. Constitution, a federal court may only issue a declaratory judgment when there is an actual controversy. Without an actual controversy, the federal courts do not have jurisdiction to hear the case. For an actual controversy to be found, the plaintiff cannot be merely seeking advice from the court, but instead must show that the controversy between parties is substantial, immediate, and real and that the parties have adverse legal interests.
Rule 57 of the Federal Rules of Civil Procedure and the Federal Declaratory Judgment Act (Title 28, Section 2201 of the U.S. Code) govern declaratory judgments in federal court. The Federal Declaratory Judgment Act states:
“In a case of actual controversy within its jurisdiction, . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought. Any such declaration shall have the force and effect of a final judgment or decree and shall be reviewable as such.”
[Last updated in September of 2022 by the Wex Definitions Team]