RECOGNITION AND ENFORCEMENT OF FOREIGN JUDGMENTS PART-1

A foreign judgment does not have any direct effect in England, but it can be recognised and enforced under various systems of rules, depending on its country of origin. Enforcement involves the successful party seeking to execute the judgment in England, using normal English methods of execution. Recognition is a lesser step and involves the English court accepting that a foreign court decided on a claim or issue and not permitting it to be re-litigated. This can be relied on as a defence to a claim on the same or connected facts. The rules for enforcement and recognition of foreign judgments depends on the state in which the judgment was given:

Common law: judgments from all states not covered by the regimes below, including from major states such as the USA, China and Russia;

Part II of the Administration of Justice Act 1920 (1920 Act): judgments from a large number of Commonwealth countries and British overseas territories;

Part I Foreign Judgments (Reciprocal Enforcement) Act 1933 (1933 Act): judgments from other major Commonwealth countries, the Channel Islands, the Isle of Man and some other countries;

Regulation 44/2001 (Brussels Regulation): judgments from EU member states, and the identical Lugano Convention for judgments from EEA states (Iceland, Norway and Switzerland);

Part II of the Civil Jurisdiction and Judgments Act 1982 (1982 Act): judgements from other parts of the UK.

COMMON LAW

At common law, a foreign judgment will be enforced and/or recognised in England if it satisfies the following criteria:;

  • the judgment is for a debt or definite sum of money;
  • the judgment is final and conclusive on the merits;
  • the court which gave the judgment had jurisdiction over the defendant, as viewed by English rules of the conflict of laws;
  • the judgment cannot be impeached on the grounds of fraud, public policy or breach of natural justice.

Judgment for a debt: The judgment must be for a definite sum which has been ascertained by the foreign court, including judgments for debts, assessed damages and costs. If the judgment is for some other relief, such as an injunction or specific performance, it cannot be enforced in England, but may be relied on to create a res judicata or issue estoppel on the underlying issues. The English court will not enforce foreign penal or revenue judgments, that is judgments which order sums payable to the state rather than a private claimant. In a criminal case in which the defendant is ordered to pay compensation, the English court will sever the criminal decision and enforce the judgment for compensation.

Final and conclusive: The judgment must be "final and conclusive" on the merits, so that it creates a res judicata between the parties: Nouvion v Freeman (1889) 15 App. Cas. 1. It must conclusively determine the existence of the debt and not be subject to revision or setting aside by the court which gave it. A default judgment may be final and conclusive, if the foreign law considers it final unless subsequently varied; but not if it can be revised when it is enforced. A right of appeal to a higher court does not affect the finality of the judgment; a judgment is final even if an appeal against it is pending, but the English court would usually stay enforcement to wait for the appeal.

Jurisdiction of the foreign court: For a foreign judgment to be capable of enforcement or recognition, the foreign court must have had jurisdiction in personam over the defendant, from the perspective of English conflict of laws rules. That the foreign court had jurisdiction under its own law is irrelevant if this does not satisfy English rules. Jurisdiction is established in any of the following cases:-

  • the person against whom the judgment is made was present in the foreign country at the time of the proceedings;
  • the person was a claimant or brought a counterclaim in the foreign proceedings;
  • the person appeared in the foreign court;
  • the person agreed to submit to the jurisdiction of the foreign court.

Presence: Presence can be permanent or temporary, even a brief visit to the country: Carrick v Hancock (1895) 12 TLR 59, but it must be voluntary and not induced by force or fraud. Companies are present in a foreign country if they have a fixed place of business or representative carrying on business, for more than a minimal time: Adams v Cape Industries Plc [1990] Ch. 433.

Claimant or counterclaimant: A party who brings a claim or counterclaim in a foreign court submits to its jurisdiction and must accept the judgment should it go against him.

Appearance: A defendant who appears in a foreign court and participates in a case on the merits accepts the court's jurisdiction. Under s.33 of the 1982 Act a defendant is not regarded as having submitted to the jurisdiction if he only appears to (a) contest jurisdiction, (b) ask for a dismissal or stay of proceedings because the dispute must be submitted to arbitration or to the courts of another country, or (c) protect or obtain the release of property seized or threatened in the proceedings. If after doing one of those things, the defendant goes on to contest the merits, he will have submitted to the jurisdiction. Steps taken by a defendant which would not be regarded by the foreign court as a submission to the jurisdiction will not be regarded as such by the English court: Adams v Cape Industries Plc [1990] Ch. 433 at 461 per Scott J. Even if the foreign court would regard steps taken by a defendant as a submission, it is still open to the English court to find there was no submission for English conflict of laws rules: AES Ust-Kamenogorsk Hydropower Plant LLP v Ust-Kamenogorsk Hydropower Plant JSC [2011] EWCA Civ 647; [2012] 1 W.L.R. 920. So long as the defendant is obviously (and probably with rational grounds) disputing jurisdiction, but also takes steps on the merits, he will not be treated as having submitted to the jurisdiction.

Jurisdiction agreement: If the parties have agreed a contract providing that all disputes shall be referred to the exclusive jurisdiction of the courts of a particular country, those courts along will have jurisdiction. Such agreements must be express and cannot be implied. They can be established by an agreement to accept service at a specified address. Jurisdiction is not established by the fact that the parties chose the law of that country to apply to their agreement, nor for the fact that the cause of action arose in that country.

Jurisdiction not established: Jurisdiction is not established by any of the following matters, although some are relied on by foreign courts: (a) the defendant's possession of property in the foreign country, (b) the defendant's presence in the country when the cause of action arose, (c) the defendant being a national of the country, (d) the defendant being domiciled (but not present or resident) in the country, (e) reciprocity with the courts of the foreign country, (f) a real and substantial connection between the case and the foreign country. Jurisdiction is also not established if the defendant is present in the foreign country but the proceedings are brought in breach of a jurisdiction agreement in favour of the courts of another country (unless the defendant submits or brings a counterclaim).

Jurisdiction in rem: A foreign court has jurisdiction to give a judgment on movable or immovable property situated in the country at the time of the proceedings. However, the foreign court does not have jurisdiction to determine the title to or possession of immovable property situated outside that country. (There may be exceptions to this rule, based on the equivalent rule limiting English jurisdiction, such as where there is a contract or equity between the parties, but none have yet been formulated in case law: Dicey, Morris & Collins at para.14-114.)

Defences: An action to recognise or enforce a foreign judgment can be defended on the grounds that the above criteria are not met. There are also specific free-standing defences: where the judgment can be impeached for fraud, where its enforcement or recognition would be contrary to public policy, or where the proceedings in which it was given were contrary to natural justice.

Fraud: A foreign judgment can be impeached for fraud committed either by the successful party, or by the court which gave the judgment. Fraud includes bribing witnesses or the judge, or giving perjured or forged evidence. It can conceivably also be fraud by the court in receiving a bribe from a third party to give judgment in favour of a particular party to the case, although this can also be considered as a breach of natural justice.

English domestic judgments can only be set aside for fraud with evidence discovered after the trial and which could not reasonably have been discovered earlier. In contrast, foreign judgments can be impeached for fraud without any newly discovered evidence, even if fraud could have been alleged in the foreign proceedings, or even if it was alleged and rejected in those proceedings: Abouloff v Oppenheimer & Co (1882) 10 Q.B.D. 295. Doubts were expressed about this decision in subsequent cases and in Commonwealth authorities, but it was applied by the Court of Appeal in Jet Holdings Inc v Patel [1990] 1 Q.B. 335 and by the House of Lords in Owens Bank Ltd v Bracco [1992] 2 A.C. 443 (a decision on the equivalent rule in the 1920 Act).

Public policy: The cases decided under this head do not offer a consistent set of principles for what is covered by public policy, but it includes the following. In principle it will be contrary to public policy to recognise a judgment obtained in disobedience to an injunction not to proceed with the case in a foreign court: AK Investment CJSC v Kyrgyz Mobil Tel Ltd [2011] UKPC 7; [2012] 1 W.L.R. 1804 at para.121. Res judicata is a principle of public policy, so that a foreign judgment will not be recognised if it inconsistent with an earlier decision of the English court in proceedings between the same parties or their privies: Vervaeke v Smith [1983] 1 A.C. 145, ED&F Man (Sugar) Ltd v Haryanto (No.2) [1991] 1 Lloyd's Rep. 429. It has not been decided whether to enforce a judgment which is exemplary, punitive or manifestly excessive is contrary to public policy.

Public policy also includes cases which would breach the Human Rights Act 1998 and the European Convention on Human Rights. This is clear where a foreign court is also a party to the Convention. In Pellegrini v Italy (30882/96) (2002) 35 E.H.R.R. 2, the ECHR decided that Italy could not recognise a judgment from the Vatican City where recognition itself would violate the Convention, despite the recognition being required by prior treaty between Italy and the Vatican. The House of Lords held in United States v Montgomery (No.2) [2004] UKHL 37; [2004] 1 W.L.R. 2241 that enforcement of a US judgment could only be refused under the European Convention where the defects in the foreign proceedings were "flagrant". The English court can also decide under this head whether the foreign court was to be regarded as lacking in independence and partial (and will not substitute the view of a foreign court of a third country which had previously refused recognition of the judgments): Yukos Capital Sarl v OJSC Rosneft Oil Co [2012] EWCA Civ 855; [2014] Q.B. 458.

Natural justice: A foreign judgment will be refused enforcement where the proceedings offend the English view of substantial or natural justice:Pemberton v Hughes [1899] 1 Ch. 781, at 790 per Lord Lindley. Natural justice traditionally required the foreign court to have given notice to the litigant that it would determine the claim and allowed the litigant the opportunity substantially to present his case before the court: Jacobson v Frachon (1927) 138 LT 386, CA, at 392 per Atkin LJ. In Adams v Cape Industries, the Court of Appeal held that natural justice was broader than just notice and the opportunity to be heard. In that case, a denial of substantial justice was found in the failure by the foreign court, in the United States, to follow its own procedure for the assessment of damages after a default judgment (in US law, as English, damages were assessed by a judge after a hearing, but here the judge had not held any hearing or objectively assessed the evidence). A mere procedural irregularity which does not deny substantial justice will not suffice.

The existence of a remedy in the foreign court may be relevant. The foreign court's view of the fairness of the proceedings is not conclusive: Jet Holdings Inc v Patel at 345 per Staughton LJ (obiter). In Adams v Cape Industries, the Court held that the where the breach of natural justice consisted of lack of notice or lack of opportunity to be heard, the judgment debtor may raise an objection in England even if there were a remedy in the foreign court. But where the breach consists of anything else, the existence of a remedy is relevant (although this will depend on whether the debtor knew of the breach in time to use the foreign remedy).

Recognition: If the criteria above are satisfied, the judgment is conclusive as to law and fact on any matter decided by the foreign court, and cannot be questioned in England. As well as being enforced, it can also be recognised as a good defence to any claim on the same facts between the same parties or their privies on the ground that it creates an issue estoppel: Carl Zeiss Stiftung v Rayner & Keeler Ltd [1967] 1 A.C. 853.

THE 1920 ACT

Introduction: Part II of the 1920 Act creates a scheme for the enforcement of judgments from the majority of Commonwealth countries, codified in Reciprocal Enforcement of Judgments (Administration of Justice Act 1920, Part II) (Consolidation) Order 1984/129.

Criteria for enforcement: Section 9(1) of the Act provides that a judgment creditor who has obtained in a superior court of a country covered by the Act may apply to the High Court to register the judgment within 12 months of the date of the judgment (or longer if an extension is granted). On such an application, the Court may order the judgment to be registered, if it is just and convenient to do so. The judgments to which the Act applies are the same as those enforceable at common law: judgments for a debt or definite sum. Although it does not say so specifically, the Act is likely to exclude judgments for fines or penalties, as at common law. A judgment registered under the Act has the same effect and its execution is subject to the same control of the Court as if it were an English judgment: s.9(3).

Defences to enforcement: Section 9(2) provides that no judgment shall be registered if certain criteria apply, which are largely the same as the defences to enforcement at common law, except for the following three points. First, there is no specific defence of breach of natural justice, but s.9(2)(c) provides that the judgment shall not be registered if the debtor was a defendant in the foreign proceedings, who was not duly served with process and did not appear in the foreign court. Secondly, a judgment cannot be registered under the Act if an appeal against it is pending against it in the foreign court, or if the debtor is entitled to and intends to appeal: s.9(2)(e). Thirdly, the public policy defence prevents registration of a judgment where the underlying cause of action could not be entertained in England for public policy (s.9(2)(f)), whereas at common law the defence is that enforcement of the judgment would be contrary to public policy.

Recognition: Recognition of foreign judgments is not covered by the 1920 Act and are thus covered by the common law principles above.