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Enforcing foreign judgments: traps for the unwary

In the first of our guest posts by members of the dispute resolution team at Herbert Smith Freehills, Anna Pertoldi looks at the traps involved in enforcing foreign judgments.

Introduction

It is surprising how difficult enforcing a judgment in another country can be. There are traps for the unwary at every turn. It is not an area which generally sees a great deal of case law, but unusually there have been a number of recent cases illustrating some of the major traps. These are traps mainly for the judgment creditor, but occasionally for the judgment debtor too.

Whilst these cases concern enforcing foreign judgments in England, they are also of relevance when considering enforcing English judgments abroad, because those countries which have reciprocal arrangements with the UK will be considering whether to enforce judgments based on the same, or at any rate very similar, provisions. So enforcement in most EU countries will be under the Brussels/Lugano regimes, in many former commonwealth countries it will be under similar provisions to those in the Administration of Justice Act 1920, and in a number of other countries, including some offshore jurisdictions, it will be under similar provisions to those in the Foreign Judgments (Reciprocal Enforcement) Act 1933.

The main lesson for claimants is to consider enforcement in detail at the outset – know what hoops you will need to jump through to enable you to enforce in a country where there are assets and make sure you will be able to do so. Or alternatively, start proceedings where the main assets are in the first place. For defendants, the converse applies – consider whether a judgment will be enforceable before taking part in proceedings.

Below are a few of the potential traps to bear in mind, illustrated by recent case law.

Only money judgments are enforceable outside of the Brussels/Lugano regimes

In Standard Chartered Bank v Zungeru Power Ltd, the defendant was seeking to register a Nigerian freezing injunction and ancillary disclosure order as an English judgment under the 1920 Act. Registration was refused on the basis that it was not a money judgment.

There is a similar requirement for the judgment to be a money judgment in the 1933 Act and under English common law. It follows, of course, that only English money judgments will be enforced in many countries, including those subject to the reciprocal arrangements in the 1920 and 1933 Acts (although it may still be possible to argue that issues decided are res judicata).

Service in accordance with local law may not be good enough on enforcement

In Reeve v Plummer, deemed service of Belgian proceedings was effected on a public prosecutor, which was good service under Belgian law. On attempting to enforce default judgments in England, the High court held the defendants had not been served in sufficient time and in such a way as to enable them to arrange for their defence, falling foul of article 34(2) of the Brussels I Regulation (now article 45(1)(b) in the Recast Brussels Regulation). Enforcement against a defendant who was taking steps to challenge the judgment in Belgium was therefore refused.

It is always tempting to get an order for alternative service or deemed service, particularly where a defendant is doing his best to avoid service, but the natural justice provisions in the Brussels/Lugano regimes (and similar provisions in the other enforcement regimes) make this a potentially dangerous shortcut where the proceedings may not be defended.

Jurisdiction has a narrow meaning in non-Brussels Regulation/Lugano Convention cases

If an English court would have taken jurisdiction in the same circumstances as the foreign court took jurisdiction, you would think that would be ok, but it isn’t necessarily. The foreign court needs to have taken jurisdiction pursuant to a jurisdiction agreement, submission to the jurisdiction, a particular connection to the jurisdiction such as residence or carrying on business or, in some cases, presence (the precise requirements varying between the regimes). So if the foreign court just took jurisdiction under its equivalent of CPR 6.36 and PD 6B, say for breach of contract committed within its jurisdiction, and the action wasn’t defended, that isn’t good enough.

On the other hand, if a defendant has taken part in the proceedings, so submitted to the jurisdiction, there is no residual discretion to refuse to enforce, even if the proceedings have been brought in breach of a jurisdiction or arbitration agreement and in flagrant breach of an anti-suit injunction (Spliethoff’s Bevrachtingskantoor v Bank of China).

The court has no jurisdiction to extend the time for appealing against registration of a foreign judgment

If you want to appeal against the registration of a foreign judgment under the Brussels I Regulation, you need to get on with it. The court probably has no power to extend the time limit provided for appealing where the defendant is within the EU (one month where the defendant is within the jurisdiction or two months if it is domiciled in another member state) (Christofi v National Bank of Greece).

There is a simplified regime for enforcing judgments given in cases begun on or after 10 January 2015 and therefore subject to the recast Brussels Regulation. In particular, there is no longer any requirement for registration, but proceedings begun before that date will still be subject to the Brussels I Regulation. The Christofi case will therefore remain relevant for some time to come.

Finally, a bit of horizon gazing – there is a possibility, in due course, of a Hague Convention on enforcement and recognition of judgments, which would allow for enforcement on a wider basis than at present in non-EU cases. There is a preliminary draft text being worked upon by a working group, which includes representatives from the UK, USA and Russia. There is quite a way to go, however, in terms of a final form of text and then subsequent adoption and coming into force of any convention.

Herbert Smith Freehills Anna Pertoldi (draft)

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