The Supreme Court of the United Kingdom has, in a judgment handed down on 24 October 2012, ruled that the liquidators of New Cap are entitled to enforce in England against a Lloyd’s Syndicate a judgment of the New South Wales Supreme Court ordering the Syndicate to repay US$5,980,600, plus interest, which the Syndicate had received from New Cap in January 1999.

New Cap, an Australian reinsurer, reinsured Lloyd’s Syndicate 991 for a number of years, including the years 1997 and 1998. The reinsurance agreements were governed by English law and contained London arbitration clauses. The parties entered into commutation agreements under which New Cap paid the sums of US$2,000,000 and US$3,980,000 representing the losses in these two years. However, at the time of payment New Cap was insolvent, and it entered administration three months later. Shortly afterwards it was wound up by its creditors. Those circumstances triggered the unfair preferences provisions of Part 5.7B of the Corporations Act 2001 (Cth).

In 2003 the liquidator commenced proceedings in New South Wales against the Syndicate, seeking a return of the payments under s 588FF of the Corporations Act 2001. The Syndicate contested the jurisdiction of NSW Court and refused to appear in the proceedings on the grounds that the Syndicate was not present in NSW and had not submitted to the jurisdiction of the Court. In December 2003 permission was given for service on the Syndicate in London, jurisdiction being founded on the fact that the cause of action arose in NSW.

The Syndicate continued to refuse to participate in the proceedings, despite a judgment of White J in September 2008 confirming that the NSW Court possessed jurisdiction and that the arbitration clauses were ineffective as between the liquidator and the Syndicate. However, the Syndicate remained a party to the separate liquidation proceedings and submitted proofs of debt in respect of unpaid sums and return premiums. Judgment was given against the Syndicate by Barrett J in New Cap Reinsurance Corporation Ltd v A E Grant [2009] NSWSC 662, a judgment later varied, [2009] NSWSC 950, to take account of the different membership of the Syndicate in the two years in question.

The NSW Court sought the assistance of the English courts in the recognition and enforcement of the award in England. English law on the recognition and enforcement of foreign judgments is labyrinthine, and there are several different procedures, including the common law and the Foreign Judgments (Reciprocal Enforcement) Act 1933 for ordinary judgments, the Brussels Regulation for EU judgments, the Lugano Convention for other European judgments, plus special statutory procedures for the recognition and enforcement of judgments given in insolvency proceedings inside the EU and outside the EU. The enforcement proceedings in England turned upon which of these procedures was the correct one and whether its requirements had been satisfied.

In a 200 paragraph judgment which produced disagreements on various points but unanimity in the outcome, the Supreme Court ruled in favour of the liquidator. The majority approach, found in the comprehensive judgment of Lord Collins, was that the judgment could be recognised and enforced under the 1933 Act, a measure which operates on a basis of reciprocity. Reciprocal arrangements exist with Australia. The Act operates where the court whose judgment is to be enforced possessed jurisdiction over the defendant either because he was present in the jurisdiction or because he had voluntarily submitted to the jurisdiction of the court. In the present case, the Syndicate was not present in NSW, but the Supreme Court found that the Syndicate had voluntarily submitted to the jurisdiction of the NSW court by pressing its claims in the liquidation of New Cap: the two sets of proceedings were sufficiently closely related for that purpose.

In the outcome, therefore, the judgment of the NSW Court in 2009 ordering the money to be repaid by the Syndicate is enforceable in England.