Examination of the foreign judgment
Vitiation by fraudWill the court examine the foreign judgment for allegations of fraud upon the defendant or the court?
Common lawAt common law, fraud is a defence to recognition and enforcement of registration of a foreign judgment. This common law principle is set out in Dicey, Morris & Collins on the Conflict of Laws Rule 53: a foreign judgment is impeachable for fraud. Such fraud may be either: fraud by the judgment creditor; or fraud by the foreign court pronouncing the judgment. As stated in Royal Bank of Scotland plc v Highland Financial Partners LP and others [2013] EWCA Civ 328, there has to be conscious and deliberate dishonesty, and it has to be material for the consideration of the evidence and causative of the impugned judgment.
The judgment debtor remains entitled to raise the defence of fraud even if the facts relied upon were known to the judgment debtor and could have been raised in the foreign proceedings, and even if the foreign court had rejected them (Vadala v Lawes (1890) 25 QBD 310 (CA)). However, the defence of fraud would not succeed where the issue of fraud has been litigated in the foreign proceedings, and the judgment debtor has not adduced any new evidence justifying an examination of the issue of fraud by the English court (House of Spring Gardens Ltd v Waite [1991] 1 QB 241; Owens Bank v Etoile [1992] 2 AC 43). In such a case, the English court may strike out the allegation of fraud for estoppel or abuse of process.
European regimeThe European instruments do not contain a separate defence for fraud. However, it has been accepted that recognition or enforcement of a foreign judgment tainted by fraud may be refused for violation of public policy (Smith v Huertas [2015] EWHC 3745 (Comm)).
Hague Court Convention 2005Pursuant to article 9 of the Hague Choice of Court Convention 2005, recognition of a foreign judgment may be refused if it was obtained by fraud in connection with a matter of procedure. An Explanatory Report on the Hague Convention gives examples of procedural fraud: where the plaintiff deliberately serves the writ on the wrong address; where gives the defendant wrong information as to the time and place of the hearing; or where either party seeks to corrupt a judge, juror or witness, or deliberately conceals key evidence.
Statutory regimesThe statutory regimes of the Administration of Judgments Act 1920 (AJA 1920) and Foreign Judgments (Reciprocal Enforcement) Act 1933 (FJA 1933) enshrine the common law principles. Section 9(2)(d) of AJA 1920 provides that registration of the foreign judgment shall be refused if it was obtained by fraud. Similarly, section 4(1)(a) provides that registration shall be set aside if the judgment was obtained by fraud. In Owens Bank v Etoile [1992] 2 AC 443 stands for the proposition that the reference to fraud in AJA 1920 must be construed by reference to the common law principles. The FJA 1933 applies in the same manner, as seen in Syal v Heyward [1948] 2 KB 443.
Public policyWill the court examine the foreign judgment for consistency with the enforcing jurisdiction’s public policy and substantive laws?
Violation of the UK public policy is a ground for refusing recognition, enforcement or registration of a foreign judgment under all regimes. However, the operation of the public policy defence varies between the regimes.
Common lawAt common law, violation of the UK public policy is a ground for refusing recognition, enforcement or registration of a foreign judgment. According to Dicey, Morris & Collins on the Conflict of Laws Rule 54, a foreign judgment is impeachable on the ground that its recognition or enforcement would be contrary to public policy. Lenkor Energy Trading DMCC v Puri [2020] EWHC 1432 (QB) clarifies that it is recognition or enforcement of the foreign judgment and not the underlying transaction upon which the judgment is based which must offend English public policy. In that case, the Court of Appeal held that a Dubai judgment in respect of dishonoured checks could be enforced in England, despite the fact that the underlying gas oil-purchase transaction for which the checks were tendered was tainted by illegality.
Examples of cases in which foreign judgments were not recognised or enforced for violation of English public policy include:
- the cause of action in the foreign proceedings is unknown to English law (Re Macartney (No. 2) [1921] 1 Ch 522);
- the interest rate on the foreign judgment was so manifestly excessive that it amounted to a penalty (JSC VTB Bank v Skurikhin and others [2014] EWHC 271 (Comm));
- the foreign judgment was obtained in breach of an arbitration agreement or injunction (AK Investment CJSC v Kyrgyz Mobil Tel Ltd [2011] UKPC 7); and
- enforcement of the foreign judgment would offend the principle of res judicata as it is inconsistent with a previous decision of a competent English court in proceedings between the same parties or their privies (ED & F Man (Sugar) Ltd v Haryanto (No. 2) [1991] 1 Lloyd’s Rep 429).
According to the European instruments, recognition and enforcement of a foreign judgment may be refused where it would be manifestly contrary to the public policy of the UK. Pursuant to article 45 of the Brussels Recast Regulation, recognition of the foreign judgment may be refused on limited grounds if recognition of the judgment would be manifestly contrary to the public policy of the UK. Equivalent defences are set out in article 34 of the Brussels Regulation, article 34 of the Lugano Convention and article 27 of the Brussels Convention. This defence is interpreted strictly and only applies in exceptional circumstances where recognition or enforcement would be at variance to an unacceptable degree with the UK legal order, or if there is a manifest breach of a rule of law or right regarded as essential in the EU legal order.
Under the EU regime, a deprivation of the right to fair trial under article 6 of the European Convention on Human Rights may also violate the UK public policy for judgment recognition and enforcement purposes. Whilst the procedures of other Convention States are presumed to comply with article 6, this presumption can be rebutted in some cases. Examples of cases in which recognition or enforcement of foreign judgments was refused for violation of the public policy of the UK to protect the right to fair trial in accordance with article 6 of the European Convention on Human Rights include:
- enforcement of the Ukrainian judgment would amount to a flagrant breach of the principle of finality and legal certainty (Merchant International Co Ltd v Natsionalna Aktsionerna Kompaniya Naftogaz Ukrayiny [2012] EWCA Civ 196; see also Joint Stock Co Aeroflot-Russian Airlines v Berezovsky [2014] EWCA Civ 20); and
- enforcement of the Maltese judgment would be manifestly contrary to public policy due to a 26-year delay, failure to inform the defendant of the subsequent revival of the proceedings and failure of its court-appointed representatives to seek instructions (Laserpoint Ltd v Prime Minister of Malta and others [2016] EWHC 1820 (QB)).
Similarly, pursuant to article 9 of the Hague Court Convention 2005, recognition of the foreign judgment may be refused where it would be manifestly incompatible with the public policy of the UK, including where the foreign proceedings were incompatible with fundamental principles of procedural fairness of the UK.
Statutory regimesBoth AJA 1920 and FJA 1933 contain provisions contemplating refusal of registration of a foreign judgment for violation of public policy. Pursuant to section 9(2)(f) of AJA 1920, registration of the foreign judgment shall be refused where the judgment was in respect of a cause of action that for public policy or similar reason could not have been entertained by the English court. Pursuant to section 4(1)(a) of FJA 1933, registration shall be set aside where enforcement of the judgment would be contrary to public policy of the UK.
Conflicting decisionsWhat will the court do if the foreign judgment sought to be enforced is in conflict with another final and conclusive judgment involving the same parties or parties in privity?
Under all regimes, enforcement of the foreign judgment may be denied if it is in conflict with another final and conclusive judgment involving the same parties or their privies. There are slight variations in the articulation of this defence across the regimes.
European regimePursuant to article 45(1)(c) of the Brussels Recast Regulation, recognition of the foreign judgment may be refused if conflicting judgments exist in the UK or other EU member states. Equivalent defences are set out in article 34(3) of the Brussels Regulation, article 34(3) of the Lugano Convention and article 27 of the Brussels Convention.
Hague Court Convention 2005Pursuant to article 9 of the Hague Court Convention 2005, recognition of the foreign judgment may be refused if conflicting judgments exist in the UK or other member states.
Statutory regimesPursuant to section 4(1)(b) of FJA 1933, registration of the foreign judgment may be set aside if the matter in dispute had previously been the subject of a final and conclusive judgment by a court having jurisdiction in the matter. While section 9(2) of AJA 1920 does not specifically articulate this defence, the same result may be obtained under the rubric of ‘public policy or similar reason’.
Common lawAt common law, the existence of a prior conflicting English judgment between the same parties or their privies is a defence to recognition and enforcement of the foreign judgment on the ground of public policy.
Enforcement against third partiesWill a court apply the principles of agency or alter ego to enforce a judgment against a party other than the named judgment debtor?
Generally, a foreign judgment creates a debt between the judgment debtor and the judgment creditor, and as such, is only enforceable against the person against whom it is made. Only in limited circumstances would the English courts look beyond the legal personality of the judgment debtor and enforce the debt against a third party by operation of the principles of piercing the corporate veil, agency, alter ego or group of companies. In Prest v Petrodel Resources Limited [2013] UKSC 34, the Supreme Court pierced the corporate veil where the person:
- was under an existing legal obligation, liability or restriction; and
- deliberately evaded that obligation, liability or restriction; or
- deliberately frustrated the enforcement of that obligation, liability or restriction by interposing a company under their control.
This principle was implied in Kensington International Ltd v Congo [2005] EWHC 2684 (Comm) in the context of recognition and enforcement of a foreign judgment against a state. In that case, the court pierced the corporate veil and allowed enforcement of judgments made against Congo against the assets of a Congolese state-controlled company, by making a third-party debt order garnishing the payments owed to that company by oil consignees. The court held that the Congolese companies were a sham or façade, had no legal substance, had no existence separate from the Congolese state and were simply part of the state, and were set up to defeat the creditors’ claims against the state.
Alternative dispute resolutionWhat will the court do if the parties had an enforceable agreement to use alternative dispute resolution, and the defendant argues that this requirement was not followed by the party seeking to enforce?
Common lawBy application of common law in conjunction with section 32(1) of the Civil Jurisdiction and Judgments Act 1982 (CJJA 1982), a foreign judgment shall not be recognised and enforced in the UK if it has been obtained in breach of an agreement to settlement the dispute elsewhere. Excluded from the scope of this provision are cases in which the judgment debtor counterclaimed in the proceedings or otherwise submitted to the jurisdiction of that court. Section 32(1) also does not apply if the agreement to settle the dispute elsewhere was illegal, void, unenforceable or incapable of being performed for reasons not attributable to the judgment creditor. In that regard, the English court is not bound by any prior determinations of the foreign court.
If an English court has previously ordered an anti-suit injunction restraining the judgment creditor from obtaining a foreign judgment in breach of an arbitration agreement, the resulting judgment would be obtained in contempt of the English court and would be unenforceable for the violation of public policy.
EU regimeThe EU regime does not contain a provision equivalent to section 32(1) of CJJA 1992 and is silent on the effect of an alternative dispute resolution clause on judgment enforceability.
Hague Court Convention 2005The rule in section 32(1) of CJJA 1982 does not apply to the judgments rendered under the Hague Court Convention 2005.
Significantly, the Convention applies only in the presence of an exclusive choice of court agreement. Articles 8 to 9 of the Convention limit (but do not preclude) the English courts’ ability to entertain an allegation that the foreign judgment was made in breach of an arbitration agreement, and conversely, pursuant to an exclusive choice of court agreement that was null and void under foreign law, where the foreign court itself did not conduct such inquiry.
Favourably treated jurisdictionsAre judgments from some foreign jurisdictions given greater deference than judgments from others? If so, why?
Formally, the English courts do not give any greater deference to judgments from some jurisdictions as opposed to others. At the same time, the EU regime, with its straightforward criteria and uniform procedures, renders the judgments more readily enforceable given its underlying policy objectives, such as a harmonised approach to jurisdiction, recognition and enforcement of judgments from the EU member states. Also, the statutory AJA 1920 and FJA 1933 regimes, with their established criteria, are premised on reciprocity. As to the common law regime, there are no readily available empirical studies demonstrating that judgments from other common-law English-speaking countries are accorded greater deference. On the other hand, one can intuit that laws and procedures of other common-law English-speaking countries are more easily understood, while laws and procedures from other countries require a greater degree of explanation and potentially proof by expert or witness evidence.
Alteration of awardsWill a court ever recognise only part of a judgment, or alter or limit the damage award?
The English courts can sever parts of judgments that are punitive as opposed to compensatory in nature, or contrary to public policy, and enforce the remaining parts. Parts of judgments corresponding to punitive, exemplary or treble damages, fines, penalties, taxes, etc, are unenforceable across the regimes. There are also express provisions for severability of judgments. For example, article 48 of the Brussels Regulation expressly provides for severance of parts of a judgment that cannot be enforced. Similarly, article 15 of the Hague Courts Convention 2005 expressly provides for severability of a judgment where only a part of it is capable of recognition or enforcement.
