Civil proceedings brought by the state or a state entity are one mechanism to recover the proceeds of corruption, or to claim compensation for corrupt acts. Substantial corruption cases typically are international in scope. The proceeds of a corrupt transaction are often laundered through and to countries other than the victim state; assets are typically held by companies and trusts incorporated or managed in offshore or other jurisdictions and wrongdoers may be located in various countries. The international context means there are a number of countries in which civil claims can be made. It also means that corrupt assets may be located in a number of countries. If so, it is usually inefficient and costly to bring proceedings in each of those jurisdictions. It is far better to make a single claim leading to a judgment which can successfully be enforced in each country where assets are located.
It is critical, at the outset, to get good local advice from lawyers in the jurisdiction in which assets are believed to be held and therefore where enforcement is likely to be sought. Too often enforcement is viewed as a mechanical stage at the end of the litigation process and is given little thought at the start of a claim. The ease or difficulty with which a judgment can be enforced against foreign assets, where necessary, should be one of the key factors in the minds of lawyers and their clients when formulating an asset recovery strategy. Even where clear legal mechanisms appear to be available for the enforcement of judgments, there may be very significant difficulties in practice, not least in countries where the legal process is very slow or subject to lengthy appeals. If enforcement is impossible or difficult, the strategy will need to be adjusted. Plainly, States will wish to avoid the expense and delay that will be caused by having to fight the case twice in different countries, or where there are significant hurdles to enforcement in a timely manner.
The English Courts are an attractive jurisdiction for civil asset recovery cases. This is for a number of reasons including: the availability of powerful legal weapons to assist claimants to find and secure assets, such as freezing injunctions and orders requiring disclosure by third parties such as banks; the willingness of the Courts to deploy those weapons in cases of fraud; the efficiency and reputation of the English Courts; and wide jurisdiction to take on cases. In addition, English judgments are enforceable and respected in many foreign countries.
Broadly speaking, there are three possible "routes" to enforcement of an English judgment. Which of those is applicable is determined by the country in which enforcement is sought:
Route 1 - Enforcement within the European Union, and in other European states
The basic principle is that judgments of the Courts of one member of the European Union should be readily enforceable in the courts of the other. This is so whether claims were contested or uncontested.
If a judgment was uncontested, it is open to a state to enforce a judgment under the European Enforcement Orders Regulation (the "EEO Regulation"). Basically the EEO allows a claimant with an uncontested judgment to obtain an EEO certificate from the court where the judgment was entered and then transfer that judgment to another EU country as an "outgoing judgment" which can then be enforced.
A judgment is considered uncontested for these purposes if it is derived from a consent order approved by the court, or if the defendant either did not object to the claim or failed to appear in the proceedings after initially objecting to the claim.
If the EEO Regulation applies, the claimant may apply to the court that has granted a judgment for an EEO certificate. Once the judgment is certified, it is automatically enforceable in the court of any other member state as if the judgment had been obtained by a court of that member state.
A relative newcomer to the enforcement stage is the "European Payment Order". This provides a simplified procedure for cross border uncontested claims for a specific amount. A European Payment Order, at least in theory, should be automatically enforceable in every EU country.
Alternatively, the Brussels Regulation governs enforceability of contested judgments as between all European Union States, except for Denmark (in respect of which an earlier instrument called the Brussels Convention applies). The 2007 Lugano Convention governs the enforcement of judgments between European States and the European Free Trade Association States of Switzerland, Norway, Liechtenstein and Iceland. Under these regimes, a judgment can only be enforced if it relates to a "civil or commercial matter" and does not fall within one of the exclusions (which, broadly, cover bankruptcy or insolvency proceedings, proceedings relating to legal capacity and proceedings relating to property rights arising out of matrimonial relations, wills and succession). A judgment in a corruption case will generally fall within the applicable regime.
Enforcement is not automatic. In very basic terms the regimes allow a state seeking enforcement of a judgment to make an application for "recognition" or a "declaration of enforceability" in the Courts of the state where enforcement is required. The application is usually straight-forward, and should require only a copy of the judgment, the completion of a standard form certificate and certified translations of these documents. If the judgment is "recognised" by the foreign court, its enforcement should be a straightforward matter.
Route 2 – Treaty Countries
Where enforcement is sought in a country outside the European Community, and in a country with which the UK has entered into an enforcement treaty, the provisions of the relevant treaty will govern the procedure for enforcement of judgments, and the circumstances in which enforcement can be challenged.
The UK has reciprocal enforcement arrangements in place with a large number of non-EU countries, particularly with Commonwealth nations. Under the English procedural rules, the enforcement of judgments in countries where there is a reciprocal treaty is started by making an application for a certified copy of the judgment which is then sent to the relevant country. Rule 74 of those Civil Procedural Rules sets out fully the procedure for making an application for a certified copy of the judgment and also contains the most up to date listing of countries and respective treaties governing enforcement.
Route 3 – The rest of the world
If enforcement is required in a country outside of the European Community, with no treaty arrangements, local law will entirely govern the enforcement process. In these circumstances, a case often has to be fought and won again. However, an existing judgment should be persuasive and offer significant assistance, and may enable a second judgment to be obtained using summary procedures without the need for a full trial and lengthy preparatory work.
This article is a whistle-stop tour of the available enforcement regimes. Obtaining a judgment, however hard-fought that may be, is not the end of the process. The time and costs involved in enforcement can often be considerable. Early analysis of the ease of enforcement is essential. Failure to engage in that analysis can lead to ‘paper’ judgments that cannot be enforced against foreign assets. A strategic and informed review of the facts and circumstances at the outset can, in enforcement and many other respects, maximise the likelihood of successful asset recovery.