The question of whether a foreign judgment can be enforced in England and, if so, how, is one which we at Wragge & Co are being asked increasingly often. Importantly, these questions regarding enforceable foreign judgments are not just adjuncts to the substantive dispute in question, to be considered once a judgment has been obtained. They run through the entire commercial relationship from the moment that a new contract is being negotiated until any judgment at the end of a dispute is satisfied.
The International Support Group at Wragge & Co specialises in this area. While some areas of cross-border litigation can be somewhat academic in nature, the question of enforcing a foreign judgment is a highly practical one.
The English court has a long history of recognising and enforcing foreign judgments. English common law does not rely, as some jurisdictions do, on the question of reciprocity for such enforcement. However, there are a number of statutory regimes in English law which do require reciprocity that have been added to the English common law, making the entire question of enforcement a somewhat complex area.
Essentially, the position is that the English court will enforce judgments from an EU court though a process of registration which is straightforward and therefore relatively inexpensive and quick. Not only are money judgments enforceable, but so are injunctions. There are also very limited defences. For example, if it would be contrary to public policy to enforce the judgment or if the defendant was given insufficient time to put in their defence. That the original court lacked jurisdiction is no basis to resist enforcement.
Money judgments from many Commonwealth countries are also enforceable through registration. Here, the grounds of challenge are somewhat wider (although still fairly limited) and include the foreign court acting without jurisdiction, a defendant not having been duly served and not appearing, the foreign judgment having been obtained by fraud or an appeal pending.
Finally, there are foreign judgments from countries with whom there is no enforcement treaty, most notably the United States. In this case the English court will enforce the foreign judgment by way of a new action in England designed primarily to test the jurisdiction of the foreign court and with no review of the underlying merits. Usually a judgment creditor will proceed by way of summary judgment.
The main grounds of challenge are that the foreign court acted without jurisdiction, that the foreign judgment was not final and conclusive or that it was obtained by fraud. The foreign judgment must be for a debt or definite sum of money.
Three recent cases on which Wragge & Co has advised demonstrate the importance of this subject at different points in time. All happen to involve the US.
The first case relates to how the law on enforcing foreign judgments impacts on the negotiation of the contract right at the outset. An English vendor was negotiating a non-disclosure agreement with a US purchaser, which agreement was to be governed by English law. The US party wanted the non-exclusive jurisdiction clause in favour of the English court removed. Did that matter? Given that the English company would be the likely claimant and the US company had no assets other than in the US, it was likely that any injunctive relief would be sought in the US rather than in the English court. This isbecause an English injunction would not be easily enforceable in the US. Without a jurisdiction clause, the English claimant would still have the ability of suing in England and obtaining permission to serve proceedings out of the jurisdiction on the US defendant, albeit with no jurisdiction clause the US defendant might more easily be able to argue the US was a more appropriate forum.
The second example is perhaps the most stark. We acted for an English company that had been sued in the US by a US claimant in relation to various non contractual claims. The question arose as to whether our client should in fact participate in those proceedings. Ultimately, they decided not to do so on the basis that they had no "presence" within the US. Given this was a non contractual claim, so there was no jurisdiction clause in favour of the US, any default judgment that the US claimant might obtain would not be enforceable in England on the grounds that the US court would be treated as lacking jurisdiction. This was a bold but ultimately justified approach to take.
Finally, in enforcement proceedings brought in England to enforce a Floridian judgment, the judgment debtor relied on an appeal in the Florida proceedings. The English Court entered judgment. The interesting question here was whether the court would order a stay of the English proceedings pending the outcome of the appeal (it being well settled law that an appeal of itself will not prevent the judgment being final and conclusive and therefore enforceable). In this case, the English court ordered a conditional stay, the condition being payment of the judgment sum into court, ie, effectively not ordering a stay.
The law in relation to enforcing foreign judgments continues to develop. Cases such as the long-running and much reported Munib Masri v Consolidated Contractors International Company SAL, relating to the enforcement of an English judgment against Lebanese companies by way of the appointment of a receiver over the defendant's interests in foreign assets, provides a perfect example of how important it is to have clear and expert advice on enforcing forgeign judgments.
Wragge & Co's International Support Group provides solutions to complex international dispute resolution issues, both in preventing issues becoming "problems" and resolving issues before they excalate. Our experts are part of the 175-lawyer cross-firm dispute resolution practice, including experts in commercial disputes, construction, mediation and arbitration, regulatory litigation, IT, professionsial negligence, insurance and debt recovery.
