Examination of the foreign judgment

Vitiation by fraud

Will the court examine the foreign judgment for allegations of fraud upon the defendant or the court?

EU regime

The Recast Brussels Regulation 2012, Brussels Regulation 2001 and Lugano Convention 2007 do not contain a separate defence for fraud. However, it has been accepted that recognition or enforcement of a judgment from a court of another member state that is tainted by fraud may be refused on grounds of public policy. Nonetheless, it would not be contrary to public policy for the UK court to recognise or register a judgment if means of redress against the alleged fraud were available in the original court giving judgment.

 

Hague Convention 2005

Unlike the Brussels regime, fraud in matters of procedure is a ground of appeal against a decision to register a judgment that falls under the Hague Convention (section 6B of the Civil Jurisdiction and Judgments Act 1982).

 

Common law rules

At common law, fraud is a defence to an action on a foreign judgment if it is operative in obtaining the foreign judgment. It has the effect of preventing enforcement in England only. The judgment debtor remains fully entitled to raise the defence of fraud even if the facts relied upon were known to the judgment debtor and could have been raised by way of defence in the foreign proceedings and even if the foreign court had rejected them. However, the defence of fraud would not succeed in two circumstances:

  • first, if the issue of fraud has been litigated in the foreign court in separate proceedings, the judgment debtor would not be permitted to raise the same defence at the point of enforcing the foreign judgment (House of Spring Gardens Ltd v Waite [1991] 1 QB 241); and
  • second, if the judgment debtor has not come up with new evidence at all to satisfy the court that further investigation on the issue of fraud is required, the court is entitled to strike out the allegation of fraud as an abuse of process (Owens Bank v Etoile [1992] 2 AC 43).

 

Other statutory schemes

The statutory regime under the Administration of Justice Act 1920 (the AJA 1920) and Foreign Judgments (Reciprocal Enforcement) Act 1933 (the FJA 1933) mirrors the common law principles. Section 9(2)(d) of the AJA 1920 prohibits registration of foreign judgements that are obtained by fraud, whereas section 4(1)(a)(iv) of the FJA 1933 provides that registration of such judgment must be set aside. In Owens Bank v Etoile, it was held that the reference to fraud in the AJA 1920 must be construed by reference to the common law principles, and it is assumed that the same would apply to the FJA 1933.

Public policy

Will the court examine the foreign judgment for consistency with the enforcing jurisdiction’s public policy and substantive laws?

It is possible to set aside the enforcement of a foreign judgment on the ground of public policy under the EU regime, Hague Convention, AJA 1920, FJA 1933 and at common law. However, the operation of this defence varies between the regimes.

 

EU regime

Article 45(1)(a) of the Recast Brussels Regulation 2012, article 34(1) of the Brussels Regulation 2001 and Lugano Convention 2007 provide that recognition and enforcement would be denied if it would be manifestly contrary to the public policy in the state where its recognition or enforcement is sought. This defence is interpreted strictly and would only apply in exceptional circumstances where recognition or enforcement would be at variance to an unacceptable degree with the legal order of the state of the enforcing court, or if there is a manifest breach of a rule of law or right regarded as essential in the EU legal order. A principal example is where the judgment debtor is able to demonstrate that there has been a deprivation of the right to fair trial in accordance with article 6 of the ECHR. In Maronier v Larmer [2003] QB 620, the presumption that the procedures of other signatories of the ECHR are compliant with article 6 was rebutted, given that the Dutch judgment was obtained from proceedings that were reactivated after it had been stayed for 12 years and without fresh service of process on the judgment debtor. The court concluded that it would infringe public policy to enforce the judgment. The presumption was also rebutted in a more recent case, Laserpoint Ltd v Prime Minister of Malta and others [2016] EWHC 1820 (QB), due to a delay of 26 years in the conduct of the proceedings and the fact that the judgment debtor was not informed that the proceedings were subsequently revived. Given that a manifest breach of public policy has been established through the analysis of article 6 of the ECHR, the judge rejected the argument that the judgment debtor also had to have exhausted all remedies available in the originating court. Another example of the public policy exception is where the foreign proceedings are tainted by fraud. On the other hand, a failure to make a reference to the ECJ by the originating court does not render recognition and enforcement of a judgment manifestly contrary to the public policy of the UK, as there exists a final remedy in the form of an action against the state of the originating court (CDR Creances SAS and another v Tapie and others [2019] EWHC 1266 (Comm)).

 

Common law rules

At common law, the public policy exception is a residual category of reasons for non-recognition and non-enforcement of foreign judgments. A recent case, Lenkor Energy Trading DMCC v Puri [2020] EWHC 1432 (QB), establishes that it is the recognition or enforcement of the foreign judgment that must be contrary to public policy, rather than the underlying transaction on which the course of action in the foreign proceedings is based. Examples from case law include:

  • cause of action in the foreign proceedings is unknown to English law (Re Macartney [1921] 1 Ch 522);
  • the foreign judgment is 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).

 

Other statutory schemes

Section 9(2)(f) of the AJA 1920 provides that a foreign judgment would not be registered if the cause of action could not have been entertained by the registering court for reasons of public policy or for some other similar reasons. The defence contained in the FJA 1933 is more limited than that under the AJA 1920 and more akin to the common law position. It provides that registration would be set aside if the enforcement would be contrary to public policy in the country of the registering court.

Conflicting decisions

What 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?

EU regime

Article 45(1)(c) of the Recast Brussels Regulation 2012 and article 34(3) of the Brussels Regulation 2001 provide that enforcement would not be permitted if the judgment is irreconcilable with a prior English judgment, which need not be obtained in proceedings subject to the Regulations. Furthermore, enforcement would not be permitted if the judgment conflicts with an earlier judgment in another member state or a third state, provided that the earlier judgment is entitled to enforcement in England.

 

Hague Convention 2005

A Hague Convention judgment will also be denied enforcement if it is inconsistent with an English judgment in a dispute between the same parties, or if it is inconsistent with an earlier judgment given in another contracting state between the same parties on the same caution of action, provided that the earlier judgment fulfils the condition for it to be recognised in England.

 

Common law

Under the common law, the existence of a prior English judgment is a defence to recognition or enforcement of a subsequent foreign judgment on the grounds of public policy.

 

Estoppel

In certain circumstances, a foreign judgment may be relied upon in the English courts to establish a right or defend a claim, even where that foreign judgment has not been formally recognised or enforced. That will be the case where the judgment creates an estoppel preventing one of the parties from re-litigating an issue between the same parties that has already been determined by a court.

Enforcement against third parties

Will a court apply the principles of agency or alter ego to enforce a judgment against a party other than the named judgment debtor?

A foreign judgment creates a debt as between the judgment debtor and judgment creditor only, and therefore is only enforceable against the party against whom the judgment is made. In very limited circumstances would the English courts hold another person liable for the debt of a corporate judgment debtor through the principle of agency. It would require the individual to have set up the corporate structure in order to avoid existing liabilities to justify a finding that the separate legal personality is a mere sham or façade. In the case of group companies, there must be a sufficiently high degree of control and influence over the entities such that it could be treated as one single economic unit. The originating court would also to have jurisdiction over the entity against which it is seeking to enforce the judgment debt (Adams v Cape Industries plc [1990] Ch 433).

Alternative dispute resolution

What 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?

A foreign judgment will not be enforced at common law, the AJA 1920 or FJA 1930 if it has been obtained in breach of an agreement to settle the dispute otherwise than by proceedings in that country (section 32(1), CJJA 1982). The protection under section 32 of the CJJA 1982 would not be available if the judgment debtor has agreed to the proceedings being brought in the foreign court, or if the judgment debtor counter-claimed or otherwise submitted to the jurisdiction of that court. Furthermore, the protection would be lost if the agreement was void, illegal, unenforceable or incapable of being performed for reasons not attributable to the fault of the party bringing the foreign proceedings (section 32(2) of the CJJA 1982). On the other hand, the EU regime does not contain provisions that are equivalent to section 32 of the Civil Jurisdiction and Judgments Act 1982 and is silent as to the effect of an agreement that refers matters to alternative dispute resolution. If an English court has granted an anti-suit injunction restraining a party from seeking judgment in another forum based on an arbitration agreement, the resulting foreign judgment would be obtained in contempt of the English court. Recognition and enforcement would be denied on grounds of public policy. Anti-suit injunctions are impermissible under the EU regime.

Favourably treated jurisdictions

Are judgments from some foreign jurisdictions given greater deference than judgments from others? If so, why?

Foreign judgments that fall under the various schemes of enforcement, including the EU regime, the AJA 1920 and FJA 1933, are more readily enforceable through the procedures set out in the relevant statute or instrument than judgments that are enforceable only at common law. This can be understood in light of the objectives underpinning the EU regime, which are to facilitate the free movement of judgments, as well as the assumption of a harmonised approach to jurisdiction, recognition and enforcement of judgments from other EU member states. On the other hand, the basis of the application of the AJA 1920 and FJA 1933 is the existence of a substantial measure of reciprocity, which is only extended to jurisdictions that demonstrate that judgments from the UK would be afforded reciprocal treatment.

Alteration of awards

Will a court ever recognise only part of a judgment, or alter or limit the damage award?

The English courts can sever parts of an award that are penal in nature, or that it would be contrary to public policy to enforce. Furthermore, the Protection of Trading Interest Act 1980 bars the enforcement of a foreign judgment sum arrived at by multiplying an amount assessed as compensation for the loss or damage sustained by the claimant. The amount in excess of the compensatory element would be severed and unenforceable. Article 48 of the Brussels Regulation 2001 also allows for severance of part of a judgment where a foreign judgment is given in respect of several matters but not all of them can be enforced. Enforcement would be limited to the eligible part of the judgment sum. Article 15 of the Hague Convention 2005 also provides for the severability of parts of judgments.

Law stated date

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10 July 2020.