Enforcement of judgments in foreign jurisdictions


9th June 2022

Let us say that you have begun proceedings against a supplier for breach of contract. Fortunately, you were advised by Blake Morgan and were successful in your claim. Now comes the point at which you must enforce the judgment. However, the defendant's assets are unhelpfully located in a foreign jurisdiction and you require advice as to how to proceed.

This article will cover the legal framework of enforcing judgments handed down by an English court in a foreign jurisdiction and what practical steps can be taken to increase the chances of successful enforcement.

The enforcement of judgments in a foreign jurisdiction will be dependent on what international treaties they have ratified and the private international law of that jurisdiction. The UN currently has 193 member states. It is therefore vital and essential that any litigant has the benefit of local advice from the jurisdiction they wish to enforce judgment in. In addition, a distinction must be drawn between enforcing English judgments in a foreign jurisdiction and enforcing foreign judgments in England. This article concerns itself with the former.

Scotland and Northern Ireland

The steps that need to be taken by a party enforcing an English judgment in either Scotland or Northern Ireland are laid out in the Civil Jurisdiction and Judgments Act 1982, as amended. In brief, the party would need to obtain a certificate from the English court which gave judgment and then apply to the foreign court to register the judgment within six months of the date of issue of the certificate. Once registration has been completed, the certificate has the same force and effect as a local judgment.

There are important caveats however. The Act applies to all civil proceedings apart from matters relating to insolvency, title to administer estates, status and capacity, among others and excludes judgments for provisions measures. The defendant has limited ability to challenge the certificate. It may apply to set aside the registration if conditions of the Act are not met or if the matter in dispute was the subject of a previous judgment by a court having jurisdiction, but this is a discretionary ground. Overall, the enforcement of English judgments in these jurisdictions is clearer given the advantages of authoritative legislation on the subject.

European Union (EU)

Prior to the UK’s departure from the EU, enforcement of judgments within the EU was relatively simple. It operated on a reciprocal basis and recognition of judgments was automatic. Enforcement thus followed nicely. Following the UK’s departure from the EU, any proceedings instituted after 31 December 2020 will not be able to rely on the benefit provided by the EU regulations, most importantly Recast Brussels Regulation. For brevity, this article will focus on the situation where enforcement is sought following proceedings instituted after 31 December 2020.

An important piece of international law is the Hague Convention on Choice of Court Agreements. Both the UK and EU are contracting states, with the UK acceding to the Convention in its own right with effect from the end of the transition period. The Convention will govern the enforcement of judgments as between the UK and EU member states, but only where there is an exclusive choice of court agreement contained within the signed instrument. It will also only take effect if the proceedings of which the enforcement is based on were instituted before 31 December 2020.

The Hague Convention

The Hague Convention covers judgments given by a court in a contracting state designated in an exclusive choice of court agreement. The other contracting states are thus bound to recognise and enforce said judgment in accordance with the rules relating to enforcement in the Convention. Only judgments in civil and commercial matters are covered and there are considerable areas that are excluded from the Convention’s remit, including family law, wills and succession, insolvency and arbitration (largely mirroring the Recast Regulations) but also consumer, employment and insurance matters, rights in rem in land, and company law matters.

The definition of “judgment” under the Convention means any decision on the merits given by a court. Default judgments are covered as well as costs determination and non-money judgments, but interim protective measures or procedural rulings are not (article 7).

The High Court considered the scope of article 7 of the Convention in Motacus Constructions Ltd v Paolo Castelli SpA [2021] EWHC 356 (TCC). In brief, a construction contract between two parties referred to the exclusive jurisdiction of the courts of Paris, France. Following a dispute over sums due under the contract, both parties agreed to and participated in adjudication. The claimant issued an application for summary judgment following the adjudicator’s award and non-payment by the defendant. The court concluded that the concept of an interim protective measure extends to a decision of an adjudicator which, by operation of law in this instance, is not final and binding on the parties, thus is properly an interim measure and not covered by the Convention. As a result, the court was not precluded from issuing summary judgment on the basis that the case was brought in contravention of the exclusive jurisdiction clause. In other words, the defendant was not successful in arguing that the arbitration award was unenforceable due to the exclusive jurisdiction clause.

When considering the judgment, the enforcing court is not allowed to review the merits of the judgment but is only obliged to enforce it if it is satisfied that the original court was designated in an exclusive choice of court agreement. This may lead to further litigation between the parties over whether the original court was designated as such. Additionally, the judgment will only be enforceable if also enforceable in its state of origin (i.e. England and Wales).

The enforcement procedure is governed by the law of enforcing state unless the Convention provides otherwise. There is a requirement that the enforcing court acts expeditiously. Under article 13 of the Convention, the party seeking enforcement must produce several documents, including a complete and certified copy of the judgment, the exclusive choice of court agreement, and documents necessary to establish that the judgment has effect or is enforceable in its state of origin among others.

However, the Convention is limited in its application. It only applies to judgments given by a court designated in a jurisdiction agreement, therefore should the English courts give judgment over a dispute where the French courts were designated in a jurisdiction agreement, the Convention would have no application. The jurisdiction must be exclusive and the Convention may not apply to asymmetric agreements. The Court of Appel considered this point (although as obiter dicta) in Etihad Airways PJSC v Flother [2020] EWCA Civ 1707 opining that the Convention should “probably” be interpreted as not applying to asymmetric jurisdiction clauses. In addition, although the Convention lays down requirements for the contracting states to recognise and enforce judgments, it leaves up to the contracting state the process of doing so.

Overall, the Convention provides some comfort for parties who wish to enforce judgments overseas in one of the contracting states. A significant advantage of the Convention is that it will cover the EU thus parties can contract with companies in the EU in the knowledge that should a dispute arise and enforcement is necessary, exclusive choice of court agreements will make enforcement easier under the Convention. This is subject to when the relevant proceedings that the enforcement is based on begun.

The EU takes the view that only choice of court agreements entered into after 31 December 2020 are covered by the Convention, on the basis that the UK only entered into the Convention in its own right after it left the EU. The UK takes the view that the Convention applies from 1 October 2015, when it acceded as part of the EU. This question is currently unanswered, so presents potential difficulty for parties seeking to rely on proceedings started between 1 October 2015 and 31 December 2020. It is interesting to note that the official status table of the Convention lists the entry into force as 1 October 2015 for the UK which may provide compelling evidence if the matter was to be specifically litigated.

International

The reach of the Hague Convention extends to its other contracting parties, namely Mexico, Singapore and Montenegro. Therefore, if English judgments needed to be enforced in these jurisdictions then the courts would follow the rules as laid down in the Hague Convention.

For the majority of countries, the Hague Convention will not apply. Therefore the litigant must rely on bilateral arrangements for reciprocal enforcement of judgments. The UK has several bilateral arrangements in place, including Australia, Canada (excluding Quebec) and India among others. The UK also has reciprocal arrangements with several European countries such as France and Germany. Arrangements with other EU states were superseded by the Recast Brussels Regulations and there is debate around whether the bilateral arrangements can be revived without further action by the governments of the UK and the other relevant state. This is an open question and likely to present uncertainty for litigants that wish to enforce judgments in the relevant states.

Where no international agreement is applicable, the party attempting to enforce judgment will need to rely upon the national law of that state. This will be the case in circumstances that involve enforcing judgments in either the USA, Russia or China. In addition, federal jurisdictions, such as the USA, may have separate judicial treatment of out of jurisdiction decisions at the federal level and the state level, leading to further complexity that the party should seek local advice to understand.

The future of enforcing judgments abroad

In respect of enforcing judgments in the EU, the UK applied to accede to the Lugano Convention on 8 April 2020. This would effectively replace the Hague Convention rules with the Lugano Convention rules vis a vis Lugano contracting states and the EU, which have the advantage of applying to a wider array of disputes and to asymmetric clauses. A concern with Lugano is that it has not been updated to implement the improvements from Recast. Overall, with this in mind, Lugano does provide a stronger degree of certainty than the Hague Convention. It is suggested that smooth cross-border litigation would be a priority for the UK, given that nearly 50% of its trade is with the EU.

The state parties to the Convention, including Switzerland, Iceland and Norway, have consented to the UK’s accession, however, the EU has so far not provided their consent or indicated whether that consent will be withheld. The European Commission has recommended that the EU does not consent to the UK’s application, on the basis that it is not an appropriate framework for judicial co-operation with third countries. It is unclear whether the UK will eventually become party to the Lugano Convention which would place the UK on the same footing as state parties to the Convention in respect of EU and EFTA judicial decisions.

Conclusion

As has been summarised, there is substantial difficulty in enforcing judgments in non-English jurisdictions. For a party to properly protect themselves, the best step is precise drafting with knowledge of the commercial risks and rewards of choice of court agreements. For example, asymmetric jurisdiction clauses may preclude the application of the Hague Convention, but this may be outweighed by the corresponding commercial benefit for the creditor (specifically in financial transactions) to be able to sue, with a fair degree of certainty, in the jurisdiction of the secured assets. The parties should also have an awareness of where the secured assets are located and the likelihood of cross-jurisdictional issues to arise.

Checklist

  1. Do you have a judgment in your favour in England and Wales?
  2. When were the proceedings started that culminated in the judgment in your favour?
    • a) Depending on start of proceedings, the relevant legal framework could be the 2001 Brussels Regulation (out of the scope of this article), the Recast Brussels Regulation or the Hague Convention on Choice of Court Agreements.
  3. Which jurisdiction do you want to enforce the judgment in?
  4. Is the jurisdiction a contracting state to the Hague Convention on Choice of Court Agreements?
    • a) If so, was the judgment awarded on the basis of an exclusive choice of court agreement?
    • b) Further analysis of the Convention is required to determine whether it is applicable.
  5. If not, does the UK have a bilateral arrangement with the jurisdiction relating to reciprocal recognition and enforcement of judgments?
  6. If not, the relevant law will be the private international law of that jurisdiction.

Note: it is vital that any litigant seeks the advice of local counsel to advise them on jurisdictional-specific matters.

If you want to know more about how the English courts approach jurisdiction, which may be the subject of dispute, my colleagues Alex Shirtcliff and Alex Lepretre have recently written a helpful article on the English courts approach to jurisdiction following the important case of FS Cairo (Nile Plaza) LLC v Brownlie [2021] EWCA Civ 996 (“Brownlie 2”). It is critical to note that, on the facts of Brownlie 2, the Hague Convention would not be applicable, due to the lack of an exclusive choice of court agreement.

If you need legal advice about anything in this article

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