No system of global trade or litigation has any value unless it provides effective measures for enforcement and execution once judgment has been obtained. A Court’s judgment has no direct force beyond its own jurisdiction. The judgment will have effect in foreign states only if the courts of those states are willing to recognise and enforce the judgment. In the absence of consent, a sovereign state is under no legal obligation to recognise claims originating in other sovereign states.
Judgments of the English Court are widely enforced around the world but a judgment creditor seeking enforcement abroad will need to navigate what can sometimes be a complex international legal framework to determine how, and indeed if, enforcement should proceed. Various international conventions and bilateral agreements govern how and to what extent one sovereign state will provide that assistance and recognition to Judgments from the Courts of another state.
Arbitration and cross border disputes
Arbitration awards are enforceable in most jurisdictions pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (“the New York Convention”). The procedure for enforcing an Award is reasonably straightforward, which is one of the significant attractions of arbitration for cross border commercial disputes. Judgments of the English Court are enforced internationally under different rules.
Strategic considerations for cross border enforcement
For obvious strategic reasons it is necessary for parties to address cross border enforcement issues at the very outset of any litigation (for instance, where there is a possible choice of jurisdiction, in order to commence proceedings in the most favourable jurisdiction or one where the Defendant has readily available assets) or indeed at the contract drafting stage (for instance, determining whether a contract should be subject to arbitration or court based dispute resolution). Consideration should be given to whether any protective interim measures might be required and whether they will be enforced locally.
It is usually necessary to obtain early advice from a local lawyer in the jurisdiction in which enforcement is to take place to guide strategy. Whilst there are various overarching common themes which arise as between states there is significant complexity and practical divergence which require careful management.
Common themes which apply to most jurisdictions
A number of common themes, as a general rule of thumb, apply to most jurisdictions. For instance, it will usually be necessary for the Court which hands down judgment to have had jurisdiction over the subject matter of the dispute; the defendant must have had proper notice of the proceedings; the judgment obtained should be a full and final judgment following a fair trial at which the Defendant has had the opportunity to put their case (even if they did not avail themselves of that opportunity); public policy of the enforcing state is not infringed (to include judgments obtained where there is lack of due process or procedural unfairness); that there will be reciprocity (i.e. the enforcing state’s judgments will also be enforceable in the state of the country which handed down judgment) and a general refusal to allow the enforcing state to review or re-open the substantive merits. The extent to which these overarching common factors are applied varies considerably between states.
Divergence between states when it comes to international enforcement
Managing the diversity between states in respect to international enforcement and consequently reducing a clear barrier to international trade has facilitated the implementation of various more streamlined procedures for recognition and enforcement through various international agreements and conventions.
The European Union for instance, to facilitate the single market, provides a streamlined reciprocal recognition and enforcement regime between member states. The relevant rules set down a common framework which regulates where parties are required to bring proceedings and common rules for what judgments can be recognised and enforced in member states. The UK is no longer party to that enforcement regime following Brexit. Proceedings issued in the Courts of England and Wales after 31 December 2020 (i.e. the end of the transitional period) and sought to be enforced in a country within the European Union accordingly will not be enforced via the European regime. The UK has sought to accede to the 2007 Lugano Convention which provides a similar framework for the recognition and enforcement of judgments as between the EU, Iceland, Norway and Switzerland. At the time of writing the application is pending but unanimous approval is required from all contracting parties for it to take effect. The EU Commission has recommended the application should be rejected.
Accordingly, English Judgments will now be enforced, subject to the jurisdiction in which enforcement is sought, by one of the methods outlined below.
The UK Regime: Scotland & Northern Ireland
The UK is comprised of more than one legal jurisdiction. Accordingly Judgments of English and Welsh Courts are not automatically enforceable in the Courts of Scotland or Northern Ireland. The procedure is governed by the provisions of section 18,19 and Schedule 6 and 7 of the Civil Jurisdiction & Judgments Act 1982 (as amended). It is necessary to obtain a certificate from the English Court which handed down Judgment (or in the case of non-money judgments a certified copy) confirming a number of specific points set out in the Act. An application must then be made within 6 months to the Scottish or Northern Irish Court to register the Judgment. Once registered the certificate will have the same force and effect as a local judgment. To obtain a certificate or certified copy the time limit for any appeal in the substantive action must have expired or any appeal been concluded and the time period for enforcement must not have expired. It is possible for a debtor to apply to set aside registration but the grounds for doing so (largely prescribed by the Act) are extremely limited. Whilst the Act applies to Judgments in most civil proceedings some areas are excluded (for instance insolvency and provisional measures such as freezing orders or interim injunctions).
Hague Convention on Choice of Law Agreements (“Hague Convention”)
The Hague Convention was concluded in June 2005 with the objective of facilitating reciprocal enforcement between signatory states where there is an exclusive choice of court agreement which specifies that disputes should be heard before the court of a contracting state. Article 3(a) states an agreement will be exclusive, if it appoints only one court with jurisdiction.
The Convention has been ratified and given force of law by the UK. Prior to Brexit this was through membership of the EU (a signatory on behalf of its members), post Brexit (i.e. .from 31 December 2020) the UK is a signatory in its own right. In addition to the EU, Mexico, Montenegro, Singapore and Ukraine have also ratified the Convention. The USA, China, Israel and North Macedonia have signed the Convention but not, to date, ratified it.
The convention does not apply to choice of court agreements concluded before the Convention’s entry into force in the relevant country. This has led to a potential tension between the UK’s view that the Convention should apply from October 2015 (when the UK signed up to the Convention as part of the EU) and the EU’s view that the Convention should only apply to the UK from the end of the transition period, i.e. 31st December 2020.
A judgment given by a court in a contracting state designated in an exclusive choice of court agreement shall be recognised and enforced in other contracting states according to the provisions of the Convention.
‘Judgment’ means any decision on the merits given by a court. This includes default judgments and costs determinations. Non-money judgments (such as final injunctions) are included. Interim or procedural decisions are excluded. The Convention covers judgments handed down in civil and commercial matters but is subject to a significant number of exclusions (for instance judgments in family, wills, insolvency, employment, most insurance matters, carriage by sea, land or air, personal injury and rights in rem in land).
The enforcing court cannot review the merits of the judgment. However, it is only obliged to enforce the judgment if satisfied the original court was properly designated in an exclusive choice of court agreement. A judgment will further only be enforced locally if it was enforceable in the court of the state which handed down judgment.
Specific additional grounds for resisting enforcement are set out in Article 9 of the Convention and include such matters as lack of notice of the proceedings, judgments obtained by fraud, public policy and inconsistency with another judgment between the same parties or with an earlier judgment in another state.
The precise procedure to adopted will be governed by the law of the state in which Judgment is sought to be enforced, unless otherwise stated in the Convention. The evidence supporting an application for enforcement under the Convention is stipulated at Article 13 (this includes provision of a certified copy of the judgment, documentation showing that the judgment has effect or is enforceable in the state of origin, provisions of translations and evidence of the exclusive choice of court agreement).
A more recent Convention, The Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial matters (“the Hague Judgments Convention”) 2019, provides a more comprehensive framework for recognition and enforcement in cross border matters. The UK is not yet a party to the Convention. The EU, Ukraine and Uruguay are signatories who have ratified the Convention and other states are actively progressing through the consultation process. The UK Government is currently reviewing feedback to a consultation process. Other signatories who have not formally ratified the Convention include the USA, Russia and Israel.
The 2019 Convention will, if implemented, help make English judgments more widely enforceable. It will, subject to limited exceptions, cover civil and commercial matters. Contracting states will be required to recognise and enforce judgments from other contracting states subject to specified limited defences. Critically however it will not be confined to judgments which are handed down in cases where there is an exclusive court agreement so will cover judgments handed down in non-contractual disputes and situations where an asymmetric jurisdiction clause (i.e. a clause which allows one party to choose where to bring proceedings) is present.
The Reciprocal Regime
The UK has various bilateral arrangements and treaties for the reciprocal enforcement of judgments with a number of countries, including, amongst others, India, Pakistan, Australia, Nigeria, Sri Lanka and various other current or former British overseas territories or commonwealth countries. The relevant English legislation in this respect is covered by the Administration of Justice Act 1920 and the Foreign Judgments (Reciprocal Enforcement) Act 1933. Where such arrangements are in place it is usually necessary to obtain a declaration of enforceability from the Court which is being asked to enforce the judgment. This introduces a further administrative step which can add to the costs and delay in enforcing an English judgment. There is however no need to commence fresh proceedings based on the judgment. Where the English Court derives jurisdiction as a result of being the place of performance of the obligation in question or was the place where the harmful event occurred, as opposed to deriving jurisdiction on a purely territorial or consensual basis, enforcement under the treaties will not generally be possible. The extent to which reciprocal arrangements are effective locally, their scope and practical detail are matters on which local lawyers must advise. The UK is further party to conventions and treaties implemented into English law which are relevant to certain industry sectors only. For instance, the Carriage of Goods by Road Act 1965 (implementing the provisions of the CMR), the Merchant Shipping Act 1995 and the Civil Aviation Act 1982 amongst others.
Enforcement under national law
Where none of the specific regimes referred to above are applicable an English Judgment will only be capable of enforcement if permissible under and in accordance with the national law of the state in question. It is essential in these circumstances to obtain advice from a local lawyer (ideally one based in the relevant state in which enforcement is sought, as State law may differ from Federal law). This is commonly encountered in respect to enforcement of English judgments in Russia, China and the USA. This may require the commencement of a new action on the judgment. Although the local court will not generally examine the underlying merits this will add a further layer of complexity, delay and cost in respect to enforcement.
In an increasingly global economy where businesses and individuals engage in transactions that transcend national boundaries, it is essential that contracting parties know that if things go wrong in the commercial relationship steps can be taken to enforce the agreed contractual terms, irrespective that the counterparty or the counterparty’s assets may be located in a different jurisdiction. Obtaining a Court judgment is the first step to protecting those rights. However, the Judgment obtained must then be enforced. Early consideration of potential issues which might arise at the enforcement stage can guide effective litigation strategy, save considerable time and costs and ultimately secure or maximise a potential recovery.