Enforcement of English judgments abroad

Whether an English judgment can be enforced abroad, and the process and the costs involved with that, will depend on the nature of the judgment and the country concerned. Certain countries are subject to a regime for the enforcement of English judgments which simplifies the process. In others, the creditor is left to decide whether to cease pursuing the debt or incurring the costs of commencing fresh proceedings in another country.

Below is a guide for in-house lawyers when seeking to enforce judgments in foreign jurisdictions and the practical considerations at the outset of a dispute.

The UK regime – Scotland and Northern Ireland

English judgments can be enforced in Scotland or Northern Ireland under the Civil Jurisdiction and Judgment Act 1982 (CJJA). The CJJA applies to all civil judgments (money or non-monetary) but excludes insolvency or provisional orders such as interim injunctive relief or freezing orders.

The UK regime for enforcement is a relatively straightforward and quick process. The steps the creditor must take to enforce a judgment are governed by Civil Procedure Rules Part 74 (CPR 74), which state that a creditor must:

(i) Obtain a certificate from the English court which gave judgment confirming the date of the judgment, the judgment sum, the level of interest and costs; and

(ii) Within six months of the date of issue of the above certificate, make an application to the foreign court to register the judgment. The application must be supported by a certified copy of the judgment and witness evidence which confirms the debtor’s details and explains why the application is necessary.

If the application is successful, the judgment will be registered and can be enforced using local enforcement methods (on which local legal advice will be necessary). The court has a limited discretion to refuse to register the judgment and will usually only do so if the creditor has committed a technical failure in serving the original claim on the debtor and/or failing to follow the process set out above. As such, it is imperative the steps set out in CJJA 1982 and CPR 74 are complied with.

The European regime

There are a number of instruments governing the enforcement of English Judgments within the EU including:

• The Recast Brussels Regulations, applicable to the enforcement of judgments across the EU (currently excluding Denmark) in proceedings instituted on or after 10 January 2015;
• The 2001 Brussels Regulations, applicable to the enforcement of judgments across the EU (including Denmark) in proceedings instituted before 10 January 2015;
• The EEO Regulation, applicable throughout the EU for uncontested judgments;
• The 2007 Lugano Convention, for the enforcement of judgments between EU and EFTA states.

The above instruments only apply to civil or commercial judgments, decrees, orders, decisions or writs of a court or tribunal including orders for costs, injunctions and interim orders. However, they cannot be used to enforce revenue, customs, administrative, matrimonial, probate, insolvency or arbitration orders or judgments.

The Recast Brussels Regulations (RBR)

The RBR introduced a simplified mechanism for the enforcement of judgments in EU member states with the intention of making the enforcement process less time consuming and costly. In particular, it has removed the requirement to apply for a declaration of enforceability and simply requires the creditor to present a copy of the judgment, together with a completed standard form certificate at the enforcing court, in order to proceed with the chosen method of enforcement.

However, whilst this does remove one costly and time consuming step of the enforcement process, the judgment debtor can still apply for refusal of recognition of the judgment on the grounds that:

1. i) the underlying proceedings were not served correctly;
2. ii) the judgment is irreconcilable with an earlier judgment given on the same cause of action;

iii) the judgment is contrary to public policy.

As such, whilst the RBR is deemed to be a more simplified process, in practice a savvy debtor can still significantly delay the enforcement process and increase legal costs for the creditor by opposing the application.

The RBR also applies to the enforcement of interim orders. However, this is only where the English court had jurisdiction over the substantive dispute. For example, if an interim injunction is obtained for a breach of restrictive covenants in a contract in the UK, but the jurisdiction of the contract was Italy, the order will not be enforceable pursuant to the RBR and the claimant will have to apply for a self-standing order in that member state. As such, it is imperative to check the governing law and jurisdiction clauses of any contract before commencing proceedings.

The 2001 Brussels Regulations

The 2001Regulations apply to all EU member states for judgments obtained before 10 January 2015. The process is governed by CPR 74 and requires the creditor to obtain a judgment certificate from the English court which gave judgment and then apply to the court of the enforcing country for a declaration that the judgment is recognised and enforceable.

There are limited grounds on which the court can refuse to recognise the judgment and, in practice, the court’s discretion is exercised very rarely and only in exceptional circumstances.

If the application is successful, then the creditor will need to serve a copy on the debtor and commence separate enforcement proceedings in that member state, the procedures for which will differ depending on the country involved.

European Enforcement Orders (EEO)

The EEO was introduced with the intention of creating a more straightforward, faster and cheaper mechanism for the enforcement of judgments within the EU. If a judgment is uncontested then it can be enforced within any EU state without the need to obtain a declaration of enforceability.

Uncontested claims are, for example, where the debtor has agreed to pay the debt (which is subsequently approved by the court) or where judgment in default has been obtained.

The EEO must be obtained from the court which gave judgment, which will issue a certificate that automatically allows the judgment to be transferred to the EU Member state where the debtor resides and to be immediately enforced. A further advantage is that the EEO does not need to be served on the debtor, who will only be made aware of the EEO when attempts are made to enforce the judgment.

It may appear as if the RBR has made the EEO redundant and/or less appealing for judgments obtained post January 2015. However, one significant advantage of the EEO is that there is no possibility of the debtor opposing enforceability. As such, in uncontested judgements, the EEO still appears to be the quickest and most cost effective method of enforcement.

The 2007 Lugano Convention

Where seeking to enforce a judgment in Iceland, Norway and Switzerland (the EFTA states), it is necessary to follow the procedures set out in the Lugano Convention.

In practice, the process is virtually identical to the 2001 Brussels Regulation involving two stages where the creditor applies (without notice) for a declaration of enforceability and, if successful, the judgment can be enforced using local procedures. The application must be made to a specified court in the enforcing state and must be supported by an authenticated copy of the judgment; a certificate of the judgment (which includes details of the monies due, costs and interest); and any necessary translations. Again, the procedure is governed by CPR 74.

However, unlike the Brussels Regulations, pursuant to the Lugano Convention the debtor has a period of one month in which to appeal the declaration of enforceability. The creditor cannot take any steps to enforce the judgment before the expiry of this period. This lengthens the process for enforcement and increases the appeal of using an EEO wherever possible.

The European regime – points to note

Whilst theoretically the processes set out above appear relatively straightforward, in practice enforcement abroad can take a significant amount of time. The foreign courts will consider procedural and public policy issues carefully. Often, as effective service of judicial documents abroad can be problematic, the court can find that service has not been effected and it is necessary for the debtor to start the process again. As such, it is always advisable to seek early legal advice.

The Commonwealth regime

The main Commonwealth countries with whom a company is most likely to have dealings include Australia, Canada, India, Israel, Pakistan, Guernsey, Jersey, Isle of Man, Bahamas, Barbados, Bermuda, BVI, Cayman Islands, Jamaica, Malaysia, New Zealand, Nigeria, Singapore and Sri Lanka.

Enforcing a judgment against one of the Commonwealth countries is possible pursuant to either the Administration of Justice Act 1920 (AJA 1920) for High Court Judgments, or the Foreign Judgment (Reciprocal Enforcement) Act 1933 (FJ(RE)A) for judgments of lower courts or tribunals.

The judgment must be final (i.e. not subject to appeal); for a specific sum; not in respect of fines or taxes, or arising out of an arbitration agreement. Further, the England/Welsh court must have had jurisdiction to deal with the original claim. If the judgment does not comply with these requirements, it cannot be registered.

There are key time limits to consider for enforcement under the Commonwealth regime. Pursuant to the FJ(RE)A, a creditor must apply to register the judgment within six years from the date of the judgment. However, pursuant to AJA 1920 a creditor only has a period of 12 months to register the judgment. If the judgment is not registered within 12 months then the creditor loses the right to enforce against the defendant outside of the jurisdiction.

Enforcement under common law

Each of the above procedures is based on reciprocal arrangements with the UK. However, there are countries in which there are no reciprocal arrangements (most notably the United States, Japan and China). In these countries, the law of the enforcing country will apply alone. Typically, this means that it is necessary to bring fresh proceedings in that country and instruct lawyers in that country to do this on your behalf.

Whilst the claim would be suitable for a summary judgment on the grounds that judgment has already been made in an English court, in effect the debtor gets a second bite of the cherry and is entitled to oppose the application where there are grounds to dispute the validity of the original judgment (for example on the basis that the foreign court did not have jurisdiction to hear the claim in the first place). This could be an extremely expensive and lengthy process.

Practical Consideration

Terms and Conditions

Before a dispute has arisen, it is vital to consider the terms and conditions of a cross border contract. In particular, governing law and jurisdiction clauses. Parties are free to choose which law will determine a dispute (even if the dispute itself is in an alternative jurisdiction). If both parties are based in the same country there would be little reason to choose a law other than of that country. However, when involved in international trade a decision has to be made as to the most appropriate governing law. Absent an express choice of law there is a risk that if each party has its own terms and conditions the governing law provisions will be inconsistent, thereby creating a risk of satellite litigation where the parties argue which law is applicable. Certainty of the governing law of the contract will reduce the risk of dealing with a dispute in the law of an unfamiliar country and legal process.

Jurisdiction may be exclusive, whereby all disputes must be resolved in the chosen country (offering greater certainty and protection) or non-exclusive, whereby depending on the nature of the dispute, the parties have the choice of forums. Notably, it does not have to be the same as the governing law.

Before commencing proceedings

Where there is a foreign element, it is important to consider how you can effectively enforce a judgment. If a judgment cannot be enforced using any of the regimes set out above, commencing proceedings in the first place could be pointless. Similarly, if fresh proceedings would be required in order to enforce the judgment, it may be sensible (if the contract allows) to start proceedings in that country rather than in the UK.

Expectations

Despite a raft of reciprocal treaties, it should be noted that when relying on the enforcement methods of another member state, whether via an EEO or the Brussels / Lugano Convention, the process of enforcement can be complicated, slow and expensive. Advice and assistance from local lawyers will always be required.

For more information please contact Elizabeth Beatty on +44 (0)1905 746471 or email [email protected]