UK: Enforcement of Judgments in England

When an international business transaction goes bad because goods or services are not paid for or monies lent are not repaid, creditors can often be left with a shortfall when they discover that the only assets the debtor owns are outside their local jurisdiction where such assets, which could satisfy a judgment, may be difficult to attack or are at risk of dissipating quickly without a trace (since there may be no interim freezing of assets). This discovery, combined with a creditor’s natural hesitation to initiate proceedings in unfamiliar jurisdictions, can lead to problems. Consequently, before a party engages in business with a party with foreign assets, it should investigate the location, value, and accessibility of the counter-party’s assets in case a dispute arises. Should a problem occur, a shrewd creditor will endeavour to preserve those assets, if possible, pending judgment. On the other hand, the debtor must determine whether he or she can ignore the foreign proceedings, confident that in doing so the judgment will not be (easily) enforceable where the debtor’s assets are located.

The principal factor which determines the applicable rules for enforcing a judgment in England from a foreign jurisdiction is the identity of the court which gives judgment (the "Adjudicating Court"). When determining what procedures will be required to enforce a judgment in England, countries can be split into three categories:

1. those which are signatories to the Brussels Convention, the Lugano Convention or Council Regulation (EC) 44/2001 (the "Brussels Regulation") (which includes most European countries). This article will collectively refer to these Conventions and Regulation as "the Brussels Regulation" since they are reasonably similar in terms;
2. those with which the UK has bilateral conventions (e.g., former British dominions and colonies); and
3. those with which the UK has no such conventions (for example the United States, Japan and the States of the former Soviet Union).

If the judgment arises out of a civil or commercial matter from a European Court, generally its enforceability in most other European countries will be governed by the Brussels Regulation. In circumstances where a judgment is not from a European country (i.e., generally categories (2) and (3) above), the rules governing enforceability will depend on the specific reciprocal arrangements (if any) with the other country. England has reciprocal enforcement arrangements in place with most Commonwealth countries, as well as other countries which historically have had ties with England. This article will focus on the procedures laid out in the Brussels Regulation before setting out the principal differences as to what is required by the English Court for enforcing judgments from courts in non-Regulation countries.

A judgment obtained in one European country (a Member State) is enforceable in almost every other European country, with minimal administration by the "Enforcing" Court. This system of automatically recognizing judgments for enforcement does not exist for most non-European countries with which English businesses frequently transact (for example, the United States).

Where a party seeks to enforce a judgment in England which has been decided in another Member State, the Civil Jurisdiction and Judgments Order 2001 provides that a qualifying judgment can be registered with the English High Court and, once registered, that it "shall, for the purpose of enforcement, be of the same force and effect" as if it had been a judgment of the High Court.

It is generally impermissible at the recognition stage to object to the jurisdiction of the Adjudicating Court. However, the jurisdiction of the Adjudicating Court will not be recognized by the English (Enforcing) Court if the dispute involves insurance contracts, certain consumer contracts, or if a Court has exclusive jurisdiction and the specific jurisdiction rules which apply in those circumstances (as set out in the Regulation) have not been complied with. Even in such rare cases where a party attempts to argue a lack of jurisdiction by the Adjudicating Court, the Enforcing Court will still be bound by the findings of fact of the Adjudicating Court. Generally, if grounds exist for objection to jurisdiction, they must be raised before the Adjudicating Court itself.

The two requirements for the recognition or enforcement of judgments which were given on or after March 1, 2002, under the Brussels Regulation are:

i) The Judgment must be made by a Court of a Member State; and

ii) The Judgment must be in respect of a civil or commercial matter.

The grounds for refusing recognition or enforcement of judgments pursuant to the Brussels Regulation are very limited: there are only four substantive grounds for refusal. These are (as set out in Art. 34 of the Brussels Regulation):

• Recognition manifestly contrary to public policy.

• Certain judgments in default of appearance: a default judgment will be denied recognition if two criteria are satisfied: (1) the judgment was given in default of appearance; and (2) the defendant was not served with the document instituting the proceedings (or with an equivalent document) in sufficient time and in such a way as to allow him to arrange for his defense, or the defendant failed to commence proceedings to challenge the judgment when it was possible for him to do so.

• Judgment irreconcilable with local judgment.

• Judgment irreconcilable with prior foreign judgment.

Two stages are involved in enforcement under the Brussels Regulation:

First, the judgment creditor obtains an order for registration for enforcement of the judgment. Initial registration of the judgment is made by application without notice to the judgment debtor. The judgment creditor is then entitled to take protective measures against the judgment debtor to preserve assets until execution of the judgment is complete. After the judgment debtor is served with notice of the registration, the judgment creditor must wait a short period to allow for any appeal against the order for registration. The determination of this appeal is conclusive of the question whether the judgment is to be enforceable. Once registered, the judgment will have the same effect for the purposes of execution as if it was a judgment of the High Court in England.

Where a judgment creditor has obtained a judgment from a country which has no reciprocal enforcement arrangement with England (e.g., the United States), the judgment creditor will be required to commence fresh proceedings in England, based on the judgment of the Adjudicating Court. It is generally possible to obtain summary judgment in the English Court on the basis that the merits have already been properly considered by the Adjudicating Court.

For example, there are currently no conventions or statutory provisions which allow for the direct recognition and enforcement of U.S. judgments in England, and parties wishing to enforce U.S. judgments in England are reliant on common law principles: English Courts require the enforcing party to show that the judgment is valid and binding, and the judgment must be for an identifiable sum of money and delivered by a foreign court with competent jurisdiction. Not all U.S. judgments will be enforceable, and sometimes only part of a judgment may be enforceable. For example, England does not recognize U.S. triple damages awards (but may still recognize the rest of the judgment). Lastly, as there is no uniform prescription for recognition procedures for enforcement purposes between each U.S. state, different states may adopt different approaches to the enforcement of a foreign judgment, so it is important to check the particular set of rules in place for the relevant state.

Likewise, an English judgment creditor seeking to enforce a judgment in a foreign country which has no agreement for automatic recognition will have to initiate proceedings in that country. Whether that Enforcing Court will reassess the merits of the case or question the English Court’s assumption of jurisdiction will depend on the foreign country’s own rules of private international law. The court may also consider it necessary to re-examine the merits of the judgment, especially where the judgment is obtained on the basis of one party’s evidence alone (for example where a party obtains a "default judgment").

As prefaced, careful consideration as to how and where a judgment might be enforced before a party enters into an international transaction may alleviate at least some of the common problems encountered by a judgment creditor. Although England is benefited by the European system of recognizing each Member State’s judgments, this simplified process does not exist for judgments originating from other jurisdictions. 

This article is presented for informational purposes only and is not intended to constitute legal advice.