Disputes often arise from cross-border transactions, leading to jurisdiction and enforcement issues. This article examines Australian legislative and common law principles governing the enforcement of foreign court judgments in Australia, which may be necessary where foreign judgment creditors are looking to access assets in the Australian jurisdiction. The inability to enforce judgments where assets are available to execute against effectively renders those judgments useless where generally much time and money has been spent in obtaining them.
We assist commercial clients to understand their rights and make informed decisions in their international commercial relationships, so that the best chances of recovery (or avoiding recovery) are preserved after judgment is obtained in a foreign jurisdiction.
The enforcement of foreign judgments in Australia is governed by:
1. the Foreign Judgments Act 1991 (Cth) (Act); and
2. the Foreign Judgments Regulations 1992 (Cth) (Regulations).
These legislative instruments only apply to judgments given by courts in countries specified in the Schedule to the Regulations (Scheduled Countries).
The Act and its Regulations provide a regime for Australian Courts to recognise and enforce (and stay or set aside) foreign judgments. Put simply, judgment creditors of Scheduled Countries may apply to an appropriate Australian Court within six years of the foreign judgment date to register the foreign judgment as an enforceable judgment of the Australian Court.
Then, the ordinary enforcement mechanisms under Australian law become available, which are discussed at the end of this article.
Additionally, Australia is a party to international bilateral treaties governing the cross-border enforcement of foreign awards and judgments, such as the Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters 1994 with the United Kingdom.
Although Australia is not a party to the Hague Convention on Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters 1971, it is party to the 1965 Hague Convention on Service Abroad of Judicial and Extrajudicial Documents in Civil/Commercial Matters (Hague Convention), which is relevant to cross-border service and the issue of jurisdiction as discussed below.
Typically, it is more complicated and expensive to enforce foreign judgments under Australian common law principles than the Act and its Regulations. Hence, commercial clients should seek advice on potential future disputes and enforcement options when considering transacting with foreign parties. None of this takes into account arbitration and other alternative methods that can be used as a mechanism to resolve disputes in this context. Advice should be taken on these matters as well although this article does not seek to cover them.
Common law position
If the country in which the original judgment is granted is not one of the Scheduled Countries for the purposes of the Act and Regulations, then the following common law conditions must be met to enforce the foreign judgment in Australia:
1. The foreign judgment must be final and conclusive;
2. There must be a valid exercise of jurisdiction over the defendant/judgment debtor by the foreign Court, which would be recognised by Australian Courts;
3. There must be identical parties in both the foreign and Australian jurisdictions; and
4. The judgment debt must be for a fixed monetary sum (i.e. not an unliquidated damages award).
The following process applies to enforce a foreign judgment in Australia by common law principles:
5. A foreign court must award judgment in favour of a party, being the judgment creditor;
6. The foreign judgment creditor must institute fresh proceedings in an appropriate Australian Court of competent jurisdiction for the recognition and enforcement of the foreign judgment within Australia;
7. A final and conclusive money judgment made by a court having jurisdiction recognised by the Australian Courts is prima facie entitled to enforcement in Australia. There are limited common law defences available to debtors to resist the recognition of foreign judgments by Australian Courts, namely if the foreign judgment:
(a) was obtained by fraud;
(b) is contrary to public policy within Australia;
(c) is contrary to principles of natural justice recognised within Australia; or
(d) is a penal judgment against the debtor.
8. The judgment creditor can either:
(a) sue for the judgment amount as a debt in an Australian Court; or
(b) alternatively (or in addition) the judgment creditor may commence new proceedings in an Australian Court on the original cause of action from the foreign proceedings and rely on the foreign judgment to argue an estoppel preventing the judgment creditor from raising any fresh defences which ought to have been raised in the foreign proceedings (which is a more costly exercise effectively requiring the foreign judgment creditor to commence the claim again from scratch).
Cross-border service and jurisdiction
One of several factors relevant to whether Australian Courts will recognise the valid jurisdiction of the foreign court over the foreign judgment creditor is whether the foreign judgment creditor conceded the jurisdiction of the foreign Court. Matters relevant to this question include:
1. whether the foreign judgment creditor was validly served with the foreign proceedings; and
2. whether the foreign judgment creditor took any active steps in the foreign proceedings.
A summary of the requirements for international service of judicial documents under the Hague Convention is as follows:
Contracting State to designate Central Authority to receive requests for service of documents from other Contracting States.
Central Authority of Contracting State in which documents originate must forward documents to Central Authority of recipient party's Contracting State (State addressed).
Central Authority of State addressed shall serve documents by method prescribed by its internal law, OR by particular method requested by Applicant Contracting State.
Central Authority may require document to be written/translated into official language of State addressed.
Arts. 6, 7
Central Authority of State addressed shall complete certificate, either in French or English, stating method and confirmation of service.
Arts. 8, 9
Each Contracting State is free to serve judicial documents abroad directly through diplomatic or consular agents, unless Contracting State opposes such service.
There are also informal diplomatic methods of cross-border service available depending on the countries involved.
The inability to prove effective service of the foreign proceedings on the judgment creditor may pose a challenge to registering and enforcing a foreign judgment in Australian Courts.
Some additional considerations relevant to the registration and enforcement of foreign judgments in Australian Courts include:
1. Quantum - If the creditor sues in Australia for a liquidated debt relying on the foreign judgment then the amount of the judgment would determine where the Australian claim is filed (i.e. monetary jurisdictional limits in the District and Supreme Courts of Australia apply). Otherwise, consideration must be given to the appropriate Australian forum if the foreign judgment creditor is seeking to commence fresh proceedings in Australia for the original cause of action;
2. The Federal Court of Australia has limited jurisdiction to enforce foreign judgments under the Act (for example, if the judgment is not a money judgment). Rather, most foreign judgments must be registered by the Supreme Court of a state or territory according to s. 6(2)(c) of the Act;
3. In the case of common law applications, the judgment creditor has 12 years from the date of the foreign judgment to register and enforce it in Australia (s.17(2) of the Limitation Act 1969 (NSW) (unlike the six-year limitation period prescribed by the Act).
Recovery following enforcement in Australia
After the Australian Court registers a foreign judgment, the following enforcement mechanisms become available to the judgment creditor to execute the judgment against Australian assets:
1. Property seizures
2. Garnishee orders
3. Charging orders
4. Freezing orders and orders for payment of monies into Court
5. Liquidation / winding up or bankruptcy
6. Committal of judgment debtors
7. Sequestration of the debtor's property.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.