English High Court Highlights Pitfalls Of Enforcing US Judgments In England

The First Tuesday Update is our monthly take on current issues in commercial disputes, international arbitration, and judgment enforcement.

The Commercial Court has shone renewed light on the difficulties which arise when seeking to enforce in England a US judgment involving an award of multiple damages.

Many English law practitioners may consider instinctively that, whilst any foreign multiple damages award would not be enforceable in England for reasons of public policy, there is no obvious reason to prevent enforcement of any accompanying compensatory or ancillary awards, particularly if it is clear from the wording of the foreign judgment precisely which sum(s) comprise those compensatory or ancillary awards. The reality, however, is less simple.

The basis for this conclusion is found in the wide drafting of section 5 of the Protection of Trading Interests Act 1980 (PTIA), which provides that the English court shall not "entertain proceedings at common law for the recovery of any sum payable" under a judgment for multiple damages, being "a judgment for an amount arrived at by doubling, trebling or otherwise multiplying a sum assessed as compensation."

Indeed, there is a growing body of case law to support the proposition that, in fact, a foreign award of multiple damages will taint, and render equally unenforceable, any other awards which arise out of the cause of action pursuant to which the judgment creditor obtained its multiple damages award. This, perhaps unexpectedly, includes the purely compensatory award from which the multiple damages were calculated, even if that compensatory award is separately identifiable (see, for example, the case of SAS¹).

The precise scope of section 5 of the PTIA was recently considered by the Commercial Court in the long-running Motorola v. Hytera litigation. By way of background, Motorola previously secured a substantial judgment in the United States under the US Copyright Act and the Defend Trade Secrets Act (DTSA) and has been seeking since 2022 to enforce parts of that judgment in England. It is important to note that whilst multiple damages are awardable (and were awarded to Motorola) under the DTSA, no multiple damages are awardable under the US Copyright Act.

Various US statutes, including the Racketeer Influenced and Corrupt Organizations (RICO) Act², have been found previously to fall foul of this prohibition on the basis that they provide for an award of punitive damages calculated by doubling or trebling the underlying compensatory award.

At trial, Motorola sought the enforcement of a number of ancillary awards arising out of the US judgment relating to interest, attorneys' fees and costs. Those awards totalled approximately US$88 million. The interest award was calculated on the whole compensatory award made by the US court under both the US Copyright Act and the DTSA. Attorneys' fees were similarly awarded under both US statutes, whilst Motorola was awarded its costs as the "prevailing party" under a US rule of procedure.

Motorola argued for the enforcement of the ancillary awards on the basis that, in summary:

1. The punitive damages awarded under the DTSA were not multiple damages within the meaning of the PTIA. Whilst statutes such as RICO provide for the mandatory doubling or trebling of a compensatory award to calculate punitive damages, the DTSA was different in that it provided for discretionary punitive damages capped at double the amount of the compensatory award.
2. Previous case law, most notably the decision of Cockerill J in SAS, was wrong to conclude that section 5 of the PTIA would render unenforceable any compensatory or other awards in a foreign judgment including multiple damages.

Hytera disagreed and argued that section 5 of the PTIA did apply. In summary:

1. The DTSA award was one for multiple damages. It was immaterial that the DTSA imposed a cap rather than a mandatory doubling or trebling of the compensatory award. In fact, the US court arrived at the punitive damages figure by doubling the compensatory award.
2. Applying SAS, each of the awards for interest, attorneys' fees and costs arose out of a cause of action in respect of which multiple damages were awarded, e., the DTSA, and were therefore unenforceable.
3. It did not matter that, for example, attorneys' fees had also been awarded under the US Copyright Act, which did not fall foul of section 5 of the PTIA given the lack of a multiple damages award under that statute. A sizeable portion of the attorneys' fees and costs would be attributable to the DTSA claim and, in circumstances where the US court had made global awards, the court could not look behind those awards to determine what the US court may have awarded by reference, for example, to the US Copyright Act claim only.

In its judgment handed down on 14 November 2024, the Commercial Court, noting there was no previous decision dealing directly with the enforcement of ancillary orders, dismissed each of Motorola's claims, having found that their enforcement was prevented by the PTIA.³ In summary, the court concluded that:

1. The DTSA award was one for multiple damages. The US court had, as a matter of fact, doubled the compensatory award, which brought the DTSA cause of action within the scope of section 5 of the PTIA.
2. The application of section 5 of the PTIA is less clear in circumstances where, as could be possible under the DTSA for example, the US court had arrived at some other punitive damages figure, which was not strictly double the compensatory amount. In that case, the court would need to consider "(i) how and (ii) in what sum the foreign court calculated the additional element of damages in order to determine whether or not the court has, in the wording of section 5 [of the PTIA], otherwise multiplied the compensatory amount."
3. The case of SAS was correctly decided. Accordingly, and in light of the finding that the DTSA award was one for multiple damages under section 5 of the PTIA, the interest, attorneys' fees and costs were unenforceable.
4. The court could not apportion interest, attorneys' fees and costs as between the DTSA and US Copyright Act, meaning the awards were unenforceable in their entirety.

This case serves as a stark reminder for parties in US litigation to consider carefully the scope of their claims in circumstances where it is anticipated that England will feature heavily in any subsequent enforcement strategy (for example, because the defendant has significant assets in England.) Claimants should therefore consider structuring their US claims to avoid seeking multiple damages altogether, either by pursuing claims only under statutes which do not provide for multiple damages, or by explicitly asking the US court not to award multiple damages under statutes that do.

Further, when asking the US court to make ancillary orders arising out of a judgment based on multiple causes of action (and, particularly, where one cause of action awards multiple damages and another does not), claimants should consider asking the US court to make separate ancillary orders specific to each cause of action.

Footnotes

1 See SAS Institute Inc v World Programming Ltd [2018] EWHC 3452 (Comm).

2 Lewis v. Eliades [2003] EWCA Civ 1758.

3 Motorola Solutions, Inc. & Anr v. Hytera Communications Corporation Ltd. & Ors [2024] EWHC 2891 (Comm).

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