Enforcement of foreign judgments in England and Wales
A consequence of the UK leaving the EU is that it became substantially more difficult to enforce foreign judgements from courts in EU and EFTA in England and Wales proceedings. The UK now relies on two principal enforcement regimes – the Hague Convention (where it applies) or the Common Law Regime.
Brexit – Transition Period.
The UK-EU Withdrawal Agreement specified that the “transition period” for Brexit began on 31 January 2020 and ended at 11 pm on 31 December 2020. During the transition period, the enforcement of the EU and EFTA court judgments in England and Wales did not change.
Articles 67 and 69 of the Withdrawal Agreement and Regulation 92 of the Civil Jurisdiction and Judgments (Amendment) (EU Exit) Regulations 2019 (SI 2019/479) provided that a majority of EU law which included the Recast Brussels and Lugano Convention would continue to apply to legal proceedings which had been instituted prior to the end of the transition period. The rules applicable to EU judgments to which the Hague Convention applied, also continued to apply to the UK as it was bound by the Hague Convention during the transitional period. The UK notified its intention to participate in the Hague Convention in its own right following the end of the transitional period.
Post- Brexit Position
The UK left the European Union on 31 December 2020. On this day, known as ‘Exit Day’ the UK ceased to be an EU member state.
Following Exit Day, the enforcement of judgments under the Brussels Regulations and the Lugano Convention is no longer available in civil and commercial matters when one of the parties is domiciled in the UK. The UK has taken steps to address this issue including applying to join the Lugano Convention in its own right, but its accession requires the agreement of all the signatories to the Lugano Convention. The EU Commission objected to the UK joining the Lugano Convention because it considers that the Lugano Convention should apply only to states with regulatory alignment with the EU.
Accordingly, there are now two enforcement regimes which govern the recognition and enforcement of foreign proceedings in England and Wales instituted after 31 December 2020. These are the Hague Convention on Choice of Court Agreements and the Common Law Regime.
The Hague Convention on Choice of Court Agreements
The Hague Convention has applied to all EU member states except Denmark since 1 October 2015. It has applied, and was entered into force, in Denmark on 1 September 2018. At present, the only non-EU states that have signed and ratified the Hague Choice of Court Convention are Montenegro, Mexico and Singapore. The US, China, Ukraine and North Macedonia have signed but not yet ratified the Hague Convention.
The Hague Convention recognises the choice of court agreements which designate a contracting state’s court as having authority. The Hague Convention also requires the recognition and enforcement of judgments made in those courts by contracting states.
The Hague Convention applies only to exclusive choice of court agreements and the legislation continues to have effect in the UK notwithstanding the UK’s exit from the EU (section 3D, Civil Jurisdiction and Judgments Act 1982 as introduced by the Private International Law (Implementation of Agreements) Act 2020).
For judgments to be enforceable under the Hague Convention in England and Wales the foreign judgment must still be enforceable in the jurisdiction to which it is obtained (Article 8 (3) the Hague Convention on Choice of Court Agreements 2005). There is not a defined limitation period for the enforcement of foreign judgments under the Hague Convention but Article 8 (4) provides English and Welsh courts may postpone or refuse recognition and enforcement if the foreign judgment is subject to appeal in the country of origin or the limitation for seeking an appeal has not expired. Further, section 4B of the Civil Jurisdiction and Judgments Act 1982 provides that a judgment to which the Hague Convention applies must be registered “without delay on completion of the formalities in Article 13 of the Hague Convention”.
The enforcement of judgments to which the Hague Convention applies is dependent on the judgment having been given by a court that exercised jurisdiction. The enforcement procedure is contained in Article 14 of the Hague Convention and governed by the Civil Procedure Rules 74.3 to 74.10 and Practice Direction 74A.
The Common Law Regime
The Common Law Regime applies to all other countries not mentioned in the above regimes and further covers judgments from the EU and EFTA states which are outside the scope of the European Regime or are given in proceedings instituted after 31 December 2020.
This regime is based on case law precedent and is not codified in a statute. As such, applications are approached on a case-by-case basis. Adams v Cape Industries plc (1990) Ch 433 is the leading case which summarises the key requirements for enforcement of judgments at common law.
The limitation period for enforcement of foreign judgments under the common law is governed by Section 24(1) of the Limitation Act 1980 which provides that any action for enforcement must be commenced within six years of the date on which the foreign judgment became enforceable. The Common Law Regime allows for the enforcement of monetary judgements only (i.e. a debt or definite sum of money) and judgements must be final and conclusive. Accordingly, other forms of judgments including provisional measures, injunctions, declaration judgments, default judgments and judgments made without notice (ex parte) awards are not enforceable under the common law regime.
The enforcement of foreign judgments in England and Wales under the Common Law Regime will only be permitted if the English and Welsh courts are satisfied that the foreign court has jurisdiction on a territorial or consensual basis according to the rules that English and Welsh law applies in such cases. Therefore, a foreign judgment will only be enforceable in England and Wales where the defendant:
- was present in the foreign country when the proceedings were commenced; or
- agreed to the relevant jurisdiction, voluntarily appeared in the proceedings, or otherwise submitted to the foreign jurisdiction.
There is no recognition of a foreign judgment under the Common Law Regime and therefore fresh proceedings must be issued in the High Court of England and Wales applying for the recognition and enforcement of a foreign judgment in England and Wales. The Claimant must attach to the proceedings the foreign judgment as evidence of the claim. A claimant can then apply for summary judgment of the claim (based on the foreign judgment) and, if successful, will then be able to enforce the claim in England and Wales. The procedures for the enforcement of foreign judgments are governed by part 74 of the Civil Procedure Rules.
The effect of Exit Day is that the enforcement of judgments from courts in EU and EFTA states given in proceedings instituted after Exit Day are now generally determined by the Hague Convention (where it applies) or the Common Law Regime. Different rules apply to the enforcement of UK judgments abroad, which we have not considered in this article.
It is in the interest of a party to seek legal advice to assess how best to protect themselves if they find their debtor(s) are located or have assets in the UK. Navigating the differing regimes can be challenging, but it is fundamentally important to identify how you can enforce the foreign judgement in England and Wales.
How can we help?
If you require advice in relation to the above, please contact Geldards LLP’s Commercial Dispute Resolution team.