Foreign Judgment Enforceable At Common Law Despite Legislative Change Making It Unenforceable In State Of Origin

• Published date: 03 October 2023
• Subject Matter: Litigation, Mediation & Arbitration, Trials & Appeals & Compensation
• Law Firm: Herbert Smith Freehills
• Author: Mr Chris Bushell and Maura McIntosh

The High Court has held that there is no common law rule preventing enforcement of a foreign judgment in England and Wales simply because it is not presently or fully enforceable in the relevant foreign jurisdiction. In the present case, that meant that Abu Dhabi judgments for amounts due under two guarantees remained enforceable in England despite a subsequent change in the law of the United Arab Emirates (UAE) which meant they could not be enforced there: Invest Bank PSC v El-Husseini [2023] EWHC 2302 (Comm).

This contrasts with the position under the Foreign Judgments (Reciprocal Enforcement) Act 1933 which enables judgments from certain countries (including for example Australia, Canada and India) to be enforced by registering the judgment in England. Under the express terms of the 1933 Act, a foreign judgment cannot be registered if it could not be enforced by execution in the country of origin.

A foreign money judgment is enforceable at common law not by registration but by suing on the judgment as a debt. The key requirement is that the foreign judgment must be final and conclusive in its jurisdiction of origin. In the court's view, a mere impediment to enforcement in that jurisdiction did not mean the judgment failed to be final and conclusive. It therefore remained enforceable at common law.

The judge noted, however, that if his conclusion on this issue were essential to the outcome of the case (which it was not, because of an alternative basis for the claim) he might have been persuaded to grant permission to appeal on it. This issue may therefore be ripe for consideration by a higher court.

Background

The claimant (the Bank) brought claims against the defendants under s.423 of the Insolvency Act 1986, which relates to transactions defrauding creditors. The court considered as a preliminary issue whether the Bank had standing to bring the challenge as a "victim" of the relevant transactions, and as part of that question whether it had an enforceable debt against the first Defendant (D1).

The underlying source of D1's alleged liability to the Bank was two personal guarantees which D1 gave in 2016 in respect of credit facilities the Bank granted to two UAE-registered companies. The Bank obtained final judgments against D1 in Abu Dhabi for amounts due under the guarantees, and some '19.6 million odd remained outstanding under those judgments by July 2021.

In January 2023 the Bank obtained a judgment against D1 in default of defence for the...