Unravelling It All: Challenging Judgments Tainted By Fraud

• Published date: 02 August 2023
• Law Firm: Gatehouse Chambers
• Author: Mr James Shaw

Final and conclusive judgments, meaning judgments of judicial bodies which bring litigation to an end and are not (or are no longer) subject to an appeal process, have a special place in this jurisdiction. The principle of finality demands that they be respected, complied with, and left undisturbed save in the most exceptional of circumstances. English law takes this attitude both to its domestic judgments, for obvious reasons, but also to foreign judgments, for less obvious (although by no means less valid) reasons.

Those seeking to undo a final and conclusive judgment of any competent court thus face an uphill task. This article looks at two related but distinct circumstances in which fraud litigators may find themselves doing just this. First, seeking to avoid enforcement or recognition of a foreign judgment procured by fraud; second, a fresh action to set aside a domestic judgment procured by fraud (or in both cases defending a judgment from such an attack).

Defeating a foreign judgment in England & Wales

The exercise in establishing fraud in foreign proceedings is a difficult and fact sensitive one. Practitioners defending the enforcement of a foreign judgment do not generally have the luxury¹ of gathering evidence, getting a client's ducks in a row, and carefully pleading out a fraud claim. In this context, the person alleging fraud is reactive; they are the defendant to proceedings and must act quickly to take instructions and find sufficient material supporting a client's allegation of fraud.

This is made all the more difficult if clients have not seen the proceedings coming or (worse) have seen them coming and chose to do nothing until service of the Claim Form.

So, how do you prevent enforcement on grounds of fraud? The key principles seem to be as follows:

1. 'Fraud' in this context can take a broad meaning. It is not confined to the limited number of causes of action generally regarded as 'fraud claims' in English law. It has been said it can extend to encompass "every variety of mala fides and mala praxis whereby one of the parties misleads and deceives the judicial tribunal": Jet Holdings Inc v Patel [1990] 1 Q.B. 335, 346. It also undoubtedly encompasses fraud and corruption by the foreign court itself, although it will be a rare case where this is successfully shown.
2. The fraud ground for resisting enforcement is a "carefully delineated exception and is not to be given an expansive application" (Gelley v Shepherd & Anor [2013] EWCA Civ 1172 at [47]) being an exception to the general rule that the English Court will not re-open the substantive merits of final and conclusive judgments entered by foreign courts of competent jurisdiction. Fraud defences are not to be run on light material or with anything other than a realistic view of the challenges they pose.
3. That being so, even where powerful considerations of comity arise, "it is questionable how compelling such considerations would be if the enforcing court considered it proven on the balance of probabilities that the foreign judgment had been obtained by fraud": GFH Capital Ltd v Haigh [2020] EWHC 1269 (Comm), per Henshaw J at [74].
4. The English Court will nevertheless take "a nuanced approach depending on the reliability of the foreign legal system the scope for challenge in the foreign court, and the type of fraud alleged..." (AK Investment CJSC v Kyrgyz Mobil Tel Ltd [2011] UKPC 7 per Lord Collins at [116], obiter).
5. In other words, where the foreign jurisdiction in question has a sophisticated legal order and reliable system for adjudicating on allegations of fraud...