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Judicial systems adopt different approaches to the enforcement of foreign judgments and, to varying degrees, allow defendants further opportunities to delay claimants achieving the redress they thought they had obtained in the originating jurisdiction.
As the world economy becomes increasingly globalised, any attempt to enable better collaborative consistency is welcome, although previous efforts in this area have had mixed results. What are the recent steps taken in this area and will they have the intended impact?
The Standing International Forum of Commercial Courts (SIFoCC) was established in May 2017 in recognition of the increase of cross border disputes as international trade continues to grow. The English Commercial Court played an integral role in the creation of the SIFoCC, which now comprises courts from a diverse range of 37 different legal jurisdictions spanning 5 continents.
SIFoCC was created for three key reasons. First, to better serve users of civil courts across the world by those courts working together. Second, because judiciaries can make a more positive impact on the rule of law together than they can individually. Third, in order to support developing nations with attracting investment by encouraging and enabling more efficient ways of resolving commercial disputes.
Representatives of SIFoCC who come from the senior judiciary in the member jurisdictions, meet periodically to discuss issues, themes and best practice. There is also a programme where judges can sit alongside judges in another jurisdiction in an observational capacity.
In June 2019, SIFoCC published its first joint document, a Multilateral Memorandum on Enforcement of Commercial Judgments for Money (the Memorandum). The Memorandum summarises of the procedures for enforcing foreign commercial money judgments in each member jurisdiction.
Whilst a non-binding document with no legal effect, it is nevertheless a useful reference point for legal practioners and claimants alike. As a symbol, it serves to show that courts are looking to work co-operatively and should help improve public understanding of enforcement procedures between states.
We consider that the Memorandum is a positive step and it will be interesting to see what further output the SIFoCC's continued work will bring. We also expect to see a rise in member jurisdictions as the work of the SIFoCC becomes more widely known.
The Hague Conference on Private International Law (HCCH) is a long-standing intergovernmental organisation in the field of private international law. Since 1955, the HCCH has developed 38 international conventions and protocols on a diverse range of issues. These are open for adoption or ratification by any state, whether members of the HCCH (currently 82 states plus the EU as a Regional Economic Integration Organisation) or non-members.
On 2 July 2019, the HCCH published the Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (the HCCH Convention). It seeks to promote cross-border judicial co-operation by providing for greater consistency and certainty in enforcing foreign judgments in qualifying matters to thereby reduce time and costs.
Concentrating on civil and commercial judgments, notable (and regrettable) exceptions to the HCCH Convention are judgments relating to intellectual property and insolvency matters, and arbitral awards. It is not, however, restricted to purely money judgments.
A variety of further criteria for falling within scope of the HCCH Convention apply, bringing some structure and formality to its application. In addition, there are grounds for refusal of recognition and enforcement by a "requested state" (that is the jurisdiction in which enforcement is sought) for example where the underlying claim was not served on the judgment debtor/defendant in that requested state in accordance with its local laws on service.
Providing the judgment is in scope and none of the exceptions or bases for refusal apply, the judgment will be recognised and enforcement can proceed in the relevant requested state's jurisdiction, without any further assessment of the merits of the judgment.
Frustratingly, the HCCH Convention stops short of setting out a standardised procedure for recognition and enforceability, instead leaving it to each individual state to determine this, with the proviso that states must act "expeditiously".
At the time of writing, the only signatory to the HCCH Convention is Uruguay. The hope is that as many states will ratify the HCCH Convention as possible to give it the widest effect, but therein lies the problem encountered with past attempts to harmonise cross border enforcement.
The 1971 Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters only attracted 5 ratifying states, whereas the 2005 Convention on Choice of Court Agreements (which seeks to aid recognition of judgments given by the parties' contractually chosen court) only came into force ten years later in 2015 following the EU becoming the second contracting party; it still only has 3 other states in addition to the EU (the UK will ratify if and when Brexit takes place).
The HCCH Convention is undoubtedly a step in the right direction, but it will need a far better uptake than previous HCCH conventions if it is to fulfil its purpose and satisfy the clear need that exists.
Of course, resolving disputes through the courts is not the only option and there are a number of alternative dispute resolution methods available to parties. Mediation as a form of ADR is well established in jurisdictions like the UK and USA and is gaining traction in many other countries.
On 7 August 2019, the United Nations opened the Singapore Convention on Mediation (the Mediation Convention) for signature. The Mediation Convention seeks to improve the credibility and use of mediation as an effective dispute resolution tool for multi-jurisdictional disputes, principally by setting out agreed standards for the form and subsequent enforcement of settlement agreements.
Similar to the HCCH Convention, the procedure for the recognition and enforceability of a qualifying settlement agreement is left to the state in which enforcement is sought. This will no doubt lead to differing treatments between countries, which could undermine the intention of providing certainty to the parties to a dispute.
As at the time of writing, 46 member states had signed the Mediation Convention, including the USA, China and India, although it will not come into force until at least three states have ratified it. The EU, including the UK, has not yet signed the Mediation Convention, although in a post Brexit landscape we consider there would be merit in the UK doing so, not least to promote international trade.
For more information contact Nick Curling, Legal Director (email@example.com) or Jack Hargreaves, Solicitor (firstname.lastname@example.org) in TLT's financial services disputes and investigations team.
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at August 2019. Specific advice should be sought for specific cases. For more information see our terms and conditions.
29 August 2019
by Nick Curling