Strategic Technologies PTE Ltd v Procurement Bureau of the Republic of China Ministry of National Defence

At common law the means of enforcing the judgment of a foreign court is by an action on the judgment. The theoretical basis for this was explained by Lord Collins of Mapesbury in Rubin v Eurofinance SA [2012] UKSC 46, [2013] 1 AC 236 at [9]:

“The theoretical basis for the enforcement of foreign judgments at common law is that they are enforced on the basis of a principle that where a court of competent jurisdiction has adjudicated a certain sum to be due from one person to another, a legal obligation arises to pay that sum, on which an action of debt to enforce the judgment may be maintained: Williams v

Jones (1845) 13 M & W 628, 633 per Parke B; Godard v Gray (1870) LR 6 QB 139, 147, per Blackburn J; Adams v Cape Industriesplc [1990] Ch 433, 513; Owens Bank Ltd v Bracco [1992] 2 AC 443, 484, per Lord Bridge of Harwich. As Blackburn J said in Godard v Gray, this was based on the mode of pleading an action on a foreign judgment in debt, and not merely as evidence of the obligation to pay the underlying liability: LR 6 QB 139, 150. …”

However, as Lord Collins went on to say, this is a theoretical and historical basis for the enforcement of foreign judgments at common law, which does not apply to enforcement under statute:

“… But this is a purely theoretical and historical basis for the enforcement of foreign judgments at common law. It does not apply to enforcement under statute, and makes no practical difference to the analysis, nor, in my judgment, to the issues on these appeals.”

Nevertheless, the common law action on a judgment remains important. As we have seen, it was not abolished by the 1920 Act and it remains the only means of enforcing a judgment given by a court in a state (such as the United States of America) to which no reciprocal statutory arrangements apply.

One significant strand running through Mr Onslow’s submissions was that enforcement of a judgment on a judgment is not possible at common law. For this purpose he cited Nouvion v Freeman (1889) 15 App Cas 1, albeit recognising that this case does not actually decide the point. The first answer which I would give to this submission is that, in truth, the common law has never had to grapple with the question whether such a judgment can be enforced and the reasoning in Nouvion v Freeman does not indicate what answer to that question it would have given. The issue in Nouvion v Freeman was whether a Spanish “remate” judgment could be enforced by action at common law when that judgment was essentially provisional, as it was open to the losing party to take “plenary” proceedings in which the merits of the issue would be reconsidered. The House of Lords held that it could not be enforced because such a judgment was not “final and conclusive”. Lord Herschell explained what is meant by saying that the foreign judgment must be “final and conclusive” in these terms (emphasis added):

“My Lords, I think that in order to establish that such a judgment has been pronounced it must be shewn that in the Court by which it was pronounced it conclusively, finally, and for ever established the existence of the debt of which it is thought to be made conclusive evidence in this country, so as to make it res judicata between the parties. If it is not conclusive in the same Court which pronounced it, so that notwithstanding such a judgment the existence of the debt may between the same parties be afterwards contested in that Court, and upon proper proceedings being taken and such contest being adjudicated upon, it may be declared that there existed no obligation to pay the debt at all, then I do not think that a judgment which is of that character can be regarded as finally and conclusively evidencing the debt, and so entitling the person who has obtained the judgment to claim a decree from our Courts for the payment of the debt.

The principle upon which I think our enforcement of foreign judgments must proceed is this: that in a Court of competent jurisdiction, where according to its established procedure the merits of the case were open, at all events, to the parties, however much they may have failed to take advantage of them, or may have waived any of their rights, a final adjudication has been given that a debt or obligation exists which cannot thereafter in that Court be disputed, and can only be questioned in an appeal to a higher tribunal. In such a case it may well be said that giving credit to the Court of another country we are prepared to take the fact that such adjudication has been made as establishing the existence of the debt or obligation. But where, as in the present case, the adjudication is considered with the non-existence of the debt or obligation which it is sought to enforce, and it may thereafter be declared by the tribunal which pronounced it that there is no obligation and no debt, it appears to me that the very foundation upon which the Courts of this country would proceed in enforcing a foreign judgment altogether fails.”

Mr Onslow relied on the words which I have emphasised as showing that a judgment is only enforceable at common law if it is given by a court in which “the whole merits of the case were open” which, he said, is not the position in an “intermediate” court such as the Cayman Islands court in this case. But it is clear from the passage as a whole that Lord Herschell was simply not addressing that issue. Nouvion v Freeman decides no more than that a judgment which can be set aside by further proceedings in the court which pronounced it, in which the existence of an obligation will be considered afresh, does not satisfy the common law requirement that in order to create an enforceable obligation a foreign judgment must be final and conclusive.

In my judgment it is neither necessary nor productive to decide what answer the common law would give to the question whether a judgment on a judgment can be enforced by action if that question were now to arise. That is because, although they restate much of the common law position, neither the 1920 nor the 1933 Act purports

Support for that approach can be found in the recent Privy Council case of Yearwood v Yearwood [2020] UKPC 26. The issue was whether a financial remedy order in matrimonial proceedings made by the English court could be registered in Antigua and Barbuda under the Reciprocal Enforcement of Judgments Act which was for relevant purposes in the same terms as the 1920 Act. One of the defendant’s arguments, relying on Nouvion v Freeman, was that the financial remedy order was not registrable as a judgment because it was not “final”. That was because it provided for adjustments to be made if the husband failed to comply. The Privy Council did not find that a helpful approach. Lady Black said:

“18.

The Board agrees that each of the two orders that the wife sought to register for enforcement constitutes a ‘judgment’ as defined in section 2(1). It does not consider that it can derive much assistance, in determining what was intended to come within the definition of the term ‘judgment’ in the Act, from older common law cases, such as Nouvion v Freeman. This is particularly so when the order with which the Board is concerned is an order made in proceedings brought under the Matrimonial Causes Act 1973, which sets up a specialised statutory scheme for the making of orders regulating family finances on the breakdown of a marriage. The Board therefore focuses on the words of the definition in section 2(1). As there provided, what is required is that there is a judgment or order in civil proceedings whereby a sum of money is made payable.”

While this reasoning depends partly on the nature of matrimonial proceedings, it demonstrates also that when deciding whether registration is permitted under the equivalent of the 1920 Act, the principal focus must be upon the Act itself.

It is, however, appropriate to approach the terms of the Act against the background that the present issue had never arisen at common law. It seems unlikely, therefore, that Parliament would have had the possibility of enforcement of a judgment on a judgment in mind.

As Mr Onslow acknowledged, and as the judge held, the Cayman judgment is within the literal definition of the term “judgment” in section 12 of the 1920 Act. It is a judgment given in civil proceedings whereby a sum of money is made payable. Its terms simply order that the defendant (the MND) must pay the plaintiff (ST) the sums adjudged due by way of principal, interest and costs. In that respect it is unlike an order (including an order for registration under the 1920 or 1933 Acts) which says no more than that the foreign judgment can be registered and enforced in the registering state.

Further, the term “original court” is defined to mean “the court by which the judgment was given”, which must refer to the judgment which it is sought to enforce by registration, that is to say (in this case) the Cayman judgment. On a literal approach, therefore, the “original court” in the present case was the Cayman Islands court. It is therefore possible to tick off the requirements set out in section 9(2): the Cayman Islands court had jurisdiction to which the MND submitted; the MND was duly served; the Cayman judgment was not obtained by fraud; no appeal from it was pending; and the Cayman judgment was in respect of a cause of action (i.e. the obligation created by the Singapore judgment) which was not contrary to English public policy.

However, the real question, as it seems to me, is whether this literal approach to the meaning of the Act is correct. For the reasons which follow, which are essentially those given by Mr Onslow, I do not think that it is. I consider that greater weight must be given to the purpose and scheme of the legislation.

First, the fundamental principle on which the 1920 Act is based is one of reciprocity. Judgments of foreign courts will only be recognised in the United Kingdom if reciprocal provisions have been made by the legislature of the Commonwealth state in which the judgment was given. That is clear from the terms of the Act itself and is underlined by the Sumner Committee Report which led to its passing. That Report ruled out the idea of simply making a judgment obtained in any part of what was then the British Empire enforceable throughout the Empire and instead proposed a scheme which included what became the safeguards set out in section 9(2). It shows also that although the 1920 Act was to be limited to the Empire, it was seen as a first step towards the making of reciprocal arrangements with foreign countries generally. The essential principle, therefore, was not, as it might have been, one of “mutual trust” between different parts of the Empire, but a principle of reciprocity with safeguards.

While there are such reciprocal arrangements between the United Kingdom and the Cayman Islands (and, as it happens, but irrelevantly to the issue of principle, between the United Kingdom and Singapore), to interpret the Act as permitting registration of a judgment on a judgment would unbalance this reciprocity. It would mean that a judgment given in a state with which no such arrangements existed and which was not even in the Commonwealth (for example, the United States) could in effect be registered for enforcement here by the expedient of an action to enforce that judgment in an intermediate state to which the 1920 Act does apply, an expedient sometimes described somewhat pejoratively as “judgment laundering”. It would not, in my judgment, be a sufficient answer to this possibility to say that such registration might if necessary be refused as a matter of discretion. Parliament cannot have intended the discretion in section 9(1) to deal with that situation. If it had done so, it would have included an equivalent discretion in the 1933 Act which was also, and even more obviously in view of its title, based on reciprocity, or would at least have addressed the issue in some other way. But it did not do so. Nor would it be an answer to say that the defendant need not submit to the jurisdiction of the intermediate court. The defendant might have no choice about that, for example if it had a presence in the state concerned. Moreover, at the time when the 1920 Act was enacted, the statutory protection against being held to have submitted to a foreign jurisdiction contained in section 33 of the Civil Jurisdiction and Judgment Act 1982 did not exist.

Essentially this same issue arose in Owen v Rocketinfo Inc (2008) 305 DLR (4^th) 370, a case before the British Columbia Court of Appeal. The claimant obtained a default judgment in Nevada which he then entered as a “sister state” judgment in California. He then commenced proceedings in British Columbia seeking registration of the California judgment in accordance with legislation which appears to have been similar in material respects to the 1920 Act. In particular, the definitions of “judgment” and “original court” were materially the same. Reciprocal arrangements for the enforcement of judgements existed between British Columbia and California, but not between British Columbia and Nevada. The Court of Appeal held that the California judgment could not be registered for three reasons. The first concerned the nature of the California judgment. It was not a judgment which itself made money payable, but merely made the Nevada judgment enforceable in California, and therefore was not within the statutory definition of “judgment”. The second reason was that there were specific indications in the British Columbia legislation that it did not apply to the registration in an intermediate state of a judgment originally given in a third state. It is the third reason, however, which is presently of interest. This was that to allow the registration of the Nevada judgment would be contrary to the principle of reciprocity. Giving the judgment of the court Tysoe JA said:

“21.

My interpretation of the term ‘judgment’ is consistent with the purpose of the legislation as contained in sections 29(1) and 37(1). To allow the appellant’s judgment to be registered in British Columbia would have the effect of permitting registration of a judgment granted by a court of a nonreciprocating jurisdiction, contrary to the intent of sections 29(1) and 37(1). In my view, the Legislature did not intend to provide for registration in British Columbia of a judgment granted by a court of another jurisdiction by an indirect method it is not permitted to be done directly. Otherwise, when the Lieutenant Governor in Council declared a state to be a reciprocating state, it would have the effect of declaring all of the jurisdictions that are reciprocal to that jurisdiction to also be states reciprocal to British Columbia for the purpose of registering judgements. In the case of declaring California to be a reciprocating state, the Lieutenant Governor in Council would effectively be declaring all other states of the United States of America to be reciprocating states because California permits the entry of sister state judgements issued by a court of any of the states of the United States.”

I find this reasoning compelling. It applies equally to the 1920 Act.

Second, what I have called the safeguards included in section 9(2) really only make sense if they refer to the proceedings in the court which gave judgment on the underlying dispute. This confirms that the Act contemplates only two stages, the proceedings in the court leading to a judgment on the merits of the underlying dispute and the proceedings in England for registration of that judgment, and not three stages also involving an intermediate court. I would accept that, literally, it is possible to interpret “the original court” in section 9(2) as referring to an intermediate court whose judgment it is sought to register, so that (in the present case) the question

It is fundamental to the operation of the Act that the English court should be able to scrutinise the proceedings in the court which gave judgment on the underlying dispute in order to ensure that the conditions for registration are satisfied. This appears most clearly, perhaps, from paragraph (f) of section 9(2), which provides that no judgment shall be registered if “the judgment was in respect of a cause of action which for reasons of public policy or for some other similar reason could not have been entertained by the registering court”. This is plainly directed to the underlying cause of action (here, the cause of action in Singapore) and not the distinct but somewhat theoretical cause of action (sued on in the Cayman Islands) to enforce the obligation created by the judgment of the Singapore court. To interpret paragraph (f) as referring to the cause of action in an intermediate court would accord greater substance than is warranted to what Lord Collins described in Rubin v Eurofinance SA as the “theoretical and historical basis for the enforcement of foreign judgments at common law”.

Once again, it is no answer to say that when registration of the judgment of an intermediate court is sought, the application of the section 9(2) safeguards to the court which gave judgment on the underlying cause of action can be dealt with as a matter of discretion under section 9(1). If that had been Parliament’s intention, it would have included a discretion to deal with the equivalent safeguards in the 1933 Act.

For these reasons it is appropriate, in my judgment, to interpret the 1920 Act as permitting registration of a judgment given by a court which adjudicated on the merits of the underlying claim, but not as extending to permit registration of a judgment on a judgment.

As I have indicated, this conclusion accords with the consensus among those commentators who have considered the issue that it should not be possible to register a judgment on a judgment under the 1920 or 1933 Acts or their foreign equivalents.

Dicey, Morris & Collins (15^th Edition, 2018) gives strong support to the MND’s position. It suggests at paragraph 14-121 that English law will not treat a judgment on a judgment as final and conclusive on the merits. That is not quite the same as saying that it cannot be registered under the 1920 Act, but in practice it amounts to much the same thing. Three reasons are suggested:

“It is unlikely, however, that ‘judgment’ in this sense extends to a decision of a foreign court that the judgment of the court of a third country is entitled to be enforced under the law of the foreign country, even where the proceedings in the foreign court were contested by parties who submitted to its jurisdiction in relation to this issue. The civil law principle that exequatur sur exequatur ne vaut is sometimes used to help explain why a judgment from the third state is not converted into an enforceable judgment by virtue of its recognition or endorsement by another court. Though no English case expressly so holds, the principle is sound for at least three reasons: the effect of the foreign proceedings will often only be to declare the third country judgment to be enforceable or executable within the territory of the foreign court, an order which by its very terms can have no effect in England; the foreign judgment will not usually be on the merits of the claim; and because of the confusion liable to result if both the judgment of the third country and the foreign (enforcement) judgment were to be separately enforceable in England”.

The first of these reasons does not apply in this case, where the Cayman Islands judgment is not limited to holding that the Singapore judgment is enforceable in the Cayman Islands. The second reason does apply, assuming (as I consider to be likely) that what is meant by “the merits of the claim” is the merits of the underlying claim as distinct from the merits of the cause of action to enforce the obligation created by the Singapore judgment. The third point is capable of arising, however, in any case where (for example) interest runs either before or after judgment at different rates in the initial and the intermediate courts and where different costs awards are made in the two jurisdictions.

Briggs, Civil Jurisdiction and Judgments (6^th Edition, 2015) is to the same effect, in particular at paragraphs 7.66 and 7.86. So too are Patchett, Recognition of Commercial Judgments and Awards in the Commonwealth (1984) at paragraph 3.12 and an article by Professor Smart, Conflict of Laws: Enforcing a judgment on a judgment? (2007) 81 ALJ 349, commenting on obiter dicta in the first instance decision of a Hong Kong court that an English judgment registered in Singapore could be registered in Hong Kong despite the absence of reciprocal registration arrangements between the United Kingdom and Hong Kong after 1997 (see Morgan Stanley & Co International Ltd v Pilot Investments Ltd [2006] 4 HKC 93). The dicta in Morgan Stanley were to the effect that because the Hong Kong legislation was similar to the unamended 1933 Act, and because the 1933 Act was amended in 1982 to make clear that there could be no registration of a judgment on a judgment, therefore such registration must have been possible before the 1982 amendment. With respect, however, this does not follow.

For completeness I should mention three other matters which featured in the parties’ submissions but which, in the end, have provided no real guidance.

One is that Mr Onslow submitted that if the 1920 Act permits registration of a judgment on a judgment, it is an outlier when compared to the regimes existing at common law, under the 1933 Act (at any rate since the 1982 amendment) and under the Brussels regime (for which he cited [20] to [23] of the opinion of Advocate General Lenz in Case C-129/92 Owens Bank Ltd v Bracco [1994] QB 509), none of which permits enforcement of such a judgment. That may be so, although as I have already explained, the position at common law has never been decided. In any event, however, even if it is correct, the submission sheds no real light on the true meaning of the 1920 Act.

Next, while it is interesting that the 1933 Act was amended in 1982 to make clear that there could be no registration of a judgment on a judgment and that no equivalent amendment was made to the 1920 Act, I do not see that this sheds light on what Parliament intended when passing the 1920 Act. The amendment of the 1933 Act is at least consistent with a desire to clarify what the position was already thought to be and does not necessarily represent a change. It is not at all clear why the 1920 Act was not amended at the same time and it is at least possible that this was simply overlooked. In any event the absence of a clarifying amendment in 1982 does not tell us much or anything about Parliament’s intention in 1920.

Finally, Mr Reza had a submission that the 2014 Consent Order in the Cayman Islands constituted “a separate pathway” to upholding the judgment of Carr J. With respect, I found that submission hard to follow. The only relevance of the 2014 Consent Order is that it supports a submission that the MND submitted to the jurisdiction of the Cayman Islands court. But that, as I have explained, is the basis on which this appeal has proceeded. Mr Reza also made some submissions to the effect that the MND is a judgment debtor whose attempts to evade payment are lacking in merit. That may or may not be so, but cannot affect the issue of principle with which this appeal is concerned.

In my judgment the 1920 Act does not permit registration of a judgment given by a court in one state in an action to enforce a judgment given by a court in another state. I would therefore allow the appeal and set aside the order of Master Yoxall for the registration here of the Cayman judgment.

The appeal is allowed.

The Order of Master Yoxall dated 4 April 2016 is set aside.

Permission to appeal to the Supreme Court is refused.

The sum of £1,000,000 paid into Court by the Appellant on 13 March 2020 is to be paid out to the Appellant, together with such interest as has accrued; provided that in the event that the Respondent makes an application to the Supreme Court for permission to appeal by 21 December 2020 this sum shall not be paid out until after the Supreme Court has determined that application.

As to costs: