Tag: Recognition

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The Prestige recognition tussle – ctd. On arbitration and state immunity.

A short update on the Prestige litigation. I reported earlier on the disclosure order in the recognition leg of the case. In that review I also listed the issues to be decided and the preliminary assessment under Title III Brussels Ia. That appeal is to be heard in December 2020 (see also 21 ff of current judgment). In The London Steam-Ship Owners’ Mutual Insurance Association Ltd v Spain (M/T “PRESTIGE”) [2020] EWHC 1582 (Comm) Henshaw J on 18 June held on yet another set of issues, related to arbitration and State Immunity.

He concluded after lengthy analysis to which it is best to refer in full, that Spain does not have immunity in respect of these proceedings; that the permission to serve the arbitration obligation our of jurisdiction, granted earlier to the Club should stand; and that the court should appoint an arbitrator.

I am pondering whether to add a State immunity chapter to the 3rd ed. of the Handbook – if I do, this case will certainly feature.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.1, Heading 2.2.11.2, Heading 2.2.16.

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Alexander bros v Alstom. A reminder of the relevance of EU law for New York Convention refusal of recognition of arbitral awards on ordre public grounds.

In Alexander Brothers Ltd (Hong Kong SAR) v Alstom Transport SA & Anor [2020] EWHC 1584 (Comm) Cockerill J discussed inter alia (at 177 ff) the impact of EU law on the ordre public assessment for potential refusal of recognition of an arbitral award under section 103 of the 1980 New York Convention.

CJEU authority are C-126/ 97 Eco Swiss (concerning EU competition law) and C-168/ 05 Claro (unfair terms in consumer contracts). At 183 Cockerill J does not suggest the CJEU authority should no longer stand. Indeed she suggests obiter that there is no reason to suggest the CJEU’s line of reasoning should not apply to wider issues than just competition law or consumer law. However, the burden of proof of showing that particular parts of EU law are of a nature to justify the ordre public exception, lies upon the party objecting to recognition. In casu Alstom have fallen short of that duty. Yes, there is scant reference to anti-corruption in the private sector; and yes there is EU money laundering law. However (at 186) ‘the EU has, in general terms, set its face against corruption. But aside from the area of money laundering it has not put in place mandatory laws or rules. In the context of international corruption of the kind in focus here it has left it to the individual member states to adopt what measures seem good to them. There is, in short, no applicable mandatory rule or public policy.’

An interesting discussion.

Geert.

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On the benefits of summary judgment in enforcement. DVB Bank v Vega Marine.

Henshaw J in  DVB Bank SE v Vega Marine Ltd & Ors [2020] EWHC 1494 (Comm) (on substance a straightforward case on sums loaned) made some important observations on the benefits of summary judgment as opposed to a default judgment in the context of recognition and enforcement.

This a few days before publication of the thesis of Vincent Richard on the very topic.

There is no doubt the English courts have jurisdiction per a valid choice of court clause under A25 BIa. Claimants are pressing for summary judgment, citing

  • Brexit. The Withdrawal Agreement extends EU law in civil procedure to proceedings issued before the end of the transition period, however claimants express anxiety over the speed of Greek enforcement proceedings given courts’ shutdown in the Covid19 era. At 61: ‘Greek counsel has advised the Claimants that the Greek courts shut down earlier this year for an indefinite period, so that obtaining an enforcement order in Greece would be likely to be delayed;’.
  • More crucially however, Henshaw J notes at 61, correctly, that even under BIa, default judgments are more vulnerable: ‘there is a risk that an enforcement order based on a simple default judgment, even if obtained before 31 December 2020, might be set aside on public policy grounds. Greek counsel advised that the Greek courts would be much less likely to refuse to recognise and enforce a reasoned English judgment following a hearing on the merits.’

Summary judgment was given against the defendants.

Geert.

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GFH Capital v Haigh. Enforcement of DIFC judgment puts spotlight on international commercial courts.

DIFC Courts, the Dubai International Financial Centre’s Courts, is one of the new generation of international commercial courts. Its rulings piggyback unto recognition and enforcement treaties which the UAE concludes with third countries (India being a recent example).

In GFH Capital Ltd v Haigh & Ors [2020] EWHC 1269 (Comm) Henshaw J first of all notes that there is no such treaty between the UK and the UAE hence he considers recognition of the July 2018 DIFC judgment by Sir Jeremy Cooke under common law principles. Helpfully, these principles have been summarised in a January 2013 Memorandum of Guidance as to Enforcement between the DIFC Courts and the Commercial Court, Queen’s Bench Division, England and Wales. Under discussion in the case is mostly the condition that the foreign court be a court of competent jurisdiction; that the foreign judgment be not obtained fraudulently; and that its recognition be not incompatible with English ordre public.

The judgment is an extensive treatment of the relevant principles and therefore suited to comparative materials.

Geert.

 

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The Prestige recognition tussle puts the spotlights on (now) Article 45 Brussels Ia, and on the relation between competing arbitral awards and judgments in ordinary.

Spain v The London Steam-Ship Owners’ Mutual Insurance Association Ltd [2020] EWHC 142 (Comm) reports on the CMR (case management conference) re what promises to be interesting litigation. A Spanish judgment concerning liability for the pollution damage caused when the vessel PRESTIGE broke in two off the coast of Spain in 2002, needs to be enforced in the UK. Brussels I’s (Regulation 44/2001) contestation of recognition is involved: particularly Articles 34(1) and (3).

At 2 Teare J summarises the story so far:

The parties have been in dispute about liability for many years. Criminal proceedings were brought against the master of PRESTIGE in Spain in 2002 and, after the conclusion of the investigative stage of the proceedings, civil proceedings were brought against the master, the Owners of PRESTIGE and the Club, as liability insurer of the Owners, in 2010. (I am told that in addition to Spain there are some 264 other claimants.) In 2012 the Club commenced arbitration proceedings in London against Spain and in February 2013 obtained an award from the sole arbitrator Mr. Alistair Schaff QC which declared that, as a result of the “pay to be paid” clause in the policy the Club had no liability to Spain. In this court Spain challenged the jurisdiction of the arbitrator but the court (Hamblen J. as he then was) held in 2013 that the arbitrator had jurisdiction. Later that year the court in La Coruna dismissed the civil claim against the master, Owners and Club but convicted the master of the crime of disobeying orders by the Spanish authorities to accept a tow of the vessel. In 2015 the English Court of Appeal upheld the decision of Hamblen J. In 2016 the Spanish Supreme Court reversed the decision of the court in La Coruna and held that the master had been seriously negligent and that the Owners and Club were liable for the damage caused. In execution proceedings in Spain, the court in La Coruna declared the Spanish State entitled to enforce a claim up to approximately €2.355 billion against the defendants in the Spanish proceedings and declared the master, Owners and the Club liable in respect of the claims, although subject (in the case of the Club) to a global limit of liability in the sum of approximately €855 million.’

Thus the Club has an arbitration award in its favour but Spain has a judgment of the Spanish Supreme Court in its favour. Spain obtained an order from Master Cook pursuant to which the Spanish judgment was registered so that it could be enforced here against the Club. The Club seeks to appeal from that order. One of the grounds on which it seeks to appeal is that the Spanish judgment is irreconcilable with the judgment of Hamblen J. and the Court of Appeal (A34(3) BI). Another ground is that recognition of England is contrary to the public policy of England (A34(1)).

This particular CMS concerns disclosure requirements: the Club’s seeking of disclosure from Spain is resisted by the latter on grounds that is clashes with BI’s intention of swift recognition.

One of the issues on which disclosure is sought, is Spain’s position under the insurance title of BI: “Are the English Judgments not qualifying judgments within article 34(3) because the English Judgments conflict with Section 3 of Chapter II of the Brussels 1 Regulation ? In particular …(b) Is the respondent [Spain] entitled to rely on the exclusive rules for jurisdiction in Section 3 of Chapter II. In particular: (i) Is the respondent [Spain] a qualifying party that is entitled to the protective rules in Section 3 ?” Reference is made to Aspen Underwiting: the Club states that it is necessary for Spain to show that it is a member of the class protected by Section 3, which (per Aspen Underwriting, GAVC] excludes “professionals in the insurance sector or entities regularly involved in the commercial or otherwise professional settlement of insurance related claims who voluntarily assumed the realisation of the claim as part of its commercial or otherwise professional activity”. Aspen Underwriting in the meantime (Teare J’s judgment was issued in January; it has been in the blog queue) has been varied by the Supreme Court.

It will therefore be necessary, submitted counsel for the Club, for Spain to disclose documents which show “the class of business” conducted by it. If it is a member of the relevant class it can rely on section 3. If it is not, it cannot.

The second class of document of which disclosure is sought is very different and relates to the public policy defence. Did the Spanish Courts refuse to allow the master to participate in an underwater investigation of the strength of the vessel’s hull and refuse to disclose the results of the investigation (so that there was a breach of the master’s right to equality of arms and to be able to prepare a defence) or were the results disclosed to the master in sufficient time to allow him to prepare his defence. The Club therefore seeks disclosure of the documents relating to that question held by Spain. Here Teare J at 21 assumes that Spain’s evidence can be expected to support its case and to rely upon the documents which show when the results were disclosed to the master and in what terms. If the evidence does not deal with this issue then Spain will be unable to advance its factual case. ‘I therefore consider it very likely that no disclosure under this head will be required. In the unlikely event that it is required a focused application can be made after Spain has provided its evidence.’

The Order eventually imposes a timetable for exchange of evidence (including expert reports) and later settlement of disclosure issues should they arise. Hearing in principle in December 2020.

This could turn out to be a most relevant case.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.1, Heading 2.2.11.2, Heading 2.2.16.

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Islandsbanki v Stanford. The finer mechanics of Lugano Convention recognition at work.

In Islandsbanki & Ors v Stanford [2020] EWCA Civ 480, upon appeal from Fancourt J in [2019] EWHC 1818 (Ch), Asplin LJ discussed whether purported execution of a foreign judgment registered in the High Court pursuant to the Lugano Convention, can be execution issued in respect of the judgment debt (for the purposes of section 268(1)(b) of the Insolvency Act 1986), if the execution occurred before the period for appealing the registration of the judgment has expired and, if not, whether the defect can be cured.

An unpaid Icelandic judgment debt from 2013 which together with interest, is now in excess of £1.5 million sterling equivalent. The judgment was given against Mr Stanford in the Reykjanes District Court in Iceland on 26 June 2013. A certificate was issued by the Icelandic court on 16 October 2013, pursuant to Articles 54 – 58 Lugano. IB applied to register the Icelandic judgment in England and Wales on 16 March 2016. A registration order was sealed on 23 March 2016 (the “Registration Order”).

Some of the issues in the Appeal (and before Fancourt J) concern purely English procedural rules however their effect is of course to facilitate, or obstruct, recognition and enforcement under the Lugano Convention. The confusion to a great degree results from the UK, despite Lugano’s direct effect, having implemented the Convention in the CPR rules anyway (at 24). The submission made by appellant (the Bank) before the Court is essentially that a narrow interpretation of the English CPR rules which would not allow remedying an error in the procedure, would run counter Lugano’s objective of facilitating recognition and enforcement (reference is made to the Pocar report and the recitals of Lugano itself).

Asplin LJ at 38 points to the language of Lugano itself: ‘during the time specified for an appeal pursuant to Article 43(5) against the declaration of enforceability and until any such appeal has been determined, no (emphasis in the original) measures of enforcement may be taken other than protective measures against the property of the party against whom enforcement is sought. The ordinary and natural meaning of those provisions is quite clear.’ She also at 37 points to the Convention’s objectives not being restricted to ease of enforcement: ‘the underlying policy of Articles 43(5) and 47(3) is that a fair and proportionate balance must be struck between the interests of the party which applies for a registration order having obtained a judgment in a foreign jurisdiction to which the Convention applies, and the defendant/debtor whose rights of appeal are prescribed by law and should not be undermined by allowing irreversible measures of enforcement.’

Conclusion, at 40: ‘It is for that reason that CPR 74.6(3) provides that a registration order must contain reference to the period in which an appeal against registration can be lodged and that no measures of enforcement can be taken before the end of that period and the reason why that prohibition was repeated in the Registration Order itself at paragraph 2. Accordingly, any attempt to remedy the premature issue and execution under the Writ of Control by means of an exercise of the discretion under CPR r3.10(b) or the use of CPR r3.1(2)(m) or 3.1(7) (or the inherent jurisdiction of the court, for that matter) would fundamentally undermine Article 47(3) and section 4A(3) in a way which is impermissible.’

at 62 ‘The defect in the execution in this case, if it can be called a defect, was fundamental….It was not a mere technicality or a formal defect which might be rectified pursuant to what is now Rule 12.64 of the Insolvency Rules 2016. It went to the heart of the execution process’.

Appeal dismissed following an interesting and clear application of both Lugano’s provisions and its spirit.

Geert.

 

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Declaration as to marital status: The High Court in MM v NA.

[2020] EWHC 93 (Fam) MM v NA is a great primer for family law conflict of laws.
Roberts J discussed formal validity (subject under English PIL to lex loci celebrationis, as is the case in many jurisdictions); ‘material” aka ‘essential’ validity aka capacity (in the common law subject to lex domiciliae: the domiciliary laws of the individual parties at the time of the marriage. Note that in the civil law this is often subject instead to lex patriae); finally: recognition, which here was complicated for Somaliland is not a State recognised by the UK.
Recognition was granted.
Geert.
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Lenkor Energy: Textbook application of the (common law of) recognition and assessment of ordre public. (Re: Dubai judgment).

Update 4 June 2020 decision upheld on appeal, [2020] EWHC 1432 (QB).

In [2020] EWHC 75 (QB) Lenkor Energy Trading v Irfan Iqbal Puri, Davison M rejected the ordre public arguments made by claimant against recognition of a money judgment of the Dubai First Instance Court.

Reflecting global understanding of ordre public, it is the judgment and not the underlying transaction upon which the judgment is based which must offend (here: English) public policy. That English law would or might have arrived at a different conclusion is not the point (Walker J in Omnium De Traitement Et De Valorisation v Hilmarton [1999] 2 Lloyd’s Rep 222).

The ordre public arguments made, were (1) illegality, (2) impermissible piercing of the corporate veil and (3) penalty.

Re (1), the argument is that the underlying transaction is illegal. Master Davison acknowledged there are circumstances where an English court might enquire into the underlying transactions which gave rise to the judgment. However such court must do so with extreme caution and in the case at issue, defendant’s familiarity with Dubai and its laws argued against much intervention by the English courts.

On (2), the veil issue, submission was that defendant was being made personally liable for the debts of IPC Dubai, which was the relevant party (as guarantor) to the Tripartite Agreement and the holder of the account upon which the cheques were drawn. The cheques had not been presented or had been presented out of time – or there was at least an issue about that. The combination of these matters was, it was suggested, to impose an exorbitant liability on Mr Puri for sums which he had not agreed to guarantee – in contravention of established principles of English law.

Here, too, Davison M emphasised defendant’s familiarity with Dubai law. The case against Mr Puri in Dubai was resolved according to the rules which the laws of Dubai apply to Dubai companies and to individuals who write cheques on Dubai accounts. Dubai law may be different than English law on this point, but not repugnantly so.

Finally on (3) the sums in particular the interest charged were suggested to be exorbitant hence a form of unenforceable punitive damages. However, 9% interest is only 1% higher than the judgment debt rate in England and only ¼% higher than the current rate under the Late Payment of Commercial Debts (Interest) Act 1998. (At 31) ‘In the light of this, to characterise the interest rate of 9% as amounting to a penalty is unrealistic.’

Geert.

 

 

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Agbara et al v Shell. Recognition /enforcement, ordre public and natural justice. Shell Nigeria ruling refused registration in the High Court.

[2019] EWHC 3340 (QB) Agbara et al v Shell Nigeria et al (thank you Adeole Yusuf for flagging) illustrates what many a conflict teacher initiates classes with. There is some, but often limited use in obtaining a judgment which subsequently cannot be enforced where the defendant’s funds are. Coppel DJ refused to enter registration of a 2010 Nigerian judgment by which claimants were awarded 15,407,777,246 Naira (approximately £33 million today) in damages in respect of the pollution of land occupied by them following the rupture of a pipeline maintained by Shell in 1969 or 1970.

Brussels Ia does not apply to recognition and enforcement of an ex-EU judgment hence the common law was applied (clearly with due deference to international comity yet the standards of natural justice nevertheless being determined by lex fori, English law). Natural justice was found to have been infringed by the proceedings at issue. This included an impossibility for Shell to cross-examine witnesses and an unusually swift completion of proceedings following the dismissal of a procedural argument made by Shell. Shell’s subsequent bumbling of the appeal via procedural mistake was not found by Coppel DJ to alter the findings of infringement of natural justice.

Obiter the factual mistakes made in the calculation of damages leading to the award and the opaque inclusion of punitive damages were also found to stand in the way of recognition and enforcement.

The ruling has some relevance for Article 33/34 BI1’s Anerkennungsprognose.

Geert.

 

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Merinson v Yukos: Dutch settlement following employment contract. Appeal denied. England has full jurisdiction as domicile of the defendant.

In [2019] EWCA Civ 830 the Court of Appeal has dismissed the appeal against Yukos v Merinson which I reviewed here – review which readers may need to appreciate the judgment. Three issues were considered by Gross LJ at the Court of Appeal:

1. Are the Damages Claims and/or the Annulment Claims “matters relating to [an] individual contract of employment” within the meaning of Article 20(1)?>>>Salter DJ’s answer at the High Court was YES. I suggested in my review that that finding should not have been made without considering the lex causae of the employment contract: Rome I in my view should have been engaged here. Both Salter DJ and Gross LJ (at 27 ff) were persuaded however by the highly material nexus between the annulment claims – whether considered together with or separately form the damages claims (Gross LJ distinguished Aspen Underwriting in the process).

2. If so, is the Settlement Agreement “an agreement .. entered into after the dispute has arisen” within the meaning of Article 23(1)?>>>Salter DJ’s answer was negative, on the basis of extensive reference to the Jenard Report and Convention and Regulation scholarship. Gross LJ agrees – I continue to find that conclusion unconvincing.

3. Further, is the English court, in any event, precluded from entertaining the Annulment Claims by Chapter IV of the Recast Judgments Regulation? >>>Here the Court of Appeal made the High Court’s reasoning its own, much more succinctly than its entertaining of the other questions.

Plenty to discuss here for the 3rd ed of the Handbook.

Geert.

 

 

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