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In recent decades, international trade has seen significant growth due to a combination of technological advancements and the reduction of trade barriers. Innovations in transportation and communication technology have made it easier and cheaper to move goods across borders. Additionally, trade agreements and organizations, like the World Trade Organization, have played a crucial role in lowering tariffs and promoting free trade.
Increased cross-border trade can lead to more complex contractual relationships, and with that complexity often comes a higher likelihood of disputes. Different legal systems, cultural differences, and varying regulations can all contribute to misunderstandings or disagreements between parties.
The biggest fear of a potential Claimant when commencing cross boarder litigation is whether, if successful, the Claimant would be able to enforce the judgment in the jurisdiction where the Defendant is present. To the Claimant, there will be little commercial sense to expand costs and time only to obtain a paper judgment which cannot be enforced against the Defendant in its jurisdiction.
Under the common law rules, there is a long-standing requirement that before a foreign judgment is recognized and enforced, it must be established that the foreign court had jurisdictional competence to deliver the judgment. It is immaterial that the foreign court had jurisdiction pursuant to the laws of its jurisdiction but rather the jurisdiction of the foreign court must be established pursuant to English conflict of laws rules.
The common law approach has been heavily criticized for being very narrow in the recognition and enforcement of foreign judgments in the United Kingdom.
The other issue that has been raised in relation to the common law rules is that it indirectly protects judgment debtors from liability in a foreign jurisdiction. This situation was most notable in Adams v Cape Industries Plc, a leading case on separate legal personality and limited liability of shareholders where the employees of Cape Industries who developed a serious health condition due to the poor working conditions at a subsidiary of Cape Industries, could not seek damages as the judgment obtained by the employees in that foreign jurisdiction was not recognized and enforced by the English courts.
In the European Union, the Brussels Convention 1968 was the first piece of legislation formulated to govern matters of jurisdiction and the recognition and enforcement of a foreign judgments in civil and commercial matters.
The Brussels Convention was later replaced by the Brussels Regulation in 2002 and was revised in 2012 and is now known as the Brussels Recast Regulation. The Brussels II Regulation was also adopted in 2003 which concerns the jurisdiction of courts and the recognition and enforcement of foreign judgments in matrimonial and family matters.
On recognition and enforcement, Article 36 and Article 39 of the Brussels Recast Regulation succinctly puts it that any judgment given in any European Union Member State shall be recognized and enforced in any other European Union Member State without the need to adhere to any special rules.
The Hague Convention on the Choice of Court Agreement was adopted on 30 June 2005 under The Hague Conference of Private International Law and is enforceable in all European Union Member States from 1 October 2015. It is a set of rules which deals with exclusive choice of court agreements and the recognition and enforcement of those judgments.
Article 8 of the Hague Convention makes it clear that a judgment given by a court selected in an exclusive jurisdiction agreement shall be recognized and enforced by other Contracting States and the enforcing court shall not review the merits of the selected court.
Another product of the Hague Conference on Private International Law is the recent Hague Convention on the recognition and enforcement of foreign judgments in civil or commercial matters which came into force in 2019.
The Hague Convention on Judgments can be said to be a significant improvement from the Hague Convention as The Hague Convention on Judgments lists out in clear terms the situations in which a court in a Contracting State may recognize and enforce a foreign judgment. This clear and organized list is a breath of fresh air as it sets out clearly the requirements an enforcing court would need to look out for in finding that a judgment is eligible for recognition and enforcement.
The Brussels Regulations, The Hague Convention and the Hague Convention on Judgments are all instruments that have been adopted to govern jurisdiction, recognition and enforcement of foreign judgment in civil and commercial matters applicable between European Union Member States and Contracting States outside the European Union. However, there is a lack of uniformity or predictability that can be applied across the board in recognizing and enforcing foreign judgments. At best, the Hague Conventions offer a seemingly clear and uniform set of rules which any party around the world could utilize in recognizing and enforcing foreign judgments.
By:- Kishondra Kumar, Legal Counsel at Pengurusan Air Selangor Sdn Bhd
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