Steven Loble

Don’t step in the jurisdiction accidentally – to avoid a judgment becoming enforceable

A decision of the High Court in May 2014 was a reminder of the danger of a defendant submitting itself to the jurisdiction of a US court, which makes a judgment of the US court enforceable in England, when it might otherwise have been unenforceable.

The case also dealt with whether a jurisdiction clause constituted an agreement to submit to the jurisdiction of the Arizona court.  The English court found that it did.

In relation to the submission to the jurisdiction of the Arizona court, the English court found that, even though the actions taken by the defendant in defence of the action did not constitute a submission the jurisdiction of the Arizona court according to Arizona law, they did under English law.

The defendant had not only fought the case on the merits, whilst preserving its objection to jurisdiction for appeal, it also made a counterclaim and a cross claim against another party.  The English court found that those actions were an express submission to the jurisdiction of the Arizona court.

Again, in April 2015, the English Commercial Court ruled that it would enforce a Chinese judgment in England (Spliethoff's Bevrachtingskantoor Bv V. Bank of China Limited Neutral Citation Number: [2015] EWHC 999 (Comm)).

Even though the Chinese proceedings were brought in breach of an anti-suit injunction, after unsuccessfully challenging the jurisdiction of the Chinese court, the defendant had appeared at trial.  It had also appealed to the Shandong High Court and then to the Supreme Court.

The Judge in the Commercial Court in London referred to paragraph14-071 of Dicey & Morris confirming that in those circumstances, there will have been submission by express reference to s.33(1)(a), (b) and (c) of the Civil Jurisdiction and Judgments Act 1982:

“If the defendant in the foreign court fails on any of these issues, but nevertheless goes on to defend the case on the merits, he will be regarded as having submitted.”

The Judge went on to say,

“Under s.32, a foreign judgment arising out of proceedings brought without agreement and in breach of a jurisdiction or arbitration clause against a party will not be recognised by the United Kingdom, provided that that party has not counterclaimed or otherwise submitted to the jurisdiction of the foreign court. But once it has so (counterclaimed or) submitted, there can be no objection on public policy grounds to recognition by reference to the jurisdiction or arbitration clause. The arbitral anti-suit injunctions are founded on and there to give effect to the jurisdiction and arbitration clauses in the Contracts. Those clauses are the very subject-matter of s.32(1)(a). The arbitral anti-suit injunctions cannot lead to a separate (and opposite) conclusion to that to be reached by a proper application of s.32.”

Whilst these cases do not make new law, they are a timely reminder that parties should consider jurisdiction and the possible enforcement of judgments from other countries at various times, including

     1.     When a contract is being negotiated;

     2.     Before instituting proceedings;

     3.     Before taking steps to defend proceedings;

     4.     Before making a counterclaim or claiming against any other party.

In relation to enforcement generally, see Enforcement of US Judgments, and Enforcement of Foreign Judgments - no exception for insolvency.

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