Considering a foreign court’s competence when enforcing at common law

Enforcement at common law by way of a new judgment is what claimants can resort to when no other option for enforcing foreign judgments in the UK is available. As one recent case demonstrates, however, using this regime is not always straightforward, particularly if the foreign court rendering the original judgment is considered to lack the requisite authority.

In an increasingly globalised world, it is common for a defendant’s assets to be located outside the jurisdiction where a judgment is rendered, thus necessitating enforcement of court judgments in another jurisdiction.

Typically, such enforcement is facilitated through bilateral or multilateral treaties, or on the basis of the principles of reciprocity (the principle whereby a court in one jurisdiction will enforce a judgment from a foreign court if that foreign jurisdiction would similarly enforce a judgment from the first jurisdiction).

When these options are unavailable, however, a claimant may seek to enforce a foreign judgment in the UK through a third mechanism: enforcing at common law by bringing a new claim.

This approach is particularly relevant to US judgments. As the US is not a signatory to the Hague Judgments Convention (2019), there is currently no reciprocal enforcement agreement between the UK and the US. Consequently, to obtain enforcement in the UK, US court judgments must be brought as a new claim under common law.

To do so, these claims must meet the requirements of enforceability under common law, which include that the judgment must be: i) for a definite sum of money; and ii) final and conclusive.

In a recent High Court judgment for Shovlin v Careless and others [2024] EWHC 324, however, enforcement of a US judgment in the UK was denied based on a third criterion concerning the competency of the foreign court’s jurisdiction.

Background to Shovlin v Careless

The underlying dispute in Shovlin v Careless primarily stemmed from events in 2008.

Initially appointed as a director of one of the defendants, Iain Shovlin, a UK citizen who had lived in the USA for many years, brought a claim to the Superior Court of California alleging that the defendants had attempted to induce investment by fraudulently manipulating the accounts of the company to which Mr Shovlin had been appointed.

Mr Shovlin also alleged that the defendants had launched a defamatory campaign to discredit him, resulting in his dismissal and loss of business opportunities.

He was successful in obtaining a judgment from the Superior Court of California, which ordered the second to fifth defendants – all English companies within the Money Expert Group – to pay USD 10,066,353 in damages, plus interests and costs.

As these companies were English, Mr Shovlin then brought a claim before the High Court to enforce the judgment at common law.

Legal issue – Did the defendants voluntarily appear in the Californian proceedings?

Although Mr Shovlin’s case met the first two criteria under common law, the issue before the High Court was to determine whether the Superior Court of California had jurisdiction.

Unless the English conflict of laws rules of international jurisdiction directed that the foreign court had jurisdiction, the courts in England & Wales must be satisfied that the defendants have voluntarily submitted to the foreign court’s jurisdiction. Otherwise, it is not possible to enforce the judgment under common law. This became the point of contention for both the claimant and the defendants in this case.

During the proceedings before the Superior Court of California in 2014, the defendants did indeed raise a challenge to the jurisdiction, an objection that was subsequently rejected. A further appeal was also unsuccessful, and so the Superior Court of California moved on to review the merits of the case.

As the defendants did not file a defence in the proceedings, default judgment was entered against them, allowing the case to proceed without further input from the defendants.

They did, however, appear in a prove-up hearing in 2019, albeit through their attorney, who requested the Court to consider the limitation periods of the case on its own motion, with the reservation that he was making a “special appearance”.

Mr Shovlin argued that, by participating in the prove-up hearing and making a motion, the defendants had voluntarily submitted to the Superior Court of California’s jurisdiction.

According to the defendants, however, they had only appeared in a special capacity. Under Californian law, “a general appearance” signifies that a party has submitted to the court’s personal jurisdiction, thereby acknowledging the court’s authority over them. In contrast, a special appearance is made to preserve a jurisdictional defence, allowing a party to challenge the court’s jurisdiction without conceding to it.

This could not therefore be deemed as voluntary submission, particularly as Section 33 of the Civil Jurisdiction and Judgments Act 1982 was unclear on whether taking steps other than disputing jurisdiction would amount to a voluntary submission.

The claimant objected to this defence, claiming that the special appearance is limited to the purposes of contesting jurisdiction, and given that the Superior Court of California had already considered, and ruled on, jurisdiction, a special appearance was no longer possible.

Judgment – Having one’s cake and eating it too

The High Court in England & Wales decided that the claimant had failed to prove general appearance or voluntary submission under Californian Law. As a matter of fact, the defendants did not file a motion, but only requested the judge to act on their own motion, which the court did not even act upon.

As a result, the High Court deemed it not possible to consider the defendants’ participation in the prove-up hearing either as active participation or as recognition of the Superior Court of California’s jurisdiction.

Moreover, it was not feasible to consider participation in the prove-up hearing as an active participation because the defendants were in default and would not have been allowed to defend their claim. In alleging otherwise, the claimant’s lawyers were trying to “have their cake and eat it too”, in the words of the High Court. The High Court also stated that the defendants’ participation in the prove-up hearing through their attorney did not amount to unequivocal representation, and that the defendants had maintained their position of not recognising the Superior Court of California’s jurisdiction throughout proceedings. Consequently, the claim was dismissed.

Key takeaways from the Judgment

In its conclusion, the High Court stated that a foreign court’s decision on jurisdiction does not prevent a defendant from continuing to argue the issue, nor does it amount to an unequivocal waiver of their right to continue disputing it.

From a claimant’s perspective, this decision highlights the various technical nuances that must be satisfied in order for a judgment to be successfully enforced overseas.

On the other hand, from the defendant’s perspective, all is not lost once a judgment has been obtained and, depending on the circumstances of the case, there may well be scope to challenge and successfully resist enforcement of a foreign judgment.

In either scenario, obtaining specialist legal advice early is crucial.