The Enforcement of Judgements guide provides expert legal commentary on the key issues and latest developments affecting businesses. The guide covers the important developments in a number of significant jurisdictions.
Last Updated: August 05, 2019
A judgment that cannot be enforced is of little or no value. It is therefore important for those involved in commercial disputes to understand, before embarking on legal proceedings, where an opponent's assets are located, what judicial assistance (if any) will be available in locating assets against which to enforce, and the process for enforcement.
In a cross-border dispute, the answer to these questions may even determine where to sue. Subsidiary questions to consider are, for example, will it be possible to enforce a judgment directly, without bringing a fresh claim, and if it is necessary to bring a fresh claim, to what extent will it be possible to rely on an existing judgment, or will the enforcing jurisdiction want to reopen the original dispute. Equally, how long will the enforcement process be likely to take and what will it cost. Furthermore, what ability does the judgment debtor have to resist enforcement action - and how best can this risk be minimised.
Enforcement difficulties have the potential to affect adversely both national and international commerce. It is for this reason that trading relationships have often given rise to attempts to create a simplified enforcement environment. For example, the European Union relies to a significant extent on respect for their Member States' judicial systems. This is reflected in the attempt to create a relatively frictionless environment for the enforcement of the judgments of one Member State in another Member State.
However, this does not cover every situation and the enforcement process can at times be more complicated. In every case, consideration of enforcement involves questions of law specific to the jurisdictions involved. The approach can differ greatly and the approach within a jurisdiction can also change over time. It is therefore essential that local legal advice in the relevant jurisdictions in question is taken when considering enforcement of a judgment or arbitral award and this guide is not a substitute for taking legal advice. What may be the answer on one set of facts may not be the same answer for another set of facts. It is also important to consider - for example - issues of limitation and whether enforcement action is prevented, given the passage of time.
This practice guide looks at a number of jurisdictions providing an overview from a law firm in each jurisdiction of their jurisdiction's enforcement regime, illustrating several key considerations specific to their jurisdictions. What is particularly striking is the different approaches adopted by the jurisdictions covered in this practice guide. For example, how much information about a debtor's asset position is available before issuing a claim, and how that information is obtained. Another significant difference between jurisdictions is whether the relevant government ministry or court service maintains a central register of court judgments. Many do, but some do not.
At a cross-border level, enforcement is often a complex topic. Again, the cross-border enforcement approach differs from jurisdiction to jurisdiction. Many jurisdictions have different cross-border enforcement regimes for different types of incoming judgments, depending, for example, on the state of origin, the subject matter of the judgment and whether the judgment is interim or final. This practice guide is set out in a way which allows the reader to compare some of the key differences between the jurisdictions covered.
This practice guide does not deal with just the enforcement of court judgments but also looks at the enforcement of arbitral awards.
The New York Convention, which in 2018 celebrated 60 years since its adoption by the UN in 1958, continues to attract new signatories, with its entry into force in Sudan in June 2018 and Papua New Guinea in October 2019, as, respectively, the 159th and 160th parties to the Convention. This provides a wide-ranging global coverage for the enforcement of arbitral awards and is one of the major attractions of arbitration.
Hague – two Sister Conventions
Recently, the Hague Choice of Court Convention 2005 has gained more of a focus in England and Wales, given the United Kingdom's forthcoming exit from the European Union. This convention has been slow to attract signatories, but it is a recent venture. Under this Convention, Member States agree reciprocally to recognise judgments in relation to claims where jurisdiction has been taken by the court of origin on the basis of an exclusive choice of court agreement. Currently, the EU states, Singapore, Mexico and Montenegro have ratified this convention (and the UK will likely do so in its own right when it leaves the EU). China, the Ukraine and the United States have signed but not ratified the convention.
Not to be confused with the Hague Choice of Court Convention 2005 is the even newer Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters, published in July 2019. It is to operate as a sister Convention to the Choice of Court Convention, but, as commentators have already noted, it will only be a 'game changer' in international dispute resolution if ratification is widespread.
In relation to these two conventions, it will be interesting to see the international uptake and use of these conventions for enforcement. Certainly, they provide a potential platform for the enforcement of judgments on a wide global scale (similar to the New York Convention in relation to the enforcement of arbitral awards).
New UN Convention for Enforcement of Mediation Settlements
The enforcement landscape is continually changing. This is in part driven by new conventions and/or new signatories to existing conventions.
In this regard, the UN Convention on International Settlement Agreements Resulting from Mediation opened for signature on 7 August 2019 in Singapore. Currently, it has been signed by 46 states including the US and China. It will enter into force six months after ratification by three UN member states. The EU has not yet signed, as it needs to decide whether EU states will sign as a block or individually. The convention provides for cross-border enforcement of mediated settlements, similar to the New York Convention for the recognition and enforcement of foreign arbitral awards.
Again, the success of the Convention will depend on uptake internationally. It will be interesting to see, first, which UN states ratify the convention and, second, if the convention is widely ratified, whether it leads to an increase in the use of mediation in relation to dispute arising from international transactions (including clauses in contracts requiring parties to mediate before a dispute escalates).
DISCLAIMER: The information in this practice guide is provided for general reference only, not as specific legal advice. Views expressed by authors are not necessarily the views of the law firms in which they practice. For specific legal advice, a lawyer should be consulted.