Enforcement of Judgments 2020 covers 24 jurisdictions. This edition discusses identifying assets, domestic judgments, foreign judgments and arbitral awards.
Last Updated: August 04, 2020
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 at a cross-border level, enforcement is often a complex topic. 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.
Added to this, the COVID-19 pandemic has also recently affected the operation of many legal systems and, for example, emergency measures may have been put in place that impact from a legal perspective. This may also impact on enforcement considerations.
Enforcement of an arbitral award may also be a relevant consideration. In this regard, the New York Convention, which in 2018 celebrated 60 years since its adoption by the UN in 1958, continues to attract new signatories. This convention provides a wide-ranging global coverage for the enforcement of certain arbitral awards and is one of the attractions of arbitration over court litigation.
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 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). No states have ratified since the last edition of this guide in mid-2019. China, the Republic of North Macedonia, Ukraine and the United States have now 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 (Hague Judgments Convention). 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.
At the time of writing, the Hague Judgments Convention has only been signed by two states, Ukraine and Uruguay, and ratified by none, so it is not yet in force. It goes much further than the 2005 Convention. It is not limited to judgments based on exclusive jurisdiction clauses. And, in contrast to the 2005 Convention, employment and consumer contracts are within scope. If adopted by a significant number of states, it will have the potential significantly to improve international cross-border enforcement of court judgments, just as the New York Convention has done for arbitration awards over the last 60 years.
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).
UN Convention for Enforcement of Mediation Settlements (Singapore Convention on Mediation)
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 from 7 August 2019 in Singapore. It has now been signed by 52 states, including the USA and China. It has been ratified by Fiji, Qatar, Singapore and Saudi Arabia. It enters into force six months after ratification by three UN member states, so will be in force by mid-September 2020. The EU has not yet signed, nor have any EU member states. 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 disputes 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, nor should it be relied upon as such. Views expressed by the authors for each jurisdiction are their own (not those of the law firms in which they practice or of any other author or contributor to this guide). Each part of this guide has been produced independently by the relevant author(s) for that jurisdiction. For specific legal advice, a lawyer should always be consulted.