Don’t step in the jurisdiction accidentally – to avoid a judgment becoming enforceable
If you are an English company or person resident in England, there may be an alternative to defending proceedings in a foreign court at great cost.
Before taking any steps in the foreign proceedings, it is worth taking advice on whether, if a judgment is obtained in the foreign court, it will be enforceable in England.
We have advised in a number of situations where, after consulting us, the clients have taken no part in the foreign proceedings. This was based on advice that a foreign judgment in the particular case would not be enforceable in England.
A decision of the High Court (Desarrollo Immobililiario Y Negocios Industriales De Alta v Kader Holdings Company Limited  EWHC 1460 (QB)) is 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 to 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.
Whilst that case did not make new law, it is a reminder that parties should consider jurisdiction and the possible enforcement of judgments from other countries at various times, including,
- When a contract is being negotiated;
- Before instituting proceedings;
- Before taking steps to defend proceedings;
- Before making a counterclaim or claiming against any other party.
In one case, not so long ago, judgments totalling almost US$400 million were granted by a US court, after we had advised our clients not to contest the proceedings. Defending the proceedings would have cost hundreds of thousands of dollars. English solicitors then contacted our client requiring payment of the judgment. We wrote to them in response and no further action was taken.
Deciding not to take part in any proceedings is, obviously, not a decision to be taken lightly and should only be taken after careful consideration of all the circumstances, including whether a foreign judgment in the particular case will be enforceable in England, and whether the defendant has assets in other places where enforcement may take place.
W Legal Limited