No residual discretion as to whether a foreign judgment should be enforced following submission to the foreign jurisdiction

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

In Spliethoff's Bevrachtingskantoor BV v Bank of China Limited [2015] EWHC 999 (Comm), the Commercial Court confirmed it had no residual discretion to refuse to enforce Chinese judgments in England where the claimant had submitted fully to the Chinese jurisdiction, even where the judgments had been obtained in breach of arbitration clauses and anti-suit injunctions.

Facts

The claimant entered two shipbuilding contracts with the Sellers, under which advance payments were made, subject to a right of refund with interest guaranteed by the defendant bank. The ships were not delivered on time by the Sellers. The shipbuilding contracts were subject to arbitration in London. Two sets of arbitration proceedings resulted and the claimant obtained awards against the Sellers.

The claimant then claimed against the defendant under the Guarantees. The defendant's defence lay essentially in events in China. In the Qingdao Maritime Court, proceedings had been brought by the Sellers, against, amongst others, the claimant, alleging fraud. The claimant unsuccessfully challenged the jurisdiction of the Chinese Court and thereafter fully defended the proceedings, in which the Sellers were ultimately successful.

The issue before the English court was whether or not the judgments in China afforded the defendant a defence to the claim on the guarantee. The claimant contended that the judgments should not be recognised in England, having been obtained in breach of arbitration clauses and arbitral anti-suit orders.

Decision

Mrs Justice Carr had little difficulty in finding that, as a matter of English law, in choosing to fully defend the claims in China after the final dismissal of its jurisdictional challenge, the claimant had submitted to the jurisdiction of the Chinese courts for the purposes of section 32 of the Civil Jurisdiction and Judgments Act 1982 ("CJJA"). The claimant could not be said to have submitted purely for the purposes of protecting or obtaining the release of property seized or threatened with seizure in the proceedings, further to section 33(1)(c) of the CJJA, as it went on to defend the case on the merits.

The claimant contended that the English court should nevertheless carry out an evaluative exercise as to whether or not to recognise the Chinese judgments based on the comments of Rix J in AES Ust-Kamenogorsk Hydropower Plant LLP [2011] EWCA Civ 647. However Mrs Justice Carr noted that the comments were based on the parties' mutual concession that such a discretion existed and had been heavily criticised inDicey & MorrisonThe Conflict of Laws. Mrs Justice Carr held that no such discretion existed.

The claimant further contended that the Chinese orders should not be recognised as a matter of public policy, the Sellers having acted in flagrant disregard of the arbitral anti-suit orders. Mrs Justice Carr considered that the ground of public policy invoked by the claimant was already fully recognised by section 32 of the CJJA; therefore once a party had submitted to the foreign jurisdiction, there could be no further objection on public policy grounds. The anti-suit orders were founded on the jurisdiction clauses in the contracts and could not lead to a different result than through a proper application of section 32.

Postscript: judgment was in any event given for the claimant as the findings of the Chinese Court were held not to affect the defendant's obligations, given that the guarantee was in the nature of a performance bond creating an independent obligation to pay on demand.

This article first appeared on The Injunctions Blog: http://theinjunctionsblog.com/