Enforcement of Judgments

A court judgment is only of value if it can be enforced in a country where the judgment debtor has assets. Therefore, at the drafting stage, you need to:

  • decide which country's courts you would prefer to hear disputes under the contract,
  • establish in what countries the other party has assets,
  • find out whether, and upon what terms, the countries in which the other party has assets will enforce judgments of your preferred courts. In many cases it will be necessary, and in all useful, to have in the contract a jurisdiction clause by which the other party submits to the jurisdiction of your preferred court.

Enforcement regimes come in four categories:

1. multilateral EU regulations: e.g the Brussels I Recast which covers recognition and enforcement of EU Member State judgments within other EU Member States (and which, in this context, applies to judgments of EU Member State courts handed down in proceedings commenced on or after 10 January 2015, and replaced the Brussels I Regulation).

2. multilateral international conventions: the only significant ones being:

  • the Lugano Convention 2007, which covers recognition and enforcement of judgments from EU Member States in the Lugano States (and vice versa), and the same as between the Lugano States themselves; and
  • the Hague Convention on Choice of Court Agreements which can cover, in certain circumstances, recognition and enforcement of judgments from EU Member States (excluding Denmark) in non-EU Hague States (and vice versa), and the same as between non-EU Hague States. For information on how the Hague Convention applies to such cases, including its relationship with other international instruments in this area, click here. If, in such a case, the Hague Convention is either not a suitable mechanism (because, for example, the parties do not wish to be limited to the particular type of jurisdiction clause to which it generally applies) or not available (because for example, the case otherwise falls outside its scope) go on to consider how categories 3 and 4 apply to your situation.

3. bilateral conventions: click on the left hand menu for details,

4. where there is no convention between the two relevant countries, enforcement will depend upon the enforcing court's own rules.

If your case falls within category 4 above, take advice as to how easily foreign judgments are enforced in the country where the assets are. The position varies wildly between countries: in England (assuming the parties' have expressed a choice in favour of the foreign court) it is almost as easy to enforce a foreign judgment under common law as it is under a convention, whereas in Indonesia it is decidedly difficult. If the only country where the other party has assets (a) has no convention with your preferred forum and (b) falls into the "decidedly difficult" category, consider whether:

  • arbitration might provide an answer: if the country where the assets are is a party to the New York Convention, an arbitration award should be enforceable there (see Arbitration... or litigation?),
  • there is some other acceptable country's courts which you might choose and with which the country where the assets are does have a convention,
  • you can take the risk of choosing, in your jurisdiction clause, the courts of the country where the assets are (which of course depends upon the advice you receive as to their impartiality, speed, etc).

If the answer to all the above questions is no, review whether you really need the deal!

Note that If choosing the English courts and enforcement of a judgment in the EU Member State/Lugano States, or under the Hague Convention in a non-EU Hague State, is important, please click here to read our analysis of how Brexit may have an impact.