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Dealing with Overseas Debtors – Advice for UK Business Owners – Part Three

Over the past few weeks we’ve been taking a detailed look on how business owners here in the UK should deal with overseas debtors.  In Part One of this series, we advised our readers that it is worth trying to recover monies owed to your business by non-paying clients from different parts of the world, showing how these debts can be split into four main categories.  Then in Part Two, we took a detailed look at the European Enforcement Order Regulation and the Brussels Regulation.  As promised, today we’re going to examine the remaining two categories of overseas debt.

COUNTRIES WITH WHICH UK HAS BILATERAL ENFORCEMENT CONVENTION

The main pieces of legislation governing this are the Administration of Justice Act and the Foreign Judgements (Reciprocal Enforcement) Act, both of which mainly cover current and former Commonwealth countries and include Crown states such as Jersey and the Isle of Man. 

Both Acts reflect the reciprocal arrangements designed to facilitate the enforcement of judgements obtained in the listed countries in England and Wales.  However, a judgement obtained in one of the listed countries must be registered in the High Court of England and Wales first and it must be a final judgement (for a specific sum) and not related to fines or taxes, not obtained by fraud, and not in breach of a jurisdiction or arbitration agreement.  The Court will need to be satisfied that the originating court had jurisdiction to deal with the original claim, which can be achieved in a number of ways, including:

  • If the debtor was resident in that jurisdiction or had its principal place of business (or the place of business through which the transaction was conducted) there
  • If the debtor agreed to submit to that court’s jurisdiction or appeared in the proceedings voluntarily.

Unless these requirements are met, the judgement should not be registered (if it has already been registered, it should be set aside if jurisdiction is later challenged by the judgement debtor).  However, an application to register under the Administration of Justice Act must be made within a year of the date of the judgement, although an extension of this may be possible in certain cases.  An application to register under the Foreign Judgements (Reciprocal Enforcement) Act must be made within 6 years, or in cases where there have been appeal proceedings, within six years of the date of the last judgement obtained in those proceedings.

A debtor may apply to have the judgement set aside for various reasons under both Acts. 

COMMON LAW

If a country does not fall under any of the above-mentioned schemes, then fresh legal proceedings in England and Wales should be initiated in order to enforce a foreign judgement.  The claim may need to be served outside the jurisdiction, with specific rules applying:

For example, in cases where fraud is alleged, the merits of the case will not need to be re-examined in court, making it possible to obtain a summary judgement, which is a procedural process that allows for a quick and early hearing of the claim with not need for a trial. 

However, in some circumstances, a judgement debtor may be able to challenge the recognition or enforcement of the original judgement.  For instance, the judgement must have been obtained from a court that is regarded as competent to do so under English law.

A foreign judgement can only be enforced if it is for a definite sum of money – courts in England and Wales will not enforce judgements for taxes or penalties and judgements must be conclusive, rather than provisional.