Desarrollo Inmobiliaro v Kader Holdings Company Ltd
| Jurisdiction | Bermuda |
| Judgment Date | 09 July 2013 |
| Date | 09 July 2013 |
| Docket Number | Commercial Jurisdiction 2013 No 59 |
| Court | Supreme Court (Bermuda) |
[2013] Bda LR 55
In The Supreme Court of Bermuda
Commercial Jurisdiction 2013 No 59
Mr S Pearman for the Plaintiff
Mr H Tucker for the Respondent
The following cases were referred to in the judgment:
Arabian American Insurance Co (Bahrain) EC v Al Amana Insurance & Reinsurance Co LtdBDLR [1994] Bda LR 27
Muhl v ArdraBDLR [1997] Bda LR 36
Re Saad Investment Co LtdBDLR [2013] Bda LR 28
Adams v Cape Industries plcELR [1990] Ch 433
Rubin v Eurofinance SAELR [2013] AC 236
Henry v Geoprosco InternationalELR [1976] QB 726
AES Ust-Kamenogorsk Hydropower Plant LLP v Ust-Kamenogorsk Hydropower Plant JSCUNK [2011] EWCA Civ 647
SA Consortium General Textiles v Sun and Sand Agencies LtdELR [1978] QB 279
Desert Sun Loan Corpn v HillUNK [1996] 2 All ER 847
The Sennar (No 2)WLR [1985] 1 WLR 490
Enforcement of foreign judgment — Similar proceedings in Hong Kong and England — Lease and Guarantee — Summary judgment application — Common law — Voluntary submission to foreign court
RULING of Kawaley CJ
1. On March 1, 2013, the Plaintiff issued a Specially Endorsed Writ of Summons seeking to enforce at common law an Arizona Superior Court money judgment entered in favour of the Plaintiff against the Defendant on June 8, 2011 (‘the Arizona Judgment’). The Plaintiff, a Mexican real estate development company, based its claim against the Defendant, a Bermudian company, on a guarantee entered into between the parties on October 21, 1992 (‘the Guarantee’) under which the Defendant guaranteed the obligations of a Lease entered into between the Plaintiff and a third party on the same date and which was signed by the Defendant as Guarantor (‘the Lease’)1.
2. The Arizona Judgment became final when, the Court of Appeals having affirmed on April 16, 2012 Judge Soto's first instance judgment, the Arizona State Supreme Court on September 24, 2012 denied the Defendant's “Petition for Review” of the appellate decision. This brought an end under Arizona law to the Defendant's challenge to the jurisdiction of the Arizona courts to adjudicate the dispute and to the Arizona Court's decision on the merits of the dispute. However, it signalled the beginning of the Plaintiff's efforts to enforce the Arizona Judgment in jurisdictions where the Defendant had commercial and/or legal ties. Most pertinently for present purposes, the Plaintiff commenced enforcement proceedings in:
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i. Hong Kong on or about May 9, 2012 (‘the Hong Kong Proceedings’); and
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ii. England and Wales on or about October 26, 2012 (‘the English Proceedings’).
3. The challenge to the jurisdiction of the Arizona Court centred on the Defendant's argument that the Arizona governing law and jurisdiction clause contained in the Lease (as amended in October 1993) was not incorporated into the Guarantee. The latter contract had no jurisdiction clause at all and provided for the potential application of Sonera/Mexican law, Hong Kong law and/or Bermudian law as the governing law of the Guarantee upon which the Plaintiff sued.
4. This Court is now required to decide two cross-Summonses. Firstly, the Defendant seeks to stay the present action pending the determination in the more advanced Hong Kong Proceedings of the question of whether the Defendant did indeed contractually submit to the Arizona Court as the Arizona Court determined. Its Summons was issued on April 2, 2013. The Plaintiff by Summons dated May 3, 2013 seeks to obtain summary judgment in respect of its enforcement claim. Each side invites this Court to follow the conflicting approach adopted in respect of essentially identical summary judgment applications made in Hong Kong and London.
5. In Hong Kong, the Plaintiff's summary judgment application was abandoned after the Hong Kong Court granted leave for expert evidence to be adduced resulting in the Plaintiff feeling bound to concede the threshold for summary judgment could not be met. In England however, Master Leslie on April 19, 2013 granted the Plaintiff's summary judgment application on the grounds that it was no longer open to the Defendant to seek to challenge the Arizona Court's findings on the jurisdiction issue. The Defendant has appealed that decision to the English Court of Appeal.
6. With the background facts now essentially agreed, the Court is required to determine what ought ultimately to be a straightforward question: in deciding whether the Plaintiff is entitled to summary judgment on its common law claim to enforce the Arizona Judgment, is the Defendant entitled to re-litigate the issue of the Arizona Court's jurisdiction which the Defendant apparently elected to permit the Arizona Court to determine in proceedings which it fully participated in at the first instance and appellate levels? If the answer to this question is affirmative, then:
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i. summary judgment must logically be refused; and
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ii. it would clearly be open to this Court to decide whether it is more convenient in case management terms for the Hong Kong Court or this Court to determine this threshold issue, taking into account the more advanced stage of the Hong Kong Proceedings.
7. If the Defendant is bound by the Arizona Court's findings on jurisdiction, the Plaintiff would clearly be entitled to summary judgment as the Defendant has advanced no other arguable grounds for this Court to refuse to enforce the foreign judgment.
8. The primary question appears to me to be the question of whether or not the Defendant may be said, summarily, to have voluntarily submitted to the jurisdiction of the foreign court. However, since this question is not routinely considered by this Court on a fully contested basis, it may be helpful to start with an analysis of the basic principles governing foreign money judgment enforcement at common law.
9. The principles of common law foreign judgment enforcement have seemingly never been considered by the local courts above the first instance level. Because the United Kingdom Civil Jurisdiction and Judgments Act 1982 (the ‘1982 Act’) has seemingly altered the English common law on this topic, the English case law and commentaries which would normally inform the shape of our own legal rules must be read with considerable caution. I am also chastened by the fact that, dealing with common law enforcement of the same Arizona Judgment, the Hong Kong Court was seemingly willing to re-investigate the merits of the contractual jurisdiction issue determined by the Arizona Court while the English Court was not.
10. Mr Pearman submitted the essential common law principles on jurisdiction were stated in Dicey Morris & Collins, Rule 43, on personal jurisdiction. However, Mr. Tucker helpfully placed a fuller extract from Chapter 14 (‘Jurisdiction and Personal Judgments’) before the Court and the logical starting point is Rule 41:
‘A judgment of a foreign country (hereinafter referred to as a foreign judgment) has no direct operation in England but may
(1) be enforceable by claim or counterclaim at common law or under statute, or
(2) be recognised as a defence to a claim or as conclusive of an issue in a claim.’
11. The practicalities of enforcement are explained in paragraph 14-011 as follows:
‘A judgment creditor seeking to enforce a foreign judgment in England at common law cannot do so by direct execution of the judgment. He must bring an action on the foreign judgement. But he can apply for summary judgment … on the ground that the defendant has no real prospect of successfully defending the claim; and if his application is successful, the defendant will not be allowed to defend at all. The speed and simplicity of this procedure, coupled with the tendency of English judges to narrowly circumscribe the defences that may be pleaded to a claim on a foreign judgment, mean that foreign judgments are in practice enforceable at common law much more easily than they are in many foreign countries.’
12. Rule 42(1) provides that a foreign judgment in personam for a debt or definite sum of money (apart from taxes or similar charges) which is made by a court with jurisdiction under Rules 43 to 46 final and conclusive and not impeachable under rules 49 to 54 may be enforced. Rule 42(2) states that such a judgment ‘is entitled to recognition at common law’. As it was common ground that none of Rules 44 to 46 or 49 to 54 apply to the present case, the crucial issue is indeed whether or not under Bermudian conflict of law rules the Arizona Court had jurisdiction to enter judgment against the Defendant. Rule 43 provides as follows:
‘a court of a foreign country outside the United Kingdom has jurisdiction to give a judgment in personam capable of enforcement or recognition as against the person against whom it was given in the following cases:
First Case — If the person against whom the judgment was given was, at the time the proceedings were instituted, present in the foreign country.
Second Case — If the person against whom the judgment was given was claimant, or counterclaimed, in the proceedings in the foreign court.
Third Case — If the person against whom the judgment was given submitted to the jurisdiction of that court by voluntarily appearing in the proceedings.
Fourth Case — If the person against whom the judgment was given had before the commencement of the proceedings agreed, in respect of the subject matter of the proceedings, to submit to the jurisdiction of that court or of the courts of that country.’
13. It is common ground that the Defendant is not by virtue of presence subject to the territorial jurisdiction of the Arizona Court. The Plaintiff's reliance on the Fourth Case notwithstanding, it seems clear...
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