Law rules

English Commercial court enforces DIFC court judgment under common law rules | K&L Gates LLP

The Commercial Court in the Queen’s Bench Division of the High Court of Justice of England and Wales (Commercial Court) has granted a motion for summary judgment on a claim for enforcement in England of a judgment DIFC Courts (an English-language common law court in the Dubai International Financial Center (DIFC), United Arab Emirates (UAE)). The case (Barclays Bank Plc v Shetty [2022] EWHC 19 (Comm)) is a helpful reminder of the principles English courts will adopt when asked to enforce a foreign judgment at common law.

The defendant, Dr. Bavaguthu Raghuram Shetty (Dr. Shetty), the founder of a foreign exchange business (UAEEC), had provided a guarantee (Guarantee) by which Dr. Shetty guaranteed the performance by the UAEEC of its obligations under certain derivative contracts with Barclays Bank PLC (Barclays), which were terminated early following a default by the UAEEC. The Guarantee was governed by English law and contained an exclusive jurisdiction clause in favor of the DIFC courts. A demand for payment was made under the guarantee by Barclays, which Dr Shetty had failed to meet.

Barclays brought proceedings against Dr Shetty in the DIFC Magistrates Court (Barclays Bank PLC v Bavaguthu Raghuram Shetty [2020] DIFC CFI 061), claiming the sums claimed under the Guarantee. By judgment dated April 22, 2021, Judge Martin granted Barclays’ request for immediate judgment (equivalent to summary judgment), finding that “none of the issues raised on behalf of Dr Shetty offer a realistic prospect of a successful defense of Barclays’ claim against him, nor any other compelling reason why the case should go to trial. Judge Martin noted that following the hearing of the motion for immediate judgment, Dr Shetty had embarked on “a strategy of seizing any point, regardless of background, with the aim of delaying the delivery of [his] decision.” The judge further ordered that the worldwide freeze order that Barclays had previously obtained remains in effect, amended to remove the previous exceptions for legal costs and reasonable living expenses.

By judgment dated May 4, 2021, the DIFC Magistrate’s Court issued its judgment on quantum, ordering judgment to be entered in the amount of USD 131,440,346.22 plus simple interest at the rate of 9% per year on the outstanding balance until the judgment is satisfied. full.

In July 2021, Barclays served a claim form and details of the claim to enforce the DIFC judgment in England and Wales and subsequently sought summary judgment. Dr. Shetty applied for an adjournment of summary judgment proceedings on the basis that he was an in-person litigant and was unable to defend the claim without legal representation and advice. He said he had been unable to hire a company to act on his behalf following freezing orders obtained in separate proceedings in India and had requested an adjournment in order to seek the variation of Indian orders and then obtain legal advice and representation in these proceedings. .

Enforcement of Common Law DIFC Court Judgments

In granting summary judgment in favor of Barclays and dismissing the request for adjournment, Judge Henshaw referred to the principles relevant to the enforcement of DIFC judgments which he had previously summarized in FH Capital Limited v Haigh and Others [2020] EWHC 1269 (Comm).

These principles, summarized in the FH Capital case, are as follows:

  • There is no treaty dealing with the recognition and enforcement of judgments between the UK and the UAE. As such, DIFC court judgments can only be enforced at common law.
  • At common law, when a competent foreign court determines that a certain sum is due from one person to another, a legal obligation arises for the debtor to pay that sum, which can be enforced in the courts of England and the Wales.
  • The DIFC Courts and Commercial Court Enforcement Guidance Memorandum includes a useful summary of the common law enforcement requirements for foreign judgments:
    • The judgment of the foreign court must be final and without appeal.
    • The commercial court will not enforce certain types of judgments, for example judgments ordering the payment of taxes, fines or penalties.
    • The foreign court must have had jurisdiction, under English conflict of law rules, to determine the subject matter of the dispute.
  • The commercial court will generally consider the foreign court to have jurisdiction only if the person against whom the judgment was rendered meets the following conditions:
    • Was, at the time of the opening of the proceedings, present in the jurisdiction; Where
    • Was the plaintiff or counterclaimant in the proceeding; Where
    • Subject to the jurisdiction of the foreign court; Where
    • Agreed, before the opening, with respect to the object of the proceedings, to submit to the jurisdiction of the foreign court.
  • A decision of a foreign court can only be challenged before the commercial court under the common law regime on limited grounds. These grounds include:
    • When the judgment was obtained by fraud;
    • Where the judgment is contrary to English public order; and
    • When the proceedings have been conducted in a manner that the commercial court considers contrary to the principles of natural justice.
  • The Commercial Court will not review a judgment of the DIFC Court on the merits. The judgment cannot be challenged on the grounds that it contains an error of fact or of law.
  • In most cases, a party will have the right to seek summary judgment without a trial under Part 24 of the Rules of Civil Procedure.

Applying the test for granting summary judgment, the Commercial Court found that Dr Shetty had no real chance of successfully arguing that the terms of enforcement of the judgment of the UK DIFC court n had not been met and concluded that there were no other compelling grounds for a trial. As a result, the Commercial Court granted Barclays’ motion for summary judgment and denied Dr Shetty’s request for an adjournment, which the court viewed as a deliberate last-minute tactic to seek to delay proceedings.

Comment

The case is a useful reminder of the availability of summary judgment in foreign judgment enforcement proceedings, such as those in the DIFC courts, in England and Wales under common law principles and contains a summary useful of the legal criteria that the English Commercial Court will apply. adopt where required to enforce such judgments under the common law regime, including, in particular, the very limited grounds available for challenging the foreign judgment.