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Despite being the UK’s largest trading partner, it persists that the US and the UK have no reciprocal agreement for the mutual recognition and enforcement of judgments in their respective jurisdictions. In the US, after the American Revolution, various states enacted ‘reception statutes’ to cultivate state laws from English common law. The anomaly being that in 2020, parties can only seek to enforce US judgments in England and Wales based on the English common law.
As the anticipated UK-US trade deal moves nearer, businesses on both sides of the Atlantic will be eager take advantage of the new economic benefits. Invariably, disputes between parties will arise and enforcing judgments will become imperative to protecting business interests.
One of the primary issues for contracting parties is to agree on which jurisdiction they voluntarily submit to in the event of a dispute and proceedings. Parties must also be sure as to their choice of which law applies to their contracts, and if not English law, then they must be aware of the intricacies of the differing laws of the various US states.
Should a party obtain judgment in the US, then they will need to issue a separate claim in England, for what the English courts would consider as a claim for a debt. While the English courts will not revisit the US case itself, the Court must consider six tests under the common law before enforcing any US judgment.
The English courts must be satisfied that the US court had jurisdiction in the first place; this includes as to if the judgment debtor was present in the US at the time proceedings were issued, or otherwise submitted to the jurisdiction of the US court e.g. through contractual agreement, or by voluntarily appearing in the US proceedings. The US judgment must be final and conclusive; if there is an appeal or other similar application in the proceedings, then the English courts will stay the claim, pending the outcome of the US proceedings. The judgment must be for a definite sum of money, but must not relate to taxes, a fine, or other penalty. An English court will not enforce a judgment obtained by fraud in the US where the judgment would otherwise not have been made. The English courts will not enforce a US judgment which is contrary to natural justice; such as where the judgment debtor was not given sufficient opportunity or notice to properly defend the claim, or where there has been a lack of service of documents on the judgment debtor in the US proceedings.
There has been various recent cases, including in the UK Supreme Court, where claims to enforce a foreign judgment have been dismissed on the grounds of failing one or more of the common law tests. Parties must ensure that they seek early legal advice when considering enforcing, or indeed defending against, US judgments in England and Wales.
For any more information please contact our Dispute Resolution team.