Recognition and Enforcement of Foreign Titles in United Reino Unido

The only information that you can find out about a judgment debtor before recognition and enforcement proceedings is that which is publicly available. There are a range of UK sources available, including Companies House, which will have statutory accounts of corporate debtors and may show where individual directors have directorships and shareholders, the Land Registry, where you can search for ownership by address, insolvency registers and registers of court judgments.  

Inquiry agents can run searches for modest initial fees and assets in the form of real estate and shares may be readily identifiable.  However, it is often not possible to identify the full extent or location of a debtor’s assets, either because the information is not publicly available or because assets are structured in a way to defeat inquiry, for example through the use of offshore holding companies or trusts.  

During proceedings, more information is available.  If a freezing injunction is obtained (see section 2 below), ancillary orders for the disclosure of financial information will likely also be granted.  During enforcement proceedings, a judgment creditor can obtain an order to question a debtor in order to obtain financial information (see section 11 below).

Yes; with one exception

If a freezing injunction is obtained to support enforcement of the judgment, that can be obtained immediately, without notice, and before recognition of the judgment. However, there is a high threshold for obtaining a freezing injunction and a heavy burden on the applicant, which needs to demonstrate among other things a real risk of dissipation of the assets by the judgment debtor if the injunction is not granted and that this outweighs any inconvenience to the debtor caused by the injunction.

Because of Brexit, it is only possible to enforce EU judgments under the Brussels Regime where the EU court proceedings in which the judgment was made were initiated before the expiry of the Brexit transition period on 31 December 2020.  If the proceedings were initiated before that date, judgment creditors can benefit from the simplified enforcement process established under the Brussels regime, which does not require a prior 'exequatur' procedure.  

For EU judgments arising out of EU court proceedings commenced from 1 January 2021 onwards, recognition will need to take place:

• At common law (see section 4 below); or
• For judgments made pursuant to exclusive jurisdiction clauses, under the simplified process established under the 2005 Hague Convention on Choice of Court Agreements which the UK entered in its own right on 1 January 2021.

As noted above, judgments made pursuant to exclusive jurisdiction clauses that fall under the 2005 Hague Convention on Choice of Court Agreements will benefit from a simplified process.

Certain judgments made in certain other countries, mainly states formerly within the British Empire, also benefit from specific statues conferring simplified processes.

However, the UK has no reciprocal treaties or specific statutes for the enforcement of judgments from many states, including important trading nations such as the USA, India, Japan and China.

This means that recognition and enforcement require a fresh action to be commenced in the relevant UK court, on the basis that the foreign judgment creates a debt, so-called ‘common law’ recognition.

Key conditions for recognition proceedings to be granted are that the foreign judgment is:

• For a debt or definite sum of money (but not a fine or penalty); and 
• Final and conclusive in the court that issued it.

If the judgment debtor/defendant is domiciled outside the UK, it will be necessary to serve them out of the jurisdiction. This can often take several months. Once service has been made, it is possible to apply for default or summary judgment if the debtor fails to respond or has no substantive defence to recognition and enforcement. However, even a summary judgment process can take several months. For this reason, for speed it is usually worthwhile to consider insolvency processes (see section 12 below).

If there is a challenge to the action by the debtor, proceedings will take much longer as the relevant UK court will need to consider if and to what extent the merits of the original judgment can be re-opened.

For common law enforcement, the main court fee is the issue fee. Broadly, this is 5% of the judgment account, capped at £10,000 for claims worth more than £200,000.

Legal costs will need to be negotiated. They can be potentially added to the claim and so recovered from the debtor (see section 10 below).

Recognition of a judgment that falls under the EU’s Brussels regime can only be challenged on very limited grounds.

Key grounds for challenging recognition of a non-EU judgment are:

• The foreign court not having jurisdiction under the relevant UK conflict of law rules;
• Fraud or breach of natural justice (such as a failure to give due notice) in the judgment being obtained; and
• Breach of UK public policy.
  

Yes; the usual limitation period is 6 years from the date that the judgment became enforceable.

Yes; as a rule of thumb, one would expect to recover two-thirds of the legal costs of a UK action, including for recognition and enforcement.

Key enforcement steps include:

• a writ of control or warrant of control, enabling the judgment creditor to take possession of items owned by the judgment debtor;
• a third party debt order (or ‘garnishee’ order), requiring a third party who owes money to the judgment debtor to pay the judgment creditor;
• a charging order, stop order or stop notice, preventing the judgment debtor from selling assets until the judgment debt is paid;
• an attachment of earnings order, requiring the judgment debtor’s employer to pay salary to the judgment creditor; and
• the appointment of a receiver, namely a third party who can collect assets of the judgment debtor on behalf of the judgment creditor.
  

These enforcement steps are not mutually exclusive and can be deployed simultaneously. The UK courts tend to be pro-enforcement and, provided they are convinced of the need for relief, can apply the rules flexibly to ensure judgments are enforced and assets preserved. The UK legal concepts of trusts and beneficial ownership can assist in this regard.

Because of the role of the UK, especially London, as both an international business hub and as a location to which many high-net-worth individuals have connections, the UK can be an important jurisdiction to consider in cross-border asset recovery mandates.

As noted in section 1 above, a judgment creditor can obtain an order to question a judgment debtor in order to obtain financial information.

If a judgment debtor does not comply with court orders, they can be held in contempt of court and subject to sanction, potentially including imprisonment.

UK enforcement is often sought because the judgment debtor is a UK domiciled company or individual. In those circumstances, the threat of insolvency is often a more direct and potent threat than that of recognition and enforcement.

The starting point for an insolvency process is generally a statutory demand. This is a formal demand for a debt of over £750 in a prescribed form requiring payment in 21 days. If the debt demanded is not paid or challenged on bona fide and substantial grounds then it will be evidence of insolvency and enable a creditor to present a petition for the bankruptcy or liquidation of the debtor.

There is authority that statutory demands can be served in respect of debts subject of foreign judgments before any recognition of that judgment takes place in the UK. This is therefore often a quick and cost-efficient way to put pressure on a UK creditor to pay on a foreign judgment debt.

Moreover, if the UK creditor is in fact insolvent, then a creditor-led insolvency process, where the creditor appoints an insolvency practitioner to maximize recovery of assets and investigate any wrongdoing by the debtor and those associated with it, often leads to the best outcome for creditors.

Because the UK, like most states worldwide, is party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, it is generally easier to enforce foreign arbitral awards in the UK than foreign judgments.

The process is generally for an application for recognition of the award to be made ex parte. The award debtor then has an opportunity to apply to set aside the recognition judgment. However, the conditions for such a set-aside will be limited to those set out in the New York Convention, which are narrow.

The recognized award can then be enforced in the same way as a judgment (see section 11 above).