Enforcement of foreign judgments: location, approbation, reprobation

By Jonathan More, Senior Associate, Fenwick Elliott

The recent case of Golden Endurance Shipping SA v RMA Watanya SA and others [2016] EWHC 2110 (Comm) provides a useful reminder of the principles surrounding the question of whether or not a party has submitted to a foreign jurisdiction in respect of a judgment in non-EU court proceedings.

Background

In the Golden Endurance case, a shipment of cargo to Morocco was found to be damaged and subject to a cargo claim in the Moroccan courts by the recipient’s insurers (“the insurers”). Golden Endurance Shipping (“GES”), however, disputed that the Moroccan courts had jurisdiction as each of the three bills of lading contained a London arbitration clause.

Parallel proceedings then unfolded in London and Morocco.

Arbitration proceedings were commenced in London by GES against the cargo recipient and the insurers arising from one of the bills of lading (“the Lome bill”). In these procedings:

1. An injunction was granted restraining proceedings in relation to that Lome bill taking place anywhere else other than before arbitrators in London;
2. A jurisdictional challenge raised by the insurers in respect of the cargo carried under the other two bills of lading was dismissed; and finally
3. An application for injunctive relief in respect of the Moroccan proceedings, insofar as they related to the cargo under the other two bills, was refused.

Within a couple of months the Moroccan court awarded the insurers damages in respect of the cargo carried under these two bills.

GES referred the following preliminary issue to the Commercial Court in England:

Should the Moroccan judgment be recognised by the court so that GES was estopped from pursuing its claim for a declaration of non-liability?

Underpinning this issue was the question of whether or not GES had submitted to the jurisdiction of the Moroccan courts, or should be treated as having done so as a consequence of its conduct in the English proceedings. The insurers argued that GES had not made a jurisdictional challenge in the Moroccan proceedings.  They said that the submission that the dispute should be referred to arbitration was a procedural defence and further that GES had lodged a substantive defence as to the merits. Finally insurers said that the argument that GES submitted in the English proceedings was different from that it put forward in the Moroccan court, which was an abuse of process.

Decision

In short it was held that the judgment from the Moroccan court was not entitled to recognition by the English courts. The clear primary argument of GES in those proceedings had been that they should be dismissed due to the London arbitration clauses. There was no abuse of process in challenging the jurisdiction of the Moroccan proceedings as there was no inconsistency of positions between the two cases.

Key principles

Jurisdiction v admissibility

An interesting sub-plot in the hearing related to the status of Moroccan law, and the distinction it made between jurisdictional challenges and admissibility challenges.

A jurisdictional challenge focuses on the court’s ability to hear the case in question and requires the relevant party to request the transfer of proceedings to another court. A transfer to an arbitration tribunal was not possible.

An admissibility challenge focuses on the other party’s right to bring the claim itself. This required the court to consider the merits of the case in order to properly reach a decision on the point. To this extent GES had taken the action it required (i.e. using the only option open to it) in order to make the challenge it did.

Court discretion

Notwithstanding these facts, the insurers argued that the court had the power to consider other relevant facts and exercise discretion in deciding whether or not GES had in fact submitted to the Moroccan jurisdiction.

Mr Justice Phillips held that it was the role of the court, in reaching a decision on such matters, to consider both the facts and the issues of law. This is not an exercise of discretion, simply an analysis of the relevant material issues that allows the court to come to a conclusion.

Approbation and reprobation

The insurers argued that the fact that GES had issued proceedings in England without referencing that two of the bills of lading had arbitration clauses meant it had taken a conflicting and inconsistent position with regard to the case in Morocco. In other (more legal) words, the fact that the dispute should be heard in arbitration proceedings was an example of approbation and reprobation.

Approbation and reprobation describe the scenario where a party takes an inconsistent position in proceedings. This is not permitted. Further, once a party takes a particular stance it cannot revert to the previous adopted position.

It can sometimes be the case that there is tension between the positions adopted by a party where parallel proceedings take place in different jurisdictions governed by different laws. Here the Judge found that whilst there was indeed some tension between GES’s positions in both proceedings, those positions were not entirely at odds. There was no “blatant inconsistency” which is what would cause the court to prevent a party from relying on the position it had undoubtedly properly adopted in the foreign proceedings.

Commentary

The ever increasing globalisation of doing business makes such cross-border/jurisdiction issues likely to continue to feature in the courts. Bills of lading, and letters of credit for example, in respect of which we have recently been involved in a dispute spanning three jurisdictions, are commonplace within the construction industry, and are the sort of instruments that might be particularly subject to such issues.

What was shown in this case was a practical approach and a healthy degree of pragmatism. Equally it is clear that, as ever, the particular facts and circumstances of a case will be determinative as to the decision.

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