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Commercial Litigation Solicitors

Cross Border Litigation

Published Winter 2010

In this age of increasing globalisation and with cross border trade being more accessible due to the internet, it is becoming increasingly common for commercial litigation disputes to have a foreign element.

The process of pursuing an individual or company out of the jurisdiction is different to pursuing an individual or company in England and it is necessary to take extra care to ensure that the correct processes and procedures are followed.

Prior to Issuing Proceedings
The first stage is to consider whether the English Courts have jurisdiction to deal with the dispute and whether English law is the correct law to apply. A written agreement or terms and conditions should contain a choice of law and jurisdiction clause stating which Courts will deal with any dispute and which country’s law will apply.

In nearly all cases we would advise that the English Courts and English law should govern the contract. If there is no such clause the parties have to rely on the rules of international law to determine the correct forum for the dispute and the applicable law. There are different rules depending upon whether the Defendant is based in the European Union (“EU”) or elsewhere in the world. Fortunately, there are conventions that harmonise rules across the EU member states but case law governs what happens elsewhere in the world.

Assuming the English Courts have jurisdiction and English law governs the dispute, if the Defendant is outside of the jurisdiction and not domiciled in the EU then the Claimant must seek the Court’s permission to serve Court proceedings on the Defendant. To obtain the Court’s permission it will be necessary for the Claimant to show  (1) that the claim falls within one of a number of categories, (2) that the claim has reasonable prospects of success and (3) that England is the proper place to bring the claim.

Even though permission may be granted the Defendant may still dispute that the English Courts have jurisdiction to hear the dispute.

Serving Proceedings
It is important to ensure that the proceedings are validly served because at the enforcement stage if the foreign Court does not consider that service has been affected properly it will refuse to recognise the English judgment.

Recognition of the judgment is vital if the judgment is to be enforced against assets based abroad. In certain countries  it is mandatory to have the proceedings translated into the country’s official language. It is strongly advisable not to post the Court documentation to the Defendant. Instead, it is advisable to consider the rules for the relevant country and in many cases papers should be served through the Foreign Process Section of the High Court in London who contact the equivalent agency in the country who will take receipt of the papers and serve them according to local rules. This process often takes 3 months or more. Other methods of service include using local government agencies or consulates.

Once a judgment has been obtained it can be enforced against a Defendant’s assets. If the Defendant has no assets within the jurisdiction of England and Wales the judgment will need to be enforced in the jurisdiction where the Defendant’s assets are located. There are rules that govern EU states which simplify the procedure for recognition and enforcement of English judgments abroad.

The UK also has reciprocal recognition and enforcement of judgment arrangements with all commonwealth countries. There are many countries that the UK does not have reciprocal enforcement arrangements with in which case the law of that country will apply. The USA is by far the biggest trading partner with no formal arrangements and although US case law does support some recognition and enforcement of English judgments it is currently necessary to commence fresh litigation in the US to sue upon an English judgment.

Encouragingly, the USA has showed political willingness to enter into a convention that provides a framework for not only recognition and enforcement of foreign judgments but also jurisdictional issues and choice of law.

If you regularly contract with individuals or companies abroad or have a cross border dispute then it is necessary to consider all of these factors very carefully. Myerson are able to advise on all types of cross border litigation and have substantial experience in dealing with these matters. Please contact Tim Norman or Adam Maher for further information.

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