Case of the Day: Strategic Technologies v. Procurement Bureau

The case of the day is Strategic Technologies Pte Ltd. v. Procurement Bureau of the Republic of China Ministry of National Defense, [2020] EWCA Civ. 1604. Strategic Technologies had a contract to supply goods to the Taiwanese government. The contract had an arbitration clause requiring arbitration in Taipei and was governed by Taiwan law. A dispute arose, and Strategic Technologies brought a lawsuit in Singapore. The government sought a stay pending arbitration, which the court granted, but then the government failed to arbitrate. As a result, the stay was lifted and the case went to a default judgment in 2002 (the lower court had held that by participating even to the limited extent of seeking a stay, the Taiwanese government had submitted to the jurisdiction of the Singaporean court).

In 2003, Strategic Technologies sought to register the judgment in England under the Administration of Justice Act 1920, a statute providing for registration of judgments of courts in many Commonwealth states (including Singapore and, as we will see in a moment, the Cayman Islands) on the basis of reciprocity. The judgment was registered, but “for reasons which have not been explained,” Strategic Technologies “took no further step to enforce this judgment.”

In 2008, Strategic Technologies brought an action on the Singaporean judgment in the Cayman Islands. The court there entered a default judgment in 2008 (the lower court again having found that the government had submitted to the jurisdiction of the Cayman court). Strategic Technologies then sought to register the judgment in England.

The decision is basically about the correct construction of the 1920 statute, and since this isn’t an English law blog I am not going to review it in detail. But there are some interesting points even for us non-English lawyers. The court discusses recognition of judgments at common law, which is still the method used in England to recognize, for example, American judgments. The common law treats a foreign judgment as a debt the judgment debtor is obligated to pay and allows a new action to be brought on the debt. According to the court, the common law about enforcement of a “judgment on a judgment” has never been settled, but the court saw no need to address it, as the 1920 statute and other English laws on judgment recognition did not aim to codify the common law.

Read literally, the statute would seem to apply to a judgment on a judgment, since the statute defines judgment in a way that does not really distinguish such judgments from other, clearly enforceable judgments. But the court held that the purpose of the statute, which was focused heavily on reciprocity, would not permit the literal construction:

It would mean that a judgment given in a state with which no such arrangements existed and which was not even in the Commonwealth (for example, the United States) could in effect be registered for enforcement here by the expedient of an action to enforce that judgment in an intermediate state to which the 1920 Act does apply, an expedient sometimes described somewhat pejoratively as “judgment laundering.”

The court cited, with approval, Owen v. Rocketinfo Inc., (2008) 305 DLR (4th) 370, a British Columbia case, in which a judgment creditor with a Nevada judgment registered the judgment in California and then sought registration in British Columbia, which had a “reciprocal arrangement for the enforcement of judgments” with California but not with Nevada. (I haven’t looked into it but I presume this means, based on language from the decision that the court quoted, that the BC government had made a finding that California recognized and enforced BC judgments on the basis of reciprocity). The BC court denied recognition. The key point was that allowing recognition would undermine the reciprocity requirement:

Otherwise, when the Lieutenant Governor in Council declared a state to be a reciprocating state, it would have the effect of declaring all of the jurisdictions that are reciprocal to that jurisdiction to also be states reciprocal to British Columbia for the purpose of registering judgements. In the case of declaring California to be a reciprocating state, the Lieutenant Governor in Council would effectively be declaring all other states of the United States of America to be reciprocating states because California permits the entry of sister state judgements issued by a court of any of the states of the United States.

Scene from Field of Dreams

This is interesting for at least two reasons. First, it has implications for the idea of “judgment arbitrage” that I’ve discussed here many times, most often in the context of the Chevron/Ecuador case. Second, it’s worth making a broader point about foreign states’ concerns about whether American courts will accord reciprocity. Our common law apparently does require reciprocity—a lack of reciprocity was the basis for the Supreme Court’s refusal to recognize a French judgment in Hilton v. Guyot, 159 U.S. 113 (1895). But neither of the uniform laws that most US states have adopted, the Uniform Foreign Money Judgments Recognition Act and the Uniform Foreign Country Money Judgments Recognition Act, have a reciprocity requirement, and only a handful of states (including Massachusetts!) impose one. This is consistent with the general American view on international judicial assistance: “If you build it, they will come.” The hope is that by providing liberal recognition of foreign judgments, liberal access to discovery in aid of foreign lawsuits, etc., America can encourage foreign states to reciprocate. It hasn’t really worked out that way. And the reciprocity requirements that foreign courts impose on American judgments can really hamper the circulation of American judgments, particularly because there are more than 50 American jurisdictions and there are lots of countries without much experience recognizing US judgments. I was working recently on a case involving recognition of a Michigan judgment in Turkey. In order to succeed, I was told, it wasn’t enough to show that American courts had actually recognized and enforced Turkish judgments: we needed to show that Michigan courts had done so. Yikes!

Sean Connery and Kevin Costner in The Untouchables
Here endeth the lesson.

Foreign states’ imposition of reciprocity requirements is, by the way, the best reason for the US to sign and ratify the Judgments Convention. We already recognize foreign judgments regardless of reciprocity. (Except in Massachusetts!) We have unilaterally disarmed in an idealistic attempt to encourage others to do the same. It would be better—better for us, and incidentally better for others—to promise to do what we already do in order to make American judgments easier to circulate around the world. Here endeth the lesson.

This Post Has 2 Comments

  1. Steven Loble

    Ted

    The English Court does not recognise judgments or orders of American Courts as a matter of comity. Instead, English Courts “regard the source of the territorial jurisdiction of the court of a foreign country to summon a defendant to appear before it as being his obligation for the time being to abide by its laws and accept the jurisdiction of its courts while present in its territory.” Adams v Cape [1990] Ch. 443.
    33. In the leading modern case on enforcement of judgments at common law (which is how US judgments may be enforced in England), so described by Dicey, the Court of Appeal in Adams v Cape stated that “comity or reciprocity is an inadequate ground for enforcement in England of the judgment of a foreign court.” (Pages 455-56). The court also made clear that it supported the authority of a foreign court to summon a defendant before it and obligate that defendant to abide by its laws and jurisdiction while in that territory. (Page 519).

    Steven

  2. Ted Folkman

    Thanks Steven! That seems right, and (I hope) consistent with what I wrote. To say that the 1920 Act doesn’t provide for recognition of a US judgment isn’t to say that the common law leaves things to comity. My points about the Judgments Convention aren’t really aimed at the UK, but at the usual suspects.

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