English courts may enforce the unenforceable

The recent case of Invest Bank PSC v El-Husseini and others [2023] EWHC 2302 (Comm) clarifies that foreign judgment debts may be enforceable at common law in England, despite being unenforceable in their jurisdiction of origin.

What happened?

This case concerned the enforcement in England of two final monetary judgments obtained by the Claimant (the Bank) against the First Defendant (the Guarantor, a private individual) before the courts of Abu Dhabi (the Abu Dhabi Judgments). 

Shortly after the final decision in Abu Dhabi, the Bank took steps to enforce in Abu Dhabi and obtained attachments to assets and travel bans against the Guarantor. The Bank also swiftly issued the proceedings in England, in July 2021, for payment of the judgment debt by the Guarantor. This culminated in default judgment in England in favour of the Bank in January 2023.

However, just before that default judgment was entered in England, the UAE Government had enacted a decree, “Article 121b”¹ which effectively prohibited enforcement of the Abu Dhabi Judgments in their home jurisdiction. In brief terms, Article 121b protects borrowers from recourse against their general assets and other forms of personal measures to enforce such as arrest warrants or travel bans.

The Guarantor sought to take advantage of this change in Abu Dhabi law. He successfully persuaded the Abu Dhabi courts to prohibit the Bank from executing the Abu Dhabi Judgments against him, lifting the attachments and travel bans.

The Guarantor also asked the English court to set aside the default judgments against him, given they were not enforceable in Abu Dhabi. This gave rise to the question: did events in Abu Dhabi affect the enforceability of the Abu Dhabi Judgments in England?

What did the court decide?

The judge ruled that the Abu Dhabi Judgments could be enforced in England notwithstanding that they were now unenforceable in the UAE.  The judge explained: “[t]here is no rule of common law that a foreign judgment with res judicata effect in its jurisdiction of origin cannot or should not be enforced here just because it is not presently or fully enforceable in the foreign jurisdiction itself”. 

It was emphasised that if the Abu Dhabi Judgments had lacked the essential qualities of finality and/or conclusiveness, then the ruling would have been different. But the mere fact that the local courts in Abu Dhabi had declined to enforce the Abu Dhabi Judgments did not deprive these final monetary judgments of such qualities, nor did the enactment of Article 121b.

The judge found that the common law position (applicable to UAE judgments) is different from the position under the Foreign Judgments (Reciprocal Enforcement) Act 1933. That statute, which applies to most commonwealth countries and certain others, provides that a judgment shall not be registered if it could not be enforced by execution in the country of the original court. But the judge in this case endorsed the commentary of Professor Briggs² that while that statutory scheme for registration of foreign judgments gives them direct effect, the common law rules differ as they do not enforce the judgment per se, but instead the obligations arising from it (i.e. the debt, which was not extinguished by the UAE decree or Abu Dhabi decisions).

Conclusion

This case makes evident that when it comes to the enforceability of foreign judgments in England, parties should beware of relying on the enforcement position in the jurisdiction of origin. Local non-enforceability does not alter the res judicata status or effect of a foreign judgment; if a foreign judgment is final and conclusive in the jurisdiction of origin, any procedural bar to its enforcement in that jurisdiction is irrelevant in the eyes of the common law. This decision may assist parties facing enforcement difficulties against defendants which have assets in England.

¹Article 121 bis of UAE Federal Decree Law No.14 of 2018 regarding the Central Bank and Organisation of Financial Institutions and Activities as inserted by UAE Federal Decree Law No.23 of 2022 in September 2022 (Article 121b).

² Briggs, A. Civil Jurisdiction & Judgments (7th ed. 2021)