Defendant wins: £2.15m default judgment set aside as foreign judgment held a “nullity” in English law
An attempt to enforce a multi-million dollar default judgment from the USA against a China-based defendant through the English courts has been decisively rejected, with the High Court setting aside a £2.15m judgment.
Background
Premium Contractor Solution LLC, a company based in Ohio, USA, had obtained a judgment in default in Ohio for US$2,633,262.25, arising from the sale of allegedly counterfeit PPE face masks during the Covid-19 pandemic. Whilst Ms Kang was not a party to the contract, it was said that she had made false representations as to the authenticity of the masks.
Ms Kang was not present in the USA at the time of those proceedings and played no part in them, hence the judgment in default. Premium later identified that Ms Kang owned a property in Bristol and despite having little evidence that she actually lived there, commenced proceedings in the High Court. Premium obtained another default judgment and attempted to enforce it through charging orders and an application for an order for sale.
In the nick of time, Ms Kang discovered the proceedings in England and applied to set aside the default judgment, for reverse summary judgment, and to unwind the enforcement proceedings.
The court’s decision
Mrs Justice Foster DBE allowed the application and gave judgment for Ms Kang. The court held that, under the English conflict of laws rules set out in Dicey, Morris & Collins, a foreign judgment in personam can only be enforced where the defendant was present in the foreign country when proceedings began or otherwise submitted to its jurisdiction. As Ms Kang satisfied neither condition, the Ohio judgment was unenforceable and had to be treated as a nullity.
The court also rejected Premium’s innovative attempt to recharacterise its claim not as the enforcement of a foreign judgment, but as a free-standing action for a debt which was only evidenced by the Ohio judgment.
“[74] As to the new alternative argument, namely that this was not a claim to enforce a foreign judgement, that in my view just does not run. It is impossible to characterise the claim as other than an attempt to enforce the judgment. This is so both as a matter of the language of the Claim Form, and very clearly, in light of the wording of the Particulars of Claim. It is impossible as I have already said to apply the conflict rules with any conclusion other than that the Ohio court did not have jurisdiction.”
Although the court found that Ms Kang’s application had not been made promptly, it accepted that there were cogent and understandable reasons for the delay and declined to infer any dishonesty on Ms Kang’s part. In any event, the judgment had to be set aside because the underlying Ohio judgment was a nullity.
Key takeaways for litigators and cross-border enforcement
This decision is a clear reminder that a foreign default judgment may be of limited value when it comes to enforcement in England and Wales. Where the defendant was not present in the foreign jurisdiction, did not participate in proceedings and there was no specific contractual agreement submitting to that jurisdiction, a default judgment is worth little more than the paper it is printed on when it comes to enforcement.
Nicholas Towers appeared for Mrs Ying Kang, instructed by Clarke Willmott LLP.
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To read the full judgment click here.
