RECOGNITION AND ENFORCEMENT OF FOREIGN DECREES

RECOGNITION AND ENFORCEMENT OF FOREIGN DECREES <!--[if gte mso 10]> RECOGNITION AND ENFORCEMENT OF FOREIGN DECREES Case: Munawar Ali Khan v Marfani & Co Ltd. [PLD 2003 Karachi 382] By Ch. Irshad Ahmad (Former Federal Law Secretary). In Munawar Ali Khan v Marfani & Co Ltd. PLD 2003 Karachi 382 the plaintiffs filed a suit in the High Court of Justice of England (UK) against the defendants for the recovery of money being certain charges payable by the defendants to the plaintiffs. When the suit was filed the defendants were neither domiciled in, nor residents of, the United Kingdom. The defendants were Pakistani residing in Pakistan. Although summonses of the suit were served on the defendants in Pakistan but they did not appear before the UK Court. The UK Court determined the suit ex pane against the defendants and decreed. The plaintiffs filed the decree of the UK Court in the Sindh High Court to seek its execution under section 44A of the Code of Civil Procedure 1908 (the Code). Section 44A ibid, so far as material, reads as under:-‑ "44A--Execution of decrees passed by Courts in the United Kingdom and other reciprocating territory.--(1) Where a certified copy of the decree of any of the superior Courts of the United Kingdom or any reciprocating territory has been filed in a District Court, the decree may be executed in Pakistan as if it had been passed by the District Court. (2) x x x (3) the District Court shall refuse execution of any such decree, if it is (4) shown to the satisfaction of the Court that the decree falls within any of the exceptions specified in clauses (a) to (f) of section 13. Explanation 1. x x Explanation 2. -- "Reciprocating territory" means the United Kingdom and such other country of territory as the Federal Government may, from time to time, by notification in the official Gazette, declare to be reciprocating territory for the purposes of this section...." Out of the exceptions specified in clauses (a) to (f) of section 13 of the Code the exception relevant for the purpose of this comment is that specified in clause (a) which reads as under: "(a) where it has not been pronounced by a Court of competent jurisdiction;" The defendants objected to the execution of the decree passed by the UK Court in Pakistan on the ground that since they were not resident of the UK when the suit was filed against them and also the process of the UK Court was not served on them within the territorial jurisdiction of the said Court, the UK Court did not have jurisdiction to pass the decree executable against them in Pakistan. In the first instance a single judge of the Sindh High Court rejected the defendants objection, but on appeal by the defendant a Division Bench following the rule established by the decision of the Privy Council in Sardar Gurdyal Singh v The Raja of Faridkot 1984 AC 670; [1894] 22 Cal. 222 and the precedents of its own Court in Swindles and Sons v Haji Muhammad Abdullah PLD 1957 Karachi 993 and Ghulam Ahmad and others v Dr. Sarosh Ratanjee Wadia PLD 1959 Karachi 626 has upheld the objection and has ruled that the decree passed by the U.K Court against the defendants who were not residents of the UK when the suit was filed against them and were not served with the process of the Court in the U K was a decree passed without jurisdiction in the international sense and was not executable in Pakistan. The Division Bench, however, allude that there exists an "anomalous situation" because under section 44A of the Code a decree passed by the UK Court is executable in Pakistan as decree of District Court but it may become unexecutable merely because the Court passing the decree was considered not to possess jurisdiction in the international sense notwithstanding that under its own system of laws it had the jurisdiction to pass the decree. The decision of the Division Bench upholding the defendants' objection is un-doubtedly a correct decision. This comment is, however, intended to clarify that the rule established by the decision of the Privy Council in Sardar Gurdyal Singh v The Raja of Faridkot 1984 AC 670 [1894] 22 Cal 222 and followed in Pakistan in the cases of Swindles and Sons v Haji Muhammad Abdullah PLD 1957 Karachi 993 and Ghulam Ahmad and others v Dr. Sarosh Ratanjee Wadia PLD 1959 Karachi 626 is sound and the "anomalous situation" alluded to in Munawar Ali Khan is more apparent than real. At the very outset it may be pertinent to point out that the Court's jurisdiction to recognise and enforce foreign judgments and decrees is fundamentally founded on the ground of comity of nations, and is exercisable within the framework of the reciprocatory arrangements -- whether implied i.e. established customarily, or express i.e. established under treaty --between the State which has established the Court which has given the judgement or passed the decree and the State which has established the Court which is required to recognize and execute the judgment or decree. The comity on which the Court's jurisdiction to recognise and enforce a foreign judgment or decree is founded is legal, and in that sense it is neither a matter of absolute obligation nor of mere courtesy and goodwill. It is founded on the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws. It appears that the foreign decrees which, in pursuance of the provisions of section 44A of the Code, are executable in Pakistan are of two categories. One, decrees of the superior Courts of the UK and, two, decrees of any other reciprocatory territory. It also appears that the decrees of the superior Courts of the UK are executable in Pakistan under the authority of law whereas the decrees of other countries are executable in Pakistan only if there is reciprocity between Pakistan and the country of original decree. But, this distinction is more apparent than real. Explanation 2 below section 44A of the Code refers to the UK as a reciprocatory territory. In 1937 the UK and British India agreed reciprocally that the decrees of the superior Courts of British India will be executable in the UK and the decrees of the superior Courts of the UK will he executable in British India, and to give legal effect to the said reciprocity section 44A was added to the Code by the Code of Civil Procedure (Amendment) Act, 1937 (8 of 1937)'. The English statute known as the Foreign Judgments (Reciprocal Enforcement) Act 1933 provided for the enforcement within the UK of judgments obtained in the superior Courts of the foreign countries to which the Act may be extended. After the enactment of section 44A of the Code the said Act of 1933 was extended to British India. Historically, the UK extended its Act of 1933 to British India by Reciprocal Enforcement of Judgements (British India and Burma) Order 1938, SRO 1938 No. 1363. The said extension continued in force to the Dominion of Pakistan by virtue of section 18 of the Indian Independence Act 1947. When Pakistan became Republic the extension was renewed by the UK Order in Council, Reciprocal Enforcement of Judgments (Pakistan) Order 1958 S.I. 1958 No. 141. Lastly the extension of the 1933 Act to Pakistan has been reaffirmed by the UK statute titled the Pakistan Act 1990 (Act 14 of 1990). (The countries declared by the Federal Government to be reciprocating territories for the purpose of section 44A of the Code are set out at the end of this comment). It is trite rule that the statute which gives effect to reciprocal arrangements, convention, treaty or agreement made between two or more countries is to be interpreted in the light of the content and scope of the arrangements, convention, treaty or agreement. Thus, before alluding to the "anomalous situation" the Division Bench of the Sindh High Court was required to examine if a decree passed by Court of Pakistan against an Englishman who was not present in Pakistan and the summonses of the suit were not served on him in Pakistan will be executed by the English Court under the Foreign Judgments (Reciprocal Enforcement) Act 1933. The law clearly establishes that the UK Court will not execute such decree. Under the Foreign Judgments (Reciprocal Enforcement) Act 1933 the successful party to the proceedings in a foreign country to which the said Act has been extended may apply to the High Court for registration of the judgment in England. A foreign judgement shall not be registered if the foreign Court acted without jurisdiction. The rules by which the 1933 Act specifies the circumstances under which a foreign Court shall be deemed to have jurisdiction are very similar to the common law rules, and under common law the first and overriding essential for the effectiveness of a foreign judgment in England is that adjudicating Court should have had the jurisdiction in the international sense over the defendant, and in international sense a Court has jurisdiction in actions in personam where there has been service of a claim form on a defendant present within the jurisdiction or where the defendant has submitted to the English Court's jurisdiction. A foreign Court may give a judgement which, according to its own system of law under which it sits, is conclusively binding on the defendant, but unless the circumstances are such as in the eye of English law to justify the Court in having assumed jurisdiction, the judgment does not create a cause of action that is actionable in England. In other words, in the view of English law, the foreign Court must have been entitled to summon the defendant and subject him to judgment. The classic common law rule is stated by the House of Lords in John Russell &. Co. Ltd. v. Cayser, Irvine & Co. Ltd [1916] 2 AC 298 at 302: "whoever is served with the King's writ [now called a claim form] and can be compelled consequently to submit to the decree made in a person over whom the Courts have jurisdiction". Jurisdiction accordingly depends on the presence of the defendant in England. As far back as 1808 the Privy Council in Buchanan v Rucker 1808 9 East 192, a case from an Island of Tobago, considered the question: if a foreign Court under its own system of law can pass a decree against an absentee defendant why it should not be recognised in the UK? The suggestion that it should be recognised prompted Lord Ellenborough to ask (with some disdain): can an Island of Tobago pass a law to bind the rights of the whole world? Would the world submit to such an assumed jurisdiction? Soundness of the rule established by the Privy Council in Sardar Gurdyal Singh v The Raja of Faridkot and followed in Pakistan in Swindles and Sons v Haji Muhammad Abdullah and Ghulam Muhammad and others can be illustrated as follows. Pakistan has, among others, declared Fiji to be a reciprocating territory for the purposes of section 44A of the Code and the decrees of the Supreme Court of Fiji are executable in Pakistan under the said section. Fiji makes a law by which its Supreme Courts shall have jurisdiction to decide any matter brought before it irrespective of the nationality, place of domicile or residence of the parties and the place at which cause of action arises. A Pakistani residing in Karachi goes to Suva (the capital of Fiji) and files a suit in the Supreme Court of Fiji against another Pakistani also residing in Karachi for damages for the breach of contract which the parties entered in Karachi and was also required to be performed in Karachi. The Fiji Supreme Court under its own system of law has the jurisdiction to try the case. The summonses of the suit are served on Pakistani defendant in Karachi but he does not appear before the Fiji Court. The Fiji Court determines the matter ex pane and pronounces judgement against absentee defendant. The plaintiff brings the decree in Pakistan and requires the Sindh High Court to execute it. In international sense the Fiji Court should have no jurisdiction to pass a decree against a defendant not present within its jurisdiction. Will the Court of Pakistan execute the decree? It should not, because, in my view, the rule that Court of Pakistan will not execute a decree passed by a foreign Court if the defendant was not residing within the jurisdiction of foreign Court when the proceedings commenced or the process of the Court was not served on him within the jurisdiction of that Court is a sound legal principle based on the principle of territorial sovereignty of the country and preventing unnecessary encroachment by other countries by conferring jurisdiction on their Courts and ultimately requiring our Courts, to execute such decrees. Although with respect to the matter of the recognition and enforcement of foreign judgements and decrees we are still in the regimen of the traditional common law rules in their international sense, but, it will be quite serviceable to refer to the relevant international material developed recently. Three international conventions on the recognition and enforcement of foreign judgements have been concluded. One, the Convention on Jurisdiction and Enforcement of Judgements in Civil and Commercial Matters of 1968 (the Brussels Convention); two, the Convention on Jurisdiction and Enforcement of Judgements in Civil and Commercial Matters of 1988 (the Lugano Convention); and three, the Hague Convention on the Recognition and Enforcement of Foreign Judgements in Civil and Commercial Matters 1971 as amended by Supplementary Protocol 1971. Conventions one and two apply to European countries and have been given effect to by the countries comprising European Communities, and in the UK by the Civil Jurisdiction and Judgements Act 1982 as amended by the Civil Jurisdiction and Judgements Act 1991. Convention three concluded by the Hague Conference on Private International Law is of general application and applies to decisions rendered in the civil or commercial matters by the Courts of Contracting States (Article 1); and the conditions of recognition and enforcement of foreign judgements, so far as material, are: A decision rendered in one of the Contracting States shall be entitled to recognition and enforcement in another Contracting State in the terms of this Convention, if the decision was given by a Court considered to have the jurisdiction within the meaning of this Convention (Article 4); and the Court of the State of origin shall be considered to have the jurisdiction for the purpose of this Convention-‑ (i) if the defendant had, at the time when the proceedings were instituted, his habitual residence in the State of origin, or, if the defendant is not a natural person, its seat, its place of incorporation or its principal place of business in that State; (ii) if the defendant had, in the State of origin, at the time when the proceedings were instituted, a commercial, industrial or other business establishment, or a branch office, and was cited there in proceedings arising from business transacted by such establishment or branch office; (iii) if the action had as its object the determination of an issue relating to immovable property situated in the State of origin; (iv) in the case of injuries to the person or damage to tangible property, if the facts which occasioned the damage occurred in the territory of the State of origin, and if the author of the injury or damage was present in that territory at the time when those facts occurred; (v) if, by a written agreement or by an oral agreement confirmed in writing within a reasonable time, the parties agreed to submit to the jurisdiction of the Court of origin disputes which have arisen or which may arise in respect of a specific legal relationship, unless the law of the State addressed would not permit such an agreement because of the subject-matter of the dispute; (vi) if the defendant has argued the merits without challenging the jurisdiction of the Court or making reservations thereon; nevertheless such jurisdiction shall not be recognized if the defendant has argued the merits its order to resist the seizure of property or to obtain its release, or if the recognition of this jurisdiction would be contrary to the law of the State addressed because the subject-matter of the dispute; (vii) if the person against whom recognition or enforcement is sought was the plaintiff in the proceedings in the Court of origin and was unsuccessful in those proceedings, unless the recognition of this jurisdiction would be contrary to the law of the State addressed because of the subject-matter of the dispute. (Article 10) It is apparent that under the Convention for the purpose of jurisdiction in an action in personam, as was the case in Munawar Ali Khan v Marfani & Co Ltd. [PLD 2003 Karachi 382], the Court giving the judgment or passing the decree shall be considered to have jurisdiction only if the defendant had, at the time when the proceedings were instituted, his habitual residence in the State of the Court which gave the judgment or passed the decree. A decree of a foreign Court in action in personam in which the Court assumed jurisdiction under its own system of laws on any ground other than the presence of the defendant within the jurisdiction, such as locality of cause of action or thrum of convenience, shall not be recognized and enforced under the Convention. Although Pakistan is not a Contracting State of the Hague Convention but its provision relating to jurisdiction of foreign Courts can usefully be referred to support the view that the rule established in the cases of Sardar Gurdyal Singh, Swindles and Sons and Ghulam Ahmad, supra, is in accord with the international view on the subject. The following countries have been declared to be reciprocating territories for the purposes of section 44A. PRE-INDEPENDECE AGREEMENTS. File/Notification No. 1. Colony of Aden. F.2(1)/66-Sol.II 2. British Burma. 3. South West Africa NEW AGREEMENTS. 1. United Kingdom. F. 11(5)156.Sol.dt. 26-7-1958 2. Colony of Singapore F.12/52-Sol. Dt 22-4-1954 3. Fiji F.227/48-Sol. 4. Australia Capital Territory F.12/55-Sol. Dt 11-4-1957 5. Northern Territory of Australia. SRO 403, dt 22-8-1959 F.12.56-Sol 6. New Zealand including the Cook F.II(20)/56-Sol.Dt. 3-11-1958 Island (including Naive) and the (Deemed to have taken Trust Territory of Western Samoa effect as on from 27-8-1958) 7. States of Queensland and Western SRO 482 (1)/73 dt.2-4-1973 Australia. F.1(2)/72-Soh.II 8. Australian State of Victoria SRO 1067(K)/70 dt 21-9-1970 F. 1(2)/67-Sol .11 9. State of Kuwait SRO.567(i)/83F1(1)/71-Sol.II 10. Turkey F.9(4)/78-Sol.II.