Tuesday, February 16, 2016
Enforcement of foreign decrees Part 2
We have been asked to opine on whether there are reciprocal enforcement agreements between Pakistan and England under Pakistani law; and how difficult enforcement of a monetary/costs judgment in Pakistan is in light of the processes that need to be undertaken. The background, briefly, is that our partner law firm in United Kingdom is acting for a defendant in a litigation and intends to apply for an order for security against costs presumably under 25.13 of the Rules and Practice directions of the Civil Procedure Rules in the United Kingdom.
Under Pakistani law, Section 44-A of the Code of Civil Procedure 1908 (the “CPC”) caters specifically to the question of judgments passed by “superior courts” in reciprocating states and especially the United Kingdom (which reciprocates through Foreign Judgments Reciprocal Enforcement Act 1933). Section 44-A of the CPC however is subject to Section 13 of the CPC which sets out the broad exceptions to such enforcement. This makes the execution process cumbersome and time consuming. Case law also has ousted the operation of Order XXI Rule 23-A of the CPC which provided for decretal amount to be deposited as security for filing of objections against such execution. It may also be stated that Pakistan is not a signatory to any of the conventions specifically mentioned under 25.13 of the Civil Procedure Rules, Rules and Practice Directions in the United Kingdom.
At the outset it must be stated the aforesaid Section 44-A of the CPC defines “Superior Court” in reference to United Kingdom as “High Court in England, Court of Sessions in Scotland, High Court in Northern Ireland, the Court of Chancery of County Palatine of Lancaster and the Court of Chancery of County Palatine of Durham.” Therefore if the litigation referred to the question pertains to a lower court in England, there is no reciprocal enforcement. This memorandum assumes that the said litigation is taking place in the High Court of England or the Courts of Chancery as aforesaid (the question refers to England and not United Kingdom).
Section 44-A of the CPC has been described as a self-contained and independent provision with the Honourable Sindh High Court in the case of Abdul Malik Badruddin v. Grosvenor Casino Limited PLD 1993 Karachi 449 (hereinafter the “Grosvenor Case”) stating that the procedure of the execution is contained in sub-sections (2) and (3) of the said provision. Therefore in Grosvenor Case, the Honourable Sindh High Court ruled that provision of Order XXI Rule 23-A does not apply to foreign judgments. Order XXI Rule 23-A provides for the deposit of decretal amount in the event that a judgment debtor seeks to file objections against execution of a decree. By ousting the operation of this rule in foreign judgments, the door has been flung open for a judgment debtor to file objections without having to deposit a judgment amount as security. The judgment in the Grosvenor Case also held that a foreign judgment or decree does not operate proprio vigore in Pakistan and is therefore not capable of automatic execution. This means that at some point the local “District Court” (which is held to be a court of original civil jurisdiction) may look at the merits of the judgment.
The objections that have specifically been allowed by Section 44-A of the CPC are exception or objections contained in Section 13 (a) through (f) of the CPC. The first objection is that a judgment has not been pronounced by a court of competent jurisdiction. The second objection is that the judgment has not been passed on merits. The second objection gives the executing court the power to determine the facts leading to the foreign judgment de novo. The third objection is that the judgment was based on an incorrect view of international law or a refusal to recognize Pakistan’s law in cases in which such law was applicable. Here again, a question of law is to be determined by the executing court. The fourth objection is that judgment was obtained as a result of proceedings that were contrary to principles of natural justice. The fifth objection is that the judgment was obtained through fraud and the final objection is that the judgment sustains a claim that breaches a Pakistani law. All of these objections require judicial application of mind and require the court to call evidence and try the matter anew. Given that Order XXI Rule 23-A does not apply, it becomes extremely easy for a judgment debtor to indefinitely delay and even frustrate the foreign judgment or in this case the UK judgment. Subsection 3 of Section 44-A of the CPC states clearly that the executing court may refuse execution if it is satisfied that any of the exceptions or objections contained in Section 13 of the CPC apply. The execution is also subject to appeal and as a whole the process may take up to two years or more to complete, which may be an additional consideration given that the issue at hand pertains to a judgment on costs.
It may additionally be stated that under subsection 2 of 25.13 of the Civil Procedure Rules of United Kingdom, an order for security for costs may be made “if the resident out of the jurisdiction; but not resident in a Brussels Contracting State, a State bound by the Lugano Convention, a State bound by the 2005 Hague Convention or a Regulation State, as defined in section 1(3) of the Civil Jurisdiction and Judgments Act 1982”. Pakistan is not a signatory or a contracting to any of the aforesaid conventions.
In view of the foregoing it is clear that despite a reciprocal enforcement provision under Section 44-A of CPC, the enforcement of a monetary or a costs judgment in Pakistan is difficult, time consuming and cumbersome. The execution is to be carried on the original civil side and will be subject to further delays due to appeals. Additionally Pakistan is not a signatory to the Hague Convention on Choice of Courts, 2005 and is not a regulation state as defined by applicable law in the United Kingdom. It is, therefore, recommended that an application for security under Rule 25.13 as aforesaid may kindly be made in the said litigation to best secure the interests of the client.