Tay & Partners

Recognition and Enforcement of Foreign Judgments under the Common Law

LegalTAPS Mar 2023

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INTRODUCTION

A judgment obtained from a foreign country has no direct application In Malaysia. It must be first recognised by the Malaysian courts before the judgment creditor is able to enforce it against the judgment debtor. There are two ways to seek recognition of the foreign judgment by statute i.e. Reciprocal Enforcement of Judgments Act 1958 (“REJA”) or under common law.

In deciding the course of action to be taken, the question is whether the foreign judgment is from a country that is listed in the first schedule of REJA[1]. If it is, the judgment creditor may rely on the applicable provisions in REJA. If it is not, the judgment creditor will have to resort to the common law rule. In this article, we will look at the common law rule of the recognition and enforcement of foreign judgments in Malaysia.

THE HISTORY

In the 17th century, the English courts had already recognised and enforced judgments obtained from foreign countries. It is based on the concept of comity where the adjudicating courts recognised the legitimate laws of other states, in the expectation that the other states would in turn also accept the laws of the adjudicating state. The concept of comity was later superseded by the doctrine of obligation where the foreign judgment imposes a duty of obligation on the judgment debtor to pay the sum which the foreign judgment granted and anything which negatives that duty or forms a legal excuse for not performing it, is a defence to the action.

The common law principle was introduced into the Malaysian legal system when the Malaysian Parliament legislated that the common law of England and the rules of equity as administered in England prior to the establishment of Malaysia may be applied in Malaysia if local circumstances permit or render necessary[2]. Therefore, in Malaysia, the common law principle in recognising and enforcing foreign judgments is in fact similar, if not identical, to the common law of England.

THE REQUIREMENTS

The legal requirements for the Malaysian courts to recognise a foreign judgment through the common law are:

(i) The foreign judgment must be an in personam or personal judgment that is final and conclusive;

(ii) The foreign judgment must be for payment of a specific sum;

(iii) The foreign judgment must have been given by a court of competent jurisdiction; and

(iv) There are no defences available to the recognition of the foreign judgment.

FINAL AND CONCLUSIVE

A foreign judgment is considered as final and conclusive when it determined the rights and liabilities of the parties and such determination cannot be reopened or reconsidered by the same court which made it, even though it may be subject to appeal to a higher court. It must be shown that in the court by which it was pronounced, it conclusively, finally and forever established the existence of the debt of which it is sought to be made conclusive evidence so as to make it res judicata between the parties.

SPECIFIC SUM

In order to enforce a foreign judgment, the foreign judgment must be for a debt or definite sum of money. A sum is sufficiently certain if it can be ascertained by a simple arithmetical process. If the foreign judgment is not for a debt or definite sum of money, but rather it compels a person to do something by specific performance or injunction, it would not be capable of being recognised and enforced under the common law.

COURT OF COMPETENT JURISDICTION

The Malaysian High Court recognised five circumstances where the “international jurisdiction” of the foreign court was established over the defendant:

(i) Where the defendant is a subject of the foreign country in which judgment has been obtained;

(ii) Where the defendant was resident in the foreign country when the action began;

(iii) Where the plaintiff has selected the forum in which he afterwards sues; (iv) Where the defendant has voluntarily appeared; and

(v) Where the defendant had contracted to submit himself to the forum in which judgment was obtained.

THE PROCESS

The judgment creditor may institute an action through writ or originating summons seeking for the recognition of the foreign judgment in Malaysia. In a writ action, the judgment creditor as a plaintiff may apply for a summary judgment on the ground that a defendant who has been served with the writ has no defence to a claim included in the writ. If the defendant fails to show that there is an issue or question in dispute which ought to be tried, the court may enter a judgment in favour of the plaintiff. Otherwise, if the court finds that there is any issue or question which ought to be tried, it may dismiss the plaintiff’s application and direct the claim to be set down for trial.

After obtaining the Malaysian court’s judgment in recognising the foreign judgment, the judgment creditor may enforce the judgement just like any judgment creditor enforcing a judgment in Malaysia.

THE DEFENCES

There are four defences available to a party to oppose the recognition of a foreign judgment under the common law. These defences are that:

(i) The foreign court had no jurisdiction;

(ii) The judgment was obtained by fraud;

(iii) The judgment would be contrary to public policy; and

(iv) The proceedings in which the judgment was obtained were opposed to natural justice.

THE DEFENCE – LACK OF JURISDICTION

The defence of lack of jurisdiction simply means that the foreign court does not have the jurisdiction over the defendant as determined by the rules of private international law in Malaysia. The main question is “did the defendant submit itself to the jurisdiction of the foreign court?”

THE DEFENCE – FRAUD

To set aside a foreign judgment on the ground of fraud, the fraud to be established must be a fraud on the foreign court pronouncing the judgment. Any allegation of fraud on the foreign court would entitle the judgment debtor leave to defend the judgment creditor’s claim in recognising the foreign judgment, unless the court is satisfied that the allegation of fraud is clearly frivolous.

THE DEFENCE – CONTRARY TO PUBLIC POLICY

The public policy consideration is centred on the nature of the judgment. However, this is not an “all-encompassing defence”. It should only be relied on when it is so blatantly clear that it would “shock the conscience” of the court or that it is so “clearly injurious to the public good”.

THE DEFENCE – BREACH OF NATURAL JUSTICE

The question is “did the proceedings in the foreign court offend against the court’s views of substantial justice?” The mere fact that the party was not satisfied with the decision of the foreign court does not trigger any breach of natural justice. Even if the evaluation of the evidence and arguments by the foreign court was questionable and led to the foreign court being ‘manifestly wrong’ in its conclusion, the foreign judgment is still not impeachable. The common law rule of breach of natural justice mainly focuses on the irregularity of the proceedings.

A common argument that was raised for the defence of breach of natural justice is that the judgment debtor was not present during the proceedings at the foreign court. However, if the defendant was aware or has sufficient notice of the foreign court proceedings but was ignorant of the very judgment pronounced by the foreign court in that proceedings, the question of breach of natural justice does not arise.

CONCLUSION

In conclusion, it is well established that foreign judgments from countries outside the scope of REJA may rely on the common law for it to be recognised and enforced in Malaysia. It must however satisfy the requirements and no defences are applicable.

[1] United Kingdom, Hong Kong Special Administrative Region of the People’s Republic of China, Singapore, New Zealand, Republic of Sri Lanka, India (excluding State of Jammu and Kashmir, State of Manipur, Tribal areas of State of Assam, Scheduled areas of the States of Madras and Andhra) and Brunei.
[2] Section 3, Civil Law Act 1956. This only concerns the English civil law, not English criminal law

The information in this article is intended only to provide general infor­mation and does not constitute any legal opinion or professional ad­vice. For further information and advice on this article and/or on any areas of Coporate and Coomercial Dispute Resolution, please contact Cheah Soo Chuan at soochuan.cheah@taypartners.com.my


Cheah Soo Chuan
Partner
T: +603 2050 1987
soochuan.cheah@taypartners.com.my

Khor Wei Wen
Associate
weiwen.khor@taypartners.com.my