The Commercial Court (Calver J) has given judgment following a 2-week trial, declaring that a judgment of the Sharjah Court of Appeal for approximately AED 582 million (c.£120 million) was obtained by fraud.
The Seventh Defendant (“Globe”) had obtained judgment in Sharjah (the “First Globe Appeal Judgment”) on its debt claim against certain SPVs owned by the Commercial Bank of Dubai (the “Bank”). The Bank and its SPVs petitioned for review of the First Globe Appeal Judgment in the Sharjah Courts on the basis that it was obtained by fraud, but those petitions were ultimately dismissed.
In the English proceedings, the Bank and its SPVs alleged that the transaction documents on which Globe’s debt claim was based (the “Globe Documents”) were backdated shams, and the First Globe Appeal Judgment was obtained by fraud. Globe contended (i) that the Globe Documents were genuine, and (ii) in any event, in light of the failed petitions in Sharjah, that the Bank and SPVs were estopped from alleging otherwise, or it was an abuse of process to do so.
The Court upheld the Claimants’ claims for declaratory relief in full, and granted a final anti-enforcement injunction to restrain Globe from taking any steps to enforce the First Globe Appeal Judgment worldwide.
The judgment provides useful guidance on the nature and scope of the rule in House of Spring Gardens v Waite (No 2) [1991] 1 QB 241, and its interaction with foreign law and procedure. In general, a foreign judgment obtained by the fraud of a party can be impugned in England, even though the foreign court had investigated the same fraud based on the same evidence: Abouloff v Oppenheimer (1882) QBD 295. However, where a party has failed in a second and separate foreign action to impugn the foreign judgment, it may be estopped from raising the same fraud defence again in England, or it may be abusive to do so: House of Spring Gardens.
Amongst other things, the judgment clarifies that:
1.A procedural mechanism by which the same foreign court reconsiders its own judgment (as distinct from a fresh action to vindicate a substantive right before a new court) is not a “second and separate action” which will engage the rule (§§8(i), 142, 153).
2. Where it is engaged, the rule in House of Spring Gardens is no more than a species of estoppel or abuse of process, and accordingly follows the same principles (§141).
3. It will not therefore give rise to an estoppel where the second foreign court was concerned, under its own law, with a narrower inquiry than the Abouloff fraud defence to recognition or enforcement (§§8(ii), 156, 162, 165, 167), or against a party who was not bound by both the first and second foreign judgments (§§8(iii), (v), 167-168).
4. Nor will it raise a Henderson abuse in respect of arguments which could not have availed a party in the second foreign proceedings (§§158-159, 167), or a Hunter abuse (collateral attack) against a party who could not have joined those second foreign proceedings (§163).
5. A foreign judgment (including one determining whether an earlier foreign judgment was obtained by fraud) cannot have greater preclusive effect than it would have in its home jurisdiction under the law applied by that country (§§8(iv), 164).
The judgment also confirms that the power to restrain enforcement abroad, of a judgment obtained by fraud abroad, has survived the modern authorities advising caution on comity grounds in relation to anti-enforcement relief: §§177-182.
Andrew Trotter and Madelaine Clifford acted for the successful Claimants at trial.
The judgment is available here.