I. INTRODUCTION
Imagine that a claimant commences proceedings in England, seeking a declaration that land situated in India is held on constructive trust on her behalf, or that the disposition of Malaysian land by the defendant was a fraud on the defendant's creditors in violation of English law.Footnote 1 How should the English court determine whether it has jurisdiction in respect of such a claim?Footnote 2 To reverse the position, say that a claimant obtains, in Israeli divorce proceedings, a declaration that she enjoys a 50 per cent interest in a property in England. Should that order be recognized or enforced by the English court in subsequent proceedings?Footnote 3 This article examines these two questions: in what circumstances may the English court assume jurisdiction in relation to foreign land, and in what circumstances should the court recognize or enforce the order of a foreign court in relation to English land?
In an increasingly globalized world, land is one of the few subjects of the conflict of laws process that remains stationary. Yet the individuals and corporations that claim interests in land are increasingly mobile; the result is an increased risk that a claimant may wish to sue in one country to vindicate rights in land located in another country. While private international law has always accorded significant deference to the right of a country's courts to determine issues relating to land within its borders—in respect of both choice of law and jurisdiction—that deference is put under real strain whenever a court is asked to assume jurisdiction in relation to foreign land. This article will argue that the orthodox English approach to both of the questions with which this article is concerned—the assumption of jurisdiction and the recognition of foreign decrees—must be re-examined. Quite apart from ensuring that the courts' approach achieves a fair, rational and just result in cases involving foreign land, that re-examination sheds valuable light on the roles of jurisdiction, choice of law and recognition of foreign judgments in the conflict of laws generally.
As to the first question, an English court does not have jurisdiction to adjudicate on title to foreign land: the so-called ‘Moçambique rule’.Footnote 4 But the court does have jurisdiction to enforce a personal obligation owed to the claimant by the defendant, arising from contract or equity, notwithstanding that the subject matter of the claim is foreign land: Penn v Lord Baltimore.Footnote 5 The Court acts on the conscience of the defendant subject to its jurisdiction. While the rule in Penn v Lord Baltimore is ancient, it retains real contemporary relevance, as the examples given at the start of this article demonstrate. The first example represents the simplest scenario: the claimant (C) asserts an equitable interest in foreign land legally owned by the defendant (D). But in a number of the reported cases, C alleges a beneficial interest in foreign land (originally) owned by D1, and must compete with either the acquirer of a subsequent legal interest (D2)Footnote 6 or unsecured creditors of D1 in bankruptcy.Footnote 7
There is an inevitable risk of conflict with the situs whenever a court is asked to assume jurisdiction in relation to foreign land. This article argues that the orthodox English rules fail to address that risk properly. The basic problem is that English courts are required to apply English law (as the lex fori) in determining whether a sufficient equitable or contractual obligation exists, on the basis that equitable jurisdiction depends on the court acting on the conscience of the defendant. That can produce irrational results where, for example, the English court is prepared to decree the existence of a mortgage over foreign land where the law of the place where the land is situated (the lex situs) does not recognize a valid encumbrance,Footnote 8 and is increasingly out of step with the modern recognition that the ordinary choice of law process should apply to equitable claims.
The law has then attempted to temper the parochialism of that approach in two ways: by holding that certain matters—most notably notice of an equitable interest by a subsequent owner—are not sufficient to create the necessary privity of obligation,Footnote 9 and by holding that the court will not have jurisdiction where the claimant's interest has been ‘destroyed’ by the lex situs. But that only creates further difficulties: in determining when a matter is governed by the lex situs and not the lex fori, and distinguishing between situations where the lex situs merely does not recognize the obligation and where it has destroyed the interest.
It will be argued that this approach is irrational and unsustainable. It derives from a time in the development of English law when the separate functions of jurisdiction and choice of law were not fully realized: when rules of jurisdiction acted as a proxy for the application of the correct law, and when choice of law was used to ensure that disputes were determined in the appropriate court. The question of whether there exists sufficient privity of obligation should simply be assessed according to the proper law of the alleged equitable obligation, which will very often be the lex situs.
By a ‘convergence’ in focus on the lex situs in relation to questions of both title and personal obligation,Footnote 10 we largely obviate the need for the traditional distinction between situations where the lex situs merely does not recognize the equitable interest in question and where it destroys the interest. The result is that where the proper law does not recognize an equitable obligation or right, C will have nothing on which to base his claim in the English court. This respects the prima facie right of the situs to govern matters relating to immovable property within its jurisdiction, while recognizing that it is nevertheless sometimes appropriate for a foreign court to assume jurisdiction in relation to such land. To the extent that the restrictions on the rule in Penn v Lord Baltimore were historically used as a means of ensuring that the English courts did not inappropriately assume jurisdiction in relation to foreign land, that function is better performed today by the modern doctrine of forum non conveniens.
The second purpose of this article is to consider the ‘converse’ of the rule in Penn v Lord Baltimore:Footnote 11 when will an English court recognize or enforce the order of a foreign court affecting English land?Footnote 12 A number of writers are sceptical about the likelihood of the court doing so, despite the fact that the English court might well assume jurisdiction if the facts were reversed. The ‘leading’ authority remains a 1932 decision of the Supreme Court of Canada, Duke v Andler.Footnote 13 This decision has recently been criticized by the English High Court,Footnote 14 and in Part IV, this article will argue that it is incoherent and should not be followed. The English court can, and should, recognize a foreign court's jurisdiction in cases where it would itself assume jurisdiction if the facts were reversed. Contrary to the prevailing view that only money judgments are enforceable under English national rules, this article will argue that there is no reason for the English court to deny recognition—and effectively enforcement—to in personam decrees of foreign courts in relation to English land. In the process, the article will shed light on the Commonwealth approach to the recognition and enforcement of foreign judgments generally.
II. PRIVITY OF OBLIGATION
There are two limitations on the rule in Penn v Lord Baltimore: there must be ‘privity of obligation’ and the lex situs must not prohibit the claim.Footnote 15 This Part examines the first of these requirements; Part III examines the second.
A. Jurisdiction and Choice of Law in Cases Involving Foreign Land
If jurisdiction depends on the existence of a personal obligation, then naturally the claimant must be able to establish the existence of such an obligation owed by the defendant; otherwise the claimant would be simply asserting an interest in land contrary to the Moçambique rule. So the requirement for ‘privity of obligation’ serves an essential function in keeping in personam jurisdiction within its proper limits.
The modern conflict of laws process involves separate consideration of jurisdiction (whether the court can, and perhaps should, hear the claim) and choice of law (determining what system of law applies to the substance of the claim). Suits involving foreign land are anomalous in the sense that the existence of jurisdiction (ordinarily a procedural question) depends on the existence of a substantive obligation.Footnote 16 That is not in itself a problem; the courts frequently have to undertake a preliminary examination of the merits of a case at the jurisdictional stage.Footnote 17
But this begs the question: what law applies to determine whether a sufficient equitable or contractual obligation exists to justify the court assuming jurisdiction? Three alternatives are possible: the law of the forum (the lex fori); the proper law of the substantive obligation (the lex causae); and the law of the place where the property is situated (the lex situs). English courts have historically held that the lex fori applies automatically, and exclusively. In other words, the choice of law process has no role to play in determining whether an obligation exists in respect of which the court can assume jurisdiction. This article criticizes that approach, arguing that it dates from a time in the development of English law when the separate functions of choice of law and jurisdiction were not properly delineated. Instead, the claimant should simply be required to establish, to the standard of a good arguable case, that the defendant owes a contractual or equitable obligation to the claimant under the proper law of the alleged obligation, which will usually be the lex situs.
B. The Law Applicable to Determining Whether a Sufficient Personal Obligation Exists
1. The basic rule
Orthodox authority is that the lex fori applies exclusively to determine whether a sufficient equitable or contractual obligation exists on the basis of which the court can assume jurisdiction.Footnote 18 In other words, the English court will not concern itself with whether the lex situs recognizes an obligation in the circumstances. Penn v Lord Baltimore itself concerned an agreement to arbitrate the demarcation of a boundary between Pennsylvania and Maryland in pre-independence North America. The suit was founded on ‘articles executed in England under seal for mutual consideration’ and that was sufficient to give the English Court of Chancery jurisdiction to enforce English equity on the parties, notwithstanding that the dispute concerned foreign land. So Lord Harwicke LC held that the ‘conscience of the party was bound by this agreement; and being within the jurisdiction of this court …, which acts in personam, the court may properly decree it as an agreement’.Footnote 19 The classic case involving fraud is Lord Cranstown v Johnston, in which Lord Alvanley MR held that the defendant had by his fraud ‘gained an advantage, which neither the law of this nor of any other country would permit’.Footnote 20
In both of those cases it was taken for granted that the English court would apply its own conceptions of equity to the parties' conduct. Lord Cottenham LC made this explicit in Re Courtney, ex p Pollard, holding that:Footnote 21
the courts of this country, in the exercise of their jurisdiction over contracts made here, or in administering equities between parties residing here, act upon their own rules, and are not influenced by any consideration of what the effect of such contracts might be in the country where the lands are situate, or of the manner in which the courts of such countries might deal with such equities.
So Lord Cottenham suggested that the English court would apply English conceptions of what is unconscionable to the conduct of parties subject to its personal jurisdiction, and would not be swayed by the fact that the lex situs would not recognize an equitable interest in the same circumstances.Footnote 22
2. The choice of law process in relation to equitable obligations
Early cases such as Lord Cranstown v Johnston appear to have proceeded on the premise that an English court can only apply English equity; they are also complicated by the fact that the court did not give separate consideration to the procedural question of whether there existed an obligation sufficient to justify the assumption of jurisdiction, and the substantive question of whether the plaintiff had made out that obligation on the merits.
More recently, a number of Australian decisions have held that because equity acts in personam, the court must necessarily apply the lex fori to equitable claims.Footnote 23Dicey notes that this is ‘tantamount to saying that there is no choice of law applicable to equitable claims’, and implies that all it should mean is that the question of equitable remedies is governed by the lex fori but the rights that give rise to them should be governed by the law identified by the applicable choice of law rules.Footnote 24 Garnett notes that there has been a recent trend in Common Law courts towards a recognition that equitable claims should be subject to the ordinary choice of law process.Footnote 25
In this respect it is necessary to understand the English Court of Appeal's decision in Lightning v Lightning Electrical Contractors Ltd. The plaintiff claimed that the defendant had purchased land in Scotland entirely funded by the plaintiff, and that it was accordingly held on resulting trust in his favour.Footnote 26 The Court applied English law to the substance of the claim. Although the case may be read as authority for the proposition that the lex fori should automatically govern such a claim,Footnote 27 the better view is that the case was exceptional: the parties were both resident in England, their relationship was based there and (apparently) the only connection with Scotland was the fact that the land happened to be purchased there. In other words, the (implicit) choice of law process pointed to English law.Footnote 28
In Martin v Secretary of State for Work and Pensions, the Court of Appeal noted that ‘on the particular facts [of Lightning] … it was plain that English law was the law applicable to the relationship between the people concerned and their property arrangements’.Footnote 29 In Martin the Court concluded that the relationship between two English domiciliaries in relation to French land was governed by French law because the transaction in question was executed in contemplation of French succession law. The consequence was that because French law did not recognize trusts, the Court would not impose a trust even though the parties were resident and domiciled in England and English equitable principles would recognize a trust in the circumstances.Footnote 30 This is clear authority that the lex fori does not automatically apply to equitable claims.Footnote 31
It is beyond the scope of this article to examine the choice of law rules applicable to equitable claims, which remain uncertain.Footnote 32 Suffice to say that there is strong academic support for the proposition that a claim asserting the existence of a constructive or resulting trust over foreign immovable property should usually be characterized as proprietary, so that the lex situs should apply.Footnote 33
3. Application of ordinary choice of law rules in the context of jurisdiction
In the author's submission, the exclusive application of the lex fori to the question of whether sufficient privity of obligation exists can no longer be justified. With courts increasingly recognizing that ordinary choice of law rules apply to equitable claims, it makes no sense for one system of law to be applied in determining whether a sufficient obligation exists for the purpose of assuming jurisdiction, only to potentially apply an entirely different system of law to the resolution of the merits of the dispute. Nor is there any justification for automatically applying the lex fori at the first stage, simply because equity acts on the conscience of the defendant. Nygh noted the ‘ludicrous’ result in Re Smith, where jurisdiction was assumed and an equitable mortgage imposed on Dominican land despite the fact that the lex situs did not recognize a valid encumbrance in the circumstances.Footnote 34 The lex fori approach inherently creates a risk of such results.
Despite the apparent parochialism of the traditional approach, the English courts have always recognized that some regard must be paid to the lex situs. This gives rise to the second principal problem with the orthodox approach: it requires the courts to distinguish between cases where the lex situs has ‘destroyed’ the interest on which the claimant relies (in which case he has no interest on which to base his claim) and where it merely does not recognize the interest (in which case the English courts are content to proceed). In Part III, this article will explain how we can ameliorate the difficulties created by that distinction by applying the proper law of the alleged obligation at each stage.
Before doing so, however, it is necessary to deal with a difficult line of cases that have complicated the traditional position even further. In each case the claimant asserted a beneficial interest in foreign land, and had to compete with the acquirer of a subsequent legal interest. The issue was whether notice of the claimant's prior interest was sufficient to establish ‘equitable privity’ for the purpose of establishing jurisdiction.
4. Cases involving subsequent owner's notice of a prior equity
Dicey notes two related principles: the claimant must establish some personal equity running from the claimant to the defendant, and the jurisdiction cannot be exercised against a stranger to the equity ‘unless they have become personally affected thereby’.Footnote 35Cheshire, North and Fawcett observes that the court will not exercise jurisdiction against a third party who has acquired land from someone contractually or otherwise personally liable to the claimant, where no equitable obligation runs from that purchaser to the claimant.Footnote 36
In Deschamps v Miller, Parker J held that the exceptions to the Moçambique rule depended on:Footnote 37
the existence between the parties to the suit of some personal obligation arising out of contract or implied contract, fiduciary relationship or fraud, or other conduct which, in the view of a Court of Equity in this country, would be unconscionable, and do not depend for their existence on the law of the locus of the immovable property.
On this approach, the court does not merely ask whether the defendant's conduct is unconscionable according the lex fori and thus simply ignore the lex situs; it requires that the equity that is alleged to give rise to the court's jurisdiction must arise under the lex fori, so that where it is characterized as arising under the lex situs it will not qualify for the purposes of investing the English court with jurisdiction.
In Norris v Chambres, a company founded by Sadleir contracted to purchase a Prussian mine, and Sadleir paid one third of the purchase price out of his own money. After he committed suicide, the defendants (other members of the company) entered into a new contract with the vendor of the mine, under which they received credit for Sadleir's advance. Norris, the administrator of Sadleir's estate, commenced proceedings alleging that the vendor held the land on trust for Sadleir to the extent of the advance, and that the defendants had notice of Sadleir's interest and purchased the mine subject to it. Sir John Romilly MR held that jurisdiction depended on ‘some contract or some personal obligation … moving directly from’ the defendants to the plaintiffs.Footnote 38 Although the Judge assumed that notice would give rise to an enforceable obligation if the dispute had concerned English land, he held that:Footnote 39
this is purely a lex loci which attaches to persons resident here and dealing with land in England. … I have no evidence before me that this is the Prussian law on this subject, and if it be so, the Prussian Courts of Justice are the proper tribunals to enforce these rights.
… The facts of the case either constitute a valid hypothecation on the mine of the Defendants in Prussia in favour of the Plaintiff, or they do not. If they do, it is in Prussia, and the Courts of law in that country, that this hypothecation is to be enforced … .
Parker J followed that decision in Deschamps v Miller. There it was alleged that the claimant's father had settled property in India on his (bigamously married) de facto wife in violation of his French marriage contract with his de jure wife. The claimant, the de jure wife's successor, sued the trustees of the Indian settlement, relying on the contract (which was governed by French law). If the land had been situate in England then the claim would have succeeded, provided that the de facto wife had notice of the de jure wife's equitable interest.Footnote 40 But the claim failed because the question of whether the de facto wife's title could be impugned had to be assessed according to the lex situs.Footnote 41 The first part of Parker J's reasoning has been quoted above. He held that the court would only entertain jurisdiction where the necessary personal obligation was recognized by English law to exist, but that:Footnote 42
[where] the whole question is whether or not according to the law of the locus the claim of title set up by one party, whether a legal or equitable claim in the sense of those words as used in English law, would be preferred to the claim of another party, I do not think the Court ought to entertain jurisdiction … .
Those decisions may be contrasted with the River Plate case, where the subsequent owners took title expressly subject to a prior charge.Footnote 43 It is difficult to draw a meaningful distinction between buying a mine with notice of a previous interest and taking property subject to a charge.Footnote 44
Some authors explain Norris and Deschamps on the basis that they really concerned competing claims to title, over which the situs has exclusive jurisdiction.Footnote 45 They certainly demonstrate the significance of how an issue is characterized: where the issue was characterized as one of notice the English court would not assume jurisdiction, but where it was characterized in terms of the personal obligation owed by a transferee to the holder of an equitable interest governed by English law, then the English court would assume jurisdiction.
However, in the author's submission that does not tell the whole story. Sir John Romilly MR and Parker J appeared to have characterized the dispute in the way that they did as a means of depriving the English court of jurisdiction in circumstances where it was plainly inappropriate for the English court to exercise jurisdiction, but at a time when English law did not recognize a general doctrine of forum non conveniens.Footnote 46
In a 1986 article, White explained that before the Judicature Acts the Court of Chancery followed a completely different approach to jurisdiction than that followed by the Common Law courts. Where service within the jurisdiction was sufficient at Common Law, Chancery required that a sufficient connection between the dispute and the forum be demonstrated before it would assume jurisdiction.Footnote 47 It thus applied jurisdiction rules as a proxy for choice of law rules which had not yet been (sufficiently) developed, at least in relation to equitable claims.Footnote 48 Yet in some respects the reverse process can also be seen: in both Norris v Chambres (a decision which predated the Judicature Acts) and Deschamps v Miller the characterization of the issue of notice as a matter governed by foreign law was used to deprive the court of jurisdiction.
In Macmillan Inc v Bishopsgate Investment Trust plc (No 3), Millett J observed that in such a case the only equity that the plaintiff could enforce is one arising from the transferee's notice, but ‘the sufficiency of such notice to affect the transferee's title is a matter for the lex situs. If, by that law, the transfer to the defendant extinguished the plaintiff's interest notwithstanding the defendant's notice, the plaintiff no longer has any proprietary interest upon which he can base his suit in England.’Footnote 49
His Honour thus concluded that Norris and Deschamps should be interpreted as cases on choice of law rather than jurisdiction.Footnote 50 In other words, once it was found that the question of notice was governed by the lex situs, it followed that only the courts of the situs had jurisdiction. But neither Sir John Romilly MR nor Parker J asked whether the lex situs had actually extinguished the plaintiff's interest in the land; the mere fact that the question of notice was governed by foreign law was sufficient to deprive the court of jurisdiction.Footnote 51 So Collier cites Deschamps v Miller as authority for the proposition that notice simply does not create an equitable obligation sufficient for the purposes of the rule in Penn v Lord Baltimore.Footnote 52
C. A Modern Approach to Choice of Law and Jurisdiction
The requirement that the interest on which the claimant relies must be recognized by English law was not merely ‘English insularity’Footnote 53 but an apparently deliberate attempt to ensure that the dispute was heard in the appropriate court applying the appropriate law. But private international law has moved on; Peter Prescott QC, sitting as a Deputy High Court Judge, has held that notice of a prior equity can now be sufficient to establish jurisdiction; the law should treat the fact that land was situate overseas as relevant to choice of law and not jurisdiction.Footnote 54 In this author's view, we should go further than that, and reject the requirement that the privity of obligation arise under the lex fori.Footnote 55 The courts can apply modern rules of jurisdiction (including the doctrine of forum non conveniens Footnote 56) to control where the dispute is heard, and modern choice of law techniques to ensure that the appropriate law is applied.
This is consistent with the approach of the Singapore Court of Appeal in Murakami v Wiryadi.Footnote 57 The Court rejected the proposition that in personam jurisdiction in relation to foreign land depended on the existence of a ‘sufficient connection between the dispute and the forum’.Footnote 58 Nothing more is required than that the court has personal jurisdiction in the ordinary fashion over the defendant in relation to an equitable or contractual claim.Footnote 59 The necessary consequence of this approach must be that, in Singaporean law, it is not necessary that the equitable or contractual obligation alleged to give rise to jurisdiction arise under the lex fori. Instead, the function performed by rules of jurisdiction in those old cases is now supplied by a modern approach to choice of law.Footnote 60
The requirement for privity of obligation performs the valuable function of ensuring that the claimant is not merely asserting title to land contrary to the Moçambique rule,Footnote 61 and accordingly ensures that the rule in Penn v Lord Baltimore stays within its proper limits. But ordinary choice of law rules should be applied to determine whether the necessary obligation exists. The separate question of whether it is appropriate for the English court, or another court, to exercise jurisdiction to enforce that obligation is best resolved by the application of the forum non conveniens principle.
A modern court faced with the facts of Norris v Chambres would inevitably have declined jurisdiction given that the dispute arose out of a contract to purchase a Prussian mine and there were parallel proceedings in Prussia.Footnote 62 So in Deschamps v Miller, although this article argues that the Court should have had jurisdiction to determine whether the de facto wife was bound by the de jure wife's equity, today the court would probably decline to exercise the jurisdiction given the lack of connection between the dispute and England.Footnote 63 The recent New Zealand case of Schumacher v Summergrove Estates Ltd illustrates this process. The High Court found that it had jurisdiction to consider the plaintiff's allegation that land in Ireland was held on constructive trust in her favour. But it nevertheless concluded that New Zealand was forum non conveniens; the Court was particularly swayed by the fact that Irish law applied to the claim.Footnote 64
III. LIMITS ON THE RELIEF THAT THE COURT MAY GIVE
A. Introduction
As noted above, the English courts have been prepared to assume jurisdiction on the basis of obligations that are not recognized by the lex situs. But the courts have always recognized that some regard has to be given to the lex situs ‘because it is essential to acknowledge the capacity of the lex situs to render futile any conflicting law with respect to title to … property’ situated there.Footnote 65 This has led, in the context of Penn v Lord Baltimore jurisdiction, to a difficult distinction between cases where the lex situs merely does not ‘recognize’ the claimant's interest and where it has actively ‘destroyed’ it. This Part of the article will explain that distinction and demonstrate how a modern approach to choice of law can ameliorate it. Penn v Lord Baltimore jurisdiction involves an inevitable risk of conflict with the courts of the situs, and in those circumstances it is particularly important that the court refrain from a chauvinistic approach to choice of law and jurisdiction.
The concerns of this article are illustrated by a particularly tortuous dispute currently being played out in the Western Australian and Malaysian courts. Singh v Singh is a dispute between two brothers which has produced at least four sets of proceedings. The plaintiff, Sardul Singh, sued his brother in the Supreme Court of Western Australia, alleging that the brother transferred real estate in Malaysia to his wife and daughter with intent to defraud creditors including the plaintiff, contrary to section 89(1) of the Western Australian Property Law Act 1969.Footnote 66 The plaintiff claimed that the land was held on constructive trust.Footnote 67
The Supreme Court dismissed the defendants' objection to jurisdiction, and that decision was upheld by the Court of Appeal in 2009.Footnote 68 Judgment was then given in default of defence in 2010.Footnote 69 Then matters became more complicated.
On 22 July 2011 the defendants commenced proceedings in the High Court of Malaysia seeking declarations that the Supreme Court of Western Australia acted without jurisdiction when it gave judgment in 2010, and essentially that the judgment should not be acted on.Footnote 70 The High Court granted an interim injunction on 10 August 2011 restraining the plaintiff from acting on the property or relying on the Western Australian judgment (except by recognition or enforcement proceedings under Malaysian law).Footnote 71 Finally, the plaintiff sought an order in Western Australia committing the defendants for contempt for failing to comply with the substantive judgment of 2010. That was refused, at which stage the Malaysian proceedings remained outstanding.Footnote 72
On its face, this is precisely the kind of ‘embarrassing conflicts’ of which there is an inherent risk when the court exercises jurisdiction over foreign land.Footnote 73 The Malaysian Court has not yet even expressed a view on the merits of the Australian judgment, but has apparently objected (in a preliminary sense) to the fact that jurisdiction was exercised at all.
B. Prohibition of the Relief by the Lex Situs
Lord Cottenham LC observed in Re Courtney that if ‘the law of the country where the land is situate should not permit, or not enable, the defendant to do what the court might otherwise think it right to decree, it would be useless and unjust to direct him to do the act.’Footnote 74Dicey notes that the scope of this principle is unclear, and is hard to reconcile with Lord Cottenham's assertion that the English court would apply its own rules of equity to the claim without regard for the lex situs.Footnote 75 Indeed it is unclear whether this limitation operates in a positive or negative fashion: Cheshire suggests that ‘it must be possible for the decree issued by the English court to be carried into effect in the country where the land is situated’ (perhaps optimistically declaring that this principle ‘requires no elaboration’)Footnote 76 but Dicey suggests that all that is required is that the lex situs does not ‘prohibit’ the enforcement of the decree.Footnote 77
In Re Courtney the bankrupts purported to give the appellant a security over land owned by them in Scotland. Lord Cottenham recognized this as an equitable mortgage under English law, despite the fact that under Scottish law no such equitable mortgage was created. The creditor thus was entitled to priority, and Lord Cottenham expressly noted that the position under Scottish law was irrelevant.Footnote 78 Other cases are to similar effect,Footnote 79 including Re Smith.Footnote 80 In that case Eve J followed the Court of Appeal's decision in British South Africa Co v De Beers Consolidated Mines, in which Cozens-Hardy MR held that ‘an English contract to give a mortgage on foreign land, although the mortgage has to be perfected according to the lex situs … is subject to such rights of redemption and such equities’ as English law provides.Footnote 81
Compare Waterhouse v Stansfield. The plaintiffs advanced money to Moody which was to be secured by a mortgage on land to be purchased by him in Demerara. The lex situs provided that no right or interest in land could be created without judicial approval ‘in the nature of a judgment’. The legal transfer of the land from the vendor to Moody was not effected before the latter became bankrupt, after which Demeraran law provided that the land vested in Moody's assignees in bankruptcy. Turner V-C proceeded on the basis that under English law the plaintiffs enjoyed a beneficial interest, but held that the plaintiffs could not thereby avoid the local requirements in demanding that the trustees transfer the land to them:Footnote 82
When the law of a foreign country places a restraint upon the alienation of the property of a debtor situated in such country, an equity arising here on a contract entered into in respect of such property cannot be enforced against the lex loci rei sitae.
The Court also refused relief in Hicks v Powell.Footnote 83 Clark executed a deed to transfer land in Madras to the plaintiffs, but the deed was not registered. Indian law provided that unless a deed was registered it could not be put in evidence in any court in India. Clark subsequently mortgaged the same land to the defendants, who had notice of the first (unregistered) deed. The second deed was duly registered. Lord Hatherley LC clearly had sympathy for the plaintiffs, but concluded that the Act had ‘swept away’ any equitable interest they had possessed.Footnote 84
In theory the distinction that explains these cases is whether the lex situs prohibits or merely does not recognize the equitable interest in question.Footnote 85 In Re Courtney, Scottish law did not prohibit an equitable interest, but was simply silent on the subject ‘inasmuch as it provide[d] no remedy for the equitable mortgagee’.Footnote 86 On the other hand, in Waterhouse Turner V-C appeared to be particularly impressed by evidence that under Demeraran law any general creditor could have objected to the transfer of the property.Footnote 87 But a distinction between silence and active prohibition is almost impossible, particularly where the lex situs may not even know the concept of an equitable interest to prohibit. Even if we accept this distinction it does not satisfactorily explain the difference between, for example, Re Smith and Waterhouse.Footnote 88
It is the inconsistency between English law and the foreign law—or the potential for the English law to override the foreign law—that produces difficulties. While that risk is inherent in the exercise of Penn v Lord Baltimore jurisdiction it can be mitigated significantly by the application of the modern choice of law process. As argued above, for equitable claims in relation to foreign land this will usually point to the lex situs; for claims based on contract it would presumptively be the lex situs under common law rulesFootnote 89 and probably under the Rome I Regulation as well.Footnote 90
This will not eliminate the difficulty in all cases; where the contract is expressly governed by English law,Footnote 91 for example, or where the nature of the relationship or the equitable claim in question is almost entirely connected with England. But for the reasons given above in relation to Lightning, the lex fori should only be applied where the choice of law process points to that law. We must doubt older English cases which appear to have assumed that English law applied to a contract made in England without analysing the point,Footnote 92 and care must be taken with older English cases that almost invariably concerned land within the Empire.Footnote 93
What if we test the suggested approach against the old cases? In Hicks v Powell the deed had been executed in Madras in relation to land in Madras; a modern court would surely find that the deed (and equitable claims arising out of it) would be governed by Indian law. So the result would be the same but the impossible distinction between non-recognition and destruction of equitable interests would be avoided. So too in Re Smith, it makes perfect sense that the effect in equity of an unregistered charge over land in Dominica should be assessed according to Dominican law, and that is exactly the approach for which counsel for the creditors argued in that case.Footnote 94
Returning to the Singh v Singh saga, the first question was whether the Western Australian Property Law Act applied at all to a disposition of land in Malaysia.Footnote 95 Section 89(1) provided that ‘every alienation of property made … with intent to defraud creditors is voidable, at the instance of any person thereby prejudiced’. Pullin JA first observed that this power to set aside fraudulent dispositions predated statute,Footnote 96 and ‘equity would have decreed in personam remedies in support even if the property was out of the jurisdiction.’Footnote 97 The Court then considered whether ‘property’ should be interpreted to include property outside Western Australia. After noting that the definition of ‘property’ in the Act was not territorially limited, Pullin JA concluded that it applied to the disposition of land overseas. In his view this did not involve the Act being applied extraterritorially because section 89(1) rendered transactions merely voidable at the suit of the person prejudiced, and thus ‘confer[red] a right on a person resident in Western Australia to avoid the disposition of property by acts performed in the State by a person resident in the State’.Footnote 98
That conclusion is consistent with English authority,Footnote 99 but two points should be noted. First, Sir Donald Nicholls V-C has stressed the importance of exercising discretion.Footnote 100 Section 89(1) does not expressly include a discretion, but in the right case the court could decline jurisdiction on forum non conveniens grounds as a means of avoiding the extraterritorial application of the statute in circumstances where the court had concluded that the dispute did not have a sufficient connection with the forum.Footnote 101
Second, Pullin JA adopted the usual approach of simply asking whether Parliament intended the statute to apply extraterritorially. But as Dicey points out, this is an artificial and potentially dangerous approach, because ‘ex hypothesi the legislature gave no thought to the matter’ of whether a given provision should apply extraterritorially. The alternative method is to ‘apply general principles derived from the conflict of laws—i.e. first characterise the question … and then apply the relevant conflict rule to the question so characterised’.Footnote 102 Where the plaintiff sought to impugn the transfer of the Malaysian land to the first and third defendants—and thus challenge their title—there is an argument that the result of this process should have been the application of the lex situs.Footnote 103
That leads us to a related question: could the court have refused relief on the basis that it could not be implemented at the situs (for example because the lex situs had destroyed the equity)?
The defendants objected to the Court's jurisdiction on the basis, inter alia, that the Court's judgment would not be entitled to recognition and enforcement in Malaysia. In particular, they argued that the Torrens system in Malaysia meant that the wife and daughter's interest in the land was indefeasible except in the case of actual fraud, and mere knowledge of a prior interest would not suffice. The Court of Appeal accepted that proposition as correct in both Australian and Malaysian law, but held that it was arguable that there had been actual fraud sufficient to defeat title.Footnote 104
The Court of Appeal appeared to accept that Malaysian law might have governed the question of indefeasibility of title to Malaysian land. However, this immediately created a disjunction, because (on the Court of Appeal's approach) the question of whether the disposition which gave rise to that title was a fraud on the second defendant's creditors was governed by Western Australian law.Footnote 105 The Court may be taken to have accepted that if the wife and daughter were not complicit in the fraud then their title would be indefeasible, whatever interest the plaintiff could establish under Western Australian equity or statute; but that was a matter for trial.Footnote 106Dicey suggests that:Footnote 107
an English court may exercise in personam jurisdiction over a transferee of land to enforce an equity which, according to English law, binds the third party. If, however, according to the lex situs, that equity is extinguished upon transfer to the defendant, then there would be no right for the claimant to enforce in England.
This is consistent with Hicks v Powell, where the Lord Chancellor found that the Indian statute had ‘swept away’ the plaintiffs' equitable interest.
The Court of Appeal's approach may have been defensible on an interlocutory application, but Hasluck J's decision to grant summary judgment on the merits (in default of defence) is more troubling. The Judge concluded that ‘the wife and daughter were aware … well before the transfer of the No 2 Malaysian property, that the second defendant had substantial debts, … [and thus] it is inconceivable that the wife and daughter were unaware of the second defendant's insolvency and his fraudulent intention’.Footnote 108 Thus order 2 specifically records that the first and third defendants had sufficient notice for the purpose of section 89(3). But Hasluck J appears to have proceeded on the assumption that only Australian law was relevant,Footnote 109 and appears not to have given any consideration at all to the question of the effect of indefeasibility of title under Malaysian law. It may be that the wife and daughter's knowledge and participation was sufficient to constitute actual fraud or that the plaintiff's equity survived registration, but in circumstances where Hasluck J was essentially reversing a transfer of land executed according to the lex situs, the lack of analysis is problematic. The defendants had filed expert affidavit evidence on the content of the Malaysian indefeasibility rules, including extracts from the relevant legislation. But they did not appear at the hearing before Hasluck J, and so their expert did not give evidence at the hearing.Footnote 110 Although one might argue that this did not constitute sufficient proof of the content of Malaysian law,Footnote 111 that is an unattractive answer in circumstances where the Court of Appeal had already suggested that Malaysian law was the same as Australian law and the meaning of ‘fraud’ in terms of the relevant statutes appeared to be well settled.Footnote 112
C. The Extent of the Relief
It is tautologous to say that the court acting in personam may only grant a remedy in personam. It may not adjudicate on the land's ‘title or disposition as against the whole world’.Footnote 113 But of course an order in personam may well result in the conveyance of the land. So Cheshire observes that the English court cannot effect a direct transfer of land in New York from a mortgagee to mortgagor, but can ‘indirectly produce the desired result by saying to the recalcitrant mortgagee: “… if you refuse to take the steps required … for a reconveyance of the property to the mortgagor, we shall imprison you or sequestrate your English property until you comply.”’Footnote 114
Dicey addresses this principle in terms of whether the court will be able effectively to supervise the execution of its decree: so it will not order the sale of foreign land at the request of a mortgagee, but will order foreclosure on a mortgage of foreign land.Footnote 115
The Privy Council's decision in Pattni v Ali is instructive.Footnote 116 The respondents had agreed to sell the appellant their shareholding in a Manx company, in a contract governed by Kenyan law. The appellant paid the purchase price and then successfully sued in Kenya for specific performance. The registrar of the Kenyan court ordered the respondents ‘to transfer all the 100% shares’ in the company to the appellants. The respondents commenced proceedings in the Isle of Man asserting a beneficial interest in the shares; in response the appellant relied on the Kenyan judgment as an estoppel and filed his own petition seeking rectification of the share register to effect the transfer.Footnote 117
The respondents' primary argument was that the Kenyan registrar's order purported to act in rem on property outside Kenya and was thus unenforceable. Lord Mance (speaking for the Committee) was unimpressed by that submission. He acknowledged the general principle that the ‘actual transfer or disposition of property’ is a matter for the legislature and courts of the situs, and accordingly that ‘in the unlikely event that the courts of state A were to purport actually to transfer or dispose of property in state B, the purported transfer or disposal should not be recognised as effective in courts outside state A.’Footnote 118 However he distinguished this from a judgment ‘determining the contractual rights of parties to property’.Footnote 119 Far from ‘purporting actually to … deal with the shares’ or otherwise alter the register, the Kenyan order simply determined the parties' rights and responsibilities in relation to them, and in that sense was ‘a classic order in personam for specific performance’.Footnote 120 Indeed, even if the order had purported to operate in rem, Lord Mance suggested that it might still have had in personam effect between the parties inter se even if was not effective against the whole world.Footnote 121 The implication of Lord Mance's speech is that a court should try to save the foreign court's judgment; it will only be refused enforcement if, and to the extent that, it purports to actually transfer land or determine title as against the whole world.
In Singh v Singh, the orders included the declaration of a constructive trust and consequential relief.Footnote 122 Most of that relief is unobjectionable, including the orders that the defendants take certain steps to enable the voidable transfer to be unwound (being the equivalent of the order for specific performance in Pattni). Order 3 is slightly more problematic. It declares that the transfer of the land to the first and third defendants is ‘void as against the plaintiff’. While that may be the effect of section 89(1), it is doubtful whether that is something that the Western Australian Court can properly order. The Court can require that the defendants do what is necessary to reverse the transfer, but it could be argued that to declare the transaction void purports to affect the effectiveness of the legal transfer itself. Unless and until the first and third defendants took the necessary steps to reverse the transfer, they remain the legal owners. In light of Pattni, however, it is likely that this order would have in personam effect even if it purports to act in rem.Footnote 123
IV. ENFORCEMENT AT THE SITUS
This Part considers the second question introduced at the beginning of this article: will an English court recognize or enforce the order of a foreign court in relation to English land?
Foreign judgments and orders do not take direct effect in England. At common law, however, they may be recognized (and then potentially enforced) if they meet certain requirements.Footnote 124 One of these is that the court which gave the judgment had ‘international jurisdiction’. This in essence requires that either the defendant submitted to the jurisdiction (in advance or by appearance) or was present or resident in the forum when proceedings were commenced.Footnote 125
Will a court applying English rules recognize relief given by another court in the exercise of that other court's Penn v Lord Baltimore jurisdiction? We have already seen that the Malaysian High Court appears to have doubts about the Western Australian Supreme Court's exercise of its jurisdiction in Singh, and has injuncted the plaintiff from acting on his judgment except by applying to have the judgment recognized or enforced in Malaysia. Two issues arise. The first is whether the enforcing court is likely to regard the first court as having had jurisdiction (in the sense required for the recognition of a foreign judgment). The second raises wider issues about whether non-money judgments can be enforced at common law at all.
A. Does a Court Acting Pursuant to the Rule in Penn v Lord Baltimore Enjoy ‘International Jurisdiction’?
The English common law has long rejected the proposition that there should be perfect reflexion generally between the rules for assuming and recognizing jurisdiction.Footnote 126 So there may be circumstances in which a court may properly assume jurisdiction pursuant to the rule in Penn v Lord Baltimore where it does not enjoy ‘international jurisdiction’.Footnote 127 But where the court prima facie did have jurisdiction on a ground recognized by English rules on the enforcement of judgments (such as where the defendant submitted to the foreign court's jurisdiction), does it make a difference that the foreign proceedings concerned English land?
Dicey suggests that ‘English courts sometimes claim for themselves a wider jurisdiction than they are prepared to concede to foreign courts as being sufficient for the judgment of that court to be recognized in England as res judicata.’Footnote 128Cheshire notes that ‘any attempt by a foreign court to regulate the disposition of land outside its jurisdiction not unnaturally provokes a certain animosity in the state where the property is situated and it is doubtful whether in this particular context the English judges would be imbued with any spirit of reciprocity.’Footnote 129 Is this assessment justified? This article will first introduce the ‘leading’ case of Duke v Andler.
1. Duke v Andler
This case concerned a contract for the sale of land in British Columbia made between residents of California. Duke (the purchaser) took title to the land and subsequently transferred it to his wife, without having fulfilled his obligations under the contract. The respondents obtained an order from the Superior Court of California requiring that Duke and his wife reconvey the land; in default a Commissioner appointed by the Superior Court effected the conveyance. The vendors sued in the Supreme Court of British Columbia for a declaration that by virtue of the conveyance and/or the judgment they were the owners of the land. The Supreme Court of Canada refused to enforce the Californian judgment. The judgment is difficult, however, because Smith J for the Court appeared to rely on three different theories in finding that the Californian judgment was unenforceable:
(a) His Honour noted that title to property (and thus the question of whether Duke's transfer to his wife could be set aside) could only be judged according to the lex situs. The California court must be presumed to have applied its own law, and not the law of British Columbia, to the question, and its conclusion must accordingly be ignored even if the result may have been the same under British Columbian law.Footnote 130
(b) His Honour held that a court exercising Penn v Lord Baltimore jurisdiction acts only in personam and therefore cannot expect its judgment to be enforceable in any other court.Footnote 131 The enforcing court should accordingly not give extraterritorial effect to the resulting judgment; in other words, it should not recognize the foreign court's jurisdiction to affect land overseas.
(c) Finally, he held that if the courts of British Columbia were obliged to enforce the Californian court's in personam judgment then ‘there would be no practical difference, in effect, between such a judgment and a judgment for a debt’ and it was established that only foreign money judgments were capable of enforcement.Footnote 132
None of these theories is convincing.Footnote 133
The first reason appears to owe something to the view (recognized in cases such as Deschamps v Miller) that the question of whether a third party purchaser was impressed with the plaintiff's equity had to be determined according to the lex situs and thus exclusively by the courts of the situs. For the reasons given above, this approach should be rejected. Indeed, Smith J's reasoning proceeds on the rather perverse assumption that the Californian court applied the wrong law. A modern court in the position of the Supreme Court should rather proceed on the basis that the first court applied the proper law (in this case presumably the law of British Columbia).Footnote 134 The Court's decision is not consistent with notions of comity, efficiency, or ensuring justice.
2. International jurisdiction
The second reason involves two propositions: a judgment in personam in relation to foreign land is not intended to operate extraterritorially (because otherwise it would be operating in rem), and the enforcing court should accordingly not recognize the foreign court's jurisdiction to affect land overseas.
This analysis is reminiscent of the approach adopted by the United States Supreme Court in a number of early cases. In Fall v Eastin, the Court found that in personam decrees do not operate extraterritorially, even though they may have extraterritorial effects.Footnote 135 The Court endorsed its earlier decision in Carpenter v Strange, arguing that to hold otherwise would give the in personam decree the ‘force and effect of a judgment in rem’ and the court has no power to annul a decree or establish a title in the foreign jurisdiction.Footnote 136
But as Pattni v Ali demonstrates, the fact that an order requires a party to act in relation to foreign land does not mean that it is an order in rem. Nor does the recognition by the courts of the situs give the judgment that effect. It simply recognizes and enforces the personal obligation owed by the defendant, and can accordingly be enforced by in personam remedies such as sequestration of the defendant's assets within the jurisdiction. The Supreme Court of Canada (mis)characterized the Californian judgment as purporting to adjudicate on title itself. Once that characterization was adopted then the question of whether the Californian court's judgment should be enforced almost ‘answers itself’, but it is not at all clear that that was what the Californian court was doing.Footnote 137 Deputy Judge David Donaldson QC has thus suggested that Dicey does the decision ‘far too much honour’ and implies that it was either wrong or should be confined to its facts.Footnote 138
Commenting on Re Courtney, Gordon suggested that it was ‘almost incredible that English Courts could ever have expected their decrees in personam to receive extra-territorial recognition’.Footnote 139 But ‘it is a curious thing to accept that a court which grants an order requiring a defendant to act in a certain way abroad does not expect or intend for that order to be given extraterritorial recognition. This comes perilously close to asserting that equity is willing to act in vain.’Footnote 140 In Singh v Singh, Pullin JA was unimpressed by the suggestion that the Western Australian court's decision would not be enforceable in Malaysia. He held that this argument proceeded on the premise that the defendants would not comply with the Western Australian order, because only then would it be necessary for an official of the Western Australian court to execute the conveyance.Footnote 141
While that position is understandable, one might suggest that it was nevertheless relevant for Pullin JA to consider whether the Malaysian court would enforce the order (whatever the Australian court thought about whether it should be complied with). One cannot pretend that defendants always voluntarily comply, which is what motivates the long-standing concern that the court should not grant relief which will be a brutum fulmen.Footnote 142 In Schumacher v Summergrove Estates Ltd, the New Zealand High Court held that it was relevant to the forum non conveniens analysis that a New Zealand judgment in relation to Irish land might not be enforceable in Ireland.Footnote 143
Having disposed of those arguments, is it nevertheless true that the foreign court ceases to possess ‘international jurisdiction’ merely because the subject matter of the dispute was foreign land?
Rule 47(2) of Dicey suggests that the ‘court of a foreign country has no jurisdiction to adjudicate upon the title to, or the right to possession of, any immovable situate outside that country’,Footnote 144 but this Rule is a ‘corollary’ of the Moçambique principle, and does not tell us anything about a foreign judgment that merely relates to foreign land without determining title or possession. It is submitted that there is no basis for imposing a special restriction where the subject matter of a dispute is foreign land.
A word is necessary about the position under the Foreign Judgments (Reciprocal Enforcement) Act 1933 (the 1933 Act). Section 4(2)(b) provides that a foreign court has jurisdiction for the purposes of the Act ‘in an action of which the subject matter was immovable property’ situate in the country of the original court. This is reflected in section 4(3)(a) which provides that a foreign court shall be deemed not to have had jurisdiction ‘if the subject matter of the proceedings was immovable property outside the country of the original court’. That rule prevails over the various kinds of in personam jurisdiction that ordinarily suffice for the purposes of the Act. The effect is that even if the foreign court has sufficient in personam jurisdiction (such as by submission), the judgment will not be registrable if the subject matter of the proceedings was immovable property outside its jurisdiction.Footnote 145
It is unclear whether Parliament intended to limit these sections to cases where title or possession were in issue (like Dicey Rule 47(2)) or whether the language of ‘subject matter’ was intended to be broader. The Greer Report on which the Act was based is Delphic in this respect. It appears to suggest that the drafters deliberately did not limit section 4(2)(b) to actions in rem:Footnote 146
[I]n so far as it deals with actions in rem, [section 4(2)(b)] is entirely in accordance with the Common Law Rule. With regard to actions in respect of immovable property, the paragraph may go a little beyond the existing law, but the extension is not an unreasonable one, having regard to the fact that, where the question of title is in question, the Common Law excludes the jurisdiction of English Courts themselves and does not recognize any other jurisdiction than that of the lex situs.
The last part of that explanation begs the question whether the Committee intended the section to apply beyond the situation where questions of title (or presumably possession) were at stake. The Committee is even less helpful in relation to section 4(3), simply observing that the exclusions in that subsection ‘are in part a statement of the existing Common Law Rules and in part a rational interpretation of these rules on a point not at present covered by any precise authority’.Footnote 147
It has been held in New Zealand that an action in personam to recover purchase money due under a contract for the sale of land falls outside the equivalent to section 4(2)(b);Footnote 148 in such a case the ‘subject-matter is the contract for sale and purchase’.Footnote 149 So it was suggested that section 6(3)(b) (the equivalent New Zealand provision) was ‘confined in its operation to actions where title to or possession of property is at issue’.Footnote 150 That language is reminiscent of the Moçambique rule (and thus its reflexion Rule 47(2)). But the Judge in the latter case immediately muddied the waters by expressly leaving open the question of whether a claim for specific performance of a contract to purchase land would be within the scope of section 6(3)(b). On the test his Honour had just propounded the answer would appear to be no: the subject matter of the claim would be the contract. These decisions were concerned with the positive ground of jurisdiction, but it seems clear from the Greer Report's use of the same ‘subject matter’ language that sections 4(2)(b) and 4(3)(a) were intended to reflect each other.
In Shami v Shami Deputy Judge David Donaldson QC found that section 4(3)(a) was not limited to cases where only title or possession were in issue. That case concerned the breakdown of an Israeli marriage. In judgments of 1998 and 2003, a Tel Aviv court declared that the lease of a London flat (in the husband's name) was held by the parties in equal shares pursuant to Israeli matrimonial property law. The wife's central claim was that the English court should recognize the 1998 and 2003 judgments and thus her 50 per cent beneficial interest in the London flat.Footnote 151 The Judge observed that a ‘paradigmatic example’ of a claim the subject matter of which was immovable property was ‘one based on the obligations of a trustee or otherwise imposed on the defendant by the foreign law in a similar way to the rules of equity in England [ie Penn v Lord Baltimore jurisdiction]’. He thus concluded that ‘an Israeli judgment which declares the existence of a trust relating to land outside Israel is … not entitled to recognition’ under the Act.Footnote 152
That conclusion may well be correct, but it introduces an undesirable dissonance with the common law rules.Footnote 153 This is because the Judge went on to conclude that the judgments were entitled to recognition at common law. He explicitly chose not to follow Duke v Andler, and after noting the jurisdiction in Penn v Lord Baltimore, said that he could see ‘no reason not to accord a similar width of jurisdiction to a foreign court’.Footnote 154 In other words, he concluded in favour of symmetry between the rules for assuming jurisdiction and recognizing a foreign court's jurisdiction at common law.
That leaves us with the final reason for which the Supreme Court of Canada refused enforcement in Duke v Andler, which of the three appears the most plausible to a modern reader. But is it correct that a court will not recognize or enforce a foreign non-money judgment?
B. The Enforcement of Non-Money Judgments in English Law
Strictly speaking it has never been possible to enforce a foreign judgment at common law. Instead, a foreign money judgment is recognized as giving rise to an immediate obligation to pay the stipulated sum, and the claimant may take fresh proceedings in England to convert that debt into an English judgment.Footnote 155 Some common law jurisdictions, including Canada, have expressly held that non-money judgments are also ‘enforceable’Footnote 156—prompting suggestions that Duke v Andler has effectively been overruled in Canada.Footnote 157
Absent such a development, however, a non-money judgment may still be recognized where the necessary requirements of jurisdiction, finality and so on are satisfied.Footnote 158 It may perform a defensive function as res judicata, cause of action estoppel or issue estoppel. A successful claimant may rely on the judgment as a defence in subsequent proceedings by the defendant who seeks to relitigate the dispute. So too a defendant may rely on the foreign judgment to prevent the claimant relitigating the dispute.Footnote 159
On the basis of many of the leading texts, one might think that recognition can only perform a negative function,Footnote 160 but Professor Briggs has attacked this orthodoxy with characteristic vigour. Although Dicey generally observes the orthodox line, it suggests in a footnote that:Footnote 161
if the non-money judgment of the foreign court is entitled to recognition as res judicata, the fact that it cannot be enforced as a debt may be of limited practical significance, for if proceedings which have to be brought on the original cause of action can be cut short by showing the issues of substance to be res judicata, with only the question of remedy left for the original decision of the English court, the technical unenforceability of the foreign judgment is merely a detail.
Thus the successful claimant may use the foreign judgment as a ‘short-cut’ to bypass relitigation of the issues of substance.Footnote 162 How does this function operate where the foreign judgment concerns land in the forum of the enforcing court?
Again, Pattni v Ali is instructive. The appellant first deployed the Kenyan judgment in an orthodox defensive fashion in the Manx proceedings. However the appellant then sought to use the Kenyan judgment as the basis for his positive claim for rectification of the share register. Lord Mance had no difficulties with the judgment performing this positive function.Footnote 163 Briggs has explained the case on the premise that the parties' appearance in the Kenyan proceedings constituted a ‘tacit agreement’ that the resulting judgment was liable to be enforced. ‘A mutual personal obligation to abide by the judgment resulted from the tacit agreement; that obligation was liable to be enforced by action brought in the Manx court’.Footnote 164 Be that as it may, the Privy Council was not called on to answer that question.Footnote 165
There is positive authority that non-money judgments will not be enforced. In Airbus Industrie GIE v Patel, the Bangalore court had already granted an anti-suit injunction to the same effect as the injunction which the applicant sought in England. The applicant's first ground for seeking an injunction in England was that the Commercial Court should essentially replicate the Bangalore injunction. Counsel for the applicant argued, in terms reminiscent of Briggs' analysis of Pattni, that the order of the Bangalore court ‘created an obligation on the English defendants not to litigate their claims against Airbus anywhere outside India’. That, he argued, was ‘analogous to the creation of a judgment debt’.Footnote 166 Colman J disagreed. He noted that ‘[t]here has never been a general principle that any other orders of a foreign court can be enforced’. He cited the obligation theory of enforcement and noted that ‘recognition for the purposes of defence or estoppel is based on the quite different principle of the discouragement in the interests of justice of relitigation’.Footnote 167 In the House of Lords, Lord Goff appeared to endorse Colman J's conclusion, noting that enforcement of the Indian order was ‘not possible’ and that Airbus had not appealed against Colman J's refusal to enforce or recognize the Indian order.Footnote 168
Colman J drew support from section 8 of the 1933 Act. Section 8(1) addresses what Colman J describes as cause of action estoppel: it provides that ‘a judgment to which Part I of this Act applies or would have applied if a sum of money had been payable thereunder … shall be recognized in any court in the United Kingdom as conclusive between the parties thereto in all proceedings founded on the same cause of action and may be relied upon by way of defence or counter-claim in any such proceedings’.Footnote 169 The final clause suggests that such a judgment can only operate defensively.
Section 8(3), on the other hand, provides that a judgment may still be recognized ‘as conclusive on any matter of law or fact decided therein if that judgment would have been so recognized before the passing’ of the Act. That does not appear to be limited to defensive operation, and lends support to Briggs' ‘short-cut’ theory.
Shami v Shami is authority that the non-money judgment of a foreign court in relation to English land can be recognized and thus ‘enforced’ at common law.
The wife claimed that the judgments were entitled to recognition under section 8 of the 1933 Act. The Judge recognized the apparently paradoxical effect of section 34 of the Civil Jurisdiction and Judgments Act 1982, in that it appeared to preclude the commencement of fresh proceedings in England for the purpose of giving effect to the recognition of a foreign judgment. But the Judge explained away that concern on the basis that here the wife was seeking to rely on the judgment in a positive way, and the real dispute was whether it was entitled to recognition. He thus concluded that the effect of section 34 appeared to be that ‘the court must couch its declaration in terms of whether the foreign judgment is entitled to recognition, rather than declaring the beneficial interest, but the difference appears to me without practical significance’.Footnote 170 That must be the right result. It was not the intention of the legislature in drafting section 34 to preclude successful claimants from obtaining recognition or enforcement, but to prevent relitigation.Footnote 171
The Judge went on to conclude that the statutory regime did not apply, because the judgments concerned ‘matrimonial matters’Footnote 172 and because the ‘subject matter of the proceedings was immovable property’. But, as explained above, he concluded that the Israeli court had international jurisdiction under the common law rules.
This, of course, required the Judge to confront the decision in Duke v Andler. For the reasons given above, his Honour did not feel bound to follow that decision.Footnote 173 In any case, he did not regard the Supreme Court's distinction between money and non-money judgments as controlling. He thus found that he was ‘bound to recognise and apply whatever points of law and fact were decided in the two Israeli judgments’.Footnote 174
The Judge concluded that the 2003 judgment clearly determined that the wife was entitled to a 50 per cent beneficial interest in the London flat. What is particularly striking is the extent to which the Judge deferred to the Israeli court. He clearly held serious reservations about the adequacy of the reasoning behind the Israeli court's conclusion—indeed no substantive reasons had been given—and concluded (examining the question with reluctance) that he would not have found that such a beneficial interest existed if he had been required to decide the question himself. Yet he nevertheless stressed that it was irrelevant whether the reasons in the foreign judgment appeared ‘comprehensible, adequate or justified’ and it should not be questioned on the merits.Footnote 175 He was particularly influenced by the fact that this was a case in which it clearly was appropriate for the Israeli court to adjudicate in relation to foreign land, because juridically-speaking the case was almost entirely connected with Israel. His decision is a useful reminder that in a case involving foreign land, it will sometimes be appropriate for the situs to cede its prerogative.
V. CONCLUSION
The subject of this study has been curiously neglected by the common law. The Moçambique rule itself has limped along, curtailed by legislative reform but somehow surviving.Footnote 176 At least its effect is clear enough. The same cannot be said for the rule in Penn v Lord Baltimore; 250 years later we still are not even sure whether it represents an exception or a stand-alone principle.Footnote 177 More problematically, English law is still dependent on old cases decided in a very different context to answer an apparently simple question: in what circumstances can an English court enforce a contract or equity in relation to foreign land?
Complications will always arise when a court is asked to assume jurisdiction over a dispute involving foreign land. But it is the purpose of private international law to manage such difficulties. This article has argued that a modern approach to choice of law, coupled with judicious application of the forum non conveniens doctrine, will promote comity, consistency and the interests of justice. There is no basis for automatically applying the lex fori to equitable claims, less still for limiting jurisdiction to cases where the right in question arises under the lex fori. We have seen debate about whether these are questions of jurisdiction or choice of law; but the reality is that they are both—the English court should be applying the proper law to all of the issues arising in a dispute and giving serious consideration to whether it is appropriate to assume jurisdiction where the subject matter is land in another jurisdiction.
The question of what effect the courts of the situs should give to in personam orders has been similarly neglected. The ‘leading’ case remains an 80-year-old decision that appears to have been decided on a flawed premise, and is in any case incoherent and unpersuasive. There is no reason why the English courts should not, in principle, give effect to the judgment of a foreign court enforcing a personal obligation in relation to English land.
