The Foreign Insolvency Process and Registering Judgments in the English Court – how do they interact?

In this briefing note, Gemma Newing, Head of Dispute Resolution at Rooks Rider Solicitors, looks at how the Foreign Insolvency process interacts with registering foreign Judgments in the English Court, following the recent decision by the Court of Appeal in Windhorst v Levy [2021] EWCA Civ 1802.  In this case it was held that a foreign insolvency process does not prevent the registration of a foreign Judgment in England and Wales.

Case overview

A Judgment was entered by a German Court against Mr Windhorst in 2003.  Between the period of 2005 – 2007, Mr Windhorst was subject to an insolvency plan in Germany, which contained a waiver of claims against Mr Windhorst.  No action was taken by Mr Levy, the Judgment Creditor, in relation to the Judgment; accepting he was bound by the insolvency plan.  However, German procedural law did not prevent Mr Levy from enforcing the Judgment obtained in 2003, despite the insolvency plan.

Under German procedural law, if a debtor wishes to prevent enforceability of a Judgment, an application is to be made seeking an order of unenforceability.   In 2019, Mr Windhorst made an application for an order of unenforceability, which was opposed by Mr Levy on grounds that Mr Windhorst had acknowledged the debt and made part payment.  The German Court ordered a stay of enforcement of the Judgment debt on grounds that Mr Windhorst provide a sum of security, which was not in fact paid.

In 2020 Mr Levy applied to register the German Judgment in the Courts of England and Wales.  In doing so, the German Court had provided a certificate of enforceability – namely confirming the Judgment was capable to being enforced.

The Court Proceedings and Judgment

The English Court was tasked with deciding firstly whether the German Judgment could be registered in England and secondly whether it was enforceable.

1. On the first point, the Court of Appeal held that the German Judgment was capable of registration in England and Wales. Under Council Regulation (EC) No 1346-2000, the English Court had to recognise the insolvency plan, however, given German law did not render the Judgment unenforceable because of the insolvency plan, unless a declaration is made to stay enforcement, the English Court could proceed to register the German Judgment.

2. On the point of enforceability, the Court of Appeal acknowledged that if Mr Windhorst’s application to refuse a stay were not allowed, this would put the Judgment creditor in a much better position in England in comparison to Germany. For that reason, the Court of Appeal mirrored the position adopted in Germany, namely the enforcement of the Judgment be stayed in England on the condition Mr Windhorst provided security in the same sum as that ordered by the German Court, pending the outcome of Mr Windhorst’s application in the German Court to render the Judgment unenforceable.

In so far as Brexit is concerned, the aspects considered by the Court in this case will remain applicable to Judgments of proceedings that have been instituted before 31 December 2020 – the date when the Brexit transition period came to an end.

In Summary

If you have a Judgment obtained from an overseas Court, it is advisable to take steps to register that Judgment in England, if there are sufficient grounds to do so.  As seen in this case, the Judgment creditor waited several years before taking such steps.  Obtain legal advice on your position in both the country where the Judgment originated and England where the Judgment is to be recognised, and act promptly.  Failure to do so could damage your prospects of getting paid from the Judgment debtor.

For more information and assistance on this or any other, please email lawyers@rooksrider.co.uk.

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Written by Elizabeth Sam, Conveyancing Paralegal in the Real Estate team at Rooks Rider Solicitors….