Enforcing foreign judgments by winding up just got easier

In a recent case High Court decision (Re a Company [2024] EWHC 1070 (Ch)), the issue of whether any limitation period applied to prevent the presentation of a winding up petition based upon a foreign judgment debt was considered.

Facts

A judgment (USD $776,907) was obtained in the Lebanese Courts  in 2010. It was subsequently appealed but ultimately the judgment was upheld. The creditor sought payment of the debt in England and issued a winding up petition. The debtor applied to the High Court to restrain the presentation of the petition.

The Lebanese judgment debt was not within the ambit of the statutory judgment registration schemes under the Administration of Justice Act 1920 (1920 Act) or the Foreign Judgments (Reciprocal Enforcement) Act 1933 (1933 Act), nor had a CPR Part 7 claim been initiated (which in effect would have converted the foreign debt into an English judgment debt).

Decision

Applying the recent decision in Drelle -v- Servis-Terminal LLC [2024] EWHC 521 (Ch), the court held that the foreign judgment debt could serve as the basis for the presentation of a winding up petition as a matter of English common law.

But as the judgment debt was originally obtained in 2010, what was the position on limitation?

The court held that the foreign judgment debt was a judgment. It applied the same limitation rules as would apply to an English judgment debt), a six-year limitation period to any action on a judgment applied (section 24 of the Limitation Act 1980 (the 1980 Act)).

Was the winding-up petition statute barred?

No, the court followed the decision in Ridgeway Motors (Isleworth) Ltd -v- ALTS Ltd [2005] EWCA Civ 92 and held that insolvency proceedings were not an “action on a judgment” for the purposes of section 24 of the 1980 Act and were not therefore within the scope of the 1980 Act. Nor was there any common law limitation period.

Accordingly, no limitation period applied to prevent a winding up petition being presented and the application to restrain presentation of the winding-up petition was dismissed.

The judge stated: “There is no necessity to obtain an English judgment to found a winding up Petition. The debt is incontrovertibly owed. There has not been satisfaction of the debt. The failure to pay the debt is of itself an act of insolvency, so the underlying solvency of the Applicant is not relevant to my considerations.”

The decision is helpful for international parties that may be involved in litigation outside the UK and who may be faced with dealing with enforcement of the judgments of foreign courts.

For further information on debt recovery issues, please contact Sharon Williamson.