A recent Court of Session decision Daniel Mikhail Zigal v Gordon Alexander Buchanan illustrates that a court judgment obtained overseas can be enforced in Scotland.
Background
It is possible for a Scottish court to accept the decision of a foreign court, and issue a judgment in similar terms, without a separate hearing of evidence on the underlying facts. This is known as the recognition and enforcement of a foreign judgment. Judgments obtained in other EU countries can (at the moment at least) be enforced easily in Scotland, but judgments from elsewhere can still be enforced in Scotland, including by making an application to the Court of Session.
Details of the case
In this case, Mr Zigal had raised a court action against Mr Buchanan, one of his business associates, in Hong Kong. Mr Buchanan didn't defend the action, so Mr Zigal obtained a court judgment against him in Hong Kong for the sterling equivalent of around £150,000.
Mr Zigal then sought to have the Hong Kong judgment accepted by the Court of Session in Scotland, presumably so that he could look to recover the sum from Mr Buchanan in Scotland, if this is where he is now based and where his assets are.
The Court of Session had the power to allow the Hong Kong judgment to be enforced in Scotland unless Mr Buchanan was able to successfully challenge that. There are a limited number of grounds for challenging a foreign judgment, such as that there was fraud in the original action or the judgment is contrary to public policy.
In this case, Mr Buchanan challenged the Hong Kong judgment on the basis that the court papers had not been served on him validly. Mr Zigal's position was that the papers were given to Mr Buchanan in an envelope at a Hong Kong bar at 11.30pm by Mr Zigal's father and another individual, who told him that he had been served, and that Mr Buchanan said "I don't want this", dropped the envelope and then left the bar. However, Mr Buchanan claimed this was incorrect, and in fact he had been assaulted by five or six men dressed in black. Mr Buchanan also challenged the judgment on the basis that he wasn't resident in Hong Kong at the time of the action.
The Court's decision
The Court of Session found that Mr Buchanan had not successfully challenged the Hong Kong judgment. Regarding service of the court papers, there was evidence that what Mr Zigal claimed happened in the bar had occurred. Although this would not amount to sufficient service of court papers in Scotland, it appeared to be valid in Hong Kong (and had been accepted by the court there), which was all that was required. Mr Buchanan's evidence that he had been attacked was rejected as he was found to be argumentative and evasive. The Court of Session also held that he was resident in Hong Kong when the court papers were served on him, based on previous evidence given by Mr Buchanan.
Key points
The key points to take away are:
- If a court action is raised against you or your business in a foreign country, it is important to defend the action in that country to avoid a judgment being issued against you
- If a judgment is issued, that can potentially be recognised and enforced against you in Scotland - especially if this is where your assets are
- The Scottish courts will not look into the underlying facts of the foreign judgment. Instead you will only have a limited number of grounds for challenging it. Doing so is difficult, as this case shows. We would recommend that you take local legal advice regarding defending the original action in the foreign court rather than waiting until an application is made to enforce the judgment in Scotland
We regularly advise clients on the enforcement of foreign judgments. If you have any queries about this, please contact Monica Connolly or your usual Brodies contact.
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