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Baker McKenzie launches Cross-Border Enforcement Center – providing analysis of the enforcement of court judgments and arbitration awards across 44 jurisdictions

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Baker McKenzie launches Cross-Border Enforcement Center – providing analysis of the enforcement of court judgments and arbitration awards across 44 jurisdictions

Baker McKenzie launches Cross-Border Enforcement Center – providing analysis of the enforcement of court judgments and arbitration awards across 44 jurisdictions

23rd September 2020

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Baker McKenzie has launched the Cross-Border Enforcement Center, a report that draws on the expertise of the Firm’s global dispute resolution team, comprising more than 1 000 lawyers in 78 offices around the world. The multi-jurisdictional team collaborated to produce a high-level comparative analysis of the enforcement of court judgments and arbitration awards across 44 jurisdictions. The report outlines procedures for the enforcement of foreign judgments and arbitration awards, including details regarding applicable laws and conventions in each of the 44 countries, along with an assessment of the time and costs involved. A section of the report allows readers to compare ratings on the ease of enforcement in all 44 jurisdictions, and will be useful in cross-border transactions and for organisations with operations in multiple countries.

There have been sustained efforts in recent years to improve enforcement of foreign judgments and awards across global borders. The New York Convention continues to gain signatories with only a handful of jurisdictions now outside of its scope. The Hague Convention on Choice of Court Agreements, which allows judgments of one jurisdiction to be enforced in another (provided a choice of court clause exists) has gained significant momentum, with numerous new signatories and its first enforcement case. The more ambitious Hague Judgments Convention, which allows for cross-border recognition of judgments in specified situations, even without a choice of court clause, was concluded in July 2019, after 27 years in development, and now has its first signatories. The Singapore Mediation Convention, which aims to ensure cross-border enforceability of settlement agreements arising from mediation, was launched last year and has been ratified by several jurisdictions.

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Darryl Bernstein, Head of Dispute Resolution at Baker McKenzie in South Africa, notes that organisations with cross-border operations must negotiate a myriad of laws and regulations in a challenging environment and as a result, cross-border legal compliance and the speedy resolution of disputes has become critical.

“To ensure compliance within short timeframes, organisations must be able to navigate policies and legal frameworks of target locations in multiple jurisdictions, all at the same time. As such, this report is aimed at distilling and simplifying enforcement complexities across 44 countries, highlighting a key focus area for the efficient resolution of cross-border disputes -  the enforcement of court judgments and arbitration awards.”

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Referring to the South African section of report, Bernstein notes that, “There are no bilateral treaties or multilateral conventions in force between South Africa and any other jurisdiction, on reciprocal recognition and enforcement of judgments.”

The present position in South Africa, however, is that even if there is no reciprocal arrangement, it is still possible to enforce a foreign judgment in the country.

“If a foreign judgment is not directly enforceable, but constitutes a cause of action, it will be enforced by the country’s courts on application, provided that the court that pronounced the judgment had jurisdiction to entertain the case, according to the principles recognised by South African law concerning the jurisdiction of foreign courts. Enforcement also depends on whether the judgment is final and conclusive in its effect and has not become superannuated, and whether the recognition and enforcement of the judgment by the country’s courts would not be contrary to public policy. Further, the judgment should not have been obtained by fraudulent means and must not involve the enforcement of a penal or revenue law of the foreign state. The enforcement of the judgment  can also not be precluded by the provisions of the Protection of Business Act.  

In terms the difficulties in enforcing a foreign judgment in South Africa, Bernstein explains that according to the Protection of Businesses Act, no foreign judgment in respect of multiple or punitive damages may be recognised or enforced in the Republic. “Multiple or punitive damages” is defined as that part of the amount of damages awarded, which exceeds the amount determined by the court as compensation for the damage or loss actually sustained by the person to whom the damages have been awarded. 

“Apart from this, our courts will not go into the merits of the case adjudicated upon by the foreign court and will not attempt to review or set aside its findings of fact or law,” he notes. 

In terms of the enforcement of foreign arbitration awards, Bernstein notes that South Africa is a signatory to the New York Convention, which provides a framework for the enforcement of such awards for all its signatories. In addition, and in light of the relatively newly commenced International Arbitration Act, there are now no unusual difficulties in enforcing such arbitration awards in South Africa. One aspect of the International Arbitration Act was to amend the Protection of Businesses Act to exclude its application in respect of foreign arbitration awards.

According to the interactive comparative rating analysis contained in the report, the ease of enforcing foreign judgments is considered to be “moderate” (as opposed to easy or difficult) in South Africa. Enforcement of foreign judgments is also considered to be moderate in other EMEA countries such as the Czech Republic, Hungary, Russia, The Netherlands, Saudi Arabia, Spain, Switzerland, Turkey and the United Arab Emirates (UAE). 

In contrast, the enforcement of foreign judgements is rated as “’easy”’ in Austria, Belgium, England and Sweden, for example. Enforcing such judgments is also mostly easy (where bilateral treaties apply or depending on the facts of the case)  in Belarus, France, Germany, Italy, Kazakhstan, Luxembourg, Poland and Uzbekistan. 

Due to South Africa being a signatory to the New York Convention and in the face of the International Arbitration Act, the enforcement of foreign arbitration awards is rated as "’easy”. Similarly, such enforcement is rated easy in Austria, Belarus (subject to potential political issues), England, France, Germany (depending on the facts of the case), Italy, Kazakhstan, Luxembourg, The Netherlands, Sweden and Uzbekistan (subject to potential political issues and corruption influence over local courts).

The ease of enforcement of foreign arbitration awards is rated as “moderate” in Belgium, Czech Republic, Hungary, Poland,  Russia and Saudi Arabia, Spain, Turkey, Ukraine and the UAE.

“The ability to adapt to the uncertain post-pandemic environment lies in using global, multidisciplinary teams to solve the problems that breach borders. This multi-jurisdictional collation of information, which is available for analysis and comparison at the push of a button, can assist in facilitating the seamless resolution of disputes across multiple borders,”  Bernstein adds.

The new report is available as an electronic handbook and in interactive website format, here: https://www.bakermckenzie.com/en/insight/publications/2020/09/cross-border-enforcement-center

 

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