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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Merchant International Company Ltd v Natsionalna Aktsionerna Kompaniia Naftogaz  EWCA Civ 196 (29 February 2012)
Cite as:  1 CLC 396,  EWCA Civ 196,  CP Rep 25,  2 All ER (Comm) 1,  WLR(D) 51,  1 WLR 3036
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ON APPEAL FROM QUEENS BENCH DIVISION, COMMERCIAL COURT
David Steel J
2010 Folio 445
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE HOOPER
LORD JUSTICE TOULSON
| MERCHANT INTERNATIONAL COMPANY LIMITED
|- and -
|NATSIONALNA AKTSIONERNA KOMPANIIA NAFTOGAZ
Mr Michael Beloff QC and Mr Robert Palmer (instructed by Hogan Lovells International LLP) for the Respondent
Hearing date: 8 February 2012
Crown Copyright ©
Lord Justice Toulson:
Power to set aside a default judgment
"1. In any other case, the court may set aside or vary a judgment entered under Part 12 if –
(a) the defendant has a real prospect of successfully defending the claim; or
(b) it appears to the court that there is some other good reason why –
(i) the judgment should be set aside or varied; or
(ii) the defendant should be allowed to defend the claim.
2. In considering whether to set aside or vary a judgment entered under Part 12, the matters to which the court must have regard include whether the person seeking to set aside the judgment made an application to do so promptly."
"6. The defendant has accordingly been finally and conclusively adjudged by the Commercial Court of the City of Kiev and/or the Supreme Commercial Court of Ukraine to be liable to pay the claimant the total sum of US$ 24,719,564.
7. The defendant is accordingly indebted to the claimant in the said amount which the claimant claims in this action."
"…the court may not renounce the consideration of all circumstances of the case in their entirety, guided by the law, only for the reasons that the case has been considered by the courts on repeated occasions and over a long period of time, and the arguments adduced by the parties had already been considered at the trial of this and other cases…Under the procedural rules, the Commercial Court shall assess the evidence in accordance with its own convictions and, therefore, the court may not base its decision on any conclusions reached by some other courts, because the opposite would result in a violation of the requirement for the court to examine all circumstances of the case at first hand."
"…the court can see no legal grounds for limiting the fresh trial of this case only to the verification of how the newly discovered circumstances affected the merits of the decisions, which have already been set aside."
"However, the need for certainty does not mean that rules should be applied so inflexibly as to make it impossible to take into account the dictates of humanity and fairness."
"In so far as recovery of money from the respondent in favour of the claimant does not meet the requirements of laws and would lead to their violation, not their enforcement, that recovery cannot be deemed to be a consequence of a fair hearing to ensure humanity and fairness. It is therefore impossible to conclude that a claim must be allowed out of consideration for ensuring legal certainty, i.e. for the sake of protecting one aspect of the principle of the supremacy of the law (legal certainty) at the cost of ignoring another aspect (legality)."
"In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law…"
"Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law…"
Judgment of David Steel J
"Accordingly, a foreign judgment will not operate as a res judicata in England unless it is a res judicata before the foreign court according to the foreign law."
Even if the setting aside of the original judgment fell foul of article 6 (contrary to Naftogaz's submission) the fact remained that there was no Ukrainian judgment left to recognise and the only remedy available to MIC would be to complain to the Strasbourg court, as MIC has done.
Arguments on the appeal
"A judgment shall be recognised only if it has effect in the State of origin, and shall be enforced only if it is enforceable in the State of origin."
"However, the court does not deem it necessary for the purposes of its examination of the present to case to determine the general issue concerning what standard should apply where the enforcing State as well as the State whose court gave the contested decision is a Contracting Party to the Convention and where the subject-matter is one of substance (i.e. here, the freedom of expression) rather than procedure. In the particular circumstances it suffices to note that the Swedish courts found that the requested enforcement (in respect of the award of compensation and costs made in the Norwegian judgment) was neither prevented by Swedish public order or any other obstacles under Swedish law."
"A foreign judgment is impeachable on the ground that its enforcement or, as the case may be, recognition would be contrary to public policy.
A foreign judgment may be impeached if the proceedings in which the judgment was obtained were opposed to natural justice."
"24. The right to a fair hearing before a tribunal as guaranteed by article 6.1 of the Convention must be interpreted in the light of the Preamble to the Convention, which declares, in its relevant part, the rule of law to be part of the common heritage of the Contracting States. One of the fundamental aspects of the rule of law is the principle of legal certainty, which requires, among other things, that where the courts have finally determined an issue, their rulings should not be called into question.
25. This principle insists that no party is entitled to seek a review of a final and binding judgment merely for the purpose of a rehearing and a fresh decision of the case. Higher courts' power of review should be exercised for correction of judicial mistakes, miscarriages of justice, and not to substitute a review. The review cannot be treated as an appeal in disguise, and the mere possibility of two views on the subject is not a ground for re-examination. Departures from that principle are justified only when made necessary by circumstances of a substantial and compelling character.
26. The Court should be especially mindful of the dangers inherent in the use of retrospective legislation which has the effect of influencing the judicial determination of a dispute to which the State is a party. Respect for the rule of law and the notion of a fair trial require that any reasons adduced to justify such measures be treated with the greatest possible degree of circumspection.
27. The procedure for quashing of a final judgment presupposes that there is evidence not previously available through the exercise of due diligence that would lead to a different outcome of the proceedings. The person applying for rescission should show that there was no opportunity to present the item of evidence at the final hearing and that the evidence is decisive."
1. The judgment obtained by MIC on 28 February 2011 was properly obtained and Naftogaz had at that stage no defence to MIC's claim;
2. The subsequent judgment of the SCCU relied upon by Naftogaz to deprive MIC of the English judgment offended against the principle of legal certainty regarded by the English courts as a fundamental part of the rule of law and regarded by the Strasbourg court an integral part of article 6.
Lord Justice Hooper:
The Master of the Rolls: