[View without highlighting]
[Printable RTF version]
||Neutral Citation Number:  EWCA Civ 20
||Case No: A3/2012/3229
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
Mr Justice Floyd
 EWHC 3017 (Ch)
||Royal Courts of Justice
Strand, London, WC2A 2LL
B e f o r e :
LADY JUSTICE ARDEN
LORD JUSTICE KITCHIN
|| Joint Stock Company "Aeroflot-Russian Airlines"
||- and -
||Berezovsky & Anr
Mr Philip Marshall QC and Mr Justin Higgo (instructed by Pinsent Masons Llp) for the Appellant
Mr Anthony Trace QC, Mr Thomas Grant QC and Mr Alexander Winter (instructed by Addleshaw Goddard Llp) for the estate of 1st Respondent
Mr Philip Jones QC and Ms Jennifer Haywood (instructed by Boodle Hatfield Llp) for the 2nd Respondent
Hearing date: Thursday 21 November 2013
HTML VERSION OF JUDGMENT
Crown Copyright ©
Lady Justice Arden :
Issue: Recognition of Russian judgments
- The claim in these proceedings is for the recognition and enforcement of a judgment dated 29 November 2007 of the Savelovsky District Court in Moscow, as varied by a judgment dated 31 May 2011 of the Golovinsky District Court in Moscow for 2,118m roubles, or the unsatisfied balance of that amount, claimed at 507m roubles, plus interest. I refer to these judgments as "the second Savelovsky judgment" and "second Golovinsky judgment".
- The law of England and Wales will recognise and enforce the judgment of a foreign court provided three conditions are fulfilled:
(1) the judgment was final and conclusive;
(2) there are no defences to recognition; and
(3) the court which gave the judgment had "international jurisdiction" over the defendant (meaning for this purpose that he was present, or (arguably) resident in the court's jurisdiction when served with the proceedings).
- Floyd J, as he then was, summarily dismissed the claim in this case on the ground that there was a complete defence to the recognition and enforcement of the judgments described in paragraph 1, namely public policy, by reason of the "finality principle". This principle is recognised by the common law and also by Strasbourg jurisprudence, that is, the case law of the European Court of Human Rights ("the Strasbourg court"). The finality principle will be examined in more detail below. It is sufficient to say at this stage that it prevents parties from re-opening a dispute save by an appeal or if fraud is shown. Neither of those exceptions applies here.
- The issue on this appeal is whether the judge was right summarily to dismiss the claim on this basis. The test for summary dismissal of a claim is high: the court must be satisfied that the claim has no real prospect of success.
- For reasons amplified below, having considered the parties' submissions, I consider that that test was not satisfied. The court needed to make findings of fact as to whether as a matter of Russian law the second Savelovsky judgment was final and binding under Russian law. Until that happened the court could not refuse recognition on the ground that the second Golovinsky judgment breached the finality principle. This is sufficient to decide this appeal but counsel argued further issues with which I also deal below. In my judgment, therefore, this appeal should be allowed. If my Lords agree, that means that there will have to be a trial at which the issues are fully considered. Accordingly I shall not go into the issues more than necessary at this stage.
Circumstances in which the Russian judgments were given and their unusual feature
- The second Savelovsky judgment and the second Golovinsky judgment arose out of criminal proceedings in which the first respondent ("Mr Berezovsky") (now deceased) and the second respondent ("Mr Glushkov") were convicted of defrauding the appellant ("Aeroflot") in the 1990s.
- Mr Glushkov was convicted by the first Savelovsky judgment on 3 July 2006 and ordered to compensate Aeroflot. The judgment stated that 214m denominated roubles were stolen from Aeroflot so that "Aeroflot suffered material damage on a large scale". The first Savelovsky judgment went on to hold that Aeroflot was entitled to compensation but that the amount should be referred for review under civil court procedures "since no indexation adjustment was made when the cash funds were paid into [Aeroflot's] account."
- On the same date, Mr Glushkov left Russia.
- In the ensuing civil proceedings before the Golovinsky court, Aeroflot stated in its statement of claim that "indexation of the embezzled amount had already been made during pre-trial investigation when the charge was brought, as it was funds in foreign currency, and not in Russian roubles that were credited to the accounts of [Aeroflot], therefore [Aeroflot] claims recovery of the amount stated in the judgment without requiring indexation."
- By the first Golovinsky judgment on 14 November 2006, Mr Glushkov was ordered to pay 214m roubles to Aeroflot as compensation.
- By the second Savelovsky judgment of 29 November 2007, Mr Berezovsky was convicted of defrauding Aeroflot and found liable to compensate Aeroflot for the sum of 214m roubles. Mr Berezovsky was no longer in Russia by this date.
- In 2010, Aeroflot recovered some 1,760m roubles through proceedings in Switzerland. This sum considerably exceeds the amount of the compensation then awarded to it by the second Savelovsky judgment. Aeroflot accepts that it must give credit for this recovery but there is a dispute as to whether Aeroflot made this recovery in reliance on Swiss legislation for mutual assistance in criminal matters or in reliance on the second Savelovsky judgment. For the purposes of the respondents' summary judgment application, the court must assume, should it be material, that Aeroflot's case is correct.
- On 13 April 2011, Aeroflot made what by common law standards were remarkable applications to the Golovinsky court asking for its capital loss of 214m roubles to be uplifted by the rate of inflation for the period from 1996, when it incurred its loss, until the date of the second Savelovsky judgment i.e. 29 November 2007, and for the period from the latter date until 1 March 2011 to compensate it for the increase in its loss due to inflation in those periods. This was a remarkable step because the court had already adjudicated upon its claim for compensation.
- By the second Golovinsky judgment, delivered on 31 May 2011, Aeroflot was granted indexation of its loss for the period from 1996 to 29 November 2007 so that the total amount of compensation payable to Aeroflot was stated to be increased to some 2,118m roubles. The order was made pursuant to article 15 of Part I of the Russian Civil Procedure Code, whereby "a person whose right has been infringed may demand full compensation of the losses that said person incurred, unless a smaller amount of compensation for losses is stipulated by law or a contract."
- The reasons why Aeroflot did not initially make a claim for indexation are not clear. Aeroflot may have thought that it did not need to be compensated since the misappropriated funds were in foreign currency. However, it appears that those funds had been converted back into roubles in about 2001, which meant that Aeroflot was vulnerable to diminution in capital by virtue of domestic inflation.
Why the judge gave summary judgment against Aeroflot
- In his careful and concise judgment, the judge dealt with many issues and we are concerned only with his ruling on the finality principle.
- The judge held that, in the case of both Mr Glushkov and Mr Berezovsky, Aeroflot's claim would plainly breach the finality principle. The judge gave four reasons as follows:
"79. In my judgment the decision to reopen the judgment as to the amount of damages payable was a plain breach of the finality principle. Firstly, there is no question of any facts having subsequently come to light. The indexation sought was only up to the date of the second Savelovsky judgment. Secondly, the second Savelovsky judgment assessed the amount of damages due for the cause of action. There is no suggestion that the indexation claim is a separate cause of action. Thus there is no need for Mr Berezovsky to rely on the Henderson v Henderson principle about claims which could have been brought. He says, in my view rightly, that the claim in the Indexation proceedings was a successful attempt to reopen the final, second Savelovsky judgment. Thirdly, I do not think there is a valid distinction to be made as a matter of policy between cases like Brumarescu, where the decision is set at naught, and a case like the present where a final award of damages is multiplied tenfold. The effect in both cases is that the dispute is reopened, and the defendant is twice troubled with the same litigation. Lastly, I cannot accept that Mr Berezovsky can be deemed to have anticipated that the judgment might be uplifted for indexation. No case was produced by either expert where a Russian court had done this in respect of indexation before the date of judgment. It is unrealistic to say that a party should have predicted a legal novelty."
- The judge, therefore, gave summary judgment against Aeroflot on the basis of the finality principle point. If he had not done so, there were potentially at least two triable issues:
i) whether residence without presence was sufficient in the case of either Mr Berezovsky or Mr Glushkov to found international jurisdiction over them. Neither was present in the Russian Federation by the time of the second Golovinsky judgment but they had residences in the Russian Federation. The judge did not decide whether this issue was triable, as it had not been properly pleaded.
ii) Whether Mr Glushkov had submitted to the jurisdiction of the Golovinsky court for the purposes of the indexation proceedings. The judge held that this was a triable issue. Mr Glushkov admits that he was present in the Russian Federation at the time of the criminal proceedings. If the indexation proceedings were merely ancillary to the criminal proceedings, he may in law have been present in the jurisdiction for the purposes of the indexation proceedings. The judge held that this was a triable issue.
- Mr Glushkov cross-appeals against the judge's ruling on the second of these issues, but the first issue does not fall for decision on this appeal.
What is the finality principle?
- For a principle that courts have rightly said is fundamental to the rule of law, it is surprisingly hard to find a comprehensive judicial definition. To say that it is the principle that results in a decision being res judicata is somewhat circular. I have, however, found helpful as a starting point the recent explanation given by the Strasbourg court in Varniené v Lithuania (App No 42916/04). It seems to capture the essence of the finality principle for the purposes also of the common law, and to capture the concept which the judge had in mind:
"38. Legal certainty presupposes respect for the principle of res judicata, that is the principle of the finality of judgments. This principle underlines that no party is entitled to seek a review of a final and binding judgment merely for the purpose of obtaining a rehearing and a fresh determination of the case. Higher courts' power of review should be exercised to correct judicial errors and miscarriages of justice, but not to carry out a fresh examination. The review should not be treated as an appeal in disguise, and the mere possibility of there being two views on the subject is not a ground for re-examination. A departure from that principle is justified only when made necessary by circumstances of a substantial and compelling character (see Ryabykh, cited above, para 52; Asito v Moldova  ECHR 40663/98, para 46, 8 November 2005)."
- The finality principle engages article 6 of the Convention (right to a fair trial). Article 1 of the First Protocol (protection of property) may also be engaged but in the present case that article has no greater effect than article 6, and therefore we do not need to consider it.
- In this context, "legal certainty" means the element of security that results from legal decisions becoming final and legal rules coming into force. Legal certainty is important because it smoothes the way for social and commercial interaction.
- Aeroflot submits that the finality principle in Strasbourg jurisprudence is limited to cases where a state official or body caused the later court to intervene in the proceedings in the original court. This is a common factual feature of cases on this point, but that is perhaps not surprising in the light of the fact that that possibility existed more frequently in former Soviet legal systems (see, for example, Brumerscu v Romania (App no 28342/95), Pravednaya v Russia (App no 69529/01)). However, as may be seen from the passage cited in paragraph 20 above, the Strasbourg jurisprudence is not limited to situations where the review is on the application of a state official.
- Since the finality principle is part of Strasbourg jurisprudence, the court's obligations under the Human Rights Act 1998 are engaged. In particular, sections 2 and 6 of the Human Rights Act 1998 impose on the courts (as public authorities) obligations (1) not to act in a way which is incompatible with a person's Convention rights and (2), in determining the scope of a Convention right, to take Strasbourg jurisprudence into account.
- The finality principle is also part of English public policy. English law has developed the finality principle beyond the basic principle described in the passage cited above. In particular, English law recognises:
- issue estoppel, that is, that an earlier final and binding decision will prevent any re-litigation not only of the same cause of action but also of any issue decided in it;
- the "Henderson v Henderson" principle that, if it is unjust for him to do so, a party may not raise by fresh proceedings claims which he could have raised in the earlier proceedings (Henderson v Henderson (1843) 3 Hare 100; Johnson v Gore Wood  AC 1 ), or
It is therefore important to know whether English law applies to all questions arising from the application of the finality principle. In particular, does English law govern the incidental question whether the foreign court's judgment was final and binding for the purposes of the finality principle? That is the principal issue on this appeal.
- the principle of election between remedies.
Aeroflot also raises other issues about the finality principle. It contends that there is a threshold of seriousness that a violation of the finality principle has to achieve before it precludes enforcement, and whether a party who wants to rely on the finality principle has to plead that defence before the foreign court.
Principal reason why Aeroflot's claim should go to trial: choice of law rules
By implication the judge decided that domestic law governed even the question whether the second Savelovsky judgment was final and binding. The fundamental reason for my disagreement with the judge's approach is that this conclusion was contrary to principle and authority. While I accept the submission of Mr Anthony Trace QC, for the estate of Mr Berezovsky, that the court must determine whether a matter offends English public policy by reference to English law, in my judgment there is an anterior question: what are the incidents of the foreign judgment with which the later foreign judgment is said to interfere?
In my judgment, the English courts will not hold that a later foreign judgment infringes the finality principle when it interferes with a prior judgment if under the foreign law the prior judgment was not final and binding. The test is whether the earlier judgment would have precluded the unsuccessful party from bringing fresh proceedings in the jurisdiction. The reason for this rule is obvious. If English law did not take this approach, the courts of this country could end up recognising and enforcing a judgment which is liable to be set aside and later set aside in the country in which it was made. That would clearly be unjust.
The converse would equally be unjust, namely if the English courts were to refuse to recognise and enforce a foreign judgment on the ground that it altered a prior judgment if in fact that judgment was always properly capable of being so altered. This might create a black hole in the recognition and enforcement of judgments in international law. By "properly capable", I mean in accordance with the domestic law and the Convention.
Carl Zeiss Stiftung v Rayner & Keeler Ltd  AC 853, cited by Mr Philip Marshall QC, for Aeroflot, decides the relevant principles as to choice of law, in so far as not previously established. The relevant issue in that case was whether the fact that an issue had already been determined in proceedings in West Germany meant that the same issue could not be re-litigated in English proceedings. The question was, therefore, whether the foreign judgment could give rise to issue estoppel and the House of Lords held that it could. In the course of this discussion, the House had to consider whether the conditions for issue estoppel were fulfilled. One of those conditions was that the judgment of the foreign court had been final and binding.
The House were unanimous in treating that issue as one governed by the foreign law even though the House applied English law to determine the conditions for estoppel.
Lord Reid gave the leading judgment. At page 918, Lord Reid held that the English courts had to be cautious about finding that a foreign judgment gave rise to issue estoppel because (inter alia) the courts were not familiar with foreign procedure. That concern was misplaced unless the court was concerned with foreign law. Later in his speech, Lord Reid held that a judgment was a "final judgment on its merits" if the matter could not be raised again in the foreign country. He cited Nouvion v Freeman (1889) App Cas 1. It would, in the judgment of Lord Reid, "verge on absurdity" if the English courts were to ascribe a higher status to a foreign judgment than would the courts of that country.
The other members of the House in Carl Zeiss, Lord Hodson at page 926-7, Lord Guest at page 936, Lord Upjohn at page 949 and Lord Wilberforce at pages 969-970 also applied Nouvion. Lord Wilberforce at page 970 also considered that "it would seem unacceptable to give to a foreign judgment a more conclusive force in this country than it has where it was given."
The question in Nouvion was the same as on this appeal: the claim was for the recognition and enforcement at common law of a foreign judgment and the question was whether that judgment was final and binding. The basic facts were that the judgment in question was a Spanish summary judgment which on the evidence could be re-opened and set aside by the judge who gave it, leaving the claimant free to institute a fresh action.
Nouvion is authority of the House of Lords for the proposition that, when the issue in English recognition and enforcement proceedings is whether a foreign judgment was final and binding, the choice of law rules are as follows: English law lays down the requirements for a final and binding judgment but the incidents in fact of the foreign judgment must be determined by foreign law. As Lords Bramwell and Ashbourne held in the House of Lords, the English courts could not ascribe a higher status to a judgment governed by foreign law than that foreign law would ascribe to it.
This court considered the question of the effect of a foreign judgment which violated the finality principle in its recent decision in Merchant International Company Ltd v Natsionalna Aktsionenra Kompaniya Naftogaz  1 WLR 3036. Nothing in that decision of this court is inconsistent with this analysis of the choice of law rules.
In Merchant International, the proceedings were for recognition and enforcement of a judgment of the Ukrainian Commercial Court ("UCC") against Naftogaz, a state-owned entity. That judgment was final and binding on Naftogaz under Ukrainian law and could not be appealed (per Toulson LJ at ). The issue on appeal to this court was not whether the court should recognise a foreign judgment: the court at first instance had already made such an order in default of defence by Naftogaz. The question was whether that order should be set aside because, after judgment was entered in the English proceedings, the Ukrainian Supreme Court ("USC") set aside the UCC judgment on Naftogaz's request on the basis of what was said to be material evidence about the capacity of Merchant International Company Ltd ("MIC"). Naftogaz then applied to set aside the English default judgment. Under CPR 13.3(1), the court had a discretion whether to set aside a default judgment.
The trial judge, Steel J, refused to set aside the default judgment.
This court held that the UCC order was final and binding at the time when MIC entered judgment, that Naftogaz could with reasonable diligence have investigated MIC's capacity at the original trial and that the order of the USC was in breach of the finality principle and had violated article 6 because it breached the Strasbourg legal certainty principle.
Toulson LJ (as he then was) gave the leading judgment. He confirmed that there was no difference between the principle as applied by the Strasbourg court and the finality principle. The focal point in his judgment is the discretion in the court under CPR 13.3(1): the court had to do what was just. He analysed the relevant considerations as follows. When judgment was entered in default, Naftogaz had no defence to the claim. He rejected (1) the argument that the UCC judgment was no longer capable of being recognised because it no longer existed, and (2) an alternative argument that the decision of the USC should only be set aside if the circumstances were extreme, and there was no allegation of impropriety by the USC. The default judgment was a form of property. Given the breach of the finality principle and article 6, Toulson LJ considered that this court should not exercise its discretion in Naftogaz's favour.
Lord Neuberger MR and Hooper LJ gave concurring judgments. The important point for the purposes of this case is the effect they ascribed to the USC judgment in the light of the violation of article 6 of the Convention. They were divided on that question. Hooper LJ was minded to agree with Steel J that it was to be disregarded. However, Lord Neuberger MR considered that there was force in the argument that the court had to take into account the fact that that judgment had set aside the UCC order. Nonetheless he agreed with the way in which Toulson LJ proposed to exercise the CPR 13.3(1) discretion.
Merchant International applied the choice of law rule already described: the question whether the UCC judgment was final and binding was treated as a question of the law of Ukraine. The question whether the USC violated the finality principle was a question of English law. The answer was yes.
Mr Philip Jones QC, for Mr Glushkov, accepts that foreign law might be relevant on some issues. However, he submits that it was a matter of English law to determine if the judgment was final and binding: see per Toulson LJ in Merchants International at . That paragraph has to be read with Toulson LJ's statement in  that the UCC judgment was final and binding under Ukrainian law.
I shall now draw the threads together. The issue is whether the second Savelovsky judgment is final and binding and therefore preclusive of any further order uplifting compensation by reference to inflation. Because of the choice of law rules set out in paragraphs 29 and 30 above, the court in these proceedings must resolve the question of the incidents under Russian law of the second Savelovsky judgment before it can consider whether to recognise or to refuse to recognise the judgments on which Aeroflot sues in these proceedings. It can only do that at trial since it must make findings on questions of Russian law about which there is conflicting expert evidence. Aeroflot may or may not win at trial, but the only question for this court is whether there should be summary judgment without a trial, which for the reasons given I would answer in the negative.
There is a subsidiary issue of Russian law that I have not yet mentioned. The parties take different positions on the question whether the second Golovinsky judgment varied the second Savelovsky judgment or replaced it. Mr Marshall submits that there are two orders and that, on enforcement of the second Golovinsky judgment, Aeroflot would have to give credit for any payment under the second Savelovsky judgment. He submits that this is consistent with Aeroflot's formulation of its claim in these proceedings. He further submits that the second Golovinsky judgment ought to have deducted the capital sum of 214m roubles from the judgment amount. The respondents contend that the second Golovinsky judgment in substance replaced the second Savelovsky judgment. It must follow by analogy from the choice of law rules described above that any issue of this nature, namely as to the meaning and effect of the second Golovinsky judgment, must also be determined under Russian law. Contrary to the submission of Mr Jones, we cannot determine that issue on this appeal.
This conclusion is sufficient to dispose of the appeal, but I will deal also with the other principal points that have been raised.
(1) Is Aeroflot right to contend that the foreign court's violation of article 6 must be "flagrant" to justify withholding recognition on that ground?
(2) Is Aeroflot right to contend that there is a strong presumption of Convention compliance because Russia is a fellow contracting party to the Convention?
I take these two issues together because they are in my judgment connected. Both concern the standards of review which the domestic court must adopt when it is asked to recognise and enforce a foreign judgment.
I start with the first question. The Strasbourg court has held that article 6 is engaged by an extradition decision in circumstances where the fugitive is at risk of a "flagrant" denial of a fair trial (Soering v United Kingdom (App No 14038/88) at . In this context, the Strasbourg court has held that:
"In our view, what the word "flagrant" is intended to convey is a breach of the principles of fair trial guaranteed by Article 6 which is so fundamental as to amount to a nullification, or destruction of the very essence, of the right guaranteed by that Article." (Mamatkulov and Askarov v Turkey (Apps No 46827/99 and 46951/99) at )
The judge held that article 6 did not require the enforcing court to refuse to recognise a breach of the finality principle in a Convention state unless the violation was "flagrant". Mr Marshall submits that the judge was wrong on this. The judge relied on Government of the USA v Montgomery  1 WLR 2241. That, too, was a case about an extradition request from a non-Convention state. The House applied Soering and held that the risk must be of a flagrant violation of article 6.
However, that does not mean that an enforcing court is not concerned with a violation by another Convention state of article 6 by reason of a breach of the finality principle unless the breach is "flagrant". In Lindberg v Sweden (App No 48198/99), cited by Toulson LJ in his judgment in Merchant International, the Strasbourg court refers to the requirement for a flagrant denial of justice in the context of the enforcement of foreign judgments in terms which suggest that the same test applies whether the judgment comes from a Convention or a non-Convention state (see the penultimate page of the report). That would exclude breaches of the finality principle which are not serious.
We do not need to decide in this case whether there is some threshold test of seriousness, though provisionally I would be inclined to hold that there was. While we are not in a position to say whether the finality principle was breached until there have been findings on questions of Russian law, the position surely is that, if the second Savelovsky judgment was final and binding under Russian law, then any breach of the finality principle was certainly flagrant. The second Golovinsky judgment increased the respondents' liability nearly tenfold.
Mr Marshall makes the point that the second Savelovsky judgment was increased rather than substituted. That does not seem to me to be an answer to the question whether there was a breach of the finality principle if the second Savelovsky judgment was final and binding.
The "strong presumption" of compliance, on which Mr Marshall relies, originates in Maronier v Larmer  QB 620, where Lord Phillips MR held:
"24 … As the European Court observed in Solo Kleinmotoren GmbH v Boch (Case C-414/92)  ECR I-2237, 2256, para 20, one of the fundamental objectives of the Brussels Convention [on Jurisdiction and the Enforcement of Judgments in Civil Matters 1968.] is to "facilitate, to the greatest extent possible, the free movement of judgments by providing for a simple and rapid enforcement procedure". This objective would be frustrated if courts of an enforcing state could be required to carry out a detailed review of whether the procedures that resulted in the judgment had complied with article 6.
25 Court procedures differ from one state to another and the courts of this country should apply a strong presumption that the procedures of other signatories of the Human Rights Convention are compliant with article 6. What we cannot accept is that we must apply an irrebuttable presumption that a judgment given in another member state cannot have resulted from a violation of article 6."
The desirability in general of the efficient enforcement of judgments to which Lord Phillips refers is not limited to states which are parties to the Brussels Convention.
In Merchant International, Toulson LJ rejected the contention that the courts of one contracting party to the Convention should not concern themselves with the question whether another contracting party had acted in violation of a Convention right. Toulson LJ at  of his judgment relied on the holding in Maronier but noted that it had been rebutted in that case.
In my judgment, when the court says that there is a presumption of compliance, it is not using the word "presumption" in its usual sense. Courts must for reasons of practicality proceed on the basis that until the contrary is shown they can assume that procedural steps were done properly. Likewise, courts attach no significance to procedural irregularities that have no material effect. In my judgment, they are entitled to do the same in relation to violations of article 6. Such a presumption is not inconsistent with the rule of law.
So, when a court is asked to enforce a foreign judgment, it need not actively inquire whether the foreign court was entitled to make the order it made. It is entitled to assume that the court acted in a proper way unless the contrary is proved. It should not simply judge the foreign court's procedure by reference to its own. It should require a clear breach of the finality principle to be shown. In practice it will probably be easier to review compliance with that principle by Convention states than by non-Convention states.
In my judgment, the question whether the court should apply a strong presumption of compliance with article 6 for Convention states should be read in the light of this explanation.
In the present case, however, for the reasons given in paragraphs 52 and 53 above, the presumption of compliance with article 6 would in my judgment be displaced if, following the making of findings of Russian foreign law, it is clear that the second Golovinsky judgment breached the finality principle.
(3) Were either the respondents or Aeroflot precluded by their respective failures to put their defences/case in the foreign proceedings?
In Israel Discount Bank v Hadjipateras  1 WLR 137, this court was concerned with the recognition of a foreign judgment based on an agreement which, contrary to English public policy, had been obtained by duress. At 144F-G, Stephenson LJ held that the defendant could not raise this point in the English recognition proceedings if he could have raised it in the foreign proceedings. O'Connor and Robert Goff LJ agreed with Stephenson LJ on this point (see pages 146E and 147A).
Both sides have leapt on this decision to argue, in the case of Aeroflot, that the respondents could have raised the question of finality in the indexation proceedings and, in the case of the respondents, that Aeroflot failed to raise its claim for indexation when the compensation was assessed in the second Savelovsky judgment. Mr Trace draws the comparisons between that uplift and damages for personal injury in domestic proceedings. A successful claimant cannot return to court and start new proceedings for a higher level of damages simply because he discovers that the original judgment was inadequate.
In my judgment, the appropriate time to consider these questions is after the question whether the second Savelovsky judgment was final and binding and precluded any further proceedings under Russian law has been determined, and when the full reasons for the parties acting as they did are known. They cannot be determined summarily.
(4) Is Aeroflot precluded from bringing these proceedings for the recognition of the second Golovinsky judgment because of its delay in making its claim for indexation or because of the Swiss proceedings?
Mr Trace also submits that Aeroflot is precluded from bringing these proceedings because of its delay in making its indexation claim and because it had already enforced the second Savelovsky judgment in the Swiss proceedings without the uplift for inflation. By this action, Aeroflot has estopped itself from relying on the second Golovinsky judgment or elected to pursue only the second Savelovsky judgment. Those are, he submits, matters of English law.
In my judgment, there is no evidence that the respondents took any step in reliance on Aeroflot's inactivity such as might lead to the conclusion that there was any estoppel, or that Aeroflot had the appropriate knowledge that it was making an election for the purposes of English law. Accordingly the court cannot grant summary judgment on this basis.
(5) Mr Marshall's criticisms of paragraph 79 of the judge's judgment
Mr Marshall criticised the reasons that the judge gave in paragraph 79 of his judgment (set out above). However, those reasons all stem from the judge's approach, which was to treat all questions as matters of English law. Since I have disagreed with that approach, I consider it would not to be useful to go through Mr Marshall's criticisms.
(6) Should the principle in Henderson v Henderson be applied here?
Mr Marshall submits that the remaining area is that of Henderson v Henderson but that that is not an appropriate basis on which to exclude enforcement of a foreign judgment. It was not relied on by the judge. Apart from the case of Henderson v Henderson itself, there is no authority applying the Henderson v Henderson principle to a foreign judgment. In any event it is not an absolute rule but a discretionary one: see Johnson v Gore Wood. Therefore it would not have been right to give summary judgment on the basis of Henderson v Henderson.
Mr Trace submits that, under the finality principle, the principle in Henderson v Henderson applies to exclude Aeroflot's further claim for an uplift since this was a claim that ought to have been made at the time of the second Savelovsky proceedings. The fact that Russian law does not have the Henderson v Henderson principle is the reason why the finality principle is offended. It is also offended because of article 6 of the Convention.
In my judgment, summary judgment could not be given on the basis that the Henderson v Henderson principle applies to the recognition of a foreign judgment since the House of Lords in Republic of India v Indian Steamship Co Ltd  AC 878 left that very question open. It has also not been the subject of submissions in this case. It is accepted that there is only one case in which Henderson v Henderson has been applied where the earlier claim was determined under foreign law, and that was Henderson v Henderson itself.
Conclusion on Aeroflot's appeal
Accordingly, the issue as to whether under Russian law the judgments in this case were final and binding cannot be determined on an application for summary judgment. Therefore, if my Lords agree, the appeal must be allowed and the application of the respondents for summary judgment against Aeroflot must be dismissed.
I have not yet mentioned an application that Aeroflot makes for this court to admit fresh evidence as to Mr Berezovsky's continued active participation in the proceedings concerning the compensation for Aeroflot even after he had left Russia. Mr Marshall did not pursue this application at the hearing and I would dismiss the application.
Cross-appeal by Mr Glushkov
Mr Jones contends that the judge was wrong on the international jurisdiction issue as respects Mr Glushkov. Mr Glushkov left the Russian Federation at the end of the first Savelovsky proceedings. The second Golovinsky proceedings were, he submits, clearly fresh proceedings. In my judgment, the evidence of Russian law about the incidents of the second Savelovsky judgment will be relevant to this issue. Accordingly, in my judgment, it should not be determined summarily but remitted to the trial judge. Accordingly I would dismiss the respondent's notice.
Disposal of this appeal
I would therefore allow the appeal, dismiss Aeroflot's application to adduce fresh evidence and dismiss Mr Glushkov's respondent's notice.
Lord Justice Kitchin:
I also agree.
Copyright Policy |
Donate to BAILII