Eliades & Ors v Lewis

Where a composite foreign judgment contains both multiple damages and separately quantified compensatory damages, section 5 of the Protection of Trading Interests Act 1980 prevents enforcement only to the extent that the award was calculated by multiplying compensation. The multiple-damages component does not render the whole judgment unenforceable.

The court should identify the part falling within the statutory exception. If the remaining part can readily be distinguished, separated and quantified, it should be recognised and enforced. The form of a single aggregate judgment does not prevent severance.

The decision does not determine whether the basic compensatory component of an award that was itself multiplied can be enforced.

The claimant obtained a New York judgment against his former managers and promoters for breach of fiduciary duty, fraud and violations of the Racketeer Influenced and Corrupt Organisations Act. The final judgment totalled US $8,065,805 and included a separately identifiable treble-damages award of US $1,188,246.

Master Whitaker entered summary judgment in England. Nelson J dismissed the defendants’ appeal and permitted enforcement subject to an undertaking concerning the applications to treble the American award. Subsequent orders in New York incorporated the trebled amount into one composite judgment.

The defendants appealed. The central issue was whether section 5 of the Protection of Trading Interests Act 1980 rendered the entire composite judgment unenforceable, or only its separately identifiable RICO element.

1. Appeal dismissed. Potter LJ delivered the leading judgment. Carnwath LJ and Jacob LJ agreed. The claimant was entitled to summary judgment for US $5,877,559, together with interest to be assessed if not agreed.

2. Section 5 of the Protection of Trading Interests Act 1980 is hostile to multiple damages. It precludes enforcement of the whole multiplied award, including the basic compensation to which the multiplier was applied. Its language did not, however, answer whether an independently calculated compensatory award became unenforceable merely because it appeared in the same judgment as multiple damages.

3. The provision is a statutory exception to the longstanding common-law recognition and enforcement of foreign judgments. Its ambiguity should be resolved purposively. Neither the legislation’s policy nor the authorities supported the draconian result that unrelated compensatory damages should become unenforceable because local procedure combined them with a multiplied award in one judgment.

4. A court faced with an objection to enforcement should determine whether and to what extent the foreign judgment falls within the relevant exception. If the unobjectionable portion can readily be distinguished, separated and quantified, that portion should be recognised and enforced. A single aggregate money judgment does not prevent severance.

5. Accordingly, section 5 barred proceedings only to the extent that the New York judgment comprised an amount calculated by multiplying compensation. The RICO element of US $1,188,246 was separately identifiable and excluded. The remaining compensatory awards were enforceable, subject to the agreed US $1 million set-off.

6. Jacob LJ reached the same construction without relying on parliamentary materials. An interpretation making enforceability depend on whether local procedure produced one judgment or several would be arbitrary and severely unjust. The statutory purpose was achieved by enforcing purely compensatory awards while excluding multiplied awards.

7. The parties had not disputed that the entire RICO element, including its basic compensatory component, was unenforceable. Jacob LJ therefore emphasised that the court did not decide whether the unmultiplied part of a multiplied award could itself be enforced.

1. Court of Appeal (Civil Division): The defendants’ appeal was dismissed unanimously. Summary judgment was ordered for US $5,877,559, together with interest.

2. High Court, Queen’s Bench Division: Nelson J dismissed the defendants’ appeal on 28 February 2003 and upheld enforcement, subject to the claimant’s undertaking to withdraw the applications to increase the American judgment.

3. Master: Master Whitaker entered summary judgment on 1 August 2002 for US $6,273,641, together with interest and costs to be assessed.

4. United States District Court, Southern District of New York: The claimant obtained judgment for compensatory and RICO damages. The judgment was subsequently entered for US $8,065,805, including the trebled RICO award.