Swycher v Vakil

Recognition of a foreign bankruptcy order may affect a bankrupt’s standing to pursue litigation in England. The effect of the order under foreign law, including its reach to assets outside the foreign state, is a question of fact for the English court, ordinarily resolved through expert evidence. An appellate court should not interfere with findings the first-instance judge was entitled to make after hearing that evidence. Under common-law conflict rules, a bankruptcy declaration affecting the bankrupt’s status in relation to assets is a judgment in rem. A judgment may be final and conclusive although an appeal is pending. The English court may protect appellate interests by imposing conditions, but a pending appeal does not itself prevent recognition. Once recognised, the bankruptcy order deprived the bankrupt of standing to prosecute the appeals.

Mr Swycher obtained orders from Sir Oliver Popplewell in 2002, including judgment against Dr Vakil and conditions affecting his counterclaim. Dr Vakil appealed. The Court of Appeal remitted the question of his standing to the High Court after learning that a Portuguese bankruptcy declaration had been made against him on 3 July 2000.

Simon J held that Dr Vakil had no standing to prosecute the appeals because, under Portuguese law, bankruptcy deprived him of control over his assets and litigation. Dr Vakil sought permission to appeal, arguing that the bankruptcy declaration should not be recognised while Portuguese embargos or appeal proceedings remained pending, and challenging the treatment of the expert evidence. The central issue was whether the declaration should be recognised in England and, consequently, whether the appeals should continue.

Disposition. Lord Justice Chadwick proceeded in Dr Vakil’s absence. The application for permission to appeal from Simon J’s order was dismissed, and the appeals numbered 2002/1050 and 2002/1582 were struck out.

1. Proceeding in the appellant’s absence. Dr Vakil had ample opportunity to attend or arrange representation, had repeatedly failed to co-operate with the court’s processes, and had provided no sufficient reason to think that an adjournment would secure his attendance. It was therefore proper to proceed in his absence.
2. Foreign law and standing. The effect of the Portuguese bankruptcy order under Portuguese law, including its effect on assets outside Portugal, was a question of fact in the English court. Simon J was entitled, after hearing expert evidence and cross-examination, to prefer the evidence called for Mr Swycher. There was no real prospect of reversing those findings. Under Portuguese law, bankruptcy deprived Dr Vakil of the right to administer or dispose of present and future assets, including the right to litigate, and placed representation of the bankrupt or estate with the trustee.
3. Recognition of the bankruptcy order. The declaration was a judgment in rem because it affected the status of the bankrupt in relation to his assets. The relevant common-law rule was therefore Rule 35(2) of Dicey & Morris, rather than Rule 35(1), which concerned judgments in personam.
4. Finality and pending appeal. A foreign judgment may be final and conclusive although an appeal is pending. The English court may impose protective conditions where necessary. By the time of the hearing, the Portuguese annulment proceedings had been determined by a judgment final and conclusive on the merits. Any pending appeal did not prevent recognition. The Portuguese liquidator had also been given an opportunity to protect the estate. The principle was applied consistently with Nuvion v Freeman [1889] 15 AC 1.
5. Final orders. Dr Vakil’s lack of standing justified striking out the pending appeals. Mr Swycher was confirmed in the judgment obtained on 2 May 2002. No order was made on the first paragraph of the related application.

1. Court of Appeal (Civil Division): In [2004] EWCA Civ 444, the court dismissed the application for permission to appeal from Simon J’s order and struck out appeals 2002/1050 and 2002/1582 for lack of standing.
2. Court of Appeal: On 29 October 2002, permission to appeal was refused on part of the judgment, granted on other monetary and costs issues, and granted in relation to the conditions appeal. The standing issue was remitted to the High Court.
3. High Court, Queen’s Bench Division: Simon J held that Dr Vakil had no standing to prosecute the appeals or related interest proceedings, following the Portuguese bankruptcy declaration.
4. High Court, Queen’s Bench Division: Sir Oliver Popplewell made the substantive orders dated 2 May 2002 and 29 July 2002 from which the earlier appeals arose.