Fonu v Demirel & Anor

Permission to serve proceedings out of the jurisdiction to enforce a foreign judgment does not depend on proof that the judgment debtor presently has assets in England. Under CPR 6.20(9), the claimant must establish a good arguable case that the rule applies and must show that England and Wales is clearly the appropriate forum.

For a public-law objection, the relevant question is whether the claim seeks to exercise or assert sovereign authority in England. The court must characterise the claim according to its substance under English law. A foreign state entity may enforce rights which could equally belong to a private person, even if the rights are treated as public receivables under foreign law.

TMSF, a Turkish public entity, sought to enforce three Turkish civil judgments against Mr Demirel at common law. Permission had been granted to serve the proceedings out of the jurisdiction, together with a worldwide freezing injunction. Two judgments had not been properly finalised, and the application remained live only in respect of the judgment equivalent to US$30 million.

Mr Demirel applied to set aside service and discharge the injunction. He argued that there were no assets in England, that England was not the appropriate forum, and that enforcement would indirectly enforce Turkish public law. The central issues were whether assets in England were required for jurisdiction under CPR 6.20(9), whether England was clearly the appropriate forum, and whether the claim was inadmissible as an attempt to enforce foreign public law.

1. The application was allowed in part. The proceedings continued in respect of the US$30 million Turkish judgment. Permission to serve out was set aside in respect of the other two judgments, and the freezing injunction was discharged because disclosure had been given, no assets were located in England, and its effectiveness as regards foreign assets was doubtful.

2. Under CPR 6.20(9), the presence of assets within the jurisdiction is not a precondition to service out of a claim to enforce a foreign judgment at common law. The rule was introduced to fill a gap affecting enforcement of judgments from countries whose judgments could not be registered in England. CPR Part 74 contains no asset-presence requirement, and it would be anomalous to imply one into CPR 6.20(9).

3. The merits threshold under CPR 6.21(1)(b) is equivalent to the summary-judgment test in CPR 24.2. The jurisdictional facts must be established on the basis of a good arguable case. The claimant also bears the burden of showing that England and Wales is clearly the appropriate forum for the proceedings.

4. The foreign-public-law rule concerns justiciability or admissibility and is ordinarily dealt with on a striking-out application. At this stage the question was whether TMSF had a real prospect of succeeding, or whether there was a serious issue to be tried. The claim had to be characterised by reference to its substance, not by the label attached to the receivables under Turkish law.

5. The relevant distinction was between an assertion of sovereign authority in England and enforcement of a right which could equally belong to a private person. The Turkish judgments arose from private-law claims pursued in the Turkish civil courts. TMSF’s assumption of the bank assets had occurred in Turkey, and enforcement of the judgments in England did not itself involve the exercise of Turkish sovereign authority in England. TMSF therefore had at least a real prospect of succeeding on the public-law issue.

6. Section 25 of the Civil Jurisdiction and Judgments Act 1982 did not apply to these proceedings, which were not brought in aid of proceedings abroad. It was unnecessary to consider the inexpediency question under section 25(2).