Merchant International Company Ltd v Natsionalna Aktsionerna Kompaniya "Naftogaz Ukrayiny"

A foreign judgment setting aside the judgment on which an English default judgment is based may itself be refused recognition where recognition would conflict with public policy or the guarantees of a fair trial under the Convention. The principle of legal certainty requires exceptional caution before a final judgment is reopened. A retrial must be confined to matters genuinely affected by newly discovered material and must not become an appeal in disguise or reopen unrelated issues. The presumption that foreign procedures comply with fair-trial requirements may be displaced by a clear failure to respect those principles. The application to set aside the English default judgment and associated freezing order was therefore dismissed.

The claimant sought to enforce in England a Ukrainian judgment for a substantial debt. After the English court entered judgment in default, the Ukrainian Supreme Commercial Court set aside the Ukrainian judgment and remitted the case for retrial, relying on alleged newly discovered material concerning the claimant’s standing or capacity. The defendant argued that there was consequently no final and conclusive foreign judgment capable of recognition and that the English judgment should be set aside.

The claimant argued that recognition of the Ukrainian setting-aside judgment would breach public policy and the court’s obligations under section 6(1) of the Human Rights Act 1998, read with article 6 of the Convention. The central issue was whether the Ukrainian decision had been reached consistently with legal certainty and fair-trial guarantees.

1. The application was dismissed. The English default judgment and associated freezing order remained in force.
2. The relevant question was whether the Ukrainian judgment setting aside the original judgment should be recognised, not whether the original judgment could otherwise be enforced. A foreign judgment is impeachable where recognition would be contrary to public policy. Recognition may also be refused where it would be incompatible with the Convention, including through the domestic duty imposed by section 6 of the Human Rights Act 1998 (paras [30]–[31]).
3. The presumption that foreign procedures comply with fair-trial requirements, recognised in Maronier v Larmer [2003] QB 620, was displaced. The Ukrainian Supreme Commercial Court had allowed the entire case, and potentially additional issues, to be reopened by reference only to the claimant’s status. It made no finding about the evidential significance of the new material, whether it could have been discovered with reasonable diligence, or whether those matters should be considered on the retrial (paras [32]–[33]).
4. The approach disregarded legal certainty. A final judgment should not be reopened merely to obtain a rehearing or fresh decision. Revision must be directed to correcting a miscarriage of justice and must not operate as an appeal in disguise. The principles identified in Pravednaya v Russia and Lizanets v Ukraine supported that conclusion (paras [16]–[19], [33], [36]).
5. Even assuming that non-recognition required a flagrant breach of article 6, the Ukrainian decision met that threshold. In any event, the heightened flagrant-breach requirement applied only to decisions of courts in non-Convention countries, not to the Ukrainian decision in this case (paras [34]–[35]).
6. The court was further fortified in its conclusion by the delay before the Ukrainian judgment was challenged and by the particular sensitivity required where the proceedings favoured a state-owned entity. Consideration of the alternative application for an interim freezing order was unnecessary (para [36]).