Vizcaya Partners Limited v Picard and another

A foreign judgment may be enforced on the basis of a prior submission only where the judgment debtor actually consented to the foreign court’s jurisdiction. Consent need not be contractual or formally expressed. It may arise through an express or implied term, or otherwise be inferred from the circumstances.

Actual consent cannot, without more, be inferred from membership of a foreign entity, the place where a contract was made or performed, its governing law, or the foreign court’s possession of long-arm jurisdiction. Where foreign law governs the contract, that law supplies its rules of construction and any terms implied by law. The forum court nevertheless decides whether those matters establish the agreement to submit required by its own rules for recognising foreign judgments.

After the collapse of Bernard Madoff’s investment scheme, the trustee of BLMIS obtained a US$180m default judgment in the New York Bankruptcy Court against Vizcaya. The judgment concerned statutory avoidance claims. The trustee sought to enforce it in Gibraltar against funds held there.

Dudley CJ refused Vizcaya summary judgment because the trustee had a reasonable prospect of establishing either Vizcaya’s presence in New York or an agreement to submit to its courts. The Gibraltar Court of Appeal rejected the presence ground but held that the submission ground should proceed to trial. The Privy Council granted leave on that ground alone.

The central issue was whether Vizcaya’s contract, which was governed by New York law and deemed made there, or the accompanying evidence of New York long-arm jurisdiction, could establish an agreement to submit to the New York Bankruptcy Court.

1. Appeal allowed. Lord Collins, delivering the Board’s judgment, held that the trustee had no real prospect of establishing a prior agreement by Vizcaya to submit to the jurisdiction of the New York Bankruptcy Court. Any consequential order would depend on the parties’ settlement, with liberty to apply.

2. The relevant common law inquiry is whether the judgment debtor actually consented in advance to the foreign court’s jurisdiction. The consent need not be contractual or formally expressed. It may be express, implied or inferred. Authorities stating that submission could not be implied were properly understood as insisting upon an actual agreement, rather than prescribing an invariable requirement of express words.

3. Actual consent cannot be inferred merely because the debtor was a member of a foreign company or partnership, the contract was made or performed abroad, foreign law governed the contract, or that law gave the foreign court long-arm jurisdiction. Blohn v Desser was wrongly decided insofar as it treated foreign partnership membership, an agent’s local business and public registration as sufficient to establish implied submission.

4. Whether submission satisfies the forum’s recognition rules is characterised under the forum’s common law. Where the contract is governed by foreign law, however, that law supplies its rules of construction and any terms implied by law. An expert proves the foreign rules of construction; the court then interprets the contract under those rules. The expert does not decide the contract’s meaning.

5. The New York evidence established only that Vizcaya’s business contacts could confer jurisdiction under section 302 of the New York Civil Practice Law and Rule. It did not identify a New York rule of construction, or a term implied by law, under which Vizcaya had agreed to jurisdiction. Neither the New York governing-law clause nor the provision deeming the contract made in New York supplied the missing consent.

6. Any inferred jurisdiction agreement would also face a serious question of scope. Following the reasoning in AWB (Geneva) SA v North America Steamships [2007] EWCA Civ 739, a contractual jurisdiction clause would not prima facie extend to statutory insolvency avoidance proceedings unrelated to contractual rights. No relevant New York rules of interpretation had been proved. It was unnecessary to decide whether the arbitration clause provided a further defence.

1. Privy Council: Allowed Vizcaya’s appeal on the prior-submission issue. The evidence could not establish an agreement to submit to the New York Bankruptcy Court. Consequential orders were left subject to the settlement, with liberty to apply.

2. Gibraltar Court of Appeal: Rejected the trustee’s case based on Vizcaya’s presence in New York, but held that the claim based on an agreement to submit had a reasonable prospect of success.

3. Supreme Court of Gibraltar: Dudley CJ dismissed Vizcaya’s application for summary judgment, holding that the trustee had a reasonable prospect of success on both presence and prior submission.