Midtown Acquisitions LP v Essar Global Fund Ltd

A foreign judgment entered by confession may be recognised and enforced in England even though the foreign procedure required no lis or action, where the debtor authorised judgment and the procedure treats it as enforceable in the same way as an ordinary judgment. The judgment may be final and conclusive while subject to an application to vacate for error, fraud or misconduct, provided it remains res judicata and enforceable in the foreign jurisdiction. A judgment based on an admission or confession is on the merits. The fraud exception requires conscious and deliberate dishonesty. Lack of notice will not necessarily offend natural justice where sophisticated parties knowingly, intelligently and voluntarily waived notice and an opportunity to be heard. Enforcement may nevertheless be stayed temporarily for reasons of comity and case management.

Midtown Acquisitions LP sought to enforce in England a New York judgment by confession against Essar Global Fund Ltd. The judgment arose from a guaranteed debt and was entered without an action under New York procedure. Essar challenged the English court’s jurisdiction, opposed summary judgment, and sought a stay because applications to vacate and stay the New York judgment were pending in New York.

The central issues were whether the New York judgment was a judgment in English law, final and conclusive, and on the merits; whether enforcement was barred by fraud or natural justice; and whether execution should be stayed pending the New York court’s consideration of Essar’s applications.

1. Jurisdiction. The court had jurisdiction to hear the enforcement claim. The absence of a lis or action did not prevent the New York judgment by confession from being a judgment in English law. The relevant question was why no action existed. Essar had confessed judgment and authorised its entry, and New York procedure permitted judgment without an action. It would therefore be wrong to deny the judgment that status merely because no action had been commenced (paras [18]–[26]).
2. Finality and conclusiveness. The judgment was presently final and binding. It was enforceable in New York notwithstanding the applications to vacate and stay. The possibility that the issuing court might set it aside for error, fresh evidence, fraud or misconduct did not make it equivalent to the unusual Spanish remate judgment in Nouvion v Freeman, which could be displaced by plenary proceedings in the same court (paras [27]–[37]).
3. Merits. A judgment by confession was on the merits. The New York court had jurisdiction to adjudicate upon the application, and evidence established the confession of liability. Judgment based on a confession was analogous to judgment on an admission in England and satisfied the relevant requirements in The Sennar No.2 (paras [38]–[46]).
4. Defences. The fraud exception required conscious and deliberate dishonesty. Essar expressly disavowed dishonesty, so its innocent-misrepresentation defence had no real prospect of success (paras [56]–[66]). The absence of notice did not establish a breach of natural justice where the evidence indicated a voluntary, knowing and intelligent waiver by sophisticated commercial parties. Essar had advanced no evidence suggesting that its waiver was ineffective (paras [67]–[72]).
5. Disposition and stay. The claimant obtained summary judgment because none of the proposed defences had a real prospect of success. Execution was stayed temporarily until one week after the New York hearing on 29 March 2017, and thereafter for the duration of any New York stay, conditional on Essar undertaking not to deal with or dispose of assets within the jurisdiction (paras [73]–[76]).

not stated in the judgment.