Lenkor Energy Trading DMCC v Puri

A foreign judgment is impeachable for public policy only where recognition of the judgment itself, rather than merely the underlying transaction, would offend English public policy. A difference between foreign and English commercial law, including a foreign rule imposing personal liability on a cheque drawer, is not enough. The court may examine the underlying transaction in an exceptional case, such as where the judgment is infected by corruption or would indirectly enforce an unlawful obligation. Recognition does not impermissibly pierce the corporate veil where the foreign law imposes personal liability independently. A judgment for the principal sum is not a penalty, and interest is not penal merely because the foreign rate differs modestly from English rates.

The claimant sought summary judgment to recognise and enforce a final Dubai judgment against the defendant. The Dubai court had imposed personal liability on the defendant, who had signed two cheques drawn on a company account that lacked sufficient funds. The judgment awarded the sums received by the company but not remitted to the claimant, together with interest.

The defendant resisted recognition on public policy grounds. He relied on the illegality affecting the underlying gasoil transaction, alleged impermissible piercing of the corporate veil, and contended that the interest award was a penalty. The central issue was whether recognition of the Dubai judgment, rather than enforcement of the underlying transaction, would offend English public policy.

1. Summary judgment. The application concerned legal issues and there was no real prospect of successfully defending recognition. There was no other compelling reason for a trial.
2. Public policy and illegality. Under Rule 51 of Dicey, Morris and Collins, the relevant question was whether recognition of the foreign judgment itself would offend English public policy. The Dubai judgment was based on Article 599/2 of Dubai’s Commercial Transactions Law, which imposed personal liability on the drawer of a cheque where insufficient funds existed. Although English law did not impose the same liability, the foreign rule was neither surprising nor repugnant to public policy.
3. The court could examine the underlying transaction in exceptional circumstances, including where the judgment was infected by the underlying public policy objection or involved corrupt practices. Those circumstances were absent. The Dubai judgment was based on self-contained legal consequences of signing dishonoured cheques in Dubai.
4. Even if the underlying transaction were examined, recognition would not indirectly enforce the Buyer’s unenforceable obligation to pay the contract price. The Dubai award related to money received by IPC Dubai and not accounted for. That obligation had been found enforceable in the related arbitration.
5. Corporate veil and penalty. Recognition did not involve impermissible piercing of the corporate veil. The liability was imposed personally under Dubai law. The principal sum was not a penalty. The 9% interest rate was not exorbitant or unconscionable, particularly given its modest divergence from relevant English rates.
6. The Dubai judgment was recognised and summary judgment was entered for the claimant.