Lenkor Energy Trading DMCC v Puri

A final money judgment of a competent foreign court is enforceable in England as a debt distinct from its underlying cause of action. The public-policy exception concerns enforcement of that judgment, not a recharacterised claim on an underlying contract.

Where the foreign judgment imposes an independent statutory liability, its connection with illegality in an underlying transaction may be slight. The court must weigh that connection against the strong policies of finality and enforceability. A restitutionary recovery of value actually received will not ordinarily undermine the integrity of the justice system merely because the original transaction was unlawful: see Patel v Mirza [2016] UKSC 42.

Lenkor Energy Trading DMCC sought to enforce in England a final Dubai judgment against Mr Puri. The Dubai judgment arose after cheques drawn by Mr Puri on IPC Dubai's account were dishonoured. Under Article 599/2 of the Dubai Commercial Transactions Law, the Dubai court held him personally liable for sums received by IPC Dubai or its nominee for cargo supplied by Lenkor.

The cargo had been supplied under a tripartite agreement tainted by deception concerning its nature and origin. Mr Puri contended that enforcing the Dubai judgment would therefore offend English public policy. Master Davidson and Murray J rejected that defence. The appeal was from Murray J's decision, reported at [2020] EWHC 1432 (QB) and [2021] 1 Lloyd’s Rep 47. The central issue was whether enforcement of the Dubai judgment was, in legal substance, enforcement of an illegal contractual obligation.

Appeal dismissed unanimously. Lewison LJ gave the court's reasons, with which Arnold and Edis LJJ agreed.

1. The court was enforcing a final judgment of a competent foreign court, rather than enforcing a contract. A foreign money judgment creates an enforceable debt independently of its underlying cause of action. The public-policy analysis must therefore respect that distinction: Omnium de Traitement et de Valorisation SA v Hilmarton Ltd [1999] 2 Lloyd’s Rep 222; RBRG Trading (UK) Ltd v Sinocore International Co Ltd [2018] EWCA Civ 838.

2. Mr Puri's liability was statutory under Article 599/2 of the Dubai Commercial Transactions Law. It was not a contractual liability under the tripartite agreement, a claim against him on a guarantee, or a claim on the cheques as negotiable instruments. The relevant underlying liability of IPC Dubai was to account for money received as Lenkor Hong Kong's nominee, under agency principles or unjust enrichment. That agency agreement had not been found illegal or unenforceable.

3. The judgment sum reflected sums actually received by IPC Dubai or its nominee for Lenkor Hong Kong's account. It did not equal either the contract price or the cheques' face value. Economic equivalence could not make distinct transactions, parties and legal liabilities the same transaction in legal substance.

4. Even if the court looked beyond the form of the Dubai claim, its connection with the illegality was slight. That connection was outweighed by the strong public policies favouring finality and enforcement of foreign judgments. Applying Patel v Mirza [2016] UKSC 42, it would not undermine the integrity of the justice system to prevent Mr Puri retaining the economic benefit of funds actually received. No exceptional circumstance justified refusing enforcement.

The appeal was dismissed.

• Court of Appeal (Civil Division) — dismissed Mr Puri's appeal and upheld enforcement of the Dubai judgment: [2021] EWCA Civ 770.
• High Court of Justice, Queen’s Bench Division — Murray J rejected the public-policy defence to enforcement: [2020] EWHC 1432 (QB); [2021] 1 Lloyd’s Rep 47.
• Master Davidson — rejected the same defence before the appeal to Murray J.