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To what extent will the courts accept public policy as a defence to enforcement?

This blog post was written by Moesha Ramsay-Howell, a member of our articled clerk programme.

In the recent decision of Lenkor Energy Trading DMCC v Puri [2020] EWHC 75 (QBD), the English High Court analysed the scope of the public policy defence to the recognition and enforcement of a foreign monetary judgment. The decision includes principles of application in both onshore and offshore jurisdictions.

The defendant was the managing director of a Dubai company and signed two cheques on the company’s behalf in favour of the plaintiff. When the cheques were dishonoured due to insufficient funds in the company’s account, the plaintiff obtained a judgment against the defendant personally before the Dubai First Instance Court pursuant to a provision of Dubai statute that renders the drawer of a cheque personally liable where the drawee account has insufficient funds. The plaintiff applied to have its judgment recognised in England which the defendant opposed on public policy grounds.

While the defendant claimed that the underlying transaction pursuant to which the cheques had been given was tainted by illegality, the court accepted that the judgment was premised on the legal consequences of signing cheques without sufficient funds under Dubai law and not the underlying transaction. Dubai’s statutory provision for more onerous liabilities is not offensive to English public policy. While it may be useful on occasion for the courts to enquire into the underlying transaction where the judgment has been ‘infected’ by the underlying public policy point, this must be approached with caution. The alleged illegality was no bar to recognition in this instance, as reliance on the public policy defence concerns the judgment and not the underlying transaction upon which the judgment is based.

The defendant’s claim that the judgment amounted to impermissible piercing of the corporate veil highlights a distinction between Dubai law and English law, the latter which could not have imposed personal liability on the defendant given the absence of an equivalent English statutory provision. The argument that the imposition of personal liability on the defendant was a contravention of English commercial law principles was rejected because those commercial law principles did not concern English public policy.

Having rejected the defendant’s arguments, the court held that the Dubai judgment was to be recognized and summary judgment on the plaintiff’s recognition application granted accordingly. This conventional application of common law principles provides insight as to how far the courts are willing to interfere with the judgments of foreign courts on public policy grounds. 

To what extent will the courts accept public policy as a defence to enforcement?

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