BVI Sets Precedent: Landmark Ruling on Foreign Judgment Enforcement at Common Law

Sterlington BVI obtained judgment on an action at common law to enforce a US Judgment against a BVI Company. For the first time, the BVI Commercial Court gave a detailed judgment on the principles of common law enforcement, which will be well known to legal practitioners in the British Commonwealth. The matter was not straight forward because it involved simultaneous proceedings in Massachusetts, Trinidad and Tobago and the BVI. The matter provides a clear illustration of the common law principle that a foreign judgment, which is final and conclusive, on the merits and not impeachable for lack of jurisdiction or procedural unfairness, is conclusive as to any matter thereby adjudicated upon, and the BVI Court cannot go behind the foreign judgment to inquire if there were any errors of fact or law.

Cashman, a US Company, obtained a judgment against BVI Company EMCS in Massachusetts. The judgment was for the payment of c.$3.6m, together with post-judgment interest, in respect of EMCS’s liabilities in tort under Massachusetts law, which had been born out of a contract entered into between the parties in 2018 for the lease of Cashman’s barge to EMCS. Cashman sought to enforce that judgment against EMCS in the BVI.

Judgments from the United States are not included in the Reciprocal Enforcement of Judgments Act (Cap 65) 1922. Therefore, if the conditions are satisfied, comity requires that a United States judgment be recognised and enforced under common law.

At common law, for a foreign judgment to be capable of recognition and enforcement in the BVI, the judgment must be:

• For a debt or a definite sum of money other than a sum payable in respect of taxes or the like, or in respect of a fine or other penalty;
• Final and conclusive;
• On the merits, and
• Given by a court with jurisdiction to give that judgment.

It is a defence to a claim for recognition and enforcement at common law if one or more of these elements cannot be made out.

Summary Judgment

Cashman brought a summary judgment application against the defendant, EMCS. The defendant EMCS, likewise brought a summary judgment application seeking dismissal of the claim against it. The test for summary judgment in the BVI is well established and the principles were not in dispute between the parties. The role of the court was to determine whether the defence EMCS had submitted had any real prospects of success, that is realistic as opposed to fanciful prospects.

EMCS’s defence focused on three issues:

1. The jurisdiction of the Massachusetts court in determining the US proceedings;
2. EMCS’s liability under the Judgment, which EMCS denied; and
3. Factual matters relating to whether the parties were bound by the contract or by a subsequent version, which incidentally contained the same provisions relating to applicable law.

In order to determine whether EMCS had any real prospect of successfully defending Cashman’s claim it was therefore necessary for the court to consider the available defences against a claim for recognition and enforcement of a foreign judgment – as set out above.

Recognition and Enforcement of a Foreign Judgment

In respect of the first three common law tests for the enforcement of a foreign judgment there was no dispute between the parties. The Massachusetts judgment was: (i) a debt for a definite sum of money; (ii) final and conclusive, and (iii) on the merits.

In respect of each test, the court helpfully restated the appropriate consideration that would be required were the matters in dispute, quoting the authority of Dicey, Morris & Collins.  In summary:

• That the sum of money must be definite and can include a final order for costs, but not an instance where an arithmetical calculation is required for the ascertainment of the sum.
• The possibility of an appeal to a higher court does not alter the finality of the judgment and, as was helpful to Cashman, a default judgment may be considered final as the alternative would be to make the judgment more useless the clearer a claimant’s case was.
• To quote Lord Diplock, who is quoted in the Cashman judgment:

That the court has held that it has jurisdiction to adjudicate upon an issue raised in the cause of action to which a particular set of facts give rise … is what is meant by, “on the merits”.

The main point for the court to determine was the matter of jurisdiction. The contract between Cashman and EMCS had a jurisdiction clause, naming the courts of Massachusetts as having exclusive jurisdiction. EMCS sought to challenge the scope of that clause, as not including the particular claim which lead to the US judgment (in tort). Rather, EMCS argued that it had only submitted to Massachusetts for contractual disputes, but not to claims in tort, albeit arising out of the contract as was the case in this matter.

The rule to be applied is a foreign judgment was not enforceable in the BVI if, in the view of BVI law, the foreign court did not have jurisdiction to give the judgment. The learned authors of Dicey give a number of examples of when a foreign court will have jurisdiction, of which the fourth was relied on by Cashman:

if the person against whom the judgment was given, had before the commencement of proceedings agreed… to submit to the jurisdiction of that court … .

In support of Cashman’s position, the court were referred to the Fiona Trust matter, which dealt with the construction of arbitration clauses. The reasoning from which has been applied to jurisdiction clauses. The court applied the reasoning from Fiona Trust, in particular that the starting position for a construction question should be the assumption the parties, “as rational businessmen”, are likely to have intended that any dispute arising out of the relationship would be dealt with by the same jurisdiction. Save where there was explicit language which was intended to exclude certain questions from the jurisdiction.

The court held it was plain the parties intended there should be a “one-stop-shop” for all their disputes. On that basis, the parties having agreed to submit to the courts of Massachusetts, EMCS had no real prospect of succeeding in defending the claim and Cashman was bound to succeed.

Conclusion

The Cashman decision is a helpful narration of the rules in BVI in respect of the enforcement of foreign judgments at common law, but importantly it will reinforce confidence in judgment creditors seeking to enforce against BVI domiciled debtors or debtors with assets in the jurisdiction.

About the Authors:

Callum McNeil

Managing Partner, British Virgin Islands

Callum McNeil is a Managing Partner, British Virgin Islands (BVI), focusing on crypto, commercial litigation, and insolvency matters in the BVI, often with cross-border elements. He has nearly two decades of offshore legal experience, including working in the Cayman Islands and Guernsey.

Jamie Guyan

Associate

Jamie is an associate at Sterlington in its British Virgin Islands Practice. Jamie has extensive experience in advising on commercial disputes, including insolvency and asset recovery, commercial litigation, shareholder and director disputes, contentious trust issues, and banking and finance litigation.