Commercial Court grants summary judgment on a claim to enforce a NY judgment

Midtown Acquisitions LP v Essar Global Fund Ltd [2017] EWHC 519 (Comm)

In a judgment handed down on 17 March 2017, the Commercial Court rejected a jurisdiction challenge to a claim to enforce a New York judgment at common law, and granted the Claimant summary judgment on its claim.

The New York judgment was entered on the basis of an affidavit of confession under New York law in connection with a debt due pursuant to an underlying Guaranty agreement. Judgments by confession are based in what is known as a “cognovit” (he has confessed) clause.

This is the first reported English decision on the question whether a judgment by confession can be enforced as a judgment in English law.

The Court rejected the Defendant’s arguments that:

(i)                  The New York judgment does not constitute a judgment for the purposes of English law because there was no lis between the parties in New York.

(ii)                 The New York judgment is not final and conclusive in circumstances where it is open to review by the same court that issued the judgment and in circumstances where a review of the judgment had been sought by the Defendant in the New York Court (which motion was scheduled to be heard by the New York court on 29 March 2017).

(iii)               The New York judgment is not “on the merits”.

The Court therefore concluded that the Claimant had much the better of the argument that the New York judgment by confession was a judgment in English law, and rejected the jurisdiction challenge.

In the context of the summary judgment application, the Court concluded that:

(i)                  Contrary to the Defendant’s case, the fraud exception to enforcement of a foreign judgment requires conscious and deliberate dishonesty, and an allegation that the foreign court was misled by an innocent misrepresentation would not suffice.

(ii)                 The New York judgment was not contrary to natural justice because the Defendant waived the right to notice.

The Court therefore granted summary judgment to the Claimant on its claim to enforce the New York judgment for US$171m.

The Court granted a stay of execution until one week following the hearing in New York on 29 March 2017 of the Defendant’s application before that Court for a stay of execution of the New York judgment.

Sonia Tolaney QC and Nehali Shah appeared for the Claimant. David Wolfson QC (leading Arshad Ghaffar) appeared for the Defendant.

You can view the full judgment here.