Media Briefing Note: Supreme Court Decision in landmark Human Rights case
30 July 2012
LONDON, 30 JULY 2012 - The Supreme Court, in refusing to grant permission to appeal, has confirmed that English courts can in some circumstances refuse to recognise a foreign judgment on the basis that the judgment is in breach of the fair trial standards of Article 6 of the European Convention on Human Rights (ECHR).
The English High Court in Merchant International v Naftogaz refused to set aside an English judgment against the Ukrainian State-owned energy company, Naftogaz. That English judgment arose from a Ukrainian final and conclusive judgment against Naftogaz for a debt of more than $20m.
Subsequently, however, that underlying Ukrainian judgment was overturned by the Ukrainian courts. The English High Court held that that the new Ukrainian judgment, on which Naftogaz relied, was in flagrant breach of Article 6 ECHR and, in particular, the requirement for legal certainty. On that basis, the English High Court refused to recognise the new Ukrainian judgment and confirmed the English judgment in Merchant's favour, allowing Merchant to recover the debt owed to it through the English courts.
The Court of Appeal upheld the High Court judgment albeit it on a narrower basis and refused permission to appeal. The Supreme Court has also refused to hear the appeal.
Charles Brasted, of Counsel in Hogan Lovells' UK & EU Public Law and Policy practice, commented:
"Although this case turned on its specific circumstances, it will not be the only case in which serial re-litigation in the Ukraine (and other countries) — in breach of the fair trial standards of Article 6 of the ECHR — has hindered the enforcement of a final judgment in the UK Courts. This decision means that the Court of Appeal's judgment stands which held, for the first time, that it is open to the UK Courts to decide for themselves whether the judgment of a Convention State's courts is compliant with the ECHR, and, if not, to refuse to recognise it. For those engaged in a seemingly unending legal battle of the sort faced by Merchant, this will provide some welcome relief. It remains to be seen how far the principle may be extended."
The full judgment in the Court of Appeal can be found here.
The full judgment in the High Court can be found here.
Merchant International asserted that it was the assignee of a substantial debt owed by Naftogaz and obtained a final judgment in the Ukraine in its favour in 2006 for a sum of approximately US$24million. Merchant then sought to enforce that judgment in England by freezing Naftogaz's English assets and bringing a fresh action for an unpaid debt. After successfully defending a jurisdictional challenge by Naftogaz, Merchant got a judgment from the English Court in February 2011.
However, the Supreme Commercial Court of Ukraine (SCCU) subsequently set aside the underlying Ukrainian judgment. The issue in this case was whether the English court must, as a result, also set aside the English judgment even if the SCCU judgment was in breach of article 6 ECHR.
A cross practice group team from Hogan Lovells represented Merchant International. The team was led by Jeremy Cole (partner, litigation) and included Charles Brasted (of counsel, UK & EU public law and policy), Liam Naidoo (senior associate, litigation), and Will Elliott (associate, government regulatory).
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