Disputes frequently arise from transactions that span across borders, giving rise to issues related to jurisdiction and enforcement. This article explores the principles of Australian legislation and common law that govern the enforcement of foreign court judgments within Australia. Such enforcement becomes necessary when foreign judgment creditors seek access to assets located within the Australian jurisdiction. The inability to enforce judgments effectively against available assets renders these judgments useless, despite the significant time and financial resources invested in obtaining them.
Our role is to assist commercial clients in comprehending their rights and making informed decisions in their international commercial relationships. By doing so, we aim to preserve the best chances of recovery or the ability to avoid recovery after obtaining a judgment in a foreign jurisdiction.
Legislative Framework The enforcement of foreign judgments in Australia is regulated by two key instruments:
- The Foreign Judgments Act 1991 (Cth) (the Act)
- The Foreign Judgments Regulations 1992 (Cth) (the Regulations)
These legislative instruments exclusively apply to judgments issued by courts in countries specified in the Schedule to the Regulations, known as “Scheduled Countries.”
The Act and Regulations establish a system for Australian courts to recognize, enforce, set aside, or stay foreign judgments. Essentially, judgment creditors from Scheduled Countries can apply to the appropriate Australian court within six years of the foreign judgment’s date to register it as an enforceable judgment in Australia. Once registered, the ordinary enforcement mechanisms under Australian law become available. These mechanisms will be discussed later in this article.
Moreover, Australia is a party to international bilateral treaties that govern the cross-border enforcement of foreign awards and judgments. An example of such a treaty is the Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters 1994, which Australia has with the United Kingdom.
Although Australia is not a signatory to the Hague Convention on Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters 1971, it is a party to the 1965 Hague Convention on Service Abroad of Judicial and Extrajudicial Documents in Civil/Commercial Matters (Hague Convention). This convention is relevant to issues of cross-border service and jurisdiction, as discussed below.
In practice, enforcing foreign judgments under Australian common law principles is often more complex and costly than relying on the Act and Regulations. Therefore, commercial clients should seek advice regarding potential future disputes and enforcement options before engaging in transactions with foreign parties. It’s worth noting that this article does not cover arbitration or other alternative methods that can be used to resolve disputes in this context, and advice should be sought on those matters as well.
Common Law Position If the country in which the original judgment was issued is not one of the Scheduled Countries specified in the Act and Regulations, the following common law conditions must be met to enforce the foreign judgment in Australia:
- The foreign judgment must be final and conclusive.
- The foreign court must have valid jurisdiction over the defendant or judgment debtor, which Australian courts would recognize.
- There must be identical parties involved in both the foreign and Australian jurisdictions.
- The judgment debt must be a fixed monetary sum and not an unliquidated damages award.
The following process applies when enforcing a foreign judgment in Australia based on common law principles:
- The foreign court must render a judgment in favor of the judgment creditor.
- The foreign judgment creditor must initiate fresh proceedings in an appropriate Australian court with competent jurisdiction to seek recognition and enforcement of the foreign judgment within Australia.
- A final and conclusive money judgment issued by a foreign court with recognized jurisdiction is presumed entitled to enforcement in Australia. However, debtors can raise limited common law defenses to resist the recognition of foreign judgments in Australian courts. These defenses include situations where the foreign judgment was obtained through fraud, contravenes Australian public policy, violates principles of natural justice recognized in Australia,