English Commercial High Court(QB): Whether Breach of Domestic Public Policy Is Equivalent to Breach of English Public Policy For the Purposes of Resisting the Enforcement of Foreign Award Before the English Courts?

Sally Roberts court case

Consider a situation wherein the lex arbitri imposes a more onerous civil liability on a defaulting party under its domestic law than the one present under the English law. In that situation, whether a foreign award which has passed the muster of more onerous civil liability threshold under its domestic law can be resisted from enforcement before the English Courts on the ground that it offends the principle of English public policy simply because it imposes less onerous civil liability under English Law.

For example Article 599/2 of the Dubai’s Commercial Transactions Law is a statutory provision that imposes personal liability on the drawer of a cheque in circumstances where the account on which the cheque is intended to draw has insufficient funds to cover the amount due under the cheque.

There is no equivalent provision in English law to Article 599/2 of the Dubai Commercial Transactions Law, which imposes personal liability on the drawer of a cheque where the drawer cannot prove that the account was sufficiently in funds.[1] Does that mean that if a Dubai Court passes a foreign judgement or an award based on Article 599/2 of the Dubai Commercial Transactions Law its enforcement can be resisted before the English Courts on the ground of breach of public policy of English Law?

This has been answered in the recent case of Lenkor Energy Trading DMCC v Puri[2] wherein the English High Court while refusing to resist enforcement of a Dubai Court’s judgement on the ground that enforcement in England of a debt claim arising under that judgment would be contrary to public policy, noticed that there is a rationale behind the policy of Article 599/2 of the Dubai Commercial Transactions Law (namely, to encourage probity in cheque transactions), which cannot be said to offend any principle of English public policy. The relevant provision, although providing for more onerous liabilities on the drawer of a cheque than is the case under English law, is “neither surprising nor repugnant”.

This is so because it is the judgment/award and not the underlying transaction upon which the judgment/award is based which must offend against English public policy. That point has been illustrated in a number of cases, but perhaps most economically in the case of Omnium de Traitement et de Valorisation v Hilmarton[3].

Albeit the judgement/award is not isolated from the underlying contract, it is relevant that the English court is considering the enforcement of an award, and not the underlying contract. The English court takes cognisance of the fact that the underlying contract, on the facts as they appear from the award and its reasons, does not infringe one of those rules of public policy where the English court would not enforce it whatever its proper law or place of performance. It is entitled to take the view that such domestic public policy considerations as there may be, have been considered by the arbitral tribunal. It is legitimate to conclude that there is nothing which offends English public policy if an arbitral tribunal enforces a contract which does not offend the domestic public policy under either the proper law of the contract or its curial law, even if English domestic public policy might have taken a different view.[4]

However, there are circumstances where an English court might enquire into the underlying transactions giving rise to the judgment such as an award or judgment which was “infected” with the underlying public policy point or “which contained a finding of fact of corrupt practices which would give rise to obvious public policy considerations”.[5]

Disclaimer: The views expressed in this post are mine and do not reflect the views of the organisation(s) I am engaged with

[1] Lenkor Energy Trading DMCC v Puri [2020] EWHC 75 (QB) at [27]

[2] [2020] EWHC 1432 (QB)

[3] [1999] 2 Lloyd’s Rep 222

[4] Westacre Investments Inc v Jugoimport-SPDR Holding Co Ltd [2000] QB 288 (CA)

[5] Timothy Walker J in OTV v Hilmarton

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