Enforcement of Foreign Judgments

 

Source: Herbert Smith Freehills LLP

 

Which domestic laws and regulations govern the recognition and enforcement of foreign judgments in your jurisdiction?

The enforcement of foreign judgments in South Africa is governed by:

  • the Enforcement of Foreign Civil Judgments Act (32/1998) (EFCJ); and
  • the common law.

 

The EFCJ applies only to judgments handed down in countries that have been designated by the minister of justice and constitutional development. The minister has designated only Namibia to date. For this reason, it is mainly the common law that governs the enforcement of foreign judgments.

International conventions

Which international conventions and bilateral treaties relating to the recognition and enforcement of judgments apply in your jurisdiction?

South Africa is not a party to any treaty relating to the recognition and enforcement of judgments.

Competent courts

Which courts are competent to hear cases on the recognition and enforcement of foreign judgments?

The EFCJ (applicable only to Namibia at this stage)

The enforcement of a foreign judgment under the EFCJ entails a simple registration of the foreign judgment at the relevant Magistrates’ Court.

The common law

Under the common law, foreign judgments may be enforced in two types of South African courts:

  • Magistrates’ Courts – where the monetary value of the foreign judgment is less than R400,000; and
  • High courts – where the monetary value of the foreign judgment is more than R400,000.

There are various magistrates and high courts located throughout South Africa. When enforcing a judgment, a party must establish which magistrates or high court has jurisdiction over the matter by looking at certain jurisdictional factors, such as the location of the defendant.

Distinction between recognition and enforcement

Is there a legal distinction between the recognition and enforcement of a judgment?

Yes.

A court may recognise and thus take cognisance of a foreign judgment without having to order enforcement. This is most commonly seen when the defence of res judicata (i.e., the matter having been finally resolved by another competent court) is relied upon.

A foreign judgment that has only been ‘recognised’ by a South African court is not automatically enforceable.

A foreign judgment requires enforcement if an order for the performance of an act is required. Enforcement therefore takes the form of a South African court order directing the sheriff or another party to act.

In short, a foreign judgment that has been recognised is not necessarily enforceable. However, an enforceable foreign judgment is automatically recognised.

Ease of enforcement

In general, how easy is it to secure recognition and enforcement of foreign judgments in your jurisdiction?

The EFCJ (applicable only to Namibia at this stage)

The procedure under the EFCJ is relatively simple: the judgment creditor need only register the foreign judgment with the relevant Magistrates’ Court in the district where:

  • the person against whom the judgment was given resides, carries on business, is employed or owns any movable or immovable property;
  • any juristic person against which the judgment was given has its registered office or its principal place of business; or
  • any partnership against which the judgment was given has its business premises or any member thereof resides.

Once registered, the foreign judgment shall have the same effect as a civil judgment of the South African court where it has been registered.

The common law

The ease with which a foreign judgment can be recognised and enforced under the common law depends upon various factors and the complexity of the matter.

A foreign judgment is not automatically enforceable but is seen as a cause of action that will be enforced by the South African courts if it meets certain requirements. However, the South African court will not re-try the case.

If a material dispute of fact is envisaged in the enforcement proceedings, action proceedings will need to be brought to enforce the judgment. These proceedings are usually lengthy and involve the leading of evidence through witnesses.

Reform

Are any reforms to the framework on recognition and enforcement of judgments envisioned or underway?

None that we are aware of.

Conditions for recognition and enforcement

Enforceable judgments

Which types of judgment (e.g., monetary judgments, mandatory or prohibitory orders) are enforceable in your jurisdiction and which (if any) are explicitly excluded from recognition and enforcement (e.g., default judgments, judgments granting punitive damages)?

The EFCJ (applicable only to Namibia at this stage)

The only type of judgment currently capable of enforcement under the Enforcement of Foreign Civil Judgments Act (EFCJ) is a civil monetary judgment handed down in Namibia. Such judgment is enforceable under the EFCJ provided that it:

  • is also enforceable in Namibia;
  • is handed down in a ‘court’ as defined in the EFCJ; and
  • does not relate to the payment of:
    • tax or charge of a like nature;
    • a fine or other penalty; or
    • the periodical payment of sums of money towards the maintenance of any person.

 

The common law

An enforceable foreign ‘judgment’ was defined in Zweni v Minister of Law and Order (1993 (1) Sa 523 (A)) as:

a decision which, as a general principle, has three attributes:

1.…the decision must be final in effect and not susceptible to alteration by the Court of first instance;

2.…it must be definitive of the rights of the parties;

3.… it must have the effect of disposing of at least a substantial portion of the relief claimed in the main proceedings.

The following judgments will not be enforced in South Africa:

  • a judgment contrary to South African public policy (e.g., a judgment for punitive damages);
  • a judgment obtained by fraudulent means;
  • a judgment involving the enforcement of a penal or revenue law of the foreign country;
  • a judgment of a foreign court relating to property situated in South Africa (as the foreign court would not have had jurisdiction over the immovable property);
  • a judgment relating to property situated outside of South Africa (as the South African court would not have jurisdiction over the immovable property);
  • a judgment precluded by the Protection of Business Act (99/1978);
  • a judgment that is capable of alteration by the court of first instance, such as a temporary injunction; and
  • a judgment relating to movable property that was not within the foreign court’s jurisdiction at the commencement of the foreign proceedings.

Other than the instances mentioned above, all foreign civil judgments should be enforceable in South Africa.

How are foreign judgments subject to appeal treated?

The EFCJ (applicable only to Namibia at this stage)

A judgment debtor may apply to the court at which the foreign judgment has been registered for the execution of the judgment to be postponed if:

  • an appeal against the foreign judgment is pending in a court of competent jurisdiction; or
  • the judgment debtor is entitled and intends to appeal against the judgment to a court of competent jurisdiction.

 

The court may, in such instances, postpone the execution of the judgment on such conditions as it may deem fit.

The common law

In order to be enforceable, the foreign judgment must be final and the court of first instance must not be able to alter it in any way.

The fact that a foreign judgment is subject to appeal does not affect this requirement.

In Jones v Kroc (1995 (1) SA 677 (A)) it was held that:

  • South African courts have discretion as to whether to enforce a foreign judgment that is subject to appeal or to stay the enforcement proceedings pending the final determination of the appeal.
  • The burden of proof in respect of proving that a foreign judgment is final and conclusive lies with the plaintiff. The burden then shifts to the defendant to persuade the court to stay the enforcement proceedings.
  • The court will consider all relevant circumstances in determining whether to exercise its discretion (including practical considerations such as what would occur if the appeal is granted and the order has been enforced). However, it will usually refuse to assess the merits of the appeal and its prospects of success.

 

Formal requirements

What are the formal and documentary requirements for recognition and enforcement of foreign judgments?

 

The EFCJ (applicable only to Namibia at this stage)

In order to be recognised and enforced the judgment must:

  • be certified by the court of the foreign country as being a true copy of the judgment; and
  • be lodged and registered with the clerk of the Magistrates’ Court in the district where:
    • the person against whom the judgment was given resides, carries on business, is employed or owns any movable or immovable property;
    • any juristic person against which the judgment was given has its registered office or its principal place of business; or
    • any partnership against which the judgment was given has its business premises or any member thereof resides.

 

Once the judgment has been registered:

  • the clerk of the court issues a notice directed to the judgment debtor, informing them of the registration; and
  • the judgment creditor must serve the notice on the judgment debtor in accordance with the manner prescribed in the rules of court.

The judgment can be executed only:

  • after the expiry of a 21-day period after service on the judgment debtor; or
  • until any application to have the registration of the judgment set aside has been disposed of.

The common law

There is no prescribed procedure as to how enforcement proceedings must be brought under the common law. Proceedings can be instituted by way of:

  • application proceedings:
    • this procedure is used where no dispute of fact is envisaged;
    • proceedings are brought by way of affidavit; and
    • the dispute is determined on the papers before the court; or
  • action proceedings:
    • this procedure is used where a material dispute of fact is envisaged; and
    • these proceedings are brought by way of summons and culminate in a trial where oral evidence is led.

 

The document instituting proceedings must be accompanied by a certified copy of the judgment, together with a translation by a sworn translator if the judgment is in a language other than English.

The action or application will need to be served on all interested parties. In this regard, if the defendant resides outside of South Africa, the documents will need to be served by way of edictal citation, which usually brings about further delays.

Substantive requirements

What substantive requirements (if any) apply to the recognition and enforcement of foreign judgments? Are enforcing courts in your jurisdiction permitted to review the foreign judgment on the merits?

The EFCJ (applicable only to Namibia at this stage)

The foreign judgment will be capable of recognition and enforcement in South Africa as long as:

  • it was handed down in a country that has been designated by the minister of justice;
  • the judgment is a money judgment;
  • it was handed down by ‘a court’ as defined in the EFCJ (i.e., the Supreme Court, high court or Magistrates’ Court of the designated country); and
  • it does not relate to the payment of “any tax or charge of a like nature or of any fine or other penalty or for the periodical payment of sums of money towards the maintenance of any person”.

The judgment must also meet the requirements set out in Section 5 of the EFCJ, which largely conform to the common law requirements, which are set out below.

The common law

The following requirements must be met for the foreign judgment to be recognised and enforceable in South Africa:

  • The foreign court must have had jurisdiction to entertain the initial matter. This is determined in accordance with the principles of South African private international law and will not be the same in all matters, for example:
    • claims involving property – the property must be situated in the foreign court’s area of jurisdiction; and
    • the grounds for international jurisdiction in other civil matters have been set out by the South African Supreme Court of Appeal and include:
      • domicile;
      • submission to jurisdiction;
      • the physical presence of the defendant in the foreign court’s jurisdiction; and
      • habitual residence in the foreign country;
    • The South African court must have jurisdiction to hear the enforcement application or action;
    • The foreign judgment must not have been obtained by fraudulent means;
    • The judgment must not involve the enforcement of a penal law or revenue law of the foreign country;
    • The foreign judgment must be final and conclusive and must not have superannuated. However, the fact that the foreign judgment is pending an appeal does not affect its finality;
    • The enforcement of the foreign judgment must not be precluded by the provisions of the Protection of Business Act (99/1978). In this regard, it is important to note that:
      • The Protection of Business Act states that the consent of the minister of economic affairs must be obtained before a civil judgment “relating to any act or transaction connected with the mining, production, importation, exportation, refinement, possession, use or sale of or ownership to any matter or material of whatever nature, whether within, outside into or from the Republic“.
      • It has been confirmed by the Supreme Court of Appeal that ‘matter or material’ constitutes “raw materials or substances from which physical things are made and not a manufactured thing”.
      • Section 1D of the Protection of Business Act also prohibits the enforcement of a civil judgment (regardless of whether the minister of economic affairs has given their consent) if that civil judgment arises from any act or transaction referred to above, and if it is connected with any liability which arises from “any bodily injury of any person resulting directly or indirectly from the consumption or use of or exposure to any natural resource of the Republic… unless the same liability would have arisen under the law of the Republic”.
      • In addition, no foreign judgment, to which the Protection of Business Act applies, in respect of multiple or punitive damages can be recognised or enforced in South Africa. In this regard, the Protection of Business Act defines ‘multiple or punitive damages’ as that part of the amount of damages awarded which exceeds the amount determined by a South African court as compensation for the damage or loss actually sustained.
      • However, South African courts have been slow to give effect to the literal wording of the Protection of Business Act, and they have interpreted it restrictively.
    • The foreign judgment must not be contrary to South African public policy, which means that:
      • the foreign court must observe the minimum standards of justice as required by South African law; and
      • considerations that are considered when determining whether a judgment is against public policy include:
        • the impartiality of the court or tribunal;
        • the ability of the defendant to have presented their case; and
        • whether reasonable notice of the proceedings was given to affected persons; and
      • the threshold utilised to determine if something is against public policy is to look at whether the principle is unconscionable,when considered against South Africa’s laws and background.

Limitation period

What is the limitation period for enforcement of a foreign judgment?

According to the principles of South African private international law, matters of procedure are governed by the domestic law of the country in which the proceedings are instituted and matters of substance are governed by the law that applies to the underlying transaction.

Prescription is considered, under South African law, to be a matter of substance, therefore the law of the foreign country would determine the time limitation question.

However, there are instances where a gap in the law arises. For example, in certain countries, time limitation periods are seen as matters of procedure and not of substance. The question which arises is therefore, which legal system must be applied?

South African courts have held that the following test must be applied to resolve this question:

  • There must be a provisional determination as to whether, in terms of South African law, prescription in terms of the Prescription Act is substantive or procedural;
  • There must be a provisional determination as to whether, in the foreign law, prescription in terms of the foreign legislation is substantive or procedural; and
  • A final determination must be made, considering policy considerations, particularly in respect of which legal system has the closest and most real connection with the legal dispute before the court.

If South African law is applicable, the Prescription Act (68/1969) governs matters of prescription.

In this regard, judgment debts ‘prescribe’ after 30 years. However, a ‘foreign judgment’ is not included in the definition of a ‘judgment debt’ in the Prescription Act. The act also states that other ‘debts’ (which is a word that is widely interpreted and would include foreign judgments) prescribe after three years.

Grounds for refusal

On what grounds can recognition and enforcement be refused?

The recognition and enforcement of a foreign judgment can be refused on the basis that it does not comply with the substantive and procedural requirements set out in terms of the common law or, if applicable, the EFCJ.

The most common ground for a court’s refusal to enforce a foreign judgment is on the basis that the judgment does not comply with the laws of natural justice. However, it is unusual for a South African court not to enforce a foreign judgment.

Service of process

To what extent does the enforcing court review the service of process in the original foreign proceedings?

In determining whether the judgment is enforceable, and particularly whether it complies with South African public policy, the South African court will look at whether reasonable notice of the proceedings was given to all affected persons.

Public policy

What public policy issues are considered in the court’s decision to grant recognition and enforcement? Is there any notable case law in this regard?

One of the substantive requirements which must be satisfied in order to enforce a foreign judgment is that the foreign judgment must not be contrary to South African public policy.

This means that the foreign court must observe the minimum standards of justice as required by South African law.

Public policy considerations include:

  • the impartiality of the court or tribunal;
  • the ability of the defendant to have presented their case; and
  • whether reasonable notice of the proceedings was given to affected persons.

The threshold utilised to determine if something is against public policy is to look at whether the conduct under scrutiny is unconscionable when considered against South Africa’s laws and background.

Punitive, or multiple, damages have been held to be contrary to South African public policy (Jones v Krok 1996 (1) SA 504 (T)).

Despite this, it was emphasised that the mere fact that the foreign award is made on a basis not recognised in South African law does not mean that it is contrary to South African public policy; this must be determined in accordance with the facts of each case.

Jurisdiction

What is the extent of the enforcing court’s power to review the personal and subject-matter jurisdiction of the foreign court that issued the judgment?

One of the substantive requirements which must be satisfied for a South African court to enforce a foreign judgment is that the foreign court must have had jurisdiction to entertain the matter. This therefore requires an examination by the South African court.

The principles of South African private international law are applicable to this examination and will not be the same in all matters, for example:

  • claims involving property – the property must be situated in the foreign court’s area of jurisdiction; and
  • the grounds for international jurisdiction in other civil matters have been set out by the South African Supreme Court of Appeal and include:
    • domicile;
    • submission to jurisdiction;
    • the physical presence of the defendant in the foreign court’s jurisdiction; and
    • habitual residence in the foreign country.

How do the courts in your jurisdiction address applications for recognition and enforcement where there are concurrent proceedings (foreign or domestic) or conflicting judgments involving the same parties/dispute?

South African courts have not yet definitively pronounced on this question.

Conflicting judgments between the same parties on the same issue

It is submitted that if conflicting judgments are presented to a court, enforcement is unlikely (as the matter regarding finality of the judgment is likely to be subject to final determination by a court having jurisdiction).

Concurrent proceedings pending between the parties on the same issue

The existence of concurrent proceedings would normally indicate a lack of finality. It is normally not for the South African court to determine whether another foreign court also seized with the matter holds jurisdiction to issue a valid judgment. For this reason, enforcement is unlikely to be granted.

South African courts are slow to enforce judgments which appear to be the product of forum shopping or where conflicting judgments are likely to be obtained.

Opposition

Defences

What defences are available to the losing party to a foreign judgment that is sought to be recognised and enforced in your jurisdiction?

In general, the defences available to a losing party relate to procedural irregularities. If a judgment has been obtained in a manner contrary to South African public policy – for example, where a party was deprived of its right to natural justice – enforcement of the judgment may be successfully opposed.

The EFCJ (applicable only to Namibia at this stage)

In addition, the losing party to the foreign judgment can attempt to allege that the substantive or procedural requirements set out in the Enforcement of Foreign Civil Judgments Act (EFCJ) for the enforcement of the foreign judgment have not been met.

The common law

In addition to a defence based on public policy, defences of prescription or superannuation (in the South African context) may be successful.

However, a South African court will not act as a further court of appeal on the merits.

Injunctive relief

What injunctive relief is available to defendants (eg, anti-suit injunctions)?

South African courts do not have a history of issuing anti-suit injunctions, mainly out of respect for the sovereignty of the court seized with the matter. A party is always free to raise the fact that proceedings are pending in an alternate forum which will, more often than not, give rise to a stay of those particular proceedings.

If faced with an injunction from a foreign court prohibiting the enforcement of a judgment, the South African courts are unlikely to enforce such an order (due to the fact that such an order would not normally constitute a final judgment capable of enforcement in South Africa). However, the courts would be unlikely to permit the enforcement proceedings to continue in light of the fact that the judgment may appear to not be final.

A defendant may attempt to interdict the enforcement proceedings in South Africa, but it is more likely that the enforcement proceedings would simply be opposed.

Recognition and enforcement procedure

Formal procedure

What is the formal procedure for seeking recognition and enforcement of a foreign judgment?

The Enforcement of Foreign Civil Judgments Act (EFCJ) (applicable only to Namibia at this stage)

in order to be recognised and enforced the judgment must:

  • be certified by the court of the foreign country as being a true copy of the judgment; and
  • be lodged or registered with the clerk of the Magistrates’ Court in the district where:
    • the person against whom the judgment was given resides, carries on business, is employed or owns any movable or immovable property;
    • any juristic person against which the judgment was given has its registered office or its principal place of business; or
    • any partnership against which the judgment was given has its business premises or any member thereof resides.

Once the judgment has been registered:

  • the clerk of the court issues a notice directed to the judgment debtor, informing them of the registration; and
  • the judgment creditor must serve the notice on the judgment debtor in accordance with the manner prescribed in the rules of court.

The judgment can only be executed:

  • after the expiry of a 21-day period after service on the judgment debtor; or
  • until any application to have the registration of the judgment set aside has been disposed of.

The common law

From a procedural point of view, there is no prescribed procedure as to how enforcement proceedings must be brought under the common law. Proceedings can be instituted by way of:

  • application proceedings:
    • this procedure is used where no dispute of fact is envisaged;
    • proceedings are brought by way of affidavit; and
    • the dispute is determined on the papers before the court; or
  • action proceedings:
    • this procedure is used where a material dispute of fact is envisaged; and
    • these proceedings are brought by way of summons and culminate in a trial where oral evidence is led.

The document instituting proceedings must be accompanied by a certified copy of the judgment, together with a translation by a sworn translator if the judgment is in a language other than English.

The action or application will need to be served on all interested parties. In this regard, if the defendant is resident outside of South Africa, the documents will need to be served by way of edictal citation, which is a longer process than usual.

Timeframe

What is the typical timeframe for the proceedings to grant recognition and enforcement?

This is dependent on the route taken to enforce a judgment.

EFCJ
This entails registration of the judgment and should be relatively quick.

Common law (application)This depends on how busy the courts are, whether the defendant is recalcitrant and whether the respondent is located in a foreign jurisdiction. This would usually take between six and 12 months.

Common law (action)This is the lengthiest route as it involves a trial and the leading of evidence. The time period also depends on how busy the courts are, whether the defendant is recalcitrant and whether the defendant is located in a foreign jurisdiction. This route could take between 18 months and three years.

Fees

What fees apply to applications for recognition and enforcement of foreign judgments?

The courts do not charge a fee for the recognition and enforcement of foreign judgments. Costs would need to be incurred in respect of the parties’ legal representation and potentially the translation of documents in any language other than English.

Security

Must the applicant for recognition and enforcement provide security for costs?

There is no automatic obligation to provide security for costs. However, a defendant/respondent is entitled to demand payment of security for costs if the applicant/plaintiff resides outside of South Africa and it does not own any un-mortgaged immovable property in South Africa. The South African courts have a discretion as to whether to award this.

Appeal

Are decisions on recognition and enforcement subject to appeal?

The general principle is that a judgment is subject to an appeal if it is ‘final in effect’; this means that the judgment must have an immediate effect and will not be reconsidered on the same facts.

Accordingly, enforcement judgments are usually appealable.

Other costs

How does the enforcing court address other costs issues arising in relation to the foreign judgment (eg, calculation of interest, exchange rates)?

South African courts are entitled to enter judgment in the foreign currency in which the foreign judgment quantified the debt. However, the defendant is also entitled to make payment in South African currency – in this regard, the applicable rate of exchange is that prevailing at the time of payment.

In terms of interest, the South African court will defer to the interest awarded in accordance with the foreign judgment or the foreign law and will not interfere with the terms of the foreign judgment.

Enforcement against third parties

To what extent can the courts enforce a foreign judgment against third parties?

This question does not appear to have been dealt with by South African courts.

A South African court is unlikely to enforce a foreign judgment against a party not cited in the judgment concerned.

Partial recognition and enforcement

Can the courts grant partial recognition and enforcement of foreign judgments?

This question does not seem to have been dealt with by South African courts.

It is submitted that partial recognition or enforcement would be granted provided it will not have the effect of materially changing the nature of the foreign judgment or would lead to a situation which contravenes public policy.

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