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RE FLIGHTLEASE: THE ‘REAL AND SUBSTANTIAL CONNECTION’ TEST FOR RECOGNITION AND ENFORCEMENT OF FOREIGN JUDGMENTS FAILS TO TAKE FLIGHT IN IRELAND

Published online by Cambridge University Press:  02 January 2014

David Kenny*
Affiliation:
Lecturer in Law, Trinity College Dublin, Dublin, [email protected].

Abstract

The common law rules for recognition and enforcement of foreign judgments were radically reformulated by the Canadian Supreme Court in Beals v Saldanha. Few other common law jurisdictions have considered whether or not to follow Canada in this development in private International Law. In 2012, the Irish Supreme Court definitively rejected the Canadian approach. This note examines the judgment in that case, and assesses the reasoning of the Irish Court.

Type
Shorter Articles and Notes
Copyright
Copyright © British Institute of International and Comparative Law 2014 

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References

1 I borrow the term from Clarke J's judgment in Goshawk Dedicated v Life Receivables Ireland [2008] IEHC 90 [4.15].

2 Council Regulation (EC) 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, OJ L12/1. It will soon be replaced by the recast of Brussels I, Regulation 1215/2012 of 12 December 2012.

3 Judgments from Iceland, Norway, and Switzerland are subject to the Lugano Convention rules.

4 In Beals v Saldanha [2003] 3 SCR 416 Major J, for the majority, saw the change effected by the court as allowing a wider category of recognition, in addition to those already recognized, without abolishing the pre-existing rules. However, LeBel J, in dissent, saw this development as a replacement of the old rules. See Briggs, A, ‘Crossing the River by Feeling the Stones: Rethinking the Law on Foreign Judgments’ (2004) 8 SYBIL 1, 15Google Scholar.

5 [2012] IESC 12 (Finnegan J).

6 Recently, Flightlease was discussed in passing in the UK Supreme Court. See Rubin v Eurofinance SA; New Cap Reinsurance Corp (in liquidation) v Grant [2012] UKSC 46. However, the issue was not directly presented in that case; it related to the rules specifically governing bankruptcy proceedings, which had been discussed briefly in Flightlease. The traditional doctrine of obligation received support from the Supreme Court in Rubin.

7 The common law rules of England and Wales are not appreciably different from those in force in Ireland. See Delany, H and McGrath, D, Civil Procedure in the Superior Courts (3rd edn, Round Hall 2012) [2525]Google Scholar; Bussoleno v Kelly [2011] IEHC 220 [13].

8 Delany and McGrath (n 7) 807; Binchy, W, Irish Conflicts of Law (Butterworths 1988) 509606Google Scholar; Newman, J, ‘Enforcement of Foreign Judgments in Non-Convention Cases’ (2000) 5(7) Bar Review 354Google Scholar.

9 See Binchy (n 8) 606–9; Bussoleno (n 7).

10 Collins, L, Dicey, Morris and Collins on the Conflict of Laws (14th edn, Sweet and Maxwell 2006)Google Scholar [14R-048]. In the latest edition, it is listed as Rule 43. Lord Collins of Mapesbury, Dicey, Morris and Collins on the Conflict of Laws (15th edn, Sweet and Maxwell 2012)Google Scholar [14R-054].

11 Briggs (n 4) 3.

12 Rainford v Newell Roberts [1962] IR 95.

13 Flightlease (n 5) [42].

14 ‘[N]owhere in the judgment of Davitt P [in Rainford] is it stated that Dicey Rule 36 is an exhaustive statement of the Irish law.’ ibid.

15 Finnegan J noted that there ‘may be other grounds upon which a judgment in personam will be enforced in this jurisdiction’. ibid [44].

16 For a history of the development of these rules, see Briggs, A, ‘Which Foreign Judgments Should We Recognise Today?’ (1987) 36 ICLQ 240CrossRefGoogle Scholar; Binchy (n 8) 585–7.

17 Briggs has recently mounted a spirited defence of the theory of obligation as the basis for recognition and enforcement. Briggs, A, ‘Recognition of Foreign Judgments: A Matter of Obligation’ (2013) 129 LQR 87Google Scholar.

18 Clarkson, CMV and Hill, J, The Conflict of Laws (4th edn, Oxford 2011) 172Google Scholar.

19 In England, this is governed by Rule 6.36, Civil Procedure Rules. In Ireland, it is governed under Order 11, Rules of the Superior Courts.

20 The doctrines of forum non conveniens, recognized by the House of Lords in The Atlantic Star [1974] Ac 436, and lis alibi pendens, as outlined in The Abadin Daver [1984] 1 All ER 470, enable courts to decline jurisdiction where appropriate.

21 Clarkson and Hill (n 18) 173.

22 Binchy (n 8) at 589–91 and Briggs (n 16) 243 queried whether this might be found to be unacceptable. However, Adams v Cape Industries [1990] CH 443 decided that temporary presence was sufficient.

23 On its exorbitance, see Russell, K, ‘Exorbitant Jurisdiction and Enforcement of Judgments: The Brussels System as an Impetus for the United States’ (2003) 19 SyracuseJIntlL&Com 57Google Scholar; Clermont, K and Palmer, J, ‘Exorbitant Jurisdiction’ (2006) 58(2) MeLRev 474Google Scholar; Merrick Dodd, E, ‘Jurisdiction in Personal Actions’ (1929) 23 IllLRev 427Google Scholar.

24 However, Briggs has recently attempted to defend the theory of obligation, even going so far as to defend transient presence as part of an obligation to respect territorial sovereignty (n 17) 92–4.

25 [1990] 3 SCR 1077.

26 ibid 1095.

27 ibid 1094; 1104. In Indyka v Indyka [1969] 1 AC 33, the House of Lords had introduced a real and substantial connection test for recognition of foreign divorce.

28 Mortguard (n 25) 1097.

29 ibid 1098.

30 ibid 1107.

31 ibid 1108. Alberta was the location of the property; the place the contracts were concluded; and the place of residence of both parties at the time contracts were concluded.

32 ibid 1098–99, discussing the relevance of Canada's Federal constitutional structure in interprovincial recognition.

33 [2003] 3 SCR 416.

34 ibid 458.

35 Le Bel, Iacobucci and Binnie JJ dissented on the result and the availability of defences, but not the introduction of the real and substantial connection test.

36 ibid 437.

37 ibid 436.

38 ibid 437.

39 ibid 437–38.

40 ibid 439.

41 ibid 441–53.

42 He would have refused to enforce the judgment on the grounds of natural justice, or alternatively on the grounds of some broader defence that the result was too harsh on the applicants. ibid 526–28.

43 ibid 473. He suggested that the connection to the foreign jurisdiction would have to be stronger if the defence of the action were more burdensome. ibid 492.

44 ibid 507–20.

45 Briggs (n 4) 10 notes that no doubt was cast on the jurisdictional competence of foreign courts that took jurisdiction because of the defendant's temporary presence in the jurisdiction. Unless the test replaced, rather than supplements, the old rules, this problem is not resolved.

46 Briggs, A, ‘Foreign Judgments: More Surprises’ (1992) 109 LQR 549, 552Google Scholar.

47 Briggs (n 4) 22 thought it was possible to transition carefully and incrementally to a different set of rules, as this is what the common law did best. Saldanha could have been a starting point to ‘help us develop the law by measured steps’. However, he found the substantive result for Saldanha ‘disgraceful’, and agreed with LeBel J that the defences required serious reconsideration. ibid 13;15–21.

48 Blom, J and Edinger, E, ‘The Chimera of the Real and Substantial Connection Test’ (2005) 38(2) UBCLRev 373Google Scholar, 380. cf Castel, J-G, ‘The Uncertainty Factor in Canadian Private International Law’ (2007) 17 McGill LJ 555Google Scholar; Black, V, Blom, J and Walker, J, ‘Current Jurisdictional and Recognition Issues in the Conflict of Laws’ (2011) 50 CanBusLJ 499Google Scholar.

49 Blom and Edinger (n 48) 418.

50 In Club Resorts v Van Brenda 2012 SCC 17, the Supreme Court clarified that real and substantial connection was presumptively established by residence or domicile, the carrying on of business, or the completion of a tort or contract in the jurisdiction. The Court said that other presumptive connections might be recognized by analogy to these ones, while regarding the impact on fairness, order and comity in private international law. Having found jurisdiction presumptively established, a court would then ask whether there were some good reason to look behind these presumptive categories and say that jurisdiction was not properly taken, such as the existence of a clearly more appropriate forum. Club Resorts was not yet handed down at the time of Flightlease, and so was not considered by the Irish Supreme Court.

51 Briggs (n 17) 94.

52 Briggs, A, The Conflict of Laws (2nd edn, Oxford 2008) 138Google Scholar.

53 Clarkson and Hill (n 18) 174.

54 In KD v MC [1985] IR 697 the Irish Supreme Court considered Indyka (n 27) and the real and substantial connection test in the context of foreign divorce but refused to rule on the point for procedural reasons. Newman, note 8, argued that the Irish courts ought to follow Mortguard before Saldanha was decided.

55 However, the court has a discretion in deciding whether or not to accede to the section 280 applications on the basis of whether or not it will be ‘just and beneficial’ to do so. See section 280(2).

56 Re Flightlease [2008] IEHC 193 [2.3].

57 There was an argument that the judgment would be in rem, as it related to bankruptcy, which traditionally is an in rem jurisdiction. This was not acceded to by either court. ibid [3.3]–[3.6] Flightlease (SC) (n 5) [12]. Though the question of the appropriate rules for bankruptcy—the subject of Cambridge Gas Transportation Corporation v Unsecured Creditors of Navigator Holdings Plc [2007] 1 AC 508 and subsequently Rubin (n 6)—therefore did not arise in Flightlease, Finnegan J did suggest that Cambridge Gas should not be followed in Ireland. ibid [59]–[68].

58 At the time the transaction that was the subject of the Swiss claim took place, Flightlease had an office in Balsberg, Zurich that constituted a fixed place of business; decisions of consequence were being made in Switzerland by Swiss board members; and Flightlease had a representative operating in Switzerland. The case, furthermore, turned on the knowledge and intention of the parties, who were largely in Switzerland, about the effect the transaction would have on Swissair. Flightlease (HC) (n 56) [4.3]; cf [2.4].

59 ibid [4.6].

60 ibid [4.5].

61 ibid [5.9].

62 ibid [5.16].

63 Flightlease (SC) (n 5) [33].

64 ibid [69]. Similar sentiments were expressed by the Supreme Court in the tort law context in Kennedy v Law Society of Ireland (No 4) [2005] 3 IR 228, 262.

65 Flightlease (HC) (n 56) [5.9]; Flightlease (SC) (n 5) [55]–[56].

66 KD (n 54) 705; McCarthy J expressed wariness about significant alteration to the law of recognition and enforcement of divorce due to the fact of public reliance on the law as it stood.

67 Flightlease (HC) (n 56) [5.13].

68 ibid [5.16]. He said there had been a ‘clear acceptance, as long ago as 1962’ of Dicey's position.

69 ibid [5.12].

70 Flightlease (SC) (n 5) [42]–[44].

71 ibid [69].

72 ibid, endorsing Clarke J's view.

73 ibid [71].

74 ibid [57].

75 Flightlease (HC) (n 56) [5.14].

76 ibid [5.15].

77 ibid [5.16].

78 ibid [5.17].

79 Flightlease (SC) (n 5) [71].

80 ibid.

81 ibid [71].

82 ibid [72].

83 ibid.

84 Briggs (n 4) 12.

85 See Kennedy (n 64).

86 Flightlease (HC) (n 56) [5.15] ‘Subject to the overall limitation that the courts in this jurisdiction could not, in any event, engage in an alteration in the common law which amounted to legislation (an issue not raised by the parties in this case), the courts remain free to allow for the orderly evolution of common law principles.’

87 Flightlease (SC) (n 5) [71]; [72].

88 Aside from, of course, in the context of the Brussels and Lugano Regimes.

89 See Briggs' scathing critique of Beals on this ground (n 4) 14.

90 Due to the unusual circumstances of the section 280 application, the liquidators were able to ask the Irish courts if the judgment would be enforced before making a decision to defend it. See above (text accompanying n 55).

91 Briggs (n 4) 22.

92 Flightlease (SC) (n 5) [7] (O'Donnell J). He had reservations about the section 280 process used in this case, as it gave the liquidators Flightlease a privilege that no individual or solvent company could avail of: having a court ruling declaring a judgment to be unenforceable before deciding to defend a foreign action or not.

93 ibid [6].

94 Briggs (n 17) 96, commenting on a similar argument.

95 Dicey's Rule ‘has little to recommend it at a policy level other than the fact that it is rule which is known and therefore predictable’. [4] He later said arguments against the merits and logic of the rules had ‘considerable force’.

96 Flightlease (SC) (n 5) [5] (O'Donnell J).

97 ibid [10].

98 ibid [11].

99 The point is particularly well made by Blom and Edinger (n 48) and Castel (n 48), both quoted by O'Donnell J.

100 The subsequent elaboration of the test in Club Resorts (see n 50) is somewhat more detailed, but still leaves substantial discretion to judges to decide if another jurisdiction is more closely connected or if there is some other reason presumptive jurisdiction should be questioned. It does not seem to offer the predictability O'Donnell J thought prospective defendants deserved.

101 Flightlease (SC) (n 5) [12] (O'Donnell J).

102 ibid [4].

103 ibid [12].

104 ibid [1].

105 ibid [4].

106 ibid [12].

107 Briggs (n 4) 17. He said that the theory of obligation, underlying the old rules, was premised on a notion of consent, and that this related prevented common law courts from assessing the merits of foreign court proceedings. When this consent was entirely absent, as it could be in the new Canadian regime, the rationale for refusing to look at the merits of the court proceedings would be absent. For example, LeBel J in Beals suggested a defence of severe unfairness was essential to avoid ‘unusually harsh’ outcomes, such as the one in that case. (n 33) 472; 526–28. He also suggested broadening the defences of public policy and natural justice in light of the new approach. ibid 507–20.

108 Blom and Edinger (n 48) 416.

109 Clarkson and Hill (n 18) 174, quoted above (n 53).