Global Judgement Enforcement – Cross-Border Judgement Enforcement and Asset Recovery
Cross-border asset recovery is a complex and often challenging process, especially when navigating the legal and procedural differences across multiple jurisdictions. From offshore judgments to onshore enforcement in regions like the UAE, lawyers must devise strategic approaches for successfully recovering assets on behalf of the creditors. An ideal approach would be to create a global asset map using available resources and tools that identifies, tracks, and consolidates assets across multiple jurisdictions.
Enforcing offshore judgments in onshore jurisdictions is often a challenge. Variations in legal frameworks, enforcement procedures, and recognition standards often complicate the process. For example, in the UAE, foreign judgments are not automatically recognized. Lawyers must navigate local laws addressing reciprocity agreements, public policy considerations, and asset availability.
In other cases, offshore jurisdictions like in the British Virgin Islands or Hong Kong add another layer of complexity with their own unique legal environments. Meanwhile, China’s regulatory landscape requires leveraging mutual recognition agreements to enforce judgments effectively, often done through Hong Kong as Hon Kong acts as a gateway for enforcement in China, because the jurisdiction in Hong Kong leverages mutual recognition agreements and simplified procedures. Recognizing and strategically working within these nuances is critical for success in recovering assets and well as navigating legal complexities.
Before initiating enforcement proceedings, it is considered to have figured out a global asset map of the debtor which serves as the backbone of any cross-border enforcement strategy. This map will assist in providing a comprehensive overview of where assets are held, how they are structured, and the legal entities involved. Assets might include: (i) Tangible Assets: Real estate, vehicles, yachts, or aircraft. (ii) Financial Assets: Bank accounts, investments, and cryptocurrencies. (iii) Intangible Assets: Intellectual property (“IP”), brand equity, or goodwill. (iv) Legal Vehicles: Trusts, offshore companies, and shell entities.
Building this map ensures enforcement efforts are targeted, efficient, and effective. Initial information can be gathered by lawyers and practitioners by collecting publicly available information such as:
(i) Public Records: Land registries, corporate filings, and IP databases reveal ownership and holdings.
(ii) Court Filings: Prior litigation, insolvency proceedings, or divorce settlements often disclose valuable asset details.
(iii) Corporate Databases: Private asset search platforms can help uncover corporate affiliations and beneficial ownership. Tools like Chainalysis track cryptocurrency movements. Global AML Tools help identify high-risk entities and potential hidden assets.
(iv) Advanced Investigations. When public records are insufficient, practitioners/lawyers may hire private Investigators that are licensed professionals skilled in cross-border asset tracing. These specialists and forensic experts analyze financial data to uncover hidden assets.
(v) Legal Mechanisms: Depending on the multitude of the matter and the jurisdictions involved, courts can provide tools to compel disclosure such as an application for Discovery Orders that require disclosure of assets in the EU/UK etc.
(vi) Freezing Orders (Mareva Injunctions): Prevent assets from being dissipated during recovery. Mareva Compania Naviera SA v. International Bulkcarriers SA (The Mareva) [1975] 2 Lloyd’s Rep 509 (UK). This key precedent established the concept of the Mareva injunction (freezing order), enabling courts to freeze assets and compel disclosure to prevent dissipation before judgment enforcement.
(vii) Receivership Appointments: Such appointments can allow enforcement receivers to take control of assets at risk, which are available in various jurisdiction.
With data in hand, lawyers and practitioners use technology to visualize and consolidate information:
In the UAE, enforcement varies significantly between onshore courts and free zones like the DIFC and ADGM. In onshore Courts foreign judgments require recognition under reciprocal agreements and must align with UAE public policy. However, in Free Zones such as DIFC and ADGM, where common-law is practised the process of recognizing and enforcing foreign judgments, often serve as conduits and facilitates for onshore enforcement. Similar to countries like China, where regulatory framework requires strategic partnerships and often necessitates enforcement through intermediary jurisdictions like Hong Kong.
Provisional remedies are also very essential for safeguarding assets before they are dissipated or moved. Asset freezing orders can help prevent movement or concealment of assets during enforcement. Disclosure Orders addressed to third parties (e.g. Banks) can compel third parties to disclose hidden accounts or holdings. While asset recovery is often an urgent matter, hasty decisions can lead to errors and missed opportunities. Lawyers and other related practitioners must adopt a methodical and patient approach, ensuring that all legal avenues are explored and enforcement actions are timed to maximize impact.
The Agreement between the UAE and India on legal cooperation in civil and commercial matters (the “Treaty”) was signed in 1999 and ratified in 2000. In January 2020, the Government of India notified the UAE as a ‘reciprocating territory’ for the purposes of recognising UAE civil judgments in India without a re-examination of the merits of the underlying dispute. This Treaty reflects the strong cultural and economic relationship between the two countries. However, since the UAE follows a civil law system and India follows a common law system, mutual recognition of court decisions can be challenging.
Parties involved in international commercial disputes often opt for arbitration, seeking a forum they perceive as more neutral than a local or national court. A significant advantage of arbitration is the enforceability of arbitral awards abroad, which is made possible by the widespread adoption of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”). As the majority of states are signatories to the New York Convention, arbitral awards are widely recognized and enforceable across borders. This promotes the global enforceability of arbitration agreements. It ensures that once parties agree to arbitrate their disputes, they can seek enforcement of this agreement in any of the contracting States.
The enforcement of judgments across jurisdictions like the UAE, and other developed and emerging markets underscores the need for a global perspective in asset recovery. By understanding jurisdictional nuances, leveraging provisional remedies, and creating a global asset map, lawyers can understand the challenges of cross-border enforcement and significantly improve their recovery efforts. Strategic patience and thorough preparation remain the cornerstones of a successful recovery process. This means staying vigilant, leveraging every tool at their disposal.
Written by – Mr. Sanjeev Kandathil
