High Court Upholds Jurisdictional Challenge to Enforcement of Foreign Judgment in Ireland

High Court upholds jurisdictional challenge to enforcement of foreign judgment in Ireland where no ‘solid practical benefit’ accrues to the plaintiff.

Matheson acted as Irish legal counsel to Enel SpA and Enelpower SpA.

The Irish High Court in the case of Albaniabeg Ambient Shpk v Enel SpA and Enelpower SpA confirms that, as a matter of Irish law, for the court to assume jurisdiction to enforce a foreign (non-EU) judgment in Ireland a “solid practical benefit” must accrue to the applicant in pursuing the proceedings in Ireland, and that several debt securities listed by the first named defendant on the Irish Stock Exchange were not sufficient for the court to assume jurisdiction.

In summary

In Albaniabeg Ambient Shpk v Enel SpA and Enelpower SpA (High Court, 8 March 2016, McDermott J), the Defendants successfully resisted an application to enforce a foreign judgment in Ireland on jurisdictional grounds. The decision confirms that, as a matter of Irish law, for the court to assume jurisdiction:

(a) the plaintiff must be able to demonstrate that a “solid practical benefit” will or is likely to accrue to the plaintiff in the event that the judgment is recognised and enforced in Ireland; and

(b) the question of whether there are, or are likely to be, assets within the jurisdiction against which to levy enforcement is critical to the question of whether any “solid practical benefit” will or is likely to accrue.

To resist enforcement on substantive grounds would involve significant time, costs and court resources. The court held that Ireland was not the appropriate jurisdiction in which to seek enforcement from the perspective of comparative cost and convenience pursuant to Order 11 of the Rules of the Superior Courts where the Defendants had no, and were unlikely in the future to have any, assets in Ireland.

The arguments

The enforcement proceedings related to an Albanian judgment in favour of an Albanian company (the “Plaintiff”) against two Italian companies (the “Defendants”) and recognition and enforcement was sought in Ireland in a sum of c. €433 million. Enforcement proceedings had also been brought in a number of other jurisdictions around the world including New York, The Netherlands, Luxembourg and France.

Leave to issue and serve the enforcement proceedings on the Defendants outside of the jurisdiction on the Defendants was granted on an ex parte basis pursuant to Order 11 of the Rules of the Superior Courts. A conditional appearance was entered in order to preserve the Defendants’ right to challenge jurisdiction and, upon the proceedings being admitted to the Commercial Court, directions were given that the question of jurisdiction be determined in the first instance.

In considering whether to set aside the service, the court had to determine whether the Plaintiff had a good arguable case and whether the case was a proper one to determine in Ireland. The court noted that the ‘comparative cost and convenience’, meaning the fitness, propriety and suitability of bringing proceedings in Ireland, was relevant to the exercise of the court’s discretion.

Whilst the judge accepted the Plaintiff had a good arguable case, whether it was a proper case to be determined in Ireland required him to address the question of whether the Defendants had assets within the jurisdiction. Although it was not a precondition that there be assets, the judge was satisfied that the court is entitled to consider whether the proceedings will serve any useful purpose. In this regard, he cited the English Court of Appeal decision in Tasarruf v Demirel(1) where it was held that the discretion to allow enforcement should not be exercised “unless it can be shown that a solid practical benefit would ensue”. He observed that these principles had been found persuasive in Ireland in the case of Yukos Capital v Tomskneft(2) where Kelly J applied the “solid practical benefit” and found there was none in circumstances where the defendant had no connection with Ireland, no assets in the jurisdiction and no real likelihood of assets coming into the jurisdiction.

In this case, the Plaintiff pointed to certain factual matters in order to demonstrate that certain companies in the Enel group have or previously had a connection with Ireland.

The Plaintiff’s principal argument was that it had identified that one of the Defendants (as well as other Enel group entities) had listed bonds on the Irish Stock Exchange which gave a sufficient connection with Ireland. The Defendants explained to the court that bonds by their nature constitute liabilities rather than assets, in that the bonds reflect funds owned by Enel which must be repaid to the bond holders upon maturity, so it would not be possible to seek execution against the redemption amount of such bonds. Furthermore, the listing of a bond in Ireland does not mean that any funds realised upon issue would ever be in or flow through Ireland (and this was the position as a matter of fact in respect of the bonds in question in this case). Accordingly, there were (and would be) no resultant assets in Ireland to be derived from such bonds.

The Plaintiff also argued that an Italian subsidiary of one of the Defendants had an Irish branch with a fixed term contract to provide services in Ireland and that this constituted a sufficient connection with Ireland. The court did not accept this argument in circumstances where the subsidiary in question was not a defendant in the proceedings and its assets would not be capable of being enforced against. The Plaintiff argued that it could look to pierce the corporate veil to get access to the subsidiary’s assets but did not identify any grounds entitling it to do so. Furthermore, the Defendants contended that the subsidiary in question had no employees in Ireland and any monies received pursuant to its contract were received in Italy. In any event, by the time the motion was heard, the contract in question had terminated. Accordingly, even if the corporate veil could be pierced, there would be no resultant benefit to the subsidiary being susceptible to enforcement.

Decision

On the evidence McDermott J concluded that the Plaintiff could not demonstrate that any solid or practical benefit would ensue if the judgment were to be recognised and enforced in Ireland. He was satisfied that the Plaintiff could not demonstrate that the Defendants had any assets within the jurisdiction and nor could they point to any reasonable possibility of any assets coming into the jurisdiction. Accordingly, there was no practical benefit to be obtained from these proceedings and they served no useful purpose. Furthermore, given the enforcement proceedings brought elsewhere, he felt it would be unfair to require the Defendants to attend in yet another foreign jurisdiction.

Conclusion

This decision is important because it has confirmed that the test for the exercise of jurisdiction of the Irish courts for the enforcement of non-EU judgments is whether there is a “solid practical benefit” to be derived from such proceedings. Although having assets within the jurisdiction is not a pre-condition for enforcement, the absence of assets (or any real prospect that they will come into the jurisdiction) is likely to be sufficient for a finding that there is no “solid practical benefit”. This is consistent with the approach of the Irish courts to the question of jurisdiction to enforce foreign arbitral awards.

Footnotes

 1. [2007] 4 All ER 1014
 2. [2014] IEHC 115