#5069 - Interdesco V. Nullifire - Conflict of Laws BCL

Interdesco v. Nullifire

Facts

Interdesco was the manufacturer of intumescent paint. Such paint has special fire protection properties. When heated it expands to form a protective meringue over the painted surface.

Distribution agreement by Interdesco to Nullifire: Interdesco concluded a five year distribution agreement with Nullifire under which Nullifire was given exclusive distribution rights in the U.K. and Ireland for Interdesco's paints. Nullifire terminated the agreement. It claimed that Interdesco's S60 failed to satisfy the U.K. standard for 60 minute paint and was therefore unmarketable. This Interdesco denied, contending in its turn that Nullifire was acting pursuant to a carefully prepared plot, in breach of its contractual duty, to replace Interdesco and steal its market.

Proceedings in France: Both parties commenced proceedings before the Tribunal de Commerce de Paris. A crucial issue in respect of Interdesco's claim for damages for wrongful termination of the distribution agreement was, at least initially, whether or not the S60 paint produced by Interdesco satisfied the contractual standard.

The court did, indeed, appoint an expert for this purpose—Mme Samuel-Langlois. She, however never completed her mission. Precisely why this was is not entirely clear to me on the evidence. What is clear, however, is that the parties urged the court to have regard to evidence of tests that had not been carried out under the supervision of a court expert.

It held that Nullifire had wrongly terminated the contract without giving the contractual notice required and that Nullifire had failed to justify this conduct by proving that Interdesco's paint was substandard.

Alleged Fraud: Nullifire has recently obtained evidence which, it contends, proves that the assertions made by Interdesco in its conclusions were deliberate falsehoods in that Interdesco had indeed been party to tests procured by Cryotherm in relation to a proposed distributorship agreement, which tests demonstrated that Interdesco's S60 paint was substandard. That evidence consists of an affidavit sworn on 12 March 1991 by Mr. Munn, the managing director of Cryotherm and a number of documents produced by Mr. Munn. I was told that Mr. Munn provided this assistance after Nullifire had informed him that a subpoena had been issued in the present proceedings.

Revision proceedings in France: In the present case Nullifire initiated the recours en révision on 26 March 1991. The grounds relied upon include the following: Interdesco deliberately withheld decisive documents, withholding of these documents evidenced fraud on the part of Interdesco, Interdesco had fraudulently lied to the court in its conclusions by averring that it had never attempted to obtain certified approval.

Question

Whether the English court should apply the same approach where a Convention judgment is attacked on the ground that it has been procured by fraud as it applies where the foreign judgment is not governed by the Convention.

Holding

Different standards applicable to English and Foreign Judgments (outside the Convention)

Citing Owens Bank v. Bracco:

Our law had long permitted the party against whom an English judgment had been given to bring an independent action to set aside the judgment on the ground that it had been obtained by fraud but strict limits were imposed in order to preserve the principle that a judgment which brings litigation to an end should not be too easily disturbed. In particular the court would not permit the new action to proceed unless the plaintiff could put forward fresh evidence, discovered since the first trial, being evidence which could not have been produced then with reasonable diligence, and which is such that, if it had been put forward at the trial, it would in probability have caused a different conclusion to be reached:

…it is clear to us that the rules for setting aside an English judgment on the ground that it was obtained by fraud are not the same as those applicable in registration proceedings or in a common law action to the raising of an issue of fraud with reference to a foreign judgment.

A judgment debtor on a foreign judgment may, therefore, defend himself in this country by showing that the judgment was obtained by fraud and it matters not that the fraud alleged has already been investigated by the foreign court even though, in such a case, the pleas of fraud will involve a retrial in this country of the matters adjudicated upon by the foreign court. It also matters not that the unsuccessful party in the foreign proceedings refrained from raising the plea of fraud in those proceedings although the facts were known to him at all material times.

Citing Abouloff v. Oppenheimer:

The fraud practised upon the court, or alleged to have been practised on the court, was the misleading of the court by evidence known by the plaintiff to be false. That was the whole fraud. The question of fact, whether what the plaintiff had said in the court below was or was not false, was the very question of fact that had been adjudicated on in the foreign court; and, notwithstanding that was so, when the court came to consider how the two rules, to which I have alluded, could be worked together, they said: “Well, if that foreign judgment was obtained fraudulently, and if it is necessary in order to prove that fraud, to retry the merits, you are entitled to do so according to the law of this country”

Application of these principles in a Convention case

The issue in the present case is whether the rule in Abouloff applies in a Convention case and, if it does not, how the court should approach an appeal against a Convention judgment based on an allegation that it was procured by fraud.

Citing Kaye:

…the answer to the preceding question is clear Article 27(1), including its application to fraud, is subordinate to the Convention no-review-of-substance principle. Articles 29 and 34(3) appear quite unequivocal in this respect, in...