#5080 - Owens Bank V. Bracco Hl - Conflict of Laws BCL

Owens Bank v. Bracco

Facts

Bank’s claim was that, on 31 January 1979, Mr. Armando Nano, the then managing director of the bank and acting on its behalf, had lent to Bracco Industria Chimica S.p.A. the sum of Swiss Fr. 9m., which had then been handed over in cash by Nano to Bracco, who was the president of Bracco Industria Chimica S.p.A. acting on its behalf, or his own behalf. The loan was made, it was said, on terms agreed orally including, inter alia, that it should be repayable in three tranches of Sw.Fr. 2m., 3m., and 4m. on 27, 28 and 29 August 1979. The documents included provisions that gave the High Court of St. Vincent and the Grenadines jurisdiction in the event of dispute.

Allegation of Fraud by Bracco: After the bank's case was closed, however, the defence intimated that they wished to set up a new defence, namely, that the signatures on the receipts and acknowledgements were genuine signatures but that they had originally appeared in the wide margins of a contract concerning a wholly different matter, that the margins with the signatures had been cut off and that Nano or someone on his behalf or on behalf of the bank had then typed in the rest of what appeared on the document.

Proceedings in Italy: Between the judgment in the High Court of St. Vincent and the dismissal of the appeal therefrom yet further proceedings had been commenced in Italy including (1) civil proceedings at the suit of both defendants seeking declarations of non-liability to the bank and (2) proceedings by the bank to enforce the St. Vincent judgment.

Bank seeks to enforce the St. Vincent Judgment in England.

Section 9 of the 1920 Act provides:

If in all the circumstances of the case they think it is just and convenient that the judgment should be enforced in the United Kingdom, and subject to the provisions of this section, order the judgment to be registered accordingly.

(2) No judgment shall be ordered to be registered under this section if - (a) the original court acted without jurisdiction; or (b) the judgment debtor, being a person who was neither carrying on business nor ordinarily resident within the jurisdiction of the original court, did not voluntarily appear or otherwise submit or agree to submit to the jurisdiction of that court; or (c) the judgment debtor, being the defendant in the proceedings, was not duly served with the process of the original court and did not appear, notwithstanding that he was ordinarily resident or was carrying on business within the jurisdiction of that court or agreed to submit to the jurisdiction of that court; or (d) the judgment was obtained by fraud.

Bank’s argument: But it is submitted for the bank that the language of section 9(2)(d) must be construed as qualified by the common law rule that the unsuccessful party who has been sued to judgment is not permitted to challenge that judgment on the ground that it was obtained by fraud unless he is able to prove that fraud by fresh evidence which was not available to him and could not have been discovered with reasonable diligence before the judgment was delivered. Here, it is said, there is no such fresh evidence. This is the rule to be applied in an action brought to set aside an English judgment on the ground that it was obtained by fraud.

Question

The question at issue in this appeal is whether a defendant who is seeking to resist the enforcement against him of a foreign judgment, either by an action on the foreign judgment at common law or under the statutory machinery for the enforcement of foreign judgments, is placed in the same position as if he were a plaintiff in an action seeking to set aside the judgment of an English court on the ground that it was obtained by fraud and can therefore only rely upon evidence which satisfies the English rule.

Holding

Scope of the Statutory Defence of Fraud under the Act

The Sumner Report points out that the adoption of this principle of strict reciprocity would give to all judgments of courts within the Empire an equal status and currency in all parts of the Empire and that some overseas governments had commented adversely on this principle. The committee accepted the criticism and recommended a much more cautious approach, the reasons for which the report...