Enforcing a Foreign Judgment in Malaysia
1. The enforcement of foreign judgment in Malaysia is governed by the Reciprocal Enforcement of Judgments Act 1958 (“hereinafter refers as REJA”).
2. Illustration can be made when A, a bank from United Kingdom lend money to B, a Malaysian. Later in 2015, the B has default in payment. In 2016, the UK High Court has declared the B as bankrupt. Now B has to pay the outstanding sum due to the A.
3. To simplify, A is the Judgment Creditor (“JC”) and B is the Judgment Debtor (“JD”).
4. The UK High Court has perfected the Order by the High Court seal, and later JC has realized that JD is now domicile in Malaysia. Hence, any suit against him in UK would be limited unless JC register the Order from UK High Court in Malaysia.
PRE-REQUISITES
5. Before we understand more about the registration, it is important to understand the pre-requisites for commencing the registration of foreign judgment.
6. Part II of the Act applies to judgments of a superior court from a reciprocating, country only if the judgments satisfy certain criteria and the criteria is spelt out in Section 3(3) of REJA, which states:
Any judgment of a superior court, other than a judgment of such a court given on appeal from a court which is not a superior court, shall be a judgment to which this Part applies, if —
(a) it is final and conclusive as between parties thereto;
(b) there is payable thereunder a sum of money, not being a sum payable in respect of taxes or other charges of a like nature or in respect of a fine or other penalty; and
(c) being a judgment from a country or territory added to the First Schedule pursuant to subsection (2), it is given after that country or territory is added to that Schedule.
7. When is a judgment final and conclusive as between parties thereto? Halsbury's Laws of England (4th Ed) speaks of this requirement in the following manner:
i. The judgment which it is sought to enforce must finally and conclusively determine the rights and liabilities of the parties to it so as to be res judicata in the country where it has been pronounced [see Nouvion v Freeman (1889) 15 App Cas 1, HL; Plummer v Woodburne (1825) 4 B & C 625; Paul v Roy (1852) 15 Beav 433; Patrick v Shedden (1853) 2 E & B 14 ];
ii. A judgment is not final and conclusive if the court which has pronounced it has power to rescind or vary it subsequently [see Nouvion v Freeman (1889) 15 App Cas I, HL; Re Macartney, Macfarlane v Macartney (1921) 1 Ch 522 at 531, 532;Blohn v Desser [1962] 2 QB 116 ].
8. Further, only the countries stated below have the right to enforce the judgment:-
REGISTRATION OF FOREIGN JUDGMENT
9. JC has the right under the REJA to enforce the judgment from its home country jurisdiction. This has been provided under Section 4 of REJA where:
A person, being a judgment creditor under a judgment to which this Part applies, may apply to the High Court at any time within six years after the date of the judgment, or, where there have been proceedings by way of appeal against the judgment, after the date of the last judgment given in those proceedings, to have the judgment registered in the High Court, and on any such application the court shall, subject to proof of the prescribed matters and to the other provisions of this Act, order the judgment to be registered:…….
10. The registration of the foreign judgment is mandatory to recover the sum payable under the judgment. It has been decided in the landmark case re A Judgment Debtor [1939] 1 Ch 601 at page 604:
Of course, apart from statute, the only way of enforcing the judgment of a foreign Court (and in the word foreign include Scotch and Irish and Dominion Courts) was by way of action, and various defences could be set up to an action of that kind
11. The English Court of Appeal further held at page 608:
I should have said, of course, that s 6 only applies to judgments for recovery of a sum of money. It seems to me that s 6 shows that the Parliament was intending by this Act to provide that the only method of enforcing foreign judgments should be by registration. That being so, the holder of a registered judgment can do whatever s 2 tells him that he can do. When I look at s 2 and find clear language used which, according to its ordinary meaning, would cover a bankruptcy notice. I must decline to read into that language by implication limiting words which would cut down the effect, and cut down its effect with a result which, I venture to think, cannot possibly have been intended by the Legislature-namely, of depriving the holder of a foreign judgment of valuable rights with regard to its enforcement which he had previously possessed.
12. However, the registration of foreign judgment is subject if at the date of application:-
(a) it has been wholly satisfied; or
(b) it could not be enforced by execution in the country of the original court.
13. In explaining “it has been wholly satisfied”, the classic case Ks Das v P Suppiah [1988] 2 MLJ 445 demonstrates that:
when the judgment was registered in the Johore Bahru High Court, it had already been wholly satisfied by the registration of the transfer of the property to the respondent and therefore by virtue of section 4(1)(a) of the Reciprocal Enforcement of Judgments Act 1958, it had been registered in contravention of the Act and under section 5(1) the registration of the judgment should be set aside.
14. Whilst the “it could not be enforced it could not be enforced by execution in the country of the original court” has been interpreted in the case Standard Chartered Bank (Singapore) Ltd V. Pioneer Smith (M) Sdn Bhd [2015] 7 CLJ 677:
It is my view that the legal analysis ought to be that focus and emphasis of the question concerning enforceability by execution should be more on the character and status of the finality of the registered foreign judgment, and not on the situation pertaining to the parties against whom the judgment had been entered. Thus, Re A Debtor is well in consonance with the legal proposition that a foreign judgment is not capable of being enforced by execution in the country of the original court if the legal rights of a judgment creditor to enforce the foreign judgment has ceased, been suspended or stayed by an order of court or by the operation of the law in the country of original court.
15. The High Court added:
It is to be noted that SA Consortium also focuses on the legal character or status of the foreign judgment, not on the position or circumstances of the defendant/respondent. This, in my view is a sensible proposition. Fundamentally, in the first place, the rules on the enforcement of foreign judgments were developed as a measured response to deal with the problem of the absconding debtor. The rules were formulated to assist a judgment creditor in having the judgment granted in its favour in the country of the original court enforced in the jurisdiction to which the judgment debtor relocated. Therefore, any question as to the interpretation of proviso (b) to s. 4(1) of REJA on whether the foreign judgment is enforceable by execution should properly only concern the legal status or character of the finality of judgment, and not the circumstances affecting the debtor or defendant which may, if at all, be relevant purely to the issue of their submission to the jurisdiction of the original court in making the judgment. Leading English case law authorities on the subject such as Pemberton v. Hughes [1899] 1 Ch 781 and Adams v. Cape Industries Plc [1990] Ch 433 which considered the physical presence of a defendant in the country of the original court are wholly concerned with the initial or threshold issue of submission to the jurisdiction of the foreign court (which is not in dispute in the instant case) and not in respect of the subsequent question on the ability to enforce the judgment of the foreign court by execution.
SETTING ASIDE THE FOREIGN JUDGMENT
16. By virtue of the Section 5 of REJA, it reserves the right of JD to set aside the registration of foreign judgment, where:
(1) On an application in that behalf duly made by any party against whom a registered judgment may be enforced, the registration of the judgment—
(a) shall be set aside if the registering court is satisfied—
(i) that the judgment is not a judgment to which this Part applies or was registered in contravention of this Act;
(ii) that the courts of the country of the original court had no jurisdiction in the circumstances of the case;
(iii) that the judgment debtor, being the defendant in the proceedings in the original court, did not (notwithstanding that process may have been duly served on him in accordance with the law of the country of the original court) receive notice of those proceedings in sufficient time to enable him to defend the proceedings and did not appear; (iv) that the judgment was obtained by fraud;
(v) that the enforcement of the judgment would be contrary to public policy in Malaysia; or
(vi) that the rights under the judgment are not vested in the person by whom the application for registration was made; and
(b) may be set aside if the registering court is satisfied that the matter in dispute in the proceedings in the original court had previously to the date of the judgment in the original court been the subject of a final and conclusive judgment by a court having jurisdiction in the matter.
Not duly served
17. The OCJ Singapore in the case United Overseas Bank Limited V Tjong Tjui Njuk [1987] 2 MLJ 295, the Court explained the definition of service in light of foreign judgment.
Was the debtor duly served with the process of the original court? I find that she was not. The creditor has in fact not complied with the Rules of the Supreme Court of Hong Kong. Before the creditor can serve the writ on the debtor in the manner provided for by O 10 r 1(2)(b), the debtor must be within the jurisdiction of the original court. The evidence clearly is that the debtor was not within the jurisdiction of the original court at the time of the writ was purported to be served on the debtor under O 10 r 1(2)(b). The service is therefore bad.
It is noted that the JC must serve the documents and ensure that the JD is within the jurisdiction of the original court:
Later, the Malaysian case Wong Teck Lim V Sim Lim Finance Ltd [2001] 3 MLJ 19 In that it was revealed that personal service could not be effected on the appellant and for that reason the respondent applied for substituted service by way of advertisement in the Malaysian newspaper which was The New Straits Times. This was duly done on 20 July 1988. This can be seen from the affidavit of Foo Soon Kee and the exhibits attached thereon. It is clear to us that the appellant was duly served with the concurrent writ of summons by way of substituted service.
Against the public policy
18. In the recent case Resort World at Sentosa Pte Ltd v Lim Soo Kok [2016] MLJU 700, the Court held that :
In the Aspinall’s case, the Plaintif, a licensed gambling casino, obtained in the High Court of England a judgment against the defendant and thereafter the plaintiff applied to the High Court in Kuala Lumpur to have the judgment registered under section 4 REJA which application was granted.
[11] On appeal to the judge-in-chambers against the registrar’s dismissal of the defendant’s application to set aside the registration, the defendant argued inter alia that the judgment was for gambling debt, and should not be enforced as it is against the public policy of this country.
[12] It is noted that the High Court in The Ritz Hotel Casino Ltd & Anor v Datuk Seri Osu Haji Sukam [2005] 6 MLJ 760 set aside the registration of a foreign judgment for a gambling debt on the ground that the registration contradicted Malaysia’s public policy. However the High Court’s decision in the The Ritz Hotel has been set aside by the Court of Appeal.
[13] In this present case, it seems to me that the Judgment Creditor is availing itself to the right of reciprocity of registering a valid and lawful judgment of a foreign court as expressly provided under REJA ……
Hence, in my view when a gaming transaction is lawful in the foreign country from where the judgment originates, the registration of the foreign judgment is not against the public policy of Malaysia.