The parties are bound by the decisions rendered by the foreign courts if the judgment of the court qualifies to be recognisable. To qualify to be recognisable, the foreign judgment has to satisfy the requirements under the relevant regime.
Every country recognizes certain circumstances where the application and enforcement of the foreign law and judgments that would otherwise be applicable is excluded. The doctrine on the basis of which the otherwise applicable foreign law is excluded goes by the name of Ordre Public in the Continental Europe and by the name of Public Policy in the common law countries including India.
The public policy doctrine is essentially a virtual disownment of the policy of international cooperation; it can also be noted to be a negation of private international law. It is regarded as a triumph of nationalism over internationalism, of policy over unity. Even then, most of the countries adhere to the doctrine.
Under the limitation of public policy, a court is given the rights to refuse to enforce a foreign judgment if that court determines that such recognition and enforcement would be in contravention of a fundamental public policy of the enforcing country.
It is to be noted that because of there being no authoritative data in this regard, it remains unclear how often the parties raise and utilize the exception under private international law. The experts and scholars are of the opinion that, this particular exception is raised and brought into utilization quite frequently by the parties. However, it is also important to note that parties seldom succeed in their attempts to prevent recognition and enforcement by invoking the limitation because courts tend to apply it rather sparingly.
Indian courts usually seek to apply the foreign law based on the rules of choice of law in various relevant factual scenarios with the view of rendering justice to the parties that are making the prayers before it. Indian Courts have a penchant of recognising and enforcing foreign law even under the circumstances where such an application may prove to be contrary to a policy of Indian law which the court would ordinarily apply in a purely domestic case.
U.S. courts have also consistently applied the public policy exception in other types of cases and denied enforcement of foreign judgments.
Scheme of the paper
This article, while attempting to understand the recognition and enforceability of foreign judgments in greater detail looks at the limitation of public policy. For the sake of clarity, this article has been divided into 5 major Chapters.
The Chapter I of the piece introduces the concept of public policy and provides a brief overview of the related concepts.
The Chapter II of this article seeks to understand the global perspective with regards to the enforceability and recognition of foreign judgments in countries like Germany, Latin America and other common law countries including India. In the same chapter, the authors also attempt to look at the Hague Convention on Choice of Courts where the authors try to understand the limitation of public policy in greater detail.
The next part under Chapter III of the piece discusses the Choice of law in cases of Contract and the limitation of Public Policy. Subsequently, Chapter IV of the article indulges in an in-depth analysis of the Choice of law in cases of Marriage and the limitation of Public Policy.
Finally, Chapter V concludes the paper with the authors putting forth the idea of unification of the law on recognition and enforcement through an international agreement.
II. GLOBAL PERSPECTIVE ON THE ENFORCEMENT AND RECOGNITION OF FOREIGN JUDGMENTS
It is apparent that there is no unanimity in the state practise or law with regards to the doctrine on application of foreign judgments in native lands. This part of the paper looks at the leading and prevailing views with regards to this doctrine.
It can be observed that most of the Latin-American states find themselves committed to the understanding that there are certain laws of forum which are categorically applicable to all circumstances and thus a foreign law in contrast to these internal laws cannot be given recognition and thereby such laws do not find application.
In Germany, the predominant view in this regard is that all foreign judgments which are in contradiction to moral bases, fundamental provisions of the legal system of the forum, or to basic notions and principles of its social and economic life are as a generally accepted rule precluded from application.
If we take a look at the prevailing view in East Europe, the broad principle here is that all those rules of foreign law which are at variance with basic values of the forum or are against the fundamental principles of its law and society are precluded from application.
The countries belonging to common law system and India take the view that courts will not apply any rule of foreign law nor will the courts give recognition and application to any such foreign judgment which is contrary to public policy. Similarly, the foreign penal and revenue laws are also precluded from application.
Thus, it is clear that under English and Indian Private International Laws, the application of otherwise applicable foreign law may be excluded under certain specific circumstances like, when the foreign judgment or law is in contravention with public policy.
HAGUE CONVENTION ON CHOICE OF COURTS AND THE LIMITATION OF PUBLIC POLICY
The Hague Conference drafted a convention on recognition, enforcement and jurisdiction to function across all the nations in a manner similar to the Brussels Convention. However, that particular agreement was not reached upon and in place of that Convention, a more limited convention on choice of court agreements was worked out in the year 2005. The Hague Convention has been signed by United States and the EC, moreover, Mexico has also acceded to the convention. Further, it is to be noted that Singapore and the United States merely signed the convention, but have not yet ratified the Convention.
Article 5 of the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters states –
“Recognition or enforcement of a decision may nevertheless be refused in any of the following cases –
(1) if recognition or enforcement of the decision is manifestly incompatible with the public policy of the State addressed or if the decision resulted from proceedings incompatible with the requirements of due process of law or if, in the circumstances, either party had no adequate opportunity fairly to present his case”
Moreover, Article 9 of the Hague Convention on Choice of Court Agreements states –
“Recognition or enforcement may be refused if –
e) recognition or enforcement would be manifestly incompatible with the public policy of the requested State, including situations where the specific proceedings leading to the judgment were incompatible with fundamental principles of procedural fairness of that State;”
Thus, it is clear that the Hague Convention in its present form allows refusal of recognition and enforcement where such “recognition or enforcement would be manifestly incompatible with the public policy of the requested State”
In must be noted here that the Brussels Convention also makes it clear that a judgment will not be recognized “if such recognition is contrary to public policy in the State in which recognition is sought”
It is further important to note that the rules relating to the exception of Public Policy is subject to interpretation, and moreover, these Conventions have not made clear the scope of the public policy exception. Nevertheless, it is apparent that standing alone, these clauses dealing with the exception of Public Policy grant the enforcing courts a significant amount of discretion.
Various scholars are of the opinion that, the public policy definition may differ from state to state, but what does not change is that “…the exception of public policy has to be applied restrictively; in particular, the simple violation of a rule is in itself not sufficient to trigger applicability of the public policy clause, not even if the overriding rule is mandatory or overriding mandatory”.
A generally accepted definition of Public Policy exception is that it would find application only when the judgment “…would violate the State’s most basic notions of morality and justice”.
PUBLIC POLICY CONSIDERATION IN INDIA
The common law of India, even as the statutory injunction, as highlighted in the Indian Contract Act under Section 23 upholds the principle that an Indian Court will not recognise or enforce a right based on foreign judgment when such recognition or enforcement of the right is opposed to justice or moral, is unconscionable or where the judgment is obtained by fraud.
Public Policy is an inclusive concept based on which the Indian Contract Act, 1872 declares void the following transactions: a contract in restraint of marriage , trade , or legal proceedings , an agreement the meaning of which is not certain or capable of being made certain , a wagering contract , et cetera.
However, when the contract involves two parties and the contract is subject to two different jurisdictions, the parties are at liberty to choose one or the other of the two. Such an exercise of choice is not opposed to public policy and the contract, accordingly, is valid.
Various important questions regarding Public Policy have come before the Courts in India where the Courts have time and again reiterated its stand that any rule or decision of a foreign law cannot be accepted in India if it is against the public policy of the country.
The Indian Courts have defined public policy consideration as something concerning the public good or something in the interest of the general public. It has been pointed out by the Courts that the public policy concept is not a static concept.
The Apex Court has observed that the public policy considerations have varied from time to time. The Supreme Court has further added that going by the prevailing social circumstances, an agreement having tendency to injury public interest is considered to be one against the public policy.
In respect to contracts, the Apex Court has noted that if the object of the contract happens to be in contravention with the public policy then in that case, the contract is considered to be void.
In recent times, the Supreme Court has appeared to be largely inclined towards the broad view which considers the doctrine of public policy to be like any other branch evolving from the common law and consequently the judges show no reluctance in invoking the doctrine.
III. CHOICE OF LAW IN CASES OF CONTRACTS AND THE LIMITATION OF PUBLIC POLICY
Under Common Law, the Courts have traditionally refused to recognised and enforce a contract where the contracts if enforced would have resulted in contravention of the principles of public policy.
In certain cases, even when the Contract was legal by its proper law, the Court refused recognition on account of public policy as the parties to the contract were, on enforcement of the Contract, going to breach the law of a foreign and friendly state.
The "Rome Convention" or the Convention on the Law Applicable to Contractual Obligations, 1980, is a measure in Private International Law which constructs a common choice of law system in contracts within the European Union.
Article 16 of the Convention on the Law Applicable to Contractual Obligations, 1980 provides-
“The application of a rule of the law of any country specified by this Convention may be refused only if such application is manifestly incompatible with the public policy ("ordre public") of the forum.”
Thus, the Rome Convention has made it clear that Courts can refuse recognition on grounds of public policy. The Courts may refuse the application of a law identified by the convention as applicable in case it happens to be in contravention with the Public Policy of the State.
The Principles on Choice of Law in International Commercial Contracts approved on March 19th 2015 provide the general principles regarding choice of law in international commercial contracts.
The principles on Choice of Law in International Commercial Contracts are non-binding set of guidelines, which the States are encouraged to integrate into their native choice of law regime in a manner suitable for the circumstances of each particular State by the Hague Conference. These Principles can very well guide the reform of native law on choice of law and they can also function together with the prevailing instruments on the subject like the Rome Convention and Mexico City Convention.
Even though the objective of the Hague Principles is to uphold the recognition of party autonomy for choice of law, these principles also provide for exceptions on that independence.
Article 11 of the Hague Principles contains the most essential exceptions to party autonomy and the application of the parties’ chosen law. Article 11 of the Hague Principles provides for the limitations resulting from intervening compulsory rules and public policy.
The objective of those exceptions is to guarantee that, in certain situations, the parties’ choice of law does not have the effect of discounting certain rules and policies that are regarded to be of fundamental prominence to States.
Article 11 (3) of the Hague Principles provides-
“A court may exclude application of a provision of the law chosen by the parties only if and to the extent that the result of such application would be manifestly incompatible with fundamental notions of public policy (ordre public) of the forum.”
Thus, the Principles on Choice of Law in International Commercial Contracts approved on March 19th 2015 make it clear that the law chosen by the parties to the Contract has to be compatible with the fundamentals of public policy of the forum otherwise its application may be rejected by the Court.
Further, it is important to note that a foreign judgment in contravention with the English principles of public policy is neither recognised nor enforced in England. In the much quoted decision of Israel Discount Bank of New York v Hadjipateras the court observed that the scope of the public policy doctrine is wide enough to embrace the principles of undue influence, duress and coercion.
IV. CHOICE OF LAW IN CASES OF MARRIAGE AND THE LIMITATION OF PUBLIC POLICY
It is well settled under law that Courts avoid recognition and enforcement of a right or obligation that is arising out of foreign law and is in violation of the fundamentals of public policy of the enforcing state. The question generally asked is not the rule of a foreign law in the abstract but the impact that the recognition and enforcement of the law will have on the enforcing state. It follows from the same that if the recognition and enforcement of the rule is acceptable then it shall not be rejected on the ground of public policy.
In the context of the English Law, as per the decision rendered by the Court in the case of Hyde v. Hyde , it was made clear that polygamous marriage is considered against public policy. However, it is to be noted that this attitude has changed with time and now in most cases, even polygamous marriages are given recognition.
Another case that needs to be mentioned in this regard is the case of Mohammed v. Knott in this case a 26 years old Nigerian Moslem man entered into a potentially polygamous marriage in Nigeria with a 13 year old Nigerian girl, this marriage was valid as per the laws of Nigeria. However, the Nigerian Couple shifted their cohabitation to England. The issue for the Court to decide was whether the marriage of the 13 year old Nigerian girl was against the public policy of England. The Court observed that since the girl had reached the age of puberty in Nigeria, the marriage cannot be held to be against the public policy of England.
Similarly, in the famous case of Cheni v Cheni the Court observed that a marriage between an uncle and his niece in Egypt could not be considered to be violative of the public policy consideration since the marriage was valid as per the law of ante-nuptial domicile of the parties to the marriage.
In England, Sir Jocelyn Simon observed that to examine if a marriage is in violation of public policy, it has to be seen whether the marriage is so offensive to the conscience of the court that it should refuse to recognise and give effect to the proper foreign law. While determining that question, the court is expected to use common sense and a reasonable tolerance.
V. INFERENCES AND CONCLUDING REMARKS
To conclude, it is clear from our understanding of the above that the public policy defence stands to be one of the most significant of the affirmative defences to the recognition and enforcement of foreign judgments.
In principle, this defence empowers the enforcing court to refute recognition and enforcement to a foreign judgment where the judgment is contrary to the enforcing jurisdiction’s public policy. Its prominence stems from the extensiveness of matters and issues that it can notionally encompass.
It is necessary however to highlight that in-spite of all in practice the courts give the public policy defences very narrow interpretation.
Even though the Courts tend to give a rather narrow interpretation to the limitation of public policy, it still has ample potential to limit the recognition and enforcement of some judgments that would otherwise be perfectly legitimate merely because they happen to be in contravention to the public policy.
Since the limitation of public policy holds such importance in Private International Law and it is in view of this that the authors argue that the unification of the law on recognition and enforcement through an international agreement would be a positive development in Private International Law.
The authors believe that, in view of the fact that the international trade and commerce requires certainty in the implementation of commercial and contractual agreements and the resolution of contractual disputes achieving greater uniformity in Private International Law is not simply of theoretical significance.
The fact that the International Trade world is ready for unification of the law on recognition and enforcement through an international agreement is apparent from the trade and commerce world’s unequivocal embrace of the New York Convention, which provides such certainty through its clear and tested system for recognition and enforcement of international arbitral awards.
The authors further highlight the fact that the benefits of a uniform recognition and enforcement convention becomes more evident in view of the ever growing globalization of commercial, economic and social relationships, which yields an ever-growing number of cross-border legal dispute resolutions, many of which happen to be enforced in a foreign country. Its importance is further highlighted by the fact that International commercial bodies place massive significance on the security and safeguard provided by the enforcement of legal rights and remedies; that is to say, in international trade, the recognition and enforcement of judgments given by the courts of other countries is “a central tool of trade integration.”
Thus, the unification of the law on recognition and enforcement through an international agreement would be a positive development in Private International Law and would be beneficial for international business conglomerates in the longer run which would in turn also boost the economy of the nations.