Enforcement of Foreign Judgments and Public Policy

The Supreme Court recently delivered a decision about enforcing foreign judgments. It confirmed that courts in Ireland will only refuse to enforce a judgment from another EU Member State in exceptional circumstances, even where the underlying judgment involved aspects which would be contrary to Irish public policy if the proceedings had been conducted in Ireland. Our Commercial Disputes team examines the decision.

A foreign judgment can be enforced in Ireland, however, the process and legal rules that apply will depend on the country it came from. It does not matter whether enforcement of a foreign judgment is based on an internationally agreed arrangement[1] or common law. One reason the Irish courts may refuse enforcement in all scenarios is if the judgment goes against public policy. The Irish Supreme Court recently refused an attempt to block enforcement of a foreign judgment on public policy grounds under the Brussels Recast Regulation (Regulation).[2] The decision confirms that Irish courts will only refuse to recognise judgments from other EU Member States on public policy grounds in exceptional circumstances. In this case, the public policy issue was champerty, which includes where a person with no genuine commercial interest in the litigation is assigned the litigation and funds it in return for a share of the proceeds. Since third-party litigation funding is also champertous in Irish law, this decision[3] will be of interest to those who have obtained judgments overseas with the benefit of third-party litigation funding.

Background

Proceedings were brought in Poland relating to an investment in a Polish shopping centre. Mr Scully had secured 78 Irish investors for the project, and they, but allegedly not Mr Scully, had suffered a loss. A group of the investors subsequently established an Irish company, Coucal Limited. The purpose of that company was to take legal action against Mr Scully in Poland. To allow Coucal Limited to take the legal action on their behalf, each of the relevant investors formally transferred their individual legal claims to the company. In other words, instead of suing Mr Scully individually, the investors gave Coucal Limited the legal right to bring the claim for them in one lawsuit. It appears that the assignments transferring the investors’ rights to make a claim were drafted in a way that allowed the claims to be passed on to an unrelated third party. Under Polish law, an assignment transferring a legal claim with no other interest attached is permissible. The Polish Court of Appeal awarded Coucal Limited a judgment worth approximately €6.3 million. When Mr Scully was faced with the possibility of the Polish judgment being enforced in Ireland, he asked the court to refuse it. He argued that enforcing the judgment was ‘manifestly contrary to public policy’ under the Regulation. Under Irish law,[4] assigning a bare cause of action is not allowed. This is because it is considered to be champertous, which involves someone improperly supporting a legal case in return for a share of the outcome.

In the High Court, enforcement was confirmed. However, the Court of Appeal overturned that decision. The case was then appealed to the Supreme Court to answer one specific question. It had to decide whether enforcement of the judgment could be refused for public policy[5] in circumstances where it was accepted that this type of assignment would not be allowed in Ireland.[6]

Decision

The Supreme Court was unanimous in confirming that the Polish judgment could be recognised and enforced in Ireland. Even though the arrangement might have been questionable under Irish law, it was noted that the Irish courts were not being asked to enforce the assignment itself. Instead, the issue was about enforcing a judgment from another EU Member State. It was accepted that in that country, the type of assignment in question was legally permissible. Chief Justice O’Donnell noted that there was a “significant space between the two propositions which it is critical to maintain”. As the issues involved different focuses, public policy was not to be “treated as a single value”:

“The test here is not the validity in Irish law of the particular assignment: it is whether or not Irish law should require refusal of recognition to a valid Polish assignment, which has been enforced in the Polish Courts, to whose judgments we are generally bound to give effect.”

He explained that the Regulation establishes a general rule that judgments should be enforced. Any exceptions to this rule must be interpreted very narrowly. He went on to explain that the public policy exception under the Regulation sets a high bar. This is partly because of the requirement that the non-compliance with public policy must be “manifest”, meaning it must be obvious or clear-cut.[7] Justifying refusal would therefore require “something offensive to basic, fundamental, and essential provisions of the legal order”. That standard had not been met in Mr Scully’s case. Critical to the Chief Justice’s reasoning were:

• The balancing of different public policy considerations. There is a “strong” public policy in favour of enforcing judgments from other EU Member States. This policy “substantially balanced if not outweighed” the concerns related to enforcing assignments.
• The “noteworthy and steady” development of Irish law on assignments. What is considered impermissible is narrowing over time. This means that “public policy against assignment cannot be said to be static” and the law is in “flux”; and
• The assignment in this case was ad hoc and specific. It did not involve the kind of commodification or trading in litigation that typically underpins Irish public policy objections to these arrangements. The Chief Justice noted that the “sophisticated arrangements” in the leading Irish case,[8] which prohibited these types of assignments, were “very far removed” from the facts of this case. Here, the “original investors [were] combining in an effective way to pursue a claim for their benefit and no-one else’s.”

Mr Justice Hogan explained that the purpose of Irish law rules on assignments is to protect the integrity of the legal process in Irish courts, but only up to the point when a judgment is given. In Mr Scully’s case, the assignment was valid as a matter of Polish law. A judgment had already been delivered on that basis. The Irish courts should not question that judgment. This approach is consistent with Article 52 of the Regulation which precludes substantive review of a judgment. The Polish judgment had to be taken as it was found. He explained that under the Regulation, the State where enforcement is being pursued is “generally indifferent as to the procedural and adjectival law of the forum save where it is manifest that such procedures operated in a demonstrably unfair fashion. At least in the case of other European Union countries, one would expect that these cases would have to be exceptional.” In addition, the public policy exception must be confined to special and exceptional cases, and Mr Scully’s application did not meet that standard.

Conclusion

The decision is important as it confirms a key point. The way public policy is considered when recognising and enforcing a foreign judgment is not necessarily the same as to how it is assessed in domestic legal proceedings. Chief Justice O’Donnell was critical of reasoning which failed to draw this distinction.[9] The decision also makes clear that public policy will only be a basis to refuse enforcement under the Regulation in exceptional cases. Although future cases will be decided on their own facts, the decision is encouraging for those looking to enforce an EU judgment in Ireland that was obtained by way of assignment of a bare cause of action or through third-party funded litigation.

It also remains to be seen whether the same bi-focal approach will be applied in cases where enforcement does not fall under the Regulation. In particular, it is unclear whether Irish courts will continue to separate the validity of the original foreign judgment from domestic public policy concerns. It is also uncertain whether they will apply the public policy exception only in truly exceptional cases when the judgment comes from outside the EU where the Regulation does not apply. For parties concerned that public policy may preclude successful proceedings in Ireland, a strategic consideration may be to seek to bring the proceedings elsewhere if possible and then seek to enforce any judgment obtained here as an alternative.

For more information and expert advice on commercial disputes, contact a member of our Commercial Disputes team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.

[1] Those applicable to Ireland are the Brussels Recast Regulation, the Lugano Convention, the Hague Convention on Choice of Court Agreements and the Hague Judgments Convention.

[2] Scully v Coucal [2025] IESC 20. The Brussels Recast Regulation applies to the recognition and enforcement of EU Member State judgments throughout the EU.

[3] Champerty arises where a third party with no interest in the dispute supports litigation in return for a share of the proceeds.

[4] SPV Osus Limited v. HSBC Institutional Trust Services (Ireland) Limited [2019] 1 IR 1.

[5] Under Article 45(1)(a) of the Brussels Recast Regulation.

[6] A second public policy ground regarding the constitution / independence of the Polish Court of Appeal was not addressed by the appeals, and the Supreme Court sought submissions as to how it might be determined subsequently.

[7] He also cited the language used by the Court of Justice in Apostolides (C-420/07), Meroni (C-559/14) and Real Madrid Club de Futbol (C-633/22) which “is an emphasis of the very high hurdle which is necessary to surmount before it can be appropriate to refuse recognition on grounds of public policy.”

[8] SPV Osus Limited v. HSBC Institutional Trust Services (Ireland) Limited [2019] 1 IR 1.

[9] He specifically referenced Sporting Index v O’Shea [2015] IEHC 407 where enforcement of an English judgment relating to a gambling debt was refused because of the public policy against gambling reflected in Irish legislation. Mr Justice Hogan also expressed misgivings about the decision reached in that case.