All prudent dispute resolution lawyers are well aware that, despite having obtained a judgment in favour of a client, enforcing that judgment against a judgment debtor could potentially cause great problems.

Lord Bingham summarised the problems with enforcing against a difficult judgment debtor thus: ‘As many a claimant has learned to his cost, it is one thing to recover a favourable judgment; it may prove quite another to enforce it against an unscrupulous defendant. But an unenforceable judgment is at best valueless, at worst a source of additional loss.’ (Société Eram Shipping Co Ltd v Cie Internationale de Navigation [2003] UKHL 30).

The dangers of pursuing judgment debtors are illustrated in the House of Lords case of Masri (respondent) v Consolidated Contractors International Company SAL and others [2009] UKHL 43. In that case the House of Lords considered, inter alia, the interpretation and application of CPR 71 (order for a judgment debtor to attend court) and section 1 of the Civil Procedure Act 1997.

In particular, the court considered: (1) whether CPR 71.2 (order to attend court) conferred power to order examination of a foreign director of a foreign company; (2) whether CPR 71.2 conferred power to order such examination in respect of foreign assets; (3) whether, if issues 1 and 2 were answered in the affirmative, it was ultra vires the rule-making power contained in section 1 of the 1997 act; and (4), whether there was any basis under CPR 6 for service upon an officer of the judgment debtor out of the jurisdiction.

The claimant in Masri had obtained an order under CPR 71.2 for the examination of Mr K, who was the chairman, general manager and director of the defendant company. Mr K was resident in Greece. The order was subsequently set aside by the High Court following an application by Mr K on the grounds of lack of jurisdiction. The claimant appealed and the Court of Appeal found in favour of the claimant. Mr K then appealed to the House of Lords on the grounds that the English courts lacked jurisdiction over him and the assets of the ­defendant company.

Section 1 of the CPR 1997 act: Rule-making powerIn order to consider issues 1 and 2 mentioned earlier, Lord Mance, delivering the leading judgment, turned his attention to the scope of section 1 of the 1997 act, which set out the rule-making power in respect of the CPR. Counsel for Mr K argued that any exercise of jurisdiction by the English courts in respect of officers who were abroad (and assets of a judgment debtor which were abroad) fell outside the concept of ‘practice and procedure’ and required express statutory legitimation before it could become one of the matters governed by rules of court.

In dismissing this argument, Lord Mance held that: ‘Parliament must be taken to have understood and endorsed the manner in which the power has been understood and exercised over the years; and it permits the extension of the jurisdiction of the English courts over persons abroad to cover new causes of action and situations.’

Lord Mance accepted, in principle, that the statutory rule-making powers under the 1997 act were wide enough to allow the rule-making authority (in this case, the Civil Procedure Committee) to enact rules relating to the examination of an officer abroad and the examination of such an officer regarding assets of a judgment debtor which were abroad.

Scope of CPR 71: Foreign officers and assets?Lord Mance then turned to the actual scope and application of CPR 71. His lordship accepted that, when considering the scope and application of CPR 71, the presumption against extra-territoriality still applied, but that CPR 71 did not expressly exclude its application to foreign assets.

Indeed, counsel for the claimant argued, and Lord Mance agreed in principle, that when determining whether foreign ‘officers’ of a company judgment debtor could be called for examination, the fact that the company was the judgment debtor meant that there was a close connection between it and Mr K as Mr K was its chairman, general manager and director, and therefore this brought Mr K within the scope of CPR 71.

However, Lord Mance focused his attention on the actual meaning of ‘officer’ under CPR 71.2 and held that ‘an officer’ of a company or other corporation referred to a current officer at the time of the application or order for examination.

Lord Mance considered the case of In re Seagull Manufacturing Co Ltd [1993] Ch 345, a case which the claimant relied upon. In that case, the Court of Appeal granted an order for the public examination of an officer (who was resident abroad) of an insolvent company under rule 12.12 of the Insolvency Rules 1986. Lord Mance distinguished In re Seagull on the basis that that case concerned the public examination of an officer and that there were strong public policy grounds to justify such an examination taking place.

CPR 71, however, was concerned with obtaining information in aid of the enforcement of a private judgment, and the public interest in questioning an officer of a company (which was present in In re Seagull) was clearly lacking in CPR 71. Further, in Lord Mance’s opinion, the historical origin of CPR 71 indicated that the rule committee (which existed in 1883) was likely to have been focusing on domestic judgments and domestically based officers of companies.

Lord Mance also argued that the extreme informality of the process by which CPR 71 enabled an order for examination to be obtained indicated a domestic focus. All these issues pointed against the application of CPR 71 to company officers who were outside the jurisdiction. Dismissing the notion that, by restricting the application of CPR 71 to those within the jurisdiction would ‘defeat its (that is CPR 71) object’, Lord Mance remarked: ‘That is, I think, to put matters substantially too high. Small though the world may have become, relatively few officers of companies are likely to contemplate, let alone be able to undertake, emigration or flight to a different country in order to avoid giving information about their company’s affairs.’

CPR 6: Service outside the jurisdictionThe House of Lords also considered the issue of whether an order under CPR 71 could be served outside the jurisdiction on a non-party under CPR 6.30(2) or alternatively under CPR 6.20(9). Lord Mance applied Vitol AS v Capri Marine Ltd [2009] Bus LR 271 in which Tomlinson J held that CPR 6.30(2) was concerned with documents which were required to be served on parties to the proceedings only.

Lord Mance also rejected the argument that an order could be served under CPR 6.20. Lord Mance held: ‘An application to enforce a judgment within the jurisdiction is distinct from an application to order examination of a witness who is abroad with a view to enforcing the judgment wherever assets may prove to exist. The former does not trespass outside the jurisdiction of the English Courts. The latter would, in a manner which was clearly not in mind in CPR 6.20(9).’

Thus, although section 1 of the 1997 act may provide scope to extend the CPR beyond the jurisdiction, this does not apply to the application of CPR 71. Any order for examination must be made in respect of officers within the jurisdiction.

Therefore, however tempting it may be, practitioners seeking to enforce a judgment against a company should ensure that any order under CPR 71 is only sought against officers within the jurisdiction. Any attempts for orders to extend beyond the jurisdiction will be clearly (and rightly) rejected by the courts, which will have the obvious consequences of wasted time and money for an already frustrated judgment creditor.

Masood Ahmed is a senior law lecturer at Birmingham City University