Enforcement Of Foreign Judgments Based On Submission To Jurisdiction – Triay & Triay Lawyers



The Privy Council decision in Vizcaya Partners Limited (“Vizcaya”) -v- Irving Picard (“Picard”) as Trustee in Bankruptcy of Bernard L Madoff Investment Securities LLC [2016] UKPC 5 is fundamental. It clarifies the issues surrounding the enforcement of foreign judgments. Its scope and application internationally, in common law countries, is important, as is recognised in the judgment itself. The importance of the ruling is underscored also because many statutes relevant to enforcement in many jurisdictions adopt that same common law rule.

Principally, this appeal considered one of the common law cases in which a judgment obtained in a foreign court would be enforced in Gibraltar. The particular rule in question would permit a judgment obtained in a foreign court to be enforced in Gibraltar, if the person against whom the judgment is entered had agreed to submit to the jurisdiction of the foreign court or of the courts of that foreign country before the relevant proceedings were started and in respect of the subject matter in dispute that are dealt with in those proceedings.

The decision provides clarity, at long last, to the vexed question, which has led to many conflicting precedents and so unclear law, namely, whether an agreement to submit under this rule can be implied or inferred or must it be expressly stated.


The basic facts are:

  • in 2010, the New York Bankruptcy Court, at the behest of Picard, entered a judgment in default of appearance against Vizcaya;
  • the judgment was founded on anti-avoidance provisions of the US Bankruptcy Code;
  • in 2011 Picard attempted to enforce this judgment against Vizcaya in proceedings in Gibraltar before its Supreme Court.
  • Vizcaya sought to have Picard’s claim for enforcement summarily dismissed;
  • in 2013, the Supreme Court of Gibraltar held that Picard had a reasonable prospect of success in its argument that (a) Vizcaya was present in New York when the anti-avoidance claim was started and (b) Vizcaya had agreed to submit to the jurisdiction of the New York Court;
  • in 2014 the Gibraltar Court of Appeal dismissed Picard’s claim for enforcement on ground (a) but held that there was a reasonable prospect of success on ground (b); and
  • Vizcaya appealed this finding to the Privy Council.


The Privy Council handed down its judgment on 3rd February 2016.

The Privy Council considered whether consent can be implied or must it be expressly given. In determining this issue, the judgment considered two classes of implied terms known to English law:


  1. Implied as a matter of fact, namely those implied from the circumstances in order to give effect to the intention of the contracting parties. These are not implied lightly but only by necessity or business efficacy, so it has to go “without saying”.
  2. Implied by law, “which are implied into classes of contractual relationship as a necessary incident of the relationship concerned” i.e. confidentiality obligations in banking contracts or in arbitration agreements.

The Privy Council held that there has to be actual agreement, and no implied or inferred terms come about by reason of:

  • the mere holding of shares in a foreign company or partnership in a foreign partnership;
  • that a contract was made in the foreign country;
  • that a contract is governed by foreign law;
  • that a contract is to be performed in a foreign country;
  • that by reason of a contract being governed by a foreign law gives that foreign court jurisdiction under that law.

The Privy Council held that Gibraltar law applies to determine whether there had been a submission to the jurisdiction of a foreign court. Under Gibraltar law, in the circumstances under consideration, there must be an actual agreement to submit to the jurisdiction of a foreign jurisdiction and such actual agreement comes about by an express term or may come about by an implied term, implied as a matter of fact or by law. Terms implied as a matter of fact depend on construction in the context of the circumstances and issues of interpretation are governed by the applicable foreign law. In these circumstances an expert is required to give evidence “to prove the rules of construction of the foreign law, and it is then for the court to interpret the contract in accordance with those rules”. In the case of terms implied by law, the function of an expert is to opine on whether a particular term is implied by the foreign law applicable to the contract.


The Privy Council held that the evidence did not show that, under New York law, a choice of law clause in a written contract has the consequence of there being an agreement to the jurisdiction of the New York court; that would only be so if business was transacted in New York. The evidence showed that the factual circumstances resulted in the New York court having jurisdiction under the US long arm statute, which did not signify an actual agreement to submit: actual agreement is a necessary requirement under Gibraltar law before a submission can be inferred.

More pertinently, it was not suggested that a term is implied as a matter of fact or law to the effect that Vizcaya agreed or consented to the jurisdiction of the court in New York, as is the requirement before the judgment becomes enforceable. No evidence was adduced to show the existence of a rule of interpretation or construction from which the court in Gibraltar could determine “… that clause 10 in the context of the choice of law and the deemed place of contracting amounts to a choice of jurisdiction”, so the court could not determine if there was a term implied as a matter of fact. Further there was no expert evidence to show that the relevant terms are implied by New York law.

Additionally, there was no basis on the contract wording or on the evidence to show that the fact that the contract was deemed to have been made in New York makes any difference. If New York law implied a term based on that provision, such implied term would have been relied on in the application for default judgment in New York, it was not. These arguments were factors in the exercise of long arm jurisdiction, which did not render the judgment enforceable in Gibraltar.

The assertion that there was an agreement, be it express or implied, that Vizcaya submitted to the jurisdiction of the New York Court was not found.

The Privy Council found further that Picard would have other “formidable difficulties”. Even if a submission to jurisdiction were to have been determined to have existed by implication as matter of fact or by law, that finding would not apply to the enforcement of a judgment based on anti-avoidance provisions of the US Bankruptcy Code. Further there was nothing to show that any New York rule of interpretation would lead a court in Gibraltar to conclude that an implied submission in the contract would apply to anti-avoidance proceedings.

The Privy Council concluded that it was unnecessary to consider the question whether an agreement to arbitrate contained in the contract applies to insolvency proceedings, which would have resulted in the default judgment being unenforceable in any event, as having been obtained in breach of an arbitration agreement.

The Privy Council allowed Vizcaya’s appeal.


Stated briefly, an actual agreement has to exist for there to be a submission to jurisdiction. The agreement may be express or implied, implication being based either as a matter of fact, which is not done lightly, or implied by law. If a contract is governed by foreign law, then evidence of the rules of construction under that law must be adduced in order for the enforcing court to determine whether there is any implication of a term by fact, as must evidence to show that a term is implied by the applicable law, if that is the contention. Additionally, submission to a jurisdiction under a contract does not amount to submission to anti-avoidance legislative provisions, unless evidence of the foreign rules of interpretation lead to a conclusion that this is the case.


Robert Vasquez QC

Triay & Triay