Winding up petitions and foreign law clauses

Re City Gardens Ltd v Dok82 Ltd [2023] EWHC 1149 (Ch)

Where a petitioner presents a creditors winding up petition against a company, founded upon an (alleged) debt arising from a contract, can the company/respondent defend/oppose the making of a winding up order under section 122 of the Insolvency Act 1986 on the basis that: (1) the petition debt is disputed/not admitted (at least not £750 or more[1]); (2) the contract contains a governing law clause, which stipulates that a foreign law (not the law of England and Wales) governs the contract, and (3) there is no evidence before court as to what that foreign law is/how it applies to the dispute?

This issue (amongst others) arose in the case of City Gardens Ltd v Dok82 Ltd [2023] EWHC 1149 (Ch) (‘City Gardens’), an appeal heard by HHJ Pearce sitting as a Judge of the High Court, against the decision of a first instance district judge.

Note, a second interesting issue arose in City Gardens, namely, in relation to the effect of exclusive jurisdiction clauses in such situations. A separate article considers the City Gardens exclusive jurisdiction clause issue, available here.

Summary
For those short on time, the answer to the question posed in the first paragraph above, is no/negative. This is because: (1) the Companies Court must undertake the task of determining whether or not the company/respondent, in good faith, disputes the debt founding the petition, on substantial grounds (the 'Question')[2]; (2) where the contract (under which the petition debt is said to arise) contains a governing law clause, stipulating a foreign law as governing disputes under the contract, the foreign law must be used to answer the Question; (3) English law treats the question of what that foreign law is (i.e. its contents, principles and propositions), as a matter of fact[3] rather than law; (4) of the various ways[4] facts are established in English legal proceedings, the two of particular relevance are: (a) through the application/effect of a presumption[5a]; and (b) through evidence; (5) English law contains the 'presumption of similarity' (paragraph 45), which applies '...where foreign law is recognised to be applicable but the content of the foreign law has not been proved' (FS Cairo v Brownlie [2022] AC 995 ('FS Cairo'[5b]), Lord Leggatt at paragraph 119). In other words, English law presumes that the foreign law in question, is the same as English law equivalent, unless evidence is before the court which proves the contrary (i.e. proves they are different); (6) so the absence of evidence of any relevant foreign law, is no impediment to the court determining the Question (as the presumption will simply apply unrebutted); (7) in practice, the party who asserts that foreign law is different from its English equivalent, in the area relevant to the dispute, will need to adduce (suitable[6]) evidence of the foreign law, to prove it is different from its English law equivolent, otherwise, the presumption of similarity will apply and, in effect, the Question will be determined according to English law principles (English law applying foreign law principles English law presumes to be the same as English law principles for the relevant area).

Facts
City Gardens Limited (petitioner/appellant) and Dok82 Limited (company/respondent) entered into a contract for the supply of furniture packs for use on property developments. The contract was: (1) company/respondent to supply furniture packs to the petitioner/appellant; (2) petitioner/appellant to pay in advance for the furniture packs, but such payment be refundable if a property development in question did not go ahead (paragraph 3).

In the event: (1) the petitioner/appellant paid a substantial sum for a furniture pack for a particular property development; (2) the particular property development later did not go ahead; and so, (3) the petitioner/appellant became entitled to a refund in respect to the relevant furniture pack (paragraph 4).

Later, the parties/contractants entered in a (second) legally binding contract (called, somewhat unhelpfully, a 'Memorandum of Understanding' ('MOU')), which: (a) recorded the existing position (paragraph 5); and (b) substituting some of the existing rights, for those in the MOU contract (particular, the quantum of the principal sum owed, and when it must be paid by)(paragraphs 5-6). The MOU contract (so far as relevant):

(1) reduced the principal sum due;

(2) required repayment by certain dates (including a long stop date);

(3) required, at clause 2.4 of the MOU, that the petitioner/appellant 'shall prepare a statement on the last business day in Hong Kong of each calendar month setting out all movements on the Debt in respect of that month and confirming any balance outstanding.' (paragraph 6.3); and

(4) contained a governing law clause, stating that 'This [contract] is governed by and shall be construed in accordance with Hong Kong law...' (paragraph 6.4)

No refund was made and the petitioner/appellant presented a creditors winding up petition, founded upon non-compliance with the long stop payment obligation in the MOU (paragraph 7). The company/respondent defended the creditors winding up petition on 4 grounds, 2 of which are broadly relevant for the purposes of this article:

'8.2. The Memorandum of Understanding is governed by the laws of Hong Kong, as to the effect of which laws there was no evidence before the court;

8.3. As a matter of construction, the court could not determine what sums (if any) were due under the [MOU]. By way of example, the court did not have before it evidence as to the meaning in Hong Kong law of clause 2.4 of the [MOU], such that the court was unable to determine whether the [petitioner/appellant] had complied with the obligation to prepare statements setting out all movements on the debt, nor indeed did the court know what such a statement was said to amount to;'

First Instance

The DJ at first instance dismissed the creditors winding up petition, on the ground (amongst others) that the Companies Court was prevented, by the governing law clause stipulating that Hong Kong law applied to the MOU, from determining: (1) whether or not the company disputed, in good faith, the petition debt on substantial grounds (and, also, the merits of (2) the petitioner/appellant's contention, that an estoppel by representation arose, to prevent the company/respondent from now denying the existence of the petition debt).

The learned appeal judge recorded, at paragraphs 10.3, 10.4 and 10.5 of City Gardens, what the first instance DJ had held in her first instance judgment:

'that the court could not rule on matters of construction or set off because they were matters of Hong Kong law. For example, [the DJ] said at paragraph 18 of the judgment: "The question put by [counsel for the company/respondent] to the court was this: 'Applying the laws of the jurisdiction of Hong Kong, is the debt properly due?' That is the question for the court to deal with today and the only court to be able to deal with that is the court of Hong Kong."

Equally, the court could not determine the [petitioner/appellant's] argument that an estoppel by representation operated so as to prevent the [company/respondent] denying its indebtedness because the existence and operation of the alleged estoppel is a matter of Hong Kong law.

That, accordingly, the Court could not judge whether the sums to which the petition related were due and owing and/or whether the [company/respondent] had a set off. As it is put at paragraph 20 of the judgment:

"a petition can be brought against a debtor company in the UK, but not when that purported debt is based on a debt that is the subject of an entirely separate jurisdiction and the [petitioner/appellant] cannot show that the debt is one that is within the remit of this court."

Grounds of Appeal

The petitioner/appellant appealed. The learned appeal judge summarised the petitioner/appellant's grounds of appeal; namely, that the first instance DJ had been wrong, as a matter of law and/or fact, to:

'...conclude ...that the petition should be dismissed on the basis of a finding that, merely because the contract is subject to Hong Kong law, the court could and should not consider whether the petition debt was genuinely disputed on substantial grounds.

...conclude that the fact that the contract is subject to Hong Kong law meant that there was a genuine dispute on substantial grounds (or was a factor to be considered in so concluding).' (paragraphs 16.1 and 16.2)

'...determine that the question of whether the contract contained a representation that the petition debt was owing was a matter of Hong Kong law' (paragraph 18.1)

'...refuse to consider whether there was a genuine dispute on substantial grounds as to the representation...' (paragraph 18.2)

Argument

At the appeal, the petitioner/appellant argued that the first instance court '...wrongly failed to exercise its judgment as to whether the debt was genuinely disputed on substantial grounds.' (paragraph 29) when it had determined that it: (1) '...could not determine this issue because the contract was subject to foreign law' (paragraph 29.1); and (2) '...was not capable of making appropriate findings of Hong Kong law' (paragraph 29). This conclusion, the petitioner/appellant argued, was wrong and contrary to authority:

(1) the authority referred to was Citigate Dewe Rogerson Ltd v Artaban Public Affairs Sprl [2009] EWHC 1689 ('Citigate'). Citigate involved the following facts: (a) an applicant seeking an injunction restraining the presentation of a petition against it - the threatened petition was to be based on invoices arising from a contract that was governed by Belgian law; (b) the court hearing the injunction application, had no evidence as to what Belgian law was ('no evidence of Belgian law before the Court' - paragraph 26 of Citigate). That on those facts, the court in Citigate had held that '...in the absence of any evidence of Belgian law, the court proceeds on the footing that it is no different from the law of this country.'

(2) that the approach in Citigate was consistent with Dicey, Morris and Collins on the Conflict of Laws, 16th edition, at paragraph 3R-001 and Rule 2 [Dicey, Morris and Collins on the Conflict of Laws being the leading textbook on conflict of laws]. Rule 2 provides:

'(1) Where a party relies on foreign law, that law must be pleaded and proved as a fact to the satisfaction of the court by evidence or sometimes by other means.

(2) In a case involving a foreign element in which foreign law is not pleaded, the court will apply English law.

(3) Where foreign law is recognised to be applicable, but there is no evidence, or sufficient evidence, of the content of the following, it will in general be presumed to be the same as English law."

(3) applying this to City Gardens, the petitioner/appellant argued either:

(a) the burden had lay on the company/respondent to prove Hong Kong law differed from English law (if that is what the company/respondent wanted to argue); that '[t]here was no material before the court that suggested that Hong Kong law differed from English law in any respect material to the existence of the alleged debt, whether by way of evidence or even submission.' (paragraph 29.2), so '...the [company/respondent] failed to show that the debt was disputed on genuine and substantial grounds, since it did not adduce evidence that Hong Kong law differed from English law.' (paragraph 29.3)[7]; alternatively, if the burden had not lay on the company/respondent, then

(b) the presumption of similarity applied (paragraph 29.4; from the third sub-rule of Rule 2 in Dicey, Morris and Collins), and the presumption had not been rebutted by any evidence proving any difference between English law and the foreign law (here, Hong Kong law). Reference was made to FS Cairo, wherein Lord Leggatt:

(i) noted that the presumption of similarity between English and foreign law is 'the basis on which English courts (and courts in other common law jurisdictions) have historically applied domestic law in cases where foreign law is recognised to be applicable but the content of the foreign law has not been proved.' (paragraph 119); and

(ii) having considered why such a presumption might apply, said:

'These factors provide good pragmatic reasons for applying the presumption in a range of cases, but they also determine its proper limits. There is no warrant for applying the presumption of similarity unless it is a fair and reasonable assumption to make in the particular case. The question is one of fact: in the circumstances is it reasonable to expect that the applicable foreign law is likely to be materially similar to English law on the matter in issue (meaning that any differences between the two systems are unlikely to lead to a different substantive outcome)?' (paragraph 126) (the 'fair and reasonable assumption' test)

(4) that in City Gardens, there is good reason to think that the law of Hong Kong, being a common law system, was likely to be similar to the law of England when dealing with issues of general contract law (so the 'fair and reasonable assumption' test was satisfied, thereby meaning the 'presumption of similarity' applied). That there is certainly no material to suggest that Hong Kong Law is different from English Law.

In response, the company/respondent's argument was, as summarised by the learned appeal judge, that '...it is for the Hong Kong courts, applying Hong Kong law to determine whether the debt is indeed due and owing. That is a pre-requisite of the presentation of a winding up petition in England because, without such a determination, the English courts cannot know whether the petitioner is truly a creditor at all.' (paragraph 30)

Decision on Appeal
The learned appeal judge in City Gardens concluded that:

(1) the petitioner/appellant's argument was 'well made' (paragraph 44) and that the DJ had fallen into error on the effect of the governing law clause stipulating Hong Kong law as applying to the contract;

(2) The learned appeal judge reasoned, at paragraphs 44 and 45, that:

'As the passages from Dicey, Morris and Collins make clear, the burden here lies on the [company/respondent] to assert (and show) that Hong Kong law differs from English law. It has not done so, but rather simply argued that the English court cannot know whether there are differences and, if so, what those differences are. But there is nothing in the material before the court to suggest that Hong Kong law differs from English law on the proper interpretation of the contract. The jurisdictions are both common law systems. As one might expect, the Hong Kong courts can be seen to be leaning on English principles of law – see the judgment in Lam v Tor Asia as an example.

It follows that, whether this is properly seen as a case where English law is applied because the [company/respondent] has failed to prove the application of different legal principles or as a case where the presumption of similarity is applied, the court must apply English law to the alleged dispute on the debt.'[8]

Conclusion
In City Gardens, the appeal was allowed as the first instance DJ had been wrong to dismiss the creditors winding up petition on the basis (amongst others) that foreign law applied to determining whether the petition debt was disputed in good faith on substantial grounds, and there was no evidence of the foreign law before the court. As set out in the summary above:

(1) the Companies Court must undertake the task of determining whether or not the company/respondent, in good faith, disputes the debt founding the petition, on substantial grounds (the 'Question');

(2) where the contract (under which the petition debt is said to arise) contains a governing law clause, stipulating a foreign law as governing disputes under the contract, the foreign law must be used to answer the Question;

(3) what that foreign law is (i.e. its contents, principles and propositions), is treated as a matter of fact;

(4) of the various ways facts are established in English legal proceedings, the two of particular relevance are: (a) through the application/effect of a presumption; and (b) through evidence;

(5) English law contains the 'presumption of similarity' (paragraph 45), which applies:

(a) '...where it is a fair and reasonable assumption to make in the particular case. The question is one of fact: in the circumstances is it reasonable to expect that the applicable foreign law is likely to be materially similar to English law on the matter in issue (meaning that any differences between the two systems are unlikely to lead to a different substantive outcome)?' (paragraph 126 of FS Cairo); and

(b) '...where foreign law is recognised to be applicable but the content of the foreign law has not been proved' (FS Cairo). In other words, English law presumes foreign laws to be the same as the equivalent English laws, unless evidence is before the court which proves the contrary;

(6) so the absence of evidence of any relevant foreign law, is no impediment to the court determining the Question (as the presumption will simply apply, where the 'fair and reasonable assumption' test is satisfied)

(7) in practice, the party who asserts that foreign law is, in the area relevant to the dispute, different from its English equivalent, will need to adduce (suitable) evidence of that what the relevant foreign law is, to prove it is different from its English law equivalent - otherwise, the presumption of similarity will apply and the Companies Court will just presume, when determining the Question, that the applicable foreign law is the same as the English law equivalent.

SIMON HILL © 2023*

BARRISTER

33 BEDFORD ROW

NOTICE: This article is provided free of charge for information purposes only; it does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by any member of Chambers or by Chambers as a whole. No attempt has been made to provide an exhaustive review/account of the law in this area. *Copyright is owned by Barrister Search Limited.

[1] The (practical) threshold for creditors petition winding up petitions is £750. However, due to some temporary rule changes brought in during the Covid pandemic, it was, for a time £10,000. Due to when the petition was presented in City Gardens Ltd v Dok82 Ltd [2023] EWHC 1149 (Ch) ('City Gardens') (on 7.2.22 - paragraph 7), the applicable threshold sum for the creditors winding up petition in City Gardens was £10,000.

In City Gardens, under the heading 'The Relevant Law', the learned appeal judge stated, at paragraph 20, that it was common ground that:

'The relevant threshold of indebtedness required for the making of a winding up order was, at the time relevant to this case, the increased figure of £10,000 pursuant to the temporary COVID-19 insolvency measures (specifically paragraph 8 of Schedule 10 to the Corporate Insolvency and Governance Act 2020 )' (paragraph 20.2)

The fact that the threshold was £10,000 rather than the usual £750 has: (1) no relevance or impact on the important aspects of the judgment; and (2) is irrelevant/immaterial for the purposes of the law discussed in this article.

[2] In City Gardens Ltd v Dok82 Ltd [2023] EWHC 1149 (Ch), the learned appeal judge recorded, as common ground, the stages applicable to the task, as follows, at paragraph 20:

'20.1 A company may be wound up if it is unable to pay its debts (section 122(1) of the Insolvency Act 1986);

20.2. The relevant threshold of indebtedness... [applies]

20.3. A company is deemed unable to pay its debts if it is proved to the satisfaction of the court that the company is unable to pay its debts as they fall due (section 123(1)(e) of the Insolvency Act 1986);

20.4. The section 123(1)(e) deeming provision does not apply where the debt upon which the petition is based is disputed in good faith on substantial grounds (see for example the summary of the law in Angel Group v British Gas [2012] EWHC 2702).

20.5. The test for whether a debt is disputed on substantial grounds is akin to whether there is a real prospect of success in disputing the debt, the test for summary judgment. As Arden LJ put it in paragraph 21 of her judgment in Collier v P & M J Wright Ltd [2008] 1 WLR 653 :

There has to be something to suggest that the assertion (sc. that the debt is disputed) is sustainable. The best evidence would be incontrovertible evidence to support the applicant's case, but this is rarely available. It would in general be enough if there were some evidence to support the applicant's version of the facts, such as a witness statement or a document, although it would be open to the court to reject that evidence if it were inherently implausible or if it were contradicted, or were not supported, by contemporaneous documentation … But a mere assertion by the applicant that something had been said or happened would not generally be enough if those words or events were in dispute and material to the issue between the parties. There is in the result no material difference on disputed factual issues between real prospect of success and genuine triable issue."'

[3] In Bumper Development Corpn v Comr of Police of the Metropolis [1991] 1 WLR 1362, Purchas LJ giving the judgment of the Court of Appeal said at 1368F:

'It is trite law that foreign law in our courts is treated as a question of fact...'

In Perry v Lopag Trust Reg [2023] UKPC 16 ('Perry'), the Lord Hodge, giving the advice of the Privy Council Board explained, at paragraph 10:

'The starting point is that findings in relation to foreign law are findings of fact because a judge is not to be imputed to know foreign law: Nelson v Bridport (1845) 8 Beav 527; 50 ER 207.'

Explaining the position on finding of fact on foreign law more widely, Lord Hodge in Perry said, at paragraphs 10 to 16:

'Absent agreement between the parties, foreign law is proved by suitably qualified experts in the relevant foreign law. Nonetheless, such findings of fact are in a special category. Judges frequently quote the dictum of Cairns J in Parkasho v Singh [1968] P 233, p 250 that “the question of foreign law, although a question of fact, is a question of fact of a peculiar kind”. Findings of fact as to foreign law are in a special category in part because, in certain circumstances, in particular when the foreign law is a common law system analogous to the judges’ domestic law, the judge at first instance and the judges in the appellate courts can use their legal skills and experience in the analysis of domestic law to analyse the foreign law. In such circumstances the appellate judges are not at any significant disadvantage in carrying out that analysis compared with the trial judge. While the circumstances of cases may vary widely, the Board derives some propositions from the case law.

First, the task of the trial judge when there are disputed questions of foreign law is to determine what the highest relevant court in the foreign legal system would decide if the point were to come to it: Dexia Crediop SpA v Comune di Prato [2017] EWCA Civ 428; [2017] 1 CLC 969 (“Dexia”), para 34; Morgan Grenfell & Co Ltd v SACE Istituto per I Servizi Assicurativi del Commercio [2001] EWCA Civ 1932 (“Morgan Grenfell”), para 50. It is not sufficient for a party to identify a judgment of a foreign court of first instance which may be on point and assert that the task of the appellate court is simply to analyse that judgment.

Secondly, if the foreign legal system is a common law system which adopts a similar approach to legal reasoning and statutory interpretation to that of English law, the English judge at first instance is entitled and required to bring to bear his or her knowledge of the common law and the rules of statutory construction in analysing the foreign law. So too is the appellate court. In MCC Proceeds Inc v Bishopsgate Investment Trust plc [1999] CLC 417 (“MCC Proceeds Inc”), a case concerned with the construction of the Uniform Commercial Code which was part of the law of New York, a common law system, Evans LJ giving the judgment of the Court of Appeal stated (para 13):

“When and to the extent that the issue calls for the exercise of legal judgment, by reference to principles and legal concepts which are familiar to an English lawyer, then the [appellate] court is as well placed as the trial judge to form its own independent view.”

The important words in that statement are “to the extent” and the reference to familiar principles and legal concepts. The court went on to state that it was not entitled to substitute its own view for the view of the trial judge when there was acceptable evidence to support the judge’s finding unless the English court interprets the statute in accordance with English rules of construction and there is no evidence that different rules would govern the foreign court’s construction or evidence that the words would have a special meaning in a foreign context (para 20). The Court of Appeal in Dexia cited these passages in MCC Proceeds Inc with approval (paras 38 and 39). The Court of Appeal in Dexia also quoted from the judgment of the Court of Appeal in Morgan Grenfell paras 50 and 51, in which the court observed that where the court was faced with differing views as to Italian law, which was not based in any relevant aspect on the common law, there was less room for the judge to apply his or her own legal training and experience to help to resolve the relevant question.

Thirdly, where the foreign law is in a foreign language the trial judge will often be dependent on translations of the relevant texts, which may or may not be precise and which may or may not be disputed, and on the evidence of the foreign law experts to understand the meaning and nuances of the foreign language in the relevant text. Thus, in Byers v Saudi National Bank [2022] EWCA Civ 43; [2022] 4 WLR 22 (“Byers”), the trial judge had to address questions of Islamic law, of which the only authorised texts were in Arabic, and he had to work with translations and with the assistance of foreign law experts. The Court of Appeal concluded that it should be slow to interfere with the judge’s findings of fact on Saudi Arabian law and should do so “only … in accordance with the principles applicable generally to findings of fact made by a trial judge who has based his findings on evidence from witnesses” (para 105). In reaching that view the Court had regard to the foreign language of the authorised texts, the fact that the concepts and principles of Saudi Arabian law were far removed from the common law, the lack of any familiarity of the English courts with the practice and culture in the capital markets of Saudi Arabia, and the fact that the judge at first instance had depended on the assistance of extensive expert evidence to explore and explain the many Saudi Arabian court decisions to which the experts referred in support of their contentions.

Fourthly and more widely, where the first instance judge is dependent upon the evidence of foreign law experts, who disagree as to the interpretation and application of a foreign law, and has to decide issue by issue whose evidence to prefer, the judge will have regard to all the evidence presented to him. The judge will reach a view based on an assessment of each expert having regard to each expert’s evidence as a whole, and the way in which each expert answered the questions posed in chief and on cross-examination to justify his or her opinions. The judge will thus evaluate the experts’ reasoning. Not all the matters which have influenced the judge in forming a view on which evidence to prefer will always be recorded in any detail in a judgment or can be ascertained from reading a transcript of the proceedings. The judge will have regard to “the whole of the sea of evidence presented to him whereas an appellate court will only be island hopping”. Those words of Lewison LJ in FAGE UK Ltd v Chobani UK Ltd [2014] EWCA Civ 5; [2014] FSR 29, para 114, are in such circumstances as applicable to a case involving expert evidence on foreign law as they are to cases involving the evidence of witnesses of fact more generally. See the judgment of Longmore LJ in Dexia at para 42.

There is thus a spectrum of circumstances in which the principal variable is the degree to which the judge can use his or her skill and experience of domestic law and of the domestic rules of statutory interpretation to ascertain the foreign law and apply it to the case in question. For example where a judge is an English lawyer, at one end of the spectrum there are cases in which the foreign law is a common law system which applies the same or analogous principles and means of legal analysis as English law. In such cases there will be considerable scope for the trial judge to bring to bear his or her legal skills and experience in domestic law in determining and applying the foreign law. The judges of a court hearing the first appeal will also be able to bring to bear their own skill and experience. In such a circumstance the members of the Board also would be able to do so and would be unlikely to invoke the practice relating to concurrent findings of fact. At the other end of the spectrum are cases of disputed foreign law in which the skill and experience of the judge in domestic law has a minimal role to play in the ascertainment and application of foreign law, as in Byers. In such cases the court at each level of the hierarchy is dependent on the written and oral evidence of expert witnesses, tested by crossexamination. The trial judge’s findings on the content and application of foreign law have a close kinship to other findings of fact. In that circumstance the first appellate court will be slow to intervene in the judge’s assessment and the Board’s practice in relation to concurrent findings of fact should be adopted.

The editors of Dicey, Morris & Collins on the Conflict of Laws (16 th ed., 2022) in their discussion of proof of foreign law start by setting out a rule. Rule 2-(1) states: “Where a party relies on foreign law, that law must be pleaded and proved as a fact to the satisfaction of the court by evidence or sometimes by other means.” In the discussion of the rule the editors recognise that the courts take judicial notice of their domestic law and of notorious facts (such as that roulette is not unlawful in Monte Carlo). They state (para 3-006) that the court may take judicial notice of a foreign law if its content is, at least in part, determined by a rule of domestic law and if, according to the domestic law, the foreign law is the same as, or substantially similar to, the domestic law. Foreign law need not be proved if it is admitted or if the parties request the court to decide a question of foreign law without proof, but the courts are reluctant to take the latter course except in cases concerning the interpretation of foreign statutes (para 3-008). While recognising that foreign law is a question of fact “of a peculiar kind”, the editors cite Dallah Real Estate and Tourism Holding Co v Ministry of Religious Affairs of the Government of Pakistan [2009] EWCA Civ 755; [2011] 1 AC 763, 777, paras 28-29, for the proposition that “generally, an appellate court, which will not have had … the opportunity to put questions to the expert witness of foreign law, will be slow to substitute its opinion for that of the trial judge” (para 3-010). This discussion in a leading textbook is consistent with the idea of a spectrum of cases in which the key variable is the extent of the ability of a judge and an appellate court to use their skill and experience in domestic law to ascertain the relevant rules of foreign law and apply them to the facts of the case.'

Readers will want to read the whole of the Perry judgment, as it contains other relevant propositions and principles.

[4] There are (at least) 5 ways of establishing a fact in English legal proceedings (though arguably the presumptions and assumptions methods are so similar as to be one). The 5 ways (or methods) are:(1) where the fact is formally admitted (i.e. one side asserts it and the other side admits it); Lord Hodge in Perry v Lopag Trust Reg [2023] UKPC 16 ('Perry'), giving the advice of the Privy Council Board noted (without disagreement), at paragraph 16, that the editors of Dicey, Morris & Collins on the Conflict of Laws (16 th ed., 2022) state in their book, that 'Foreign law need not be proved if it is admitted...'.

(2) the application of a presumption (i.e the application of a rule that states that, where fact A is proved as existing/having existed, the Court/law will presume fact B exists/existed - either irrebutably or rebutably. That is a way of establishing fact B exists/existed)

(3) the application of an assumption (i.e the application of a rule that states that, where fact A is proved as existing/having existed, the Court/law will assume fact B exists/existed - either irrebutably or rebutably. That is a way of establishing fact B exists/existed). For instance, in Haque v Hussain [2023] EWHC 502 (Ch) (not a creditors winding up case), ICC Judge Jones sitting as a Judge of the High Court, said at paragraph 49:

'Before the trial, neither side had considered it appropriate to refer to expert evidence of the law of Pakistan. The parties chose to ask the court to assume it was the same as the law of this jurisdiction.'

(4) judicial notice (a judge holding that the fact asserted is so well known that the judge finds the fact established, without requiring any evidence (or any other fact establishing method being involved) (see Commonwealth Shipping Representative v Peninsular and Oriental Branch Service [1923] AC 191, where Lord Sumner said, at 212 'Judicial notice refers to facts, which a judge can be called upon to receive and to act upon, either from his general knowledge of them, or from enquiries to be made by himself for his own information from sources to which it is proper for him to refer'. There are therefore in fact two forms of judicial notice (without inquiry vs with inquiry). For instance, Lord Hodge in Perry noted (without disagreement), at paragraph 16, that the '...editors of Dicey, Morris & Collins on the Conflict of Laws (16 th ed., 2022) ... recognise that the courts take judicial notice ... of notorious facts (such as that roulette is not unlawful in Monte Carlo)'

(5) evidence (of course).

A form of presumption particularly relevant is contained in section 4 of the Civil Evidence Act 1972. Section 4 creates a presumption that foreign law will be as decided in a reported authority, unless the contrary is proved (see section 4(2)(b) and Phoenix Marine Inc. v China Ocean Shipping Co. [1999] 1 Llloyds's Rep 682). Section 4 is entitled 'Evidence of foreign law' and section 4(2) to 4(5) provides:

'(2) Where any question as to the law of any country or territory outside the United Kingdom, or of any part of the United Kingdom other than England and Wales, with respect to any matter has been determined (whether before or after the passing of this Act) in any such proceedings as are mentioned in subsection (4) below, then in any civil proceedings (not being proceedings before a court which can take judicial notice of the law of that country, territory or part with respect to that matter)-

(a) any finding made or decision given on that question in the first-mentioned proceedings shall, if reported or recorded in citable form, be admissible in evidence for the purpose of proving the law of that country, territory or part with respect to that matter; and

(b) if that finding or decision, as so reported or recorded, is adduced for that purpose, the law of that country, territory or part with respect to that matter shall be taken to be in accordance with that finding or decision unless the contrary is proved:

Provided that paragraph (b) above shall not apply in the case of a finding or decision which conflicts with another finding or decision on the same question adduced by virtue of this subsection in the same proceedings.

(3) Except with the leave of the court, a party to any civil proceedings shall not be permitted to adduce any such finding or decision as is mentioned in subsection (2) above by virtue of that subsection unless he has in accordance with rules of court given to every other party to the proceedings notice that he intends to do so.

(4) The proceedings referred to in subsection (2) above are the following, whether civil or criminal, namely-

(a) proceedings at first instance in any of the following courts, namely the High Court, the Crown Court, a court of quarter sessions, the Court of Chancery of the county palatine of Lancaster and the Court of Chancery of the county palatine of Durham;

(b) appeals arising out of any such proceedings as are mentioned in paragraph (a) above;

(c) proceedings before the Judicial Committee of the Privy Council on appeal (whether to Her Majesty in Council or to the Judicial Committee as such) from any decision of any court outside the United Kingdom.'

(5) For the purposes of this section a finding or decision on any such question as is mentioned in subsection (2) above shall be taken to be reported or recorded in citable from it, but only it, it is reported or recorded in writing in a report, transcript or other document which, if that question had been a question as to the law of England and Wales, could be cited as an authority in legal proceedings in England and Wales.'

See CPR r.33.7 for the procedure which must be followed by a party who intends to put in evidence of a finding under section 4 of the Civil Evidence Act 1972.

[5a] Sometimes it has been referred to as an assumption rather than a presumption. For instance, in Bumper Development Corpn v Comr of Police of the Metropolis [1991] 1 WLR 1362, Purchas LJ giving the judgment of the Court of Appeal said at 1368F:

'It is trite law that foreign law in our courts is treated as a question of fact which must be proved in evidence. In the absence of any evidence to the contrary, it is to be assumed to be the same as English law.'

The presumption can arise from an English (or Welsh) reported authority containing a determination as to what that foreign law is. See section 4 of Civil Evidence Act 1972, referred to in a footnote above.

[5b] For a recent case in this area, see Granville Technology Group Ltd (In Liquidation) v LG Display Co Ltd [2023] EWHC 2418 (Comm), a decision of Foxton J on 4.10.23

[6] Foreign law will usually be established by expert evidence. Such expert evidence will be: (a) from a suitably qualified person; and (b) set out the relevant foreign law, corroborating the opinion, with references to statutes, ordinances, rules etc, and authorities (as applicable).

Section 4 of the Civil Evidence Act 1972 is entitled 'Evidence of foreign law' and section 4(1) provides:

'It is hereby declared that in civil proceedings a person who is suitably qualified to do so on account of his knowledge or experience is competent to give expert evidence as to the law of any country or territory outside the United Kingdom, or of any part of the United Kingdom other than England and Wales, irrespective of whether he has acted or is entitled to act as a legal practitioner there.'

In Deutsche Bank AG (London Branch) v Central Bank of Venezuela [2023] EWCA Civ 742, the Court of Appeal considered documentary evidence/expert evidence of foreign law. Falk LJ (with whom Phillips LJ and Males LJ agreed), said at paragraphs 77 to 81:

77. ... I should address points raised in submissions about the assessment of foreign law documentary evidence, and in particular the STJ Decisions. [Counsel for the Maduro Board] submitted that this Court is as well-placed as the judge to assess that evidence. He relied in particular on Lord Leggatt's judgment in Brownlie v FS Cairo (Nile Plaza) LLC [2021] 3 WLR 1011 at [148]. However, the focus of Lord Leggatt's comments there was on whether the evidence of an expert witness was required. Lord Leggatt explained that in some cases it may be sufficient to know what the relevant legal text says, whereas in others expert assistance may be required.

78. Lord Leggatt's comments were recently referred to by Lord Hodge in Lea Lilly Perry and another v Lopag Trust Reg and another No 2 [2023] UKPC 16 , where the Privy Council considered a challenge to findings of fact in respect of foreign law which had been made by a trial judge and had been upheld by a lower appellate court (concurrent findings of fact).

79. In Perry the argument that the Privy Council's practice of generally declining to hear appeals against challenges to concurrent findings of fact should not be applied where the findings relate to foreign law was rejected on the facts of that case (at [8]-[25]). In doing so Lord Hodge recognised that findings of fact as to foreign law are in a special category, but there is a spectrum of circumstances. At one end the foreign legal system may be a common law system which applies an approach similar to that under English law, where both a first instance judge and appellate courts will bring to bear their own skill and experience. At the other end of the spectrum may be cases where the relevant legal system is far removed from the common law, such as Byers v Saudi National Bank [2022] EWCA Civ 43; [2022] 4 WLR 22 where the trial judge was dependent on (potentially imprecise) translations of foreign texts and on the evidence of foreign law experts, and/or where the trial judge may have had to evaluate the reasoning of the experts to determine which view was to be preferred. At that end of the spectrum skill and experience in domestic law may have a "minimal role to play" and the trial judge's findings on the content and application of foreign law will "have a close kinship to other findings of fact", such that an appellate court should be slow to intervene in the judge's assessment and the Board's practice in relation to concurrent findings of fact should be adopted (see at [15]).

80. At [21], Lord Hodge addressed a submission that it was not essential for foreign law principles to be addressed by expert evidence. He referred to Lord Leggatt's comments in Brownlie at [148] but explained that the present appeal was not concerned with that issue, but rather with the extent to which judges could use their training and experience to review findings of fact based on the evidence of experts. The conclusion on the facts was that the judge in Perry could not apply his skill and experience in domestic law to a material extent in considering the relevant areas of Israeli and Liechtenstein law, and instead relied on expert evidence which he evaluated, such that the practice in respect of concurrent findings of fact applied ([35]-[38]; [45]).

81. Similarly, we are not concerned here with whether expert evidence was required. In this case it was determined that it was required. Further, this case, like Perry, is obviously much closer to the Byers end of the spectrum described by Lord Hodge than cases where the foreign law is analogous to English law. The judge was clearly heavily dependent both on translations of the STJ Decisions and on the expert evidence. As for the STJ Decisions themselves, their language in translation is, perhaps inevitably, somewhat stilted and they are in a form which is unfamiliar to an English lawyer, with the consequence that it is difficult to be confident that the translations have captured all the nuances of the originals. As for the expert evidence, the judge had the benefit not only of the experts' written reports but also of their oral evidence. She evaluated their evidence as a whole and, where there was disagreement, determined which view she preferred. She also considered the STJ Decisions with obvious care. In contrast, while we have reviewed the experts' joint memorandum and were taken to some other parts of the evidence, our review was more in the nature of the "island hopping" in a sea of evidence referred to by Lewison LJ in FAGE UK Ltd v Chobani UK Ltd [2014] EWCA Civ 5; [2014] FSR 29 at [114].'

[7] It was separately being argued by the petitioner/appellant on appeal, that if English law (principles equivalent to English law principles) applied to the contract and so the dispute, there was no genuine dispute, on substantial grounds.

[8] The reference to 'Lam v Tor Asia' is a reference to the Hong Kong Court of Appeal case of Guy Kwok Hung Lam v Tor Asia Credit Master Fund LP [2022] HKCA 1297 ('Lam v Tor Asia') - particularly, the judgment of Hon G Lam JA. In that judgment, Hon G Lam JA sets out the law in respect to exclusive jurisdiction clauses in Hong Kong, using as part of his analysis/reasoning, passages from common law authorities, including English law authorities.