Enforcement of foreign judgments/arbitral awards under the laws of Mauritius

INTRODUCTION

There are essentially three regimes under which foreign judgments can be enforced in Mauritius. These are:

1. The Foreign Judgments (Reciprocal Enforcement) Act 1961;
2. The Reciprocal Enforcement of Judgments Act 1923; and
3. Article 546 of the Mauritian Code of Civil Procedure (‘exequatur’ proceedings).

REQUIREMENTS

The legal framework under which a foreign judgment is recognized and enforced in Mauritius is Article 546 of the Mauritian Code of Civil Procedure. It provides for what are known as “exequatur” proceedings. The Code of Civil Procedure does not actually set out the conditions that are to be fulfilled for an application for “exequatur”. These conditions have been established as a result of case law. In the case of D’Arifat v Lesueur [1949 MR 191], the Supreme Court set down some conditions to be fulfilled for an exequatur application to be granted. Any final judgment or order obtained in a foreign court would be enforceable in Mauritius without re-examination of the merits of the case, provided that:

(i) the foreign judgment is still valid and capable of execution in the country where it was delivered;

(ii) it is not contrary to any principle affecting public order in Mauritius;

(iii) the defendant was regularly summoned to attend the proceedings; and

(iv) the court which delivered the judgment had jurisdiction to deal with the matter.

Interestingly, our law does not distinguish between recognition and enforcement. All three regimes provide for enforcement. An application by way of motion under Article 546 of the Civil Code of Procedure is to have a foreign judgment made executory in Mauritius and to have the judgment registered before the Supreme Court of Mauritius. Both the Foreign Judgments (Reciprocal Enforcement) Act 1961 [“FJREA”] and the Reciprocal Enforcement of Judgments Act 1923 (“REJA”) provide for enforcement through the need of registration before the Supreme Court of Mauritius.

PROCEDURE

An applicant wishing to enforce a foreign judgment will have to enter an action before the Supreme Court of Mauritius by way of motion supported by affidavit, praying from the Court for an Order making executory the judgment delivered/granted in the foreign country.

The affidavit will have as annexure a duly authenticated copy of the judgment evidence to show that the foreign judgment is a final one, when possible, a duly authenticated certificate that the judgment has not been appealed. The Supreme Court on receipt of such an application, fixes the time limit (a maximum of two months) within which the respondent should apply to set aside the application for registration. If no such application is made within the time limit, the Judge will order the registration of the Judgment and it will be declared executory in Mauritius.

If the respondent is a foreign entity, an order authorising initial service outside the jurisdiction of Mauritius together with an order fixing the time at which the judgment debtor should appear should be requested before a Judge in Chambers in Mauritius. The Judge in Chambers will normally fix the delay during which the papers will have to be served on the respondent, due consideration being taken for affording the respondent ample time to make his stand known in Court on the returnable day.

On the returnable date, the Court will deal with the following:-

1. Declaration of the foreign judgment as executory in Mauritius. When considering whether or not to make this declaration, the Court will evaluate whether the foreign judgment is contrary to any principles of public order in Mauritius; and

2. Direction to the Master and Registrar of the Court to forward to the Registrar General’s office of Mauritius a certified copy of the judgment and the Order of the Court within the prescribed time for registration purposes.

APPLICATION OF FJREA AND REJA

The applications of the FJREA and the REJA are very specific. They apply to monetary judgments or orders only, i.e. judgments or orders whereby a sum of money is payable (not being a sum of money payable in respect of taxes or other charges of a like nature, in respect of a fine or other penalty, or in respect of multiple damages). In the case of Beegun vs Josgray & Ors [2010 SCJ 17], it was held that foreign judgments given in relation to the status or capacity of individuals have to be enforced by way of “exequatur” proceedings if those judgments are to be used for acts of material execution on assets or property or for acts of coercion on individuals.

GROUNDS TO CHALLENGE RECOGNITION/ENFORCEMENT OF JUDGMENT

In respect of monetary judgments or orders only, as per section 3(2) of the REJA, no judgment shall be ordered to be registered under the Act where:

(a) The original court acted without jurisdiction;

(b) The judgment debtor, being a person who was neither carrying on business nor ordinarily resident within the jurisdiction of the original court, did not voluntarily appear or otherwise submit or agree to submit to the jurisdiction of that court;

(c) The judgment debtor, being the defendant in the proceedings, was not duly served with the process of the original court and did not appear, notwithstanding that he was ordinarily resident or was carrying on business within the jurisdiction of that court or agreed to submit to the jurisdiction of that court;

(d) The judgment was obtained by fraud;

(e) The judgment debtor satisfies the Supreme Court either that an appeal is pending, or that he is entitled and intends to appeal, against the judgment; or

(f) The judgment was in respect of a cause of action which for reasons of public policy or for some other similar reason could not have been entertained by the Supreme Court.

COURT’S APPROACH IN THE EVENT OF CONFLICTING LOCAL LAW

In the case of Dallah Albaraka (Ireland) Ltd v Pentasoft Technologies Limited [2012 SCJ 453], the Court referred to the case of Renggli v Shaw [1998 MR 143] where reference was made to O46 r.2 of the Rules of the Supreme Court of England whereby ‘’a writ of execution to enforce a judgment which is six years or more old may issue with the leave of the Court” and to “our own rules whereby a judgment by default is void if not executed within six months of the judgment”. It was held that in matters of conflict of laws, we are mainly governed by the French principles of private international law. In that respect, it was held that with regard to the period of prescription of judgments for the purpose of their execution, it is the lex fori which is applicable and that “time has not run against that judgment so as to make it unenforceable since, as pointed out above, the judgment is still enforceable in England”.

The Court was further of the view that what was more important was whether the judgment which was sought to be enforced was still valid in the sense that it has not been set aside or reversed on appeal. This is an essential condition whether under the Code de Procedure Civil or under the 1923 Act.

LIMITATION PERIOD

Under the procedure of Article 546 of the Code of Civil Procedure, a foreign judgment can be sought to be enforced as long as the judgment is still valid and capable of execution in the country where it is delivered. It is normally the procedure that the applicant for “exequatur” proceedings is expected to rely on the expert opinion of a lawyer in the country where the judgment was delivered so as to opine on whether the judgment is still valid and capable of execution in the initial jurisdiction.

SPECIAL ENFORCEMENT REGIMES APPLICABLE TO JUDGMENTS FROM CERTAIN COUNTRIES

Under the REJA, a judgment obtained in the superior courts of England and Wales will be enforced by the Supreme Court without re-examination of the merits of the case provided that:

• The judgment was obtained in a superior court in the United Kingdom;
• The superior court in the United Kingdom had the requisite jurisdiction;
• The judgment was not obtained by fraud;
• The judgment debtor, being the defendant in the proceedings, was duly served with the process of the original court and either voluntarily appeared or submitted to or agreed to submit to the jurisdiction of the court;
• The judgment debtor, being a person who was either carrying on business or ordinarily resident within the jurisdiction of the original court either voluntarily appeared or otherwise submitted or agreed to submit to the jurisdiction of the court;
• The application for enforcement is made to the Supreme Court within a period of 12 months after the date of the judgment unless a longer period has been granted by the Supreme Court;
• The judgment is final and conclusive, notwithstanding that an appeal may be pending against it or it may still be subject to an appeal in the United Kingdom;
• The judgment has not been given on appeal from a court which is not a superior court; and
• The judgment is duly registered in the Supreme Court in circumstances in which its registration is not liable thereafter to be set aside.

Enforcement under the FJREA can be sought with respect to any judgment of a superior court of a foreign country to which Part I of the FJREA extends, other than a judgment of such a court given on appeal from a court which is not a superior court, and shall be a judgment to which Part I of the FJREA Part applies, where –

(a) it is final and conclusive as between the parties;

(b) there is payable under it a sum of money, not being a sum payable in respect of taxes or other charges of a like nature or in respect of a fine or other penalty; and

(c) it is given after the coming into operation of the Proclamation directing that Part I shall extend to that foreign country.

Procedure

The procedure to be followed for the registration of UK judgments under the REJA is provided for under Government Notice No. 178 of 1924.

According to the above, leave must first be obtained to register in the Supreme Court of Mauritius a judgment obtained in a Superior Court in the UK. The application shall be made ex parte or by summons to a Judge. If the application is made ex parte, the Judge to whom it is made may direct that summons be issued. The application shall be supported by an affidavit of the facts exhibiting the judgment or a verified or certified or otherwise duly authenticated copy thereof. The said affidavit must state that to the best of the information and belief of the deponent, the judgment creditor is entitled to enforce the judgment and that the judgment does not fall within any of the cases for which a judgment cannot properly be ordered to be registered. The affidavit must also, so far as the deponent can, give the full name, title, trade or business and usual or last known place of abode or business of the judgment creditor and judgment debtor.

RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS

The Convention on the Recognition and Enforcement of Foreign Arbitral Awards Act 2001 (the “CREFAA”) gives force of law in Mauritius to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) signed on 10 June 1958.

The case of Cruz City 1 Mauritius Holdings v/s Unitech Ltd & Anor [2014 SCJ 100] was the first matter to be adjudicated upon by the Supreme Court of Mauritiu, exercising its special jurisdiction as provided for under the International Arbitration Act 2008 (“IAA”).

The Supreme Court held that rnder Article V (2) (b) of the Convention, it had the discretion not to enforce an award, a discretion which it has to exercise with rigour, if it considers that doing so would go against the public policy of Mauritius. However, it was held that it was the public policy in the international context that would matter and not the public policy that would normally apply when challenging a domestic award. It was further held that : “the task of this Court while considering the recognition and enforceability of foreign awards under Article V (2) (b) of the New York Convention is not to see whether the decision of the Tribunal in its application of the law of the country governing the agreement in question was against the public policy of that country but to see whether the enforcement of the award prayed for would be against the public policy of this country.” Essentially, the respondent has to show with precision and clarity in what way and to what extent enforcement of the award would have an adverse bearing on a particular international public policy of this country. Not only must the nature of the flaw in the arbitration proceedings be unambiguously described but a specific public policy must be identified and established by the party relying on it.

It is to be noted that the New York Convention applies equally to the recognition and enforcement of international arbitration awards rendered under the IAA, that is, where Mauritius is the seat pursuant to Section 40 of the IAA.

Mauritius – SA double taxation avoidance treaty

Last year, a Mauritian delegation headed to South Africa to approve and ratify the agreement on the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (“The Agreement”). The Agreement in itself had been previously signed by the Republic of Mauritius and the Republic of South Africa on the 17^th of May 2013. It was expected to come into effect around the 1^st of January 2015, once both countries had completed the necessary ratification procedures. Now that the necessary procedures are complete, the Agreement is will be ratified within the coming week, thus replacing the current Double Taxation Avoidance Agreement (“DTA”) between the two countries.

Historically, South Africa has had a tax treaty with Mauritius since 1997 (concluded in 1996) and South African investors have used Mauritius as a vehicle for investing in other countries with which Mauritius has numerous treaties. Similarly, international investors from other countries that have tax treaties with Mauritius have used Mauritius as an intermediary to invest in South Africa.

In addition to the new Agreement, the Mauritian Minister for Financial Services and Good Governance Roshi Bhadain and the South African Minister of Finance Nhlanhla Musa Nene, signed a Memorandum of Understanding covering:

• The treatment of dual-resident entities
• The tax treatment of capital gains, and
• The proposal to withhold tax rates on dividends, interests and royalties

What are the Salient Features of the New Agreement?
A major change in respect of the new agreement concerns the determination of tax residency, and specifically the tie-breaker rule that applies in cases where both Mauritius and South Africa claim that a particular company is a tax resident in their respective jurisdictions.

The current treaty provides that where a company is a tax resident in both Mauritius and South Africa, that company will for purposes of the existing agreement be deemed as tax resident in the country where the company has its effective place of management.

In fact, Paragraph 3 of Article 4 of the Organisation for Co-orperation and Development (“OECD”) Model Tax Convention states that a non-individual:

 “..Shall be deemed to be a resident only of the State in which its place of effective management is situated.” [Highlight added]

The new treaty, on the other hand, introduced a shift from the place of effective management test to what is known as the Competent Authority Procedure. This new prcedure provides that where a company is a resident of both states, “the competent authorities of the Contracting States shall by mutual agreement endeavour to settle the question and determine the mode of application of the Agreement to such person“. It further also provides that in “the absence of such agreement such person shall be considered to be outside the scope of the Agreement“.

The OECD has explicitly sanctioned this option as an acceptable one, and recommends that the following factors be considered by the competent authorities of the countries involved, in making their determination:

• the place where meetings of the company’s Board of Directors or equivalent body are usually held;
• the place where the chief executive officer and other senior executives usually carry on their activities;
• the place where the senior day to day management of the person is carried on;
• the place where the person’s headquarters are located;
• which country’s laws govern the legal status of that person;
• where its accounting records are kept; and whether determining that the legal person is a resident of one of the contracting states but not for the other would carry the risk of an improper use of the provisions of the DTA.

In the context of South African treaties, this approach to resolving questions of residence for companies is certainly not new nor even very unusual. It is currently to be found in 13 of South Africa’s existing DTAs, including, in the African context, the treaties it concluded with Botswana, Nigeria and Uganda.

What does this mean for South African investors?

The new agreement stresses the importance for South African companies that wish to be treated as tax residents in either Mauritius or South Africa to ensure that they are not effectively managed in the other country instead.

If SARS contends that a Mauritian company is effectively managed in South Africa, but Mauritius does not believe this to be the case, then even under the existing DTA, a dispute between the two countries as to where the relevant taxpayer has its place of effective management will be triggered, which would need to be resolved by the competent authority process.

The problem that arises is that a Mauritian incorporated company could find itself being declared as no longer tax resident in Mauritius. This is so despite the fact that the company may have attempted to arrange its affairs in such a way that its place of effective management is in Mauritius.

In addition, should no agreement be reached between Mauritius and South Africa, the treaty will simply not apply, and the company, as a dual resident, will be subject to tax in both South Africa and Mauritius. Even though the company could potentially claim relief in terms of section 6 of the Act, it would probably end up paying more tax than it would have otherwise.

Effectively, if the South African Revenue Service (SARS) believes that a Mauritian company is effectively managed in South Africa and therefore a resident in terms of domestic law, SARS will tax that company in South Africa, whether Mauritius agrees that the company is resident in South Africa or not.