Enforcement of Judgments Pending Appeal: Motorola Solutions v Hytera Communications [2024] EWHC 149 (Comm)
As anticipated, Brexit has made the lives of cross border practitioners far more interesting, and no more so than in connection with enforcement. After all, there's little point in battling to establish the jurisdiction of the English courts, fighting a trial tooth and nail, and then getting a judgment against a foreign entity that you can't enforce. This is why readers will have noticed that members of the team are now invariably keen to take early advice as to enforcement from practitioners qualified in the jurisdiction in which the Defendant is domiciled, or at least where it squirrels away its assets.
In Motorola Solutions Jacob J had cause to examine enforcement from the other end of the telescope. Motorola had brought proceedings against Hytera in the Northern District of Illinois, obtaining judgment in its favour for US$136.3 million in compensatory damages under the US Copyright Act 1976 for the period 2010 to May 2016. It also had judgment in its favour for US$135.8 million for compensatory damages under the US Defend Trade Secrets Act 2016, and US$271.6 million in exemplary or punitive damages. There was also judgment for around US$86.5 million interest and costs.
In November 2023 Cockerill J gave judgment in respect of the US$136.3 million compensatory damages award, holding that it could be enforced within this jurisdiction. Motorola accepted that it could not obtain judgment in this jurisdiction for the exemplary/punitive damages element, and there remained issues which will have to be resolved in due course as to whether or not it can obtain judgment in this jurisdiction for the Ł135.8 million in compensatory damages under the 2016 Act. Still, it wished to proceed to enforce the compensatory award, meagre though it was.
But there was a problem.
Hytera appealed the judgment in the compensatory award, and Motorola cross-appealed. The appeals were heard by the Seventh Circuit Court of Appeals in December 2023, and the judgment on appeal is not yet available and might not be handed down for another year. On Motorola's case, judgment is certainly likely to be given by the end of the year; Hytera's case is that it is probable that judgment will be given rather sooner, and they point to some statistical evidence, on the basis of research carried out by a Chicago law firm, which indicates that judgments of that appeal court tend to be given on average within four months of the hearing of the appeal. But there was uncertainty before Jacobs J as to when judgment on the appeal, which raised substantial issues which were plainly arguable, would be likely to be given.
The US judgment has not been formally stayed; in order for Hytera to obtain a stay of enforcement, they would have had to file a bond, but they were not in a position to do that and, therefore, the judgment remains an enforceable judgment, as Cockerill J found in November 2023. Meanwhile Motorola has had mixed success in actually prising the case out of Hytera within the American jurisdiction, and therefore brought proceedings within this jurisdiction seeking enforcement of it. As indicated, this led to Cockerill J finding that the compensatory judgment was enforceable within this jurisdiction notwithstanding that it is under appeal, since it has not been stayed in the American jurisdiction.
Hytera therefore sought a stay of enforcement within this jurisdiction - a stay, remember, which it could not get in America because it could not file a bond.
The submissions
Motorola told the court that Hytera was a business bursting with health and vitality oozing dollars from every pore. Why not, then, enforce the enforceable judgment against it? Where was the harm? And whilst being richer than Croesus, Motorola's counsel suggested, Hytera was also prone to keeping its assets in hard to reach jurisdictions and doing whatever the company equivalent is of hiding them under the mattress. Therefore it was right that Motorola should crack on with enforcement whilst it still could, and with no downside to Hytera.
Hytera's legal team told a different, and more woeful, tale. Although it was true that Hytera had substantial assets, alas! they were not readily accessible, and in order to find a sum now (with interest on the English judgment) in excess of $150 million it would have to liquidate its assets to such a degree that it would, in effect, be forced to dismantle its business. Such a process would be irreversible -and this, in the context of a source judgment under appeal, and which could be overturned at any moment (or within the year, which amounts to the same thing in the World of Law).
The law
The question for Jacobs J was whether it was appropriate to permit Hytera to have a stay of enforcement pursuant to CPR 83.7(4)(a), which provides that the court may grant a stay of execution where "there are special circumstances which render it inexpedient to enforce the judgment or order".
Counsel for Hytera submitted that the fact that the case is under appeal in the United States is in itself, and independent of the issues raised as to Hytera's liquidity, a sufficient reason for the court to grant the stay of execution because the appeal in itself was a special circumstance which rendered it inexpedient to enforce the judgment. Jacobs J gave this submission short shrift, however, observing that appeals are something which happen 'extremely frequently'; where a party is well able to pay, and the payee able to return any payment should an appeal succeed, a judgment will usually be enforced without delay. But in this case the liquidity arguments added another dimension to the judge's cogitations.
Jacobs J approached the question of whether or not to order a stay as if he were being asked to stay a home-grown English judgment pending appeal. The starting point is that a claimant should not be kept out of his or her money even though an appeal is pending - but there may be countervailing considerations, such as those referred to in Hammond Suddard Solicitors v Agrichem International Holdings Ltd [2001] EWCA Civ 2065:
"By CPR rule 52.7, unless the appeal court or the lower court orders otherwise, an appeal does not operate as a stay of execution of the orders of the lower court. It follows that the court has a discretion whether or not to grant a stay. Whether the court should exercise its discretion to grant a stay will depend on all the circumstance of the case, but the essential question is whether there is a risk of injustice to one or the other or both parties if it grants or refuses a stay. In particular, if a stay is refused what are the risks of the appeal being stifled? If a stay is granted and the appeal fails, what are the risks that the respondent will be unable to enforce the judgment? On the other hand, if a stay is refused and the appeal succeeds, and the judgment is enforced in the meantime, what are the risks of the appellant being able to recover any monies paid from the respondent?"
Here the appeal would not be stifled (having been heard), and Motorola had (wisely) offered to set up an escrow account so that no concerns need be raised as to whether Hytera would get their money back if successful on appeal. But Jacobs J was troubled by the prospect that having to satisfy the judgment would cause Hytera to sell off substantial parts of his business, irreversibly damaging the business against the backdrop of an appeal which was not frivolous:
"I should note that there is one unusual feature of this case which in my view is relevant to the exercise of my discretion. It is an unusual feature that the appeal has actually been argued out in the United States, and that it can fairly be said that the judgment on appeal is reasonable imminent. Indeed, it may possibly be given in the next 3 months or thereabouts. It also is clear from the materials which I have seen (and indeed from the fact that the appeal judgment is not expected for some time) that the appeal there raises matters of some complexity. This is not therefore a case where one is waiting for an appeal to come on, but where one is simply waiting for a decision to come from the court in the context of an appeal raising substantial issues. Against this background, I would regard it as undesirable and unjust to require a party to be put in the position of having effectively to dismantle its business in order to meet a significant judgment, where the appeal result is reasonably imminent."
On the evidence, this risk was made out, and he was therefore satisfied that in the circumstances a stay should be granted. Nevertheless, he held that Hytera was in a position to pay some part of the judgment sum, and accordingly ordered a stay of proceedings for two months, to continue thereafter only on the condition that Hytera pays the sum of $25 million into court. If the payment into court is not made, the stay will be lifted.
Conclusion
The judgment of Jacobs J is of interest not just to cross border specialists but to any litigators holding a judgment which is subject to appeal; it is a reminder that merely appealing an order does not operate as a stay and that some additional factor must be brought into play to justify keeping the successful party out of his or her award. Nor is the process an all or nothing one - it is possible for a judge confronted with an application for a stay pending appeal to impose conditions, including the payment of part of the award, on an order for a stay. The objective is to do justice between the parties and to preserve their respective positions pending the outcome of the appeal.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
MOTOROLA SOLUTIONS, INC. 
