Trinity Term · MMXXVI · 7 min
Enforcement Scoring for Cross-Border Awards
A zero to five scale for what a judgment is actually worth in the jurisdictions that must honour it.
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By Eleanor V. Hudson, Co-Founder and Managing Partner.
A judgment is a piece of paper. What it is worth depends entirely on the willingness of a second jurisdiction to treat that paper as though it were its own. For most of the matters HLC considers, the tribunal sits in one place and the assets sit in another. The Enforcement Score is the instrument by which that second question is priced in at the beginning, rather than discovered at the end.
The scale
The score is a single integer, zero through five, applied at underwriting and revisited at each Investment Committee review. It is not a probability of enforcement; it is a composite that captures probability, duration, and the friction cost of collection.
- 5, ordinary. Enforcement expected within twelve months of a final award, in a New York Convention jurisdiction with a functioning commercial bench and seizable assets already identified.
- 4, contested but conventional.Enforcement expected within eighteen to twenty-four months, with foreseeable challenges under Article V of the Convention that are unlikely to succeed on the record.
- 3, real friction. Enforcement plausible within three years but requiring litigation in a second forum, with meaningful uncertainty about asset location or corporate veil.
- 2, structural resistance. The respondent’s home forum is known to resist recognition, or the assets sit in a jurisdiction without a mature enforcement bar. Multi-forum strategy is required.
- 1, sovereign or sovereign-adjacent. The respondent is a state, a state instrumentality, or controls the courts of the enforcement forum. Immunity defences, attachment restrictions, and diplomatic exposure are live.
- 0, unenforceable on the current record.No credible path to collection has been identified. Not fundable at the merits stage regardless of the strength of the underlying claim.
How the score constrains pricing
The Enforcement Score does not, on its own, decide whether a matter is funded. It decides how it is funded. A score of five permits the tightest multiples and the longest tenors; the case can be priced against a paper judgment with reasonable confidence. A score of three narrows the multiple band and shortens the tenor at which the matter remains attractive; the deployment is smaller relative to the claim, because a portion of the claim will be consumed by collection.
At a score of two, HLC requires either (i) a co-funding arrangement that isolates enforcement risk, or (ii) a pre-identified enforcement counsel of record with a documented track record in the relevant forum. At one, the matter is fundable only under the Three-Tier Structure, with enforcement priced as a separate tranche. At zero, the matter is declined.
What the score is not
It is not a country score. Two matters against respondents in the same jurisdiction can carry very different Enforcement Scores; the identity of the respondent, the location of its liquid assets, and the state of its corporate structure matter more than the flag on the courthouse. A well-capitalised private respondent in a difficult jurisdiction can score four; a state-instrumentality respondent in an otherwise cooperative forum can score one.
It is also not static. A score of three at the outset can migrate to a five if, during the pendency of the proceeding, the respondent lists on a foreign exchange or issues bonds subject to New York or English law. The Investment Committee revisits the score at each semi-annual portfolio review, and any material change in the respondent’s asset footprint is a trigger for an interim reassessment.
The discipline behind the number
A funder that underwrites the merits without underwriting the enforcement is underwriting a hope. The Enforcement Score does not remove the difficulty of collection; it surfaces it, prices it, and refuses to let it be treated as someone else’s problem. It is, in that sense, the practical form of the Non-Interference Doctrine: HLC does not run the case, but HLC is the party that will ultimately be paid, and the mechanism of that payment must be underwritten with the same seriousness as the claim itself.
❦
E. V. Hudson
Eleanor V. Hudson, Co-Founder and Managing Partner.
A judgment is a piece of paper. What it is worth depends entirely on the willingness of a second jurisdiction to treat that paper as though it were its own. For most of the matters HLC considers, the tribunal sits in one place and the assets sit in another. The Enforcement Score is the instrument by which that second question is priced in at the beginning, rather than discovered at the end.
The scale
The score is a single integer, zero through five, applied at underwriting and revisited at each Investment Committee review. It is not a probability of enforcement; it is a composite that captures probability, duration, and the friction cost of collection.
How the score constrains pricing
The Enforcement Score does not, on its own, decide whether a matter is funded. It decides how it is funded. A score of five permits the tightest multiples and the longest tenors; the case can be priced against a paper judgment with reasonable confidence. A score of three narrows the multiple band and shortens the tenor at which the matter remains attractive; the deployment is smaller relative to the claim, because a portion of the claim will be consumed by collection.
At a score of two, HLC requires either (i) a co-funding arrangement that isolates enforcement risk, or (ii) a pre-identified enforcement counsel of record with a documented track record in the relevant forum. At one, the matter is fundable only under the Three-Tier Structure, with enforcement priced as a separate tranche. At zero, the matter is declined.
What the score is not
It is not a country score. Two matters against respondents in the same jurisdiction can carry very different Enforcement Scores; the identity of the respondent, the location of its liquid assets, and the state of its corporate structure matter more than the flag on the courthouse. A well-capitalised private respondent in a difficult jurisdiction can score four; a state-instrumentality respondent in an otherwise cooperative forum can score one.
It is also not static. A score of three at the outset can migrate to a five if, during the pendency of the proceeding, the respondent lists on a foreign exchange or issues bonds subject to New York or English law. The Investment Committee revisits the score at each semi-annual portfolio review, and any material change in the respondent’s asset footprint is a trigger for an interim reassessment.
The discipline behind the number
A funder that underwrites the merits without underwriting the enforcement is underwriting a hope. The Enforcement Score does not remove the difficulty of collection; it surfaces it, prices it, and refuses to let it be treated as someone else’s problem. It is, in that sense, the practical form of the Non-Interference Doctrine: HLC does not run the case, but HLC is the party that will ultimately be paid, and the mechanism of that payment must be underwritten with the same seriousness as the claim itself.