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ENFORCEMENT OF JUDGMENTS IN EU PIL Giovanni Zarra Adjunct Professor 18 May 2017
Definitions • Member State of Origin: Member State in which the judgment was given • Member State addressed: Member State in which enforcement is sought • Court of origin: court which granted the judgment • Judgment: any judgment given by a court or tribunal of a Member state, whatever that judgment may be called. This covers any decree, injunction, order, decision or writ of execution. Not only money judgments.
Important difference • Res judicata (claim preclusion – civil law): regards necessarily the entire judgment. • Issue estoppel (common law): regards a single preliminary question decided within a broader judgment.
Italy Art. 64 law 218 of 1995 1. La sentenza straniera è riconosciuta in Italia senza che sia necessario il ricorso ad alcun procedimento quando: a) il giudice che l'ha pronunciata poteva conoscere della causa secondo i principi sulla competenza giurisdizionale propri dell'ordinamento italiano; b) l'atto introduttivo del giudizio è stato portato a conoscenza del convenuto in conformità a quanto previsto dalla legge del luogo dove si è svolto il processo e non sono stati violati i diritti essenziali della difesa; c) le parti si sono costituite in giudizio secondo la legge del luogo dove si è svolto il processo o la contumacia è stata dichiarata in conformità a tale legge; d) essa è passata in giudicato secondo la legge del luogo in cui è stata pronunziata; e) essa non è contraria ad altra sentenza pronunziata da un giudice italiano passata in giudicato; f) non pende un processo davanti a un giudice italiano per il medesimo oggetto e fra le stesse parti, che abbia avuto inizio prima del processo straniero; g) le sue disposizioni non producono effetti contrari all'ordine pubblico.
EU Recognition Article 36 1. A judgment given in a Member State shall be recognised in the other Member States without any special procedure being required. Enforcement Article 39 A judgment given in a Member State which is enforceable in that Member State shall be enforceable in the other Member States without any declaration of enforceability being required. No Exequatur: Declaration of enforceability previously required in order to then asked enforcement in a foreign country (in Italy, the Court of Appeal had to verify the respect of due process and public policy). Now a judgment from another Member State is automatically effective.
EU Article 41 1. Subject to the provisions of this Section, the procedure for the enforcement of judgments given in another Member State shall be governed by the law of the Member State addressed. A judgment given in a Member State which is enforceable in the Member State addressed shall be enforced there under the same conditions as a judgment given in the Member State addressed. 2. Notwithstanding paragraph 1, the grounds for refusal or of suspension of enforcement under the law of the Member State addressed shall apply in so far as they are not incompatible with the grounds referred to in Article 45. 3. The party seeking the enforcement of a judgment given in another Member State shall not be required to have a postal address in the Member State addressed. Nor shall that party be required to have an authorised representative in the Member State addressed unless such a representative is mandatory irrespective of the nationality or the domicile of the parties
EU – Refusal of Recognition (Art. 45) This is a sort of reverse exequatur. 1. On the application of any interested party, the recognition of a judgment shall be refused: (a) if such recognition is manifestly contrary to public policy (ordre public) in the Member State addressed; (b) where the judgment was given in default of appearance, if the defendant was not served with the document which instituted the proceedings or with an equivalent document in sufficient time and in such a way as to enable him to arrange for his defence, unless the defendant failed to commence proceedings to challenge the judgment when it was possible for him to do so;
continued c) if the judgment is irreconcilable with a judgment given between the same parties in the Member State addressed; (d) if the judgment is irreconcilable with an earlier judgment given in another Member State or in a third State involving the same cause of action and between the same parties, provided that the earlier judgment fulfils the conditions necessary for its recognition in the Member State addressed; or (e) if the judgment conflicts with: (i) Sections 3, 4 or 5 of Chapter II where the policyholder, the insured, a beneficiary of the insurance contract, the injured party, the consumer or the employee was the defendant; or (ii) Section 6 of Chapter II
continued 2. In its examination of the grounds of jurisdiction referred to in point (e) of paragraph 1, the court to which the application was submitted shall be bound by the findings of fact on which the court of origin based its jurisdiction. 3. Without prejudice to point (e) of paragraph 1, the jurisdiction of the court of origin may not be reviewed. The test of public policy referred to in point (a) of paragraph 1 may not be applied to the rules relating to jurisdiction. 4. The application for refusal of recognition shall be made in accordance with the procedures provided for in Subsection 2 and, where appropriate, Section 4.
EU – relationship between jurisdiction and enforcement • We know that for jurisdictional purposes Brussels 1215/2012 applies whether the defendant is domiciled in a Member State. • For the purpose of enforcement, all civil and commercial judgments issued by a MS court are entitled to be enforced. • This means that even if: (i) the court of origin wrongly exercised jurisdiction; or (ii) the defendant was not domiciled in a MS and the court of origin assumed exhorbitant jurisdiction, THE JUDGMENT MUST BE ENFORCED without a jurisdictional test of the decision.
Example • Art. 14 of the French CC entitles any French claimant to start proceedings in France • Proceedings are started against a defendant non domiciled in a Member State • The judgment can circulate throughout all Europe, notwhithstanding the fact that all other countries would not have assumed jurisdiction. Asymmetry deriving from mutual trust.
Choice of court agreements and fraud • There is no provision in the regulation permitting to review the violation of choice of court agreements and arbitration agreements at the enforcement stage. • There is no provision for allowing the enforcing court to evaluate whether the parties committed a fraud. The same applies if the judge committed a fraud. • However, the public policy exception could help here.
Exceptions • Insurance • Consumer contracts • Employment contracts • Exclusive jurisdiction – e. g. rights in rem – but only if the court with exclusive jurisdiction is in a MS. • This means that if a French court gives a judgment on a building in California (right in rem located in California) such a judgment shall be enforced.
Grounds for refusal: public policy Art. 45(1)(a) However, art. 45(3) expressly states that public policy may not be used as an indirect way of ensuring that the court that granted the judgment had jurisdiction.
Krombach v. Bamberski • Bamberski was a French lady, married and had two children • Then divorced and married Krombach (German) and went to live with him in Germany • Once, the children went to Germany to visit their mother and Kromback. The daughter spent a day windsurfing and then complained of feeling tired. Krombach (a doctor) gave her an injection intended to treat anemia. • The daughter died. Criminal proceedings were started in Germany but then abandoned for lack of evidence of a crime.
continued • French authorities then started investigations. Criminal proceedings started against Krombach in France. French courts assumed criminal jurisdiction because Bamberski was a French citizen. Under French law a party may bring civil claims in the course of criminal proceedings. Art. 7 states that “a person domiciled in a Member State may be sued in another Member State: • (3) as regards a civil claim for damages or restitution which is based on an act giving rise to criminal proceedings, in the court seised of those proceedings, to the extent that court has jurisdiction under its own law to entertain civil proceedings”; Bamberski started both criminal and civil proceedings in France.
continued • Krombach wanted to defend himself in France (in the civil trial) but cannot because otherwise he would have been imprisoned. • Krombach’s lawyer appeared but French courts refused to hear them because a fugitive is not entitled to be defended in a French trial. • Krombach was sentenced of 15 years in prison and Bamberski also obtained an amount of money in civil damages
continued • Enforcement sought in Germany. • Krombach resisted saying that enforcement was contrary to public policy. • Lower courts said the judgment must be enforced in accordance with the regulation. Federal Supreme Court referred to the CJEU.
continued Two questions: (i) could public policy be used in order to deny recognition to a civil judgment provided that there would not have been French civil jurisdiction in accordance with the regulation? (ii) could the public policy clause be invoked for lack of right to a fair trial and right to defend himself? Keep in mind art. 6 ECHR
CJEU in Krombach • Recourse to public policy is exceptional. Goal of the Regulation is to ensure circulation of civil and commercial judgments • States are free to determine their public policy but the Court can limit an overly extension of the concept. • General principles of community law shall, however, be taken into account. Fair trial is one of them.
First question • Fundamental principle: jurisdiction cannot be reviewed by the enforcing court • Public policy cannot be used for a failure to comply with regulation’s rule on jurisdiction (even if jurisdiction was wrongly assumed) • The fact that civil French jurisdiction was established on the basis of a criminal proceeding is not sufficient to overcome this principle.
Second question • The differences between legal rules to be applied are not sufficient to establish public policy violation. • However if the judgment delivered in another contracting State would be at variance to an unacceptable degree with the legal order of the State in which enforcement is sought inasmuch as it infringes a fundamental principle, public policy may be invoked. • The infringement would have to constitute a manifest breach of a rule of law regarded as essential in the legal order of the State in which enforcement is sought or a fundamental right in that legal order
continued • The ECt. HR has several times recalled that every person charged with an offence shall have the right to be effectively defended by a lawyer. • Lack of a lawyer is a manifest breach of a fundamental right. • This is also a fundamental principle of community law. • Recourse to public policy is possible.
Gambazzi v. Daimler Chrysler • Various frauds of millions of dollars against Canadian pension funds and other trustees. • The mastermind was a man called Stolzenberg, Daimler Chrysler one of the victims. It brought proceedings against Gambazzi (who participated in the fraud) in London. • Freezing orders and assets disclosure orders were issued against Gambazzi. He did not comply and he was then debarred to take part to proceedings (sanction). • Default judgment against him. Pay a lot of money.
continued • Enforcement sought in Switzerland but refused on grounds of public policy. • Enforcement then sought in Italy. Reference to CJEU.
CJEU in Gambazzi • Fundamental rights cannot be restricted. • UK government submitted that its action were dictated by fair administration of justice. • Sanctions are possible but they shall not be manifestly disproportionate. • The sanction suffered by Gambazzi is the most serious possible. High threshold to admit it. This is to be determined by national courts.
continued • Proceedings shall be determined as a whole and all circumstances shall be taken into account. • With regard to the failure to comply with the disclosure order, the national court shall take into account whether it is sufficient that Gambazzi did not comply because, according to him, he would have infringed his professional secret as a lawyer. • With regard to the freezing order and the rest of the judgment, it is essential to understand whether Gambazzi had a right to be heard and to appeal decisions. Compliance with adversarial principle and right of defence?
continued • National courts shall carry out an overall balancing exercise and understand whether the exclusion of Gambazzi from proceedings was disproportionate. Comment: - human rights are not absolute and imply a balancing; - proportionality, necessity and adequacy of measures!
Conflicting judgments 45(1). Refusal is possible: (c) if the judgment is irreconcilable with a judgment given between the same parties in the Member State addressed; [it is irrelevant whether the domestic judgment came prior or after the foreign one] (d) if the judgment is irreconcilable with an earlier judgment given in another Member State or in a third State involving the same cause of action and between the same parties, provided that the earlier judgment fulfils the conditions necessary for its recognition in the Member State addressed;
Conflicting judgments One of them outside the scope of reg. Hofmann v. Krieg • Husband wife German, married and lived in Germany. • The husband left and went to The Netherlands. • Wife obtained maintenance order from German Courts. • Husband obtained divorce from Dutch Courts (after).
continued • Enforcement sought of the German decision in The Netherlands • Husband claimed that maintenance order cannot be enforced in Holland due to conflict with divorce judgment. • Maintenance order is covered by the regulation, divorce not! Regulation does not apply to status. • German court was in principle not obliged to recognize Dutch divorce, but Dutch courts should recognize Germand decision on maintenance!
CJEU in Hoffmann • The German judgment presupposes the existence of a matrimonial relationship. • Consideration shall be given to the existence of a decision which dissolves such a matrimonial relationship. • But Regulation does not apply to status and capacity of natural person. • There is no written conditional relationship between the two decisions.
continued • The enforcing State may draw adverse inferences from a national decree of divorce. • In order to decide whethere is a conflict of judgments, it shall be seen whether they entail legal consequences which are mutually exclusive. • This is the case here. • Therefore a judgment outside the scope of the regulation may anyway be used to preclude enforcement. Inconsistencies are to be avoided.
Default Judgments • It is unfair to enforce a judgment if the defendant was never told about the proceedings and had no opportunity to defend them. 45(1)(b). Enforcement may be refused: where the judgment was given in default of appearance, if the defendant was not served with the document which instituted the proceedings or with an equivalent document in sufficient time and in such a way as to enable him to arrange for his defence, unless the defendant failed to commence proceedings to challenge the judgment when it was possible for him to do so;
continued • It is for the court of origin to decide whether the defendant was served in accordance with the applicable legal rules • There is, however, a factual test for the court addressed: was the claim form served in sufficient time and in such a way as to enable the defendant to arrange for his defence? • Sufficient time is based on the assumption that the defendant will need time to find a lawyer, gather evidence and research the law. The amount of time depends on the facts.
continued • “Such a way” requirement: the defendant shall be actually aware of the service of the claim form or at leastall reasonable steps have been taken to ensure this. • The finding of the court of origin that the defendant had sufficient time is not necessarily to be taken into account by the addressed court. • Trade Agency v. Seramico: the court of origin must issue a certificate providing for the date of service and date of initiation of proceedings. Such a certificate, however, is not binding for the enforcing court.
When does time begin to run? • Moment of the service at the appropriate address or moment when it came to tjhe knowledge of the defendant? • In favour of the latter: the defendant must actually know of the claim • In favour of the former: the claimant does not know whether the defendant is actually informed!
Klomps v. Michel • CJEU stated that usually we have to refer to the former provision. • In exceptional circumstances time starts running from the moment of the actual notice to the defendant. • Court must consider the relationship between the parties and the steps necessary to avoid a default judgment. • Usually, in commercial relationship, service at the place of business is OK even if the defendant is away.
Debaecker v. Bouwman • Defendant’s rented home in Antwerp. He left without notice and without providing the landlord with an address. • He left on the 21 of September. On 24 September a claim was served by the landlord at the closer police station. This was due service according to Belgian law. • On 28 September the defendant communicated a new (and far) address to the landlord. • Landlord did not attempt to inform of the pending claim.
continued • Default judgment on 1 October. • Served at the police station. • Defendant remained ignorant of the proceedings. • He then moved to The Netherlands where an attempt of enforcement by the landlord took place. • Was the claim served in time? Question for Dutch courts.
continued • Clearly the defendant did not have time. • Are we in the exceptional category set forth in Klomps? • The overall facts shall be considered, also whether the defendant took steps in order to avoid to be served. • Balancing exercise. It is unfair however to ask the claimant to ascertain in every case that the claims reaches the defendant. He has to serve correctly. But, however, service a police station is not enough. • Factual analysis by the enforcing court.
Proceedings to set aside • Enforcement cannot be refused if the defendant had the possibility to set aside the default judgment in the State of origin and did not do so. • Ratio: avoid abuses • When should it be regarded as possible for the defendant to bring proceedings to set aside the default judgment?
ASML Nethelands v. SEMIS • ASML was Dutch, SEMIS Austrian. • Claim served on the defendant after the date of the hearing. Default judgment issued but never given to the defendant. • Enforcement proceedings started in Austria. • Enforcement order issued by Austrian Court and SEMIS become for the first time aware of the service and of the judgment, but not of the content of the latter!
continued • In this case the question was whether it was possible for the defendant to set aside the judgment in The Netherlands. • The remedy existed, but the defendant was precluded to avail himself of it in concreto. • Reference to the CJEU.
CJEU in ASML • The regulation wants to semplify circulation of judgments avoiding formalities. • This however cannot undermine the right to a fair hearing • Settled case law: fundamental rights are part of the general principles of EU law the respect of which must be ensured by the Court. • Commencement of proceedings against a judgment is possible only if the person which has to start proceedings can familiarise with the judgment.
continued • Knowledge of the contents of the default judgment is essential. • The abstract existence of a remedy is not sufficient to let us conclude that it was possible to set aside the default judgment. • On the other hand, mere formal irregularities are insufficient if they do not adversely affect the defendant’s right. Concrete analysis by national courts.
Comment The default judgment must be given to the defendant before the expiry of the time limit for applying to have it set aside. In addition it must be given to him in sufficient time before this to enable him to prepare his case. This follows from the parallel drawn by the CJEU between the service of the default judgment and service of the claim form.
continued • This judgment was under regulation 44/2001. • However, now Art 43(1) Regulation 1215 requires that a copy of the judgment to be enforced is served on the person against whom enforcement is sought. • The content of the default judgment will be necessarily known by the defendant at this point. • In ASML if the defendant hypotetically received this copy after the possibility to set aside the default judgment, the result would have been the same. Otherwise the defendant should have asked suspension of enforcement and start set aside proceedings in the State of origin.
Apostolides v. Orams • Mr and Mrs Orams had not been served with the document starting proceedings in Cyprus so as to enable them to prepare their defense. • Default judgment was given. • Successively application to set aside. Fair hearing was granted but it was refused to set aside the judgment because the Orams did not have a valid defense. • Enforcement in England. Referral to the CJEU.
Continued • Fair balance between mutual trust (pro enforcement) and respect for the right of defence (against enforcement). • If the defendant had the possibility to challenge the default judgment and to argue that he had not been duly served this is sufficient to satisfy the right of defense argument. • This case, however is strange: the Cyprus Court of Appeal rejected the claim in the merits even if it admitted that there was no respect for right of defence. • If it would have simply dismissed (without judgment on the merits, probably the CJEU’s approach would have changed.
Summary Default judgment: - Failure to avail of set aside remedy: enforcement - Avail of set aside remedy but declined: enforcement - Avail of the remedy and is successful: no judgment to be enforced! - No available remedy (too late): refusal of enforcement.
Motivation in default judgment • Art. 6 ECHR requires motivated judgments • If there is no motivation, judgment is against public policy • Enforcement to be refused • English Courts issue default judgment by just saying that the defendant was duly informed but decided not to take part and defend himself. No motivation.
Trade Agency v. Seramico • Seramico started proceedings in England. • Default judgment because the defendant did not appear. Defendant was condemned to pay without motivation. • Seramico started enforcement in Latvia. The English judgment was accompanied by a certificate with date of service and date of beginning of the proceedings. • Latvian courts are not bound by the certificate (as we already saw). • Public policy?
CJEU • The enforcing State is entitled to take the view that a judgment without motivation is a restriction of fundamental rights. We shall see if this is acceptable. • There could be restrictions to fundamental rights in the name of general interests and if proportionality is respected. • UK argued that this kind of default judgment is aimed at ensuring the good administration of justice.
Continued • This is an objective which can justify restrictions. • However it is addressed court which shall make such an analysis. • The obligation to give reasons may vary in accordance with the subject of the judgment and shall be evaluated taking into account the overall framework. • Concrete evaluation of proportionality to be made by Latvian courts
continued A violation of public policy is likely to be found in two cases: - The public policy violation may be found in principle by a State in all the cases where there is no motivation - Where it is proved that the lack of motivation rendered it difficult for the defendant to set aside the judgment in the State of origin. - According to the Advocate general, however, if the defendant receives a different document informing him of the grounds and facts of the claim this could suffice.
Rulings on jurisdictional issues What if a court in a MS states that it does not have jurisdiction because there is a choice of court agreement which gives jurisdiction to a Court in another MS? Is this judgment enforceable also in other MS for its part (which is obiter in the motivation) in which it recognizes that there is a valid choice of court agreement? Gothaer v. Samskip: YES. Mutual trust. No review of what has been decided by a MS Court, even if this statement is part of the ratio decidendi and not of the dispositive part). Motivation of judgments is res judicata (similar to issue estoppel).