61992CC0414_EN
Opinion of the Advocate-General
Opinion of the Advocate-General
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Mr President,
Members of the Court,
1. The Bundesgerichtshof has submitted questions to the Court of Justice for a preliminary ruling on the interpretation of the Convention of 27 September 1968 on jurisdiction and the enforcement of judgments in civil and commercial matters ("the Brussels Convention"). The questions arose in a case before it between a German company, Solo Kleinmotoren, and an Italian businessman, Emilio Boch. The issue in dispute is whether a court settlement reached in Germany is a bar to Mr Boch' s having a judgment delivered in Italy enforced in Germany.
2. The facts of the case are as follows: Mr Boch ran a business in Milan under the name "SOLO", dealing in agricultural machinery which was supplied by Solo Kleinmotoren. In 1966 a company was formed in Bologna with the name SOLO Italiana SpA which subsequently took over the sales in Italy of the machinery manufactured by Solo Kleinmotoren; accordingly Solo Kleinmotoren discontinued its supplies to Mr Boch.
Mr Boch thereupon brought two actions. One action, which was brought before the Tribunale Civile, Milan, concerned breach of the contract between the parties. The other action, brought before the Tribunale Civile, Bologna, against both Solo Kleinmotoren and SOLO Italiana, concerned misuse of the trade name and unfair competition.
3. The action in Milan ended in 1975, when the Corte d' Appello, Milan, ordered Solo Kleinmotoren to pay Emilio Boch approximately LIT 48 million, with interest. That judgment was, in accordance with the Brussels Convention, declared enforceable in Germany. Solo Kleinmotoren, however, appealed against the enforcement decision to the Oberlandesgericht Stuttgart. Before that court and at its suggestion, the parties reached a court settlement on 24 February 1978 which provided inter alia as follows:
"1. The judgment debtor [Solo Kleinmotoren] shall pay the judgment creditor [Emilio Boch] ... DM 160 000
2. The judgment debtor will collect ... goods ...
3. All the parties' claims against one another arising from their business relationship are hereby resolved ...
The judgment creditor undertakes not to assert the claims forming the subject-matter of the present legal dispute against Solo Italiana, Bologna ..."
4. The action brought in Bologna resulted in a judgment delivered in 1979 in which the Corte d' Appello, Bologna, held Solo Kleinmotoren and SOLO Italiana jointly liable for misuse of the trade name "SOLO" and unfair competition. The Corte d' Appello stated that the decision on the quantum of damages should be dealt with in later proceedings. In its reasoning the Corte d' Appello considered a submission that Emilio Boch' s claims should be regarded as having been satisfied in their entirety in Stuttgart on 24 February 1978. The court did not uphold that submission, stating inter alia that the court settlement had never been declared enforceable in Italy and, in any case, was unrelated to the dispute being heard by the court. The judgment states inter alia:
"Moreover it is clear from the content of the minute of the settlement and the subject-matter of the dispute as expounded before the German courts and set out in the settlement deed that the matters at issue in the present dispute were excluded from the settlement of the relations which was there reached between Emilio Boch and the German company. The proceedings before the Oberlandesgericht Stuttgart were concerned with the enforcement of the judgment of the Court of Appeal, Milan, on the application brought by Emilio Boch ... for termination of the exclusive supply contract and for compensation for the damage resulting from the breach."
5. In 1981 Emilio Boch brought proceedings before the Tribunale Civile, Bologna, to obtain payment of damages for infringement of his trade name and unfair competition. In 1986 the Tribunale Civile, Bologna, ordered Solo Kleinmotoren and SOLO Italiana to pay damages of approximately LIT 180 million. That judgment was upheld by the Corte d' Appello, Bologna. Before both courts, Solo Kleinmotoren contended that the court settlement reached before the Oberlandesgericht Stuttgart in 1978 put an end to the parties' differences. Each court rejected that submission, stating that the judgment delivered in 1979 by the Corte d' Appello, Bologna, had dealt with that question and it was therefore res judicata.
6. Emilio Boch then lodged an application in the Landgericht Stuttgart to obtain enforcement in Germany of the judgment ordering the payment of damages delivered in Bologna. The application was granted in an order of 4 December 1990. It was confirmed in an order of the Oberlandesgericht Stuttgart on 4 February 1992. It is against that order that Solo Kleinmotoren has appealed to the Bundesgerichtshof seeking to have it set aside and asking that Emilio Boch' s application for an order for enforcement be dismissed.
7. Before the Bundesgerichtshof Solo Kleinmotoren contended that Point 3 of the court settlement reached in the Oberlandesgericht Stuttgart was aimed at precluding all claims that Emilio Boch might have against the company, including the claims on which he subsequently obtained judgment before the courts in Bologna; on that basis the company claimed that the court settlement was a bar to the recognition and enforcement of the judgment for damages delivered in Bologna. In that submission the company relied on Article 27(3) of the Brussels Convention, which provides:
"A judgment shall not be recognized:
(3) if the judgment is irreconcilable with a judgment given in a dispute between the same parties in the State in which recognition is sought."
The company takes the view that a court settlement is covered by Article 27(3).
8. The Bundesgerichtshof held that it had to decide whether a court settlement can be treated as a judgment barring recognition under Article 27(3) before it could decide whether there was a conflict between the content of the court settlement and the judgment in respect of which enforcement was sought. The Bundesgerichtshof therefore referred the following questions to the Court of Justice for a preliminary ruling:
"Can a judgment within the meaning of Article 27(3) of the Brussels Convention, with which the judgment whose recognition is sought is irreconcilable, also be an enforceable settlement which is reached by the same parties before a court of the State in which recognition is sought in order to settle legal proceedings which are in progress?
If so, does that answer apply to all the terms of that settlement or only to those which are independently enforceable pursuant to Article 51 of the Brussels Convention and possibly only if the conditions for enforcement are met?"
9. The parties to the main proceedings, the German Government, the Italian Government and the Commission have submitted observations to the Court.
10. Emilio Boch claimed that the Court of Justice should decline to answer the questions referred to it. He stated that the judgment of the Corte d' Appello, Bologna, was final on the question whether there was a conflict between the court settlement and the claim that he had raised before the court and that it had upheld. The correctness of such a judgment which has the force of res judicata cannot be disputed in connection with an application for an order for enforcement under the Brussels Convention, since the third paragraph of Article 34 of the Convention provides that under no circumstances may the foreign judgment be reviewed as to its substance.
11. Mr Boch' s view is based on a particular interpretation of the Convention, namely that the third paragraph of Article 34 excludes application of Article 27(3) when, in the judgment in respect of which enforcement is sought, a position has been taken on whether it is irreconcilable with a "judgment between the same parties" given in the State of enforcement.
12. The Bundesgerichtshof did not refer questions to the Court of Justice concerning the meaning of the third paragraph of Article 34. It chose to pose the questions quoted above concerning the interpretation of Article 27(3). The Bundesgerichtshof found it appropriate to seek a ruling on those questions because if they are answered in the negative application of Article 27(3) is in any case precluded.
13. In my opinion it would not be right, in the present case, for the Court of Justice to state its view on the correctness of the interpretation contended for by Mr Boch of the third paragraph of Article 34 of the Convention. No question has been raised in that regard and, as mentioned, a reply in the negative to the question referred to the Court will mean that a decision on the meaning of the third paragraph of Article 34 is rendered unnecessary.
14. The Bundesgerichtshof posed the question concerning the interpretation of Article 27(3) because Solo Kleinmotoren relied on that provision as a bar to enforcement of the judgment for damages delivered in Italy.
15. Under Article 31 of the Convention "a judgment given in a Contracting State and enforceable in that State shall be enforced in another Contracting State when, on the application of any interested party, the order for its enforcement has been issued there" and under the second paragraph of Article 34 "the application may be refused only for one of the reasons specified in Articles 27 and 28".
16. The provisions which are relevant to a decision in this case are to be found in Title III on recognition and enforcement. The first provision in Title III is Article 25, which lays down: "For the purposes of this Convention, 'judgment' means any judgment given by a court or tribunal of a Contracting State, whatever the judgment may be called, including a decree, order, decision or writ of execution, as well as the determination of costs or expenses by an officer of the court."
17. It is clear that that definition does not cover a court settlement.
18. Special rules on the enforcement of court settlements are laid down in Title IV on authentic instruments and court settlements. Article 51 provides: "A settlement which has been approved by a court in the course of proceedings and is enforceable in the State in which it was concluded shall be enforceable in the State in which enforcement is sought under the same conditions as authentic instruments." Article 50, which concerns authentic instruments, provides that such a document "which has been formally drawn up or registered as an authentic instrument and is enforceable in one Contracting State shall, in another Contracting State, have an order for its enforcement issued there, on application made in accordance with the procedures provided for in Article 31 et seq." and that "the application may be refused only if enforcement of the instrument is contrary to public policy in the State in which enforcement is sought".
19. Whilst there is no doubt but that, in respect of judgments whose recognition is sought, Article 27(3) operates on the basis of the definition given in Article 25, doubt has been raised in the present case whether the definition in Article 25 also applies to the "judgment" which is relied upon as a bar to recognition of the foreign judgment.
20. The Bundesgerichtshof states in this connection that the definition in Article 25 applies directly only to the judgment to be recognized and that it is questionable whether the concept of a "judgment" as a bar to recognition under Article 27(3) "corresponds exactly to the term set out in Article 25 of the Brussels Convention in view of the difference between their objects".
21. The Bundesgericht' s assumption is, in my view, not sustainable. The definition in Article 25 applies, on its terms, generally to the term "judgment" when it is used in the convention ° "For the purposes of this Convention". Neither in the travaux préparatoires nor elsewhere in the Convention is there any suggestion that the definition should not apply to judgments which bar recognition.
22. The very formulation of Article 27(3) militates against a judgment which is a bar to recognition including a court settlement. The English version of the provision thus also uses the term "judgment" in respect of a bar to recognition. All the language versions speak of a "judgment" "given" in the State in which recognition is sought. Article 51 of the Convention speaks of a court settlement being "approved" by the court in the course of proceedings.
23. To accept that a judgment barring recognition under Article 27(3) could be a court settlement would therefore necessitate a construction of the provision which is not warranted by the wording and context of the provision.
24. Such a broad interpretation is not appropriate given that Article 27(3) contains a derogation from the objective of the Convention, which is to promote the recognition and enforcement of judgments in the Contracting States, and on its wording Article 27(3) affords judgments given in "the State of enforcement" a particularly privileged position, since they can be a bar to recognition if they are given either before or after the judgment whose recognition and enforcement is sought.
25. In addition, as mentioned in the order for reference and in many of the observations, acceptance of a court settlement as a bar to recognition gives rise to particular problems, including the problems prompting the second of the questions referred to the Court.
26. Accordingly there would have to be particularly strong and cogent grounds for interpreting Article 27(3) to the effect that a court settlement can also constitute a bar to recognition.
27. According to the travaux préparatoires, the reason for the provision is that "the rule of law in a State would be disturbed if it were possible to take advantage of two conflicting judgments". (1) It may be maintained that the rule of law in the State of enforcement will also be disturbed if there is a conflict between a foreign judgment and a domestic settlement, but it can equally truly be maintained that the disturbance is more pronounced and noticeable if the conflict is between two judgments.
28. In my view there is no reason to enter into a discussion of the arguments for a broad interpretation of Article 27(3) with reference to the lis pendens rules in Article 21 of the Convention which are based on the premise, per se correct, that the provisions should be given a consistent interpretation. There is nothing, in my opinion, in that line of reasoning which significantly advances the cause of a broad interpretation of Article 27(3).
29. Solo Kleinmotoren contended that only by acceptance of a court settlement as a bar to recognition can the necessary equal treatment of the various means by which proceedings may be concluded in the Contracting States be achieved.
In amplification the company stated that proceedings in all the Contracting States can be terminated by common agreement of the parties. According to Solo Kleinmotoren that happens, however, in many Contracting States not by way of a "court settlement" but by a "consent judgment". (2) That is the case in Belgium, Luxembourg, Ireland and the United Kingdom. In the result the same process occurs in practice, with the name given to it and its minor details merely varying from State to State. If, in such a situation more weight were attached to the name than the content, judgments from the Contracting States would indeed ostensibly be treated in the same way. In substance, however, it would be treating differently the States which call the termination of proceedings brought about inter alia by the parties' themselves a court settlement.
30. That argument does not, in my view, carry enough persuasive weight for the interpretation suggested by the company. According to the information available there is no support for the contention that the two alternative ways of concluding disputes differ from each other merely on minor details. On the evidence there are currently no Contracting States whose legal systems accord the status of res judicata to court settlements, whereas "consent judgments" can acquire that status. The Convention does not lay down any requirement that a judgment should have become res judicata before it can be recognized, subject to the first paragraph of Article 30, but it is nevertheless a significant difference between the two means of terminating proceedings generally that the one cannot acquire the status of res judicata whilst the other will generally become res judicata at some point.
Furthermore, there is the point that a settlement will typically not be afforded all the guarantees of a judgment and the authority of the law does not lie behind a court settlement as it does in the case of a court judgment.
31. It does not therefore appear to me possible to interpret Article 27(3) to the effect that that provision, despite its wording, includes a court settlement as a bar to recognition. If there should appear in practice to be a need for it to do so, the provision can be amended so as to achieve such a result.
32. As is also mentioned in the order for reference, it should not be overlooked in this connection that Article 27(1) contains a rule which can be applied in order to refuse to recognize and enforce foreign judgments, that is to say when recognition "is contrary to public policy" in the State in which enforcement is sought, and if necessary that provision could be applied in a case where the circumstances are quite out of the ordinary.
33. As a consequence of the suggested interpretation of Article 27(3), there is no reason to reply to the second question referred to the Court.
Conclusion
34. On the basis of the foregoing, I would suggest that the Court answer the first question referred to it as follows:
An enforceable settlement reached by the same parties before a court in the State in which recognition is sought to settle legal proceedings which are in progress does not constitute a judgment which, under Article 27(3) of the Brussels Convention, can preclude recognition of a foreign judgment.
(*) Original language: Danish.
(1) - Jenard Report, OJ 1979 C 59, p. 45.
(2) - So-called jugements convenus, jugements d' expédient, jugements de donner acte .