HOBHOUSE J: On 26 February 1991 Master Creightmore made an order
for the registration of an order of the Land Court of Berlin, dated 12
February 1991. The question that I have to consider is whether he
properly allowed that registration. The party affected by it has appealed
to this court as it is entitled to. There has been some delay in the listing
of the appeal, apparently purely to suit the convenience of the parties.
Since this raises a question which is not covered by English authority I
have directed, without the objection of the parties, that these proceedings
take place in open court and I am giving my decision in open court.
The parties referred to in the relevant order are a German company which
can conveniently be called M. (it has an address in Berlin) and another
company, E., who do not appear to have any address in Germany and who
are an English company with their registered and/or head office at 20, M.
Square, London, W1.
The order that was made by the German court is described in an informal
translation as "an injunction granted without oral proceedings due to the
urgency of the matter" under certain provisions of the German Civil Code
and Code of Procedure. It said that E. are
"to be prohibited, on pain of a fine to be determined by the court for
each case of infringement of up to 500,000 D.M. alternatively to be
sentenced to a term of imprisonment for infringement or a term of
imprisonment of up to six months, the latter to be enforced against their
legal representatives, (1) from passing on to third parties the master
tape or the master tapes containing the new musical presentations of [a
certain pop group] . . . (2) from reproducing or causing to be reproduced
the new musical presentation of [that pop group]; (3) from distributing
and/or publishing or causing to be distributed and/or published as well
as broadcasting by radio or television the new musical presentations of
[the pop group]; (4) from producing, reproducing and/or distributing . . .
or causing to be produced, reproduced and/or distributed . . . advertising
material"
in promotion of presentations of the pop group. It also included an order
for costs against the respondents.
The order is unqualified in its effect. It does not state what its territorial
extent is. I express no view about that because it will be a matter either
to be considered by the German courts in relation to any proceedings
in Germany or by the English courts in relation to any proceedings in
England; questions of the jurisdiction of the German courts under the
Brussels Convention on Jurisdiction and the Enforcement of Judgments in
Civil and Commercial Matters 1968 may be relevant to the interpretation
of the order. I am not concerned with that aspect nor with any other
question of the jurisdiction of the German court.
The order is also an order which, on the face of it, takes immediate effect.
There is no suspensive provision. There is no provision of the order which
requires that it be served or which prevents it from taking effect at once
on the date on which it was made. There is also no evidence of German
law which qualifies that position. I have a letter from a German lawyer, to
which I shall have to revert, dated 21 March
1991, which deals with other matters but does not state that there is any
restriction upon the immediate effect of that order.
The order was made on an ex parte basis. It was made solely upon
the written application of M., without any prior notice or the service of
any document or any proceedings on E. in any jurisdiction. It was, as
will be appreciated from what I have already said, made without any
representation or any opportunity for representation by E. So, it was in
every sense an ex parte application and order.
The enforcement of this German order by way of registration in this
country has been sought under section 4 of the Civil Jurisdiction and
Judgment Act 1982 which provides a simplified ex parte procedure for
the registration of Convention judgments in this country. The relevant
question is whether or not an order of the character of the German order
is capable of registration in this country under section 4. That question
has been considered by the European Court of Justice in Denilauler
v. S.n.c. Couchet Fr res (Case 125/79) [1980] E.C.R. 1553, in which
representations were received from a number of governments including
the Government of the United Kingdom.
The proceedings the subject of the ruling by the European Court of
Justice originated from proceedings in the French courts which had
given rise to a monetary judgment in favour of the plaintiffs against the
defendants for a certain number of French francs. Subsequently an ex
parte order was granted in support of the execution of that judgment.
The form of that order was analogous to a Mareva injunction in support
of execution. Its subject matter was a bank account in a Frankfurt bank
(that is, not in France but in the Federal Republic of Germany). The bank
account was then frozen pursuant to that order without any prior service
on the defendant. The challenge was whether that order, which had
been registered (again without prior notice) in the German courts, was
registrable under the Brussels Convention.
A number of questions were raised. The first two questions referred to the
Court of Justice were:
"1. Do articles 27(2) and 46(2) also apply to proceedings in which
provisional protective measures are taken without the opposite party's
being heard? 2. Is article 47(1) of the Convention to be interpreted as
meaning that the party applying for enforcement must also produce
documents which establish that the judgment of which enforcement is
sought has been served, even if that judgment concerns a provisional and
purely protective measure?"
The arguments addressed to the Court of Justice took a number of
forms. One argument was that where it was necessary to produce what
was called a "surprise" effect (as is commonplace for Mareva or Anton
Pillerorders), then all the requirements of notice to the opposite party
should be treated as dispensed with and the full scope for registration
should be permitted. The court did not accept that argument. A different
argument, also advanced, was that the requirements of the Convention
applicable to default judgments should be applied by analogy to ex parte
proceedings. The court did not accept that argument. A further argument,
which was the argument which was accepted, was that
ex parte proceedings fell outside the scope of Title III of the Convention
with the conclusion that ex parte orders by their character were
not orders which were capable of registration under Title III of the
Convention.
However, the court chose to formulate its answer by reference to two
criteria. At the conclusion of the judgment, in the usual way the court
gave its answer to the relevant questions. The court said, at p. 1571:
"The reply to questions 1 and 2 should therefore be that judicial decisions
authorizing provisional or protective measures, which are delivered
without the party against which they are directed having been summoned
to appear and which are intended to be enforced without prior service do
not come within the system of recognition and enforcement provided for
by Title III of the Convention."
That wording was apt to the order which was before the court in that
case; it was an order which was intended to be enforced without
prior service. It was intended to be enforced directly against the bank
account without prior notice to the defendants so as to prevent the
defendants from having the opportunity to take the money out of the
bank account before it could be frozen. The wording that the court used,
as is commonplace, was apt to the particular facts of the case which was
before the court.
It is submitted before me that the present case involves an order which
is not of that character and that it is fundamental to the decision of the
European Court of Justice that there is a double test and that they were
not simply expressing a view which covered ex parte proceedings and
proceedings which did not involve an opportunity by the defendant to
resist the order. I have to consider, having regard to the court's judgment
read as a whole and the scheme of the Convention, whether or not
the law is that there must be some additional criterion "intended to be
enforced without prior service."
It is now convenient to turn to the scheme of the Convention. Titles
I and II deal with the scope of the Convention and the jurisdiction of
courts in Convention countries. Part of Title II is article 20 which makes
provision for the protection of parties who are not present before the
court. The first paragraph of article 20 deals with questions of jurisdiction
which either were or should have been present to the mind of the court
in Berlin and are matters solely for them and I will say no more about
it. The second paragraph says that the court shall stay the proceedings
so long as it is not shown that the defendant has been able to receive
the document instituting the proceedings or an equivalent document
in sufficient time to enable him to arrange for his defence and that all
necessary steps have been taken to this end.
I mention this because this dovetails in with part of the provisions of Title
III and also because it was treated as significant by Mr. P. Jenard of the
Belgian Ministry of Foreign Affairs and External Trade in his report on the
Convention of 1968 and the Protocol of 1971 in the Official Journal of the
European Communities, vol. 22, 5 March 1979 (O.J.) 1979 C59(1). There,
dealing with article 27, he said:
"Looking at the second paragraph of article 20 which lays down that the
court of the state in which judgment is given must stay the proceedings if
the document instituting the proceedings is not served on the defendant
in sufficient time it might be assumed that article 27(2) would apply only
in exceptional cases. It must not be forgotten, however, that the second
paragraph of article 20 requires the court of the state in which judgment
is given to stay the proceedings only when the defendant is domiciled in
another contracting state."
He also stresses that this is one of the features of the Convention which
justifies the summary procedure for registration which exists under
Title III and the requirement that contracting states give effect to that
summary procedure.
It goes without saying that this order of the German court was not made
in proceedings which met the requirements of article 20 because the
German court did not stay proceedings even though the defendant had
not received any document instituting the proceedings. There was no
document instituting the proceedings which was served or attempted
to be served upon the relevant defendant, let alone a document which
was served in sufficient time to enable him to arrange his defence
to the application that was made. That of course is not a comment
which outlaws ex parte proceedings but it does indicate that ex parte
proceedings are outside the contemplation of the scheme of the
Convention.
Article 27 provides that judgments shall not be recognised for a number
of reasons of which the second is:
"where it was given in default of appearance, if the defendant was not
duly served with the document which instituted the proceedings or with
an equivalent document in sufficient time to enable him to arrange for his
defence."
So here again there is a link between the opportunity to defend the
proceedings and the recognition of the judgment. Article 46 requires:
"A party seeking recognition or applying for enforcement of a judgment
shall produce: (1) a copy of the judgment which satisfies the conditions
necessary to establish its authenticity; (2) in the case of a judgment
given in default, the original or a certified true copy of the document
which establishes that the party in default was served with the document
instituting the proceedings or with an equivalent document."
The present order was given in proceedings at which the defendants
did not appear and did not have an opportunity of appearing; further,
article 46(2) cannot be complied with. It is also to be noted that article
47 requires that a party applying for enforcement shall also produce
documents which establish that according to the law of the state in which
it has been given the judgment is enforceable and has been served.
However, service of the judgment is a separate point from the opportunity
to appear and be heard in the proceedings in which the judgment is
thereafter given.
The argument of M. is that, on the ruling of the European Court of Justice,
if there is a subsequent opportunity to apply to set aside the judgment
or order then that suffices to meet the requirements of the Convention.
A clear statement of that view of the law, and it is a view which is said
to be based upon the decision of the European Court of Justice, is in the
valuable text book, O'Malley and Layton, European Civil Practice (1989),
at p. 702:
"The court went on to consider whether this type of ex parte order fell
within the scope of Title III and, as has already been observed, concluded
that it did not. The enforcement of an interim order in a state other than
that in which it was granted is conditional upon the person against whom
the order was made having had an opportunity to oppose the order.
If it was originally made ex parte, it can only be enforced in the other
contracting states if the defendant has since had the chance to apply for
the order to be revoked or discharged. It would seem to follow by analogy
with article 27(2) that the notice must have been given in sufficient time
to enable the defendant to prepare his opposition."
By the word "opposition" I think that the authors must be intending
to mean "application." So the authors contemplate that the order can
become a registrable order ex post facto. In other words, even though
it was not made in proceedings which satisfied the requirements of the
Convention and was made in the absence of the other party, it is sufficient
if at some later date prior to the actual registration there is a reasonable
opportunity for the defendant to apply in the foreign country for the
judgment to be set aside. That is a somewhat extravagant proposition and
finds no support in the language or scheme of the Convention.
The judgment of the court in Denilauler v. S.n.c. Couchet Fr res (Case
125/79) [1980] E.C.R. 1553, deals with the scheme of the Convention
in a way similar to that which I have outlined. It refers to article 27 and
article 46 and points out, at p. 1568, that proceedings that are ex parte
do not meet those criteria:
"These provisions were clearly not designed in order to be applied to
judgments which, under the national law of a contracting state, are
intended to be delivered in the absence of the party against whom
they are directed and to be enforced without prior service on him. It is
apparent from a comparison of the different language versions of the
words in question and in particular from the terms used to describe the
party who does not appear that these provisions are intended to refer
to proceedings in which in principle both parties participate but in which
the court is nevertheless empowered to give judgment if the defendant,
although duly summoned, does not appear."
They are recognising the principle of an opportunity to defend the
proceedings after having been summoned and indicating that the
safeguard is apt for default proceedings but not other proceedings. It
is in that context, in my judgment, in which the statement "and to be
enforced without prior service on him" is to be read. It is possible for
there to be proceedings which would involve orders which are only to
take effect after the defendant has had the order served on him and been
given a reasonable opportunity to appear before the court and dispute the
making of the order. That, in my judgment, is what they are referring to
in the phrase "without prior service on him." The court continued, at pp.
1568-1569:
"The same applies to article 47(1) of the Convention. . . . This provision
which relates to judgments in cases in which both parties participate
as well as to judgments . . . in default delivered in the state of origin
cannot by definition apply to judgments such as the type in dispute,
which have a different character. . . . It is necessary to consider whether
judicial decisions of this type, having regard to the scheme and objects
of the Convention, may be dealt with under the simplified procedure
for recognition and enforcement provided by the Convention. . . .
All the provisions of the Convention, both those contained in Title
II on jurisdiction and those contained in Title III on recognition and
enforcement, express the intention to ensure that, within the scope of
the objectives of the Convention, proceedings leading to the delivery
of judicial decisions" - and I stress the word "leading" - "take place in
such a way that the rights of the defence are observed. It is because
of the guarantees given to the defendant in the original proceedings
that the Convention, in Title III, is very liberal in regard to recognition
and enforcement. In the light of these considerations it is clear that the
Convention is fundamentally concerned with judicial decisions which,
before the recognition and enforcement of them are sought in a State
other than the State of origin, have been, or have been capable of being,
the subject in that State of origin and under various procedures, of an
inquiry in adversary proceedings. It cannot therefore be deduced from the
general scheme of the Convention that a formal expression of intention
was needed in order to exclude judgments of the type in question from
recognition and enforcement."
The remainder of the judgment of the Court of Justice does not really add
to the essentials of their reasoning but in fairness to the submission of M.
it ought to be observed that in the final paragraph before they expressed
their conclusion they came back to article 24 and articles 25 to 29 and
said, at p. 1571:
"On the other hand the conditions imposed by Title III of the Convention
on the recognition and the enforcement of judicial decisions are not
fulfilled in the case of provisional or protective measures which are
ordered or authorised by a court without the party against whom they
are directed having been summoned to appear and which are intended
to be enforced without prior service on that party. It follows that this
type of judicial decision is not covered by the simplified enforcement
procedure provided for by Title III of the Convention. However, as the
government of the United Kingdom has rightly observed, article 24
provides a procedure for litigants which to a large extent removes the
drawbacks of this situation."
On that last point it is clear that article 24 of the Convention permits
the taking of preservative measures in Convention countries as the
need arises and a party does not need to make use of registration to
achieve that result. The urgency of the present proceedings was said to
be justified by the need to preserve the status quo. That was why the
procedure was adopted. Under article 24 there is scope for a party to
apply in any relevant country for preservative relief.
It is apparent that what M. are seeking to achieve by registration in
England is something of a completely different character. They are
seeking to register a permanent injunction. They did not seek to register
in this country until 26 February (or possibly a day or two before), that is,
not until after the initial urgency had passed. They are seeking to achieve
a completely different effect, a registered judgment which establishes
substantive, permanent and final rights, not provisional interim relief.
They seek to establish this position without serving any process upon E.
and without giving E. any opportunity to be heard before the relevant
order was made.
This order, having regard to the manner in which it was obtained, does
not come within Title III at all. It is not an order of the relevant character;
it is inconsistent with the scheme of the Convention read as a whole; and
it is inconsistent with the essence of what was decided by the European
Court of Justice.
Turning now to the detail, when the matter was brought before the
master it was on an ex parte application on affidavit. The affidavit did not
suggest in any way that the order of the German court was suspended
until after it was served. The order itself does not say so; the affidavit
does not say so and no subsequent affidavit says that it was in any way
suspended or only had a suspended effect. Therefore, even on their
own argument, M. do not bring themselves within it because this order
was not a judgment which was not intended to take effect without prior
service.
Further, the affidavit did not deal in any way with the ex parte character
of the proceedings or the service of the proceedings. M. have attempted
to make that point good by a later affidavit and a letter dated 21 March
from the German lawyer, but there is nothing in the affidavit on which
registration was obtained about any opportunity to set aside the order. On
the affidavit itself, the "judgment" ought not on any view to have been
registered. Then, again, the affidavit does not state that the "judgment"
has been served in any way. It merely raises a possibility that something
may have happened which dispensed with the need for formal service
under German law and it does not say that that has in fact occurred.
All it says is: "It is clear, however, from what appears hereafter that E.
Records are now aware of the injunction and its precise terms." That
affidavit did not comply with the requirements of the Convention and the
corresponding provisions in the Rules of the Supreme Court with regard to
proof of service of the "judgment" in the requisite formal fashion.
A later affidavit, which has been sworn for the purposes of this appeal and
was not before the master, adduces evidence about the scope that exists
under German procedural law to apply to set aside the order or take other
proceedings in relation to the order in the Berlin court. It has been rightly
commented that this possibility does not appear on the face of the order
nor was it drawn to the attention of E. at the time they were told about
the order. Indeed they were told the reverse; they were told that it was
effectively going to be immediately registered in this country. This is not
a situation where the order on its face indicates to the defendants the
right to apply to have it set aside, nor does the order require the person
serving the order, if it is served, to inform the defendant of his rights.
Bearing this in mind, the value of the letter of 21 March of the German
lawyer is somewhat limited but he does say that as a matter of German
law there is no time limit for a defendant to apply to set aside an
injunction; he can do so either by instituting proceedings himself or by
instituting proceedings which require the plaintiff to start substantive
proceedings within a certain time. But it is quite clear that whatever
course the defendants adopt, the order is effective and remains effective
unless and until the German court chooses to set aside. There is nothing
to be criticised, of course, in that procedure. Subject to the important
difference that the court does not require substantive proceedings to be
started, it corresponds to the equivalent procedure in this country. But
it reinforces the position that the form of order that is made is not one
which fits within the Brussels Convention. It is an order which is made
without the opportunity for the defendant to defend himself before the
order is made. It is made without the service of any process on him. It is
an a fortiori case from a default judgment.
Having regard to the scheme of the Convention as a whole and having
regard to the essential train of reasoning in the European Court of Justice,
it is clear that the present type of order is one which is simply not capable
of being registered in this country under the Brussels Convention. So,
even if the various other defects in the registration proceedings were to
be cured, the fatal defect would remain. There are remedies open to the
plaintiffs: they can (subject to jurisdiction) commence proceedings in
Germany which do have the character which enables them to register any
judgment given under Title III or they can start appropriate proceedings,
either of an interim or some other character, in this country where,
after all, the defendants are domiciled. But the present order is not of a
character which is amenable to registration and I so hold. The registration
must be set aside and this appeal must be allowed.