Source: https://iclg.com/practice-areas/enforcement-of-foreign-judgments-laws-and-regulations/2-european-union
Timestamp: 2020-01-25 11:01:14
Document Index: 167707855

Matched Legal Cases: ['art. 1', 'art. 1', 'art. 1', 'art. 66', 'art. 2', 'art. 2', 'art. 36', 'art. 39', 'art. 36', 'arts 37', 'art. 61', 'art. 56', 'art. 38', 'art. 43', 'art. 54', 'art. 52', 'art. 45', 'art. 45', 'art. 6', 'art. 45', 'art. 41', 'art. 44', 'art. 44', 'art. 51']

Enforcement of Foreign Judgments 2019 | European Union | ICLG
European Union: Enforcement of Foreign Judgments 2019
The ICLG to: Enforcement of Foreign Judgments Laws and Regulations - covers regimes in specific jurisdictions, enforcement regimes applicable to judgments from certain countries, methods of enforcement in 36 jurisdictions.
ICLG.com > Practice Areas > Enforcement of Foreign Judgments > European Union
Overview of Key Enforceability Regimes
Enforceability Regime of the Brussels I Recast Regulation
1. Overview of Key Enforceability Regimes
Key EU specific enforceability regimes
The European Union (the “EU”) provides for several legal regimes to ensure that judgments rendered by an EU Member State in a civil or commercial matter are swiftly enforced in other EU Member States, in particular:
Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast) (the “Brussels I Recast Regulation”);
Regulation (EC) No 861/2007 of the European Parliament and of the Council of 11 July 2007 establishing a European Small Claims Procedure; and
Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings (recast).
It should be noted at the outset, however, that these instruments do not provide for actual enforcement of the judgment yet merely for the judgment’s enforceability, i.e. the status that gives access to actual enforcement measures available under the laws of each EU Member State.
The driving force behind the idea of swift enforcement throughout the EU is the principle that EU Member States should trust one another. Yet, this need for mutual trust does not come without conditions or restrictions.
This contribution will focus on a discussion of the conditions and restrictions that the Brussels I Recast Regulation determines for enforceability of judgments (see section 2) as this regulation can be said to provide for the general regime, whereas the other regulations have a specific object (i.e. matters of uncontested claims, small claims or insolvency). The discussion may, however, serve as a reference tool for the application of the other enforceability regimes since they are modelled after that of the Brussels I Recast Regulation and of its predecessor.
Key international law enforceability regimes applicable to the EU
The European Union is a party to:
the Lugano Convention of 30 October 2007 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the “2007 Lugano Convention”); and
the Hague Convention of 30 June 2005 on Choice of Court Agreements (the “2005 Hague Convention”).
The 2007 Lugano Convention essentially extends the application of the enforcement regime of the predecessor of the Brussels I Recast Regulation to Iceland, Norway and Switzerland (with these states then effectively being treated as EU Member States for this purpose). The discussion below may therefore again serve as a reference tool.
The enforcement regime included in the 2005 Hague Convention only applies in the event of a judgment delivered by a court with jurisdiction based on an exclusive forum clause within the specific meaning of this convention (except that the Brussels I Regulation will prevail in an intra-EU context). Currently, this convention is only in force between the EU Member States, Mexico, Montenegro, and Singapore. Due to its limited scope of application, both in object and territorial reach, the 2005 Hague Convention will not be covered in this contribution.
EU legal regimes offering actual enforcement tools
For the sake of completeness, it is noted that EU law also includes additional legal regimes that provide for actual enforcement tools (rather than enforceability mechanisms with respect to judgments as the ones referred to above):
Regulation (EU) No 655/2014 of the European Parliament and of the Council of 15 May 2014 establishing a European Account Preservation Order procedure to facilitate cross-border debt recovery in civil and commercial matters.
In a narrow set of cross-border cases, these instruments offer creditors payment and attachment orders which may aid in the recovery of their claims in addition to the measures available under national law. A discussion of these instruments and the tools they offer exceeds, however, the scope of this contribution.
2. Enforceability Regime of the Brussels I Recast Regulation
The Brussels I Recast Regulation is the successor of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the “Brussels I Regulation”). As the name already suggests, rather than bringing about a paradigm shift, the Brussels I Recast Regulation continues the same path as its predecessor.
Matters covered: civil and commercial matters
The Brussels I Recast regulation applies in civil and commercial matters (art. 1, section 1). These are independent notions that have proper meaning within the framework of the Regulation and are therefore not to be construed simply by reference to the domestic law of an EU Member State.
To determine whether a case constitutes a civil or commercial matter, and therefore falls within the scope of the Brussels I Recast Regulation, it is necessary to identify the legal relationship between the parties to the dispute and to examine the basis of, and the detailed rules applicable to, the action that is brought. The European Court gives broad meaning to the notions. Disputes with state actors acting in a private capacity (acta iure gestionis) are, for example, also covered.
The Regulation, however, clarifies that the sphere of civil and commercial matters does not extend to revenue, customs or administrative matters or to the liability of state actors for acts and omissions in the exercise of state authority (acta iure imperii) (art. 1, section 1).
In addition, the Regulation excludes from its scope (art. 1, section 2):
maintenance obligations arising from a family relationship, parentage, marriage or affinity; and
As far as arbitral decisions are concerned, parties may of course seek enforceability under the regime of the New York Convention of 10 June 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.
Judgments covered: judgments rendered by EU Member States
The enforceability regime included in the Brussels I Recast Regulation only applies to judgments rendered in legal proceedings instituted on or after 10 January 2015 (art. 66, section 1). As to judgments given in legal proceedings instituted before that date, the Brussels I Regulation therefore continues to apply.
‘Judgment’ is a notion that is broadly construed and covers both the actual decision and the conclusions drawn in support of that. The Regulation also clarifies that ‘judgment’ means any judgment given by a court or tribunal of a Member State, whatever the judgment may be called, including a decree, order, decision or writ of execution, as well as a decision on the determination of costs or expenses by an officer of the court (art. 2, sub a).
For the purposes of recognition and enforcement, judgment includes provisional, including protective, measures ordered by a court or tribunal which by virtue of the Brussels I Recast Regulation has jurisdiction as to the substance of the matter. It does not include a provisional, including protective, measure which is ordered by such a court or tribunal without the defendant being summoned to appear, unless the judgment containing the measure is served on the defendant prior to enforcement (art. 2, sub a).
Recognition and enforceability: automatic access to national enforcement measures
Automatic access to enforcement (no exeqatur needed)
Under the Brussels I Recast Regulation, judgments are recognised and awarded enforceable status without it being necessary for parties to lodge a special procedure (art. 36, section 1, and art. 39). Recognition and enforceability are therefore automatic events. This essentially means that there is automatic access to the enforcement measures that are available under the national law of a Member State. It is therefore in principle only in the enforcement phase that potential grounds for refusal are dealt with.
The Brussels I Recast Regulation clarifies that, albeit that recognition and enforceability are automatic events, a party who desires to do so, may still apply for a decision that there are no grounds for refusal of recognition (as discussed in the next section) (art. 36, section 2).
Automatic enforceability is a key departure from the regime that the Brussels I Regulation put forward. The Brussels I Regulation already provided for automatic recognition but still required a party seeking enforcement to first initiate court proceedings to obtain a judicial declaration of enforceability (commonly referred to as the exequatur procedure). The Brussels I Recast Regulation abolished this requirement.
In spite of automatic recognition and enforceability, the requesting party will still need to comply with some (minor) formalities to be able to invoke in a Member State a judgment rendered in another Member State (see arts 37 and 42), i.e. the production of:
a certificate issued by the court of origin that, as far as enforcement is concerned, among others needs to certify that the judgment is enforceable in the Member State of origin.
If the desired enforcement concerns a judgment ordering a provisional, including a protective, measure, the certificate will also have to describe the measure and certify that the rendering court has jurisdiction as to the substance of the matter and that the judgment is enforceable in the Member State of origin. In addition, the requesting party will have to provide proof of service of the judgment where the measure was ordered without the defendant being summoned to appear.
The court or authority before which a judgment rendered in another Member State is invoked may, where necessary, also require the invoking party for a translation or transliteration of the contents of the certificate or even the judgment itself.
No legalisation or other similar formality shall, however, be required for documents that have to be produced (art. 61). Furthermore, no security, bond or deposit shall be required of a party seeking enforcement in another Member State for reason that this party is a foreign national or that he is not domiciled or resident in the Member State where enforcement is sought (art. 56).
Possibility of suspension of recognition
The court or authority before which a judgment given in another Member State is invoked may suspend the proceedings, in whole or in part, if (art. 38):
an application has been submitted for a decision that there are no grounds for refusal of recognition or for a decision that the recognition is to be refused based on one of those grounds.
Service required prior to taking the first enforcement measure
To benefit from actual enforcement (except where it concerns a protective measure), the requesting party will have to serve the certificate on the person against whom enforcement is sought prior to taking the first enforcement measure. If the judgment was not yet previously served onto that person, the judgment will have to accompany the certificate (art. 43, section 1).
Adaptation needed in case of unfamiliar enforcement measure
If a judgment contains a measure or an order which is not known in the law of the Member State where enforcement is sought, that measure or order shall, to the extent possible, be adapted to a measure or an order known in the law of that Member State which has equivalent effects attached to it and which pursues similar aims and interests (art. 54, section 1).
Grounds to refuse recognition and enforceability: limited and strictly construed checks
Five limited grounds of refusal
Under no circumstances may a judgment rendered in a Member State be reviewed as to its substance in the Member State where enforcement is sought (art. 52).
A judgment’s recognition and enforceability may, however, be challenged, respectively, by any interested party and the person against whom enforcement is sought because of the following five grounds for refusal (art. 45, section 1):
manifest incompatibility with public policy (ordre public) in the Member State where recognition and enforcement are sought;
a default of appearance where 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;
irreconcilability with a judgment given between the same parties in the Member State where recognition and enforcement are sought;
irreconcilability 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 where recognition and enforcement are sought; or
conflict with the specific rules on jurisdiction in relation to insurance matters, consumer contracts, and employment contracts (where the policyholder, the insured, a beneficiary of the insurance contract, the injured party, the consumer or the employee was the defendant) or with the rules on exclusive jurisdiction.
As to the latter ground, the findings of fact on which the court of origin based its jurisdiction will bind the court to which the application for refusal was submitted (art. 45, section 2).
Because of the principle of mutual trust, the five refusal grounds need to be applied strictly.
It should be noted, however, that national law may still provide for restrictions as to actual enforcement in so far as they are not incompatible with the five refusal grounds (e.g. procedural limitations such as time limits).
Close-up of the public policy exception
Where the other grounds for refusal are quite straightforward in their application, the public policy exception requires some further elaboration. The notion of public policy in the meaning of the Brussels I Recast Regulation is a hybrid concept. On the one hand, it refers to the international public order of the EU Member States, i.e. the essential principles on which their legal system rests. It is therefore up to each EU Member State to determine what precisely falls within its ambit. On the other hand, the public policy exception is still to be applied in a European Union law setting, which means that the European Court of Justice watches over its boundaries. The Court basically ensures that EU Member States do not misuse this notion to undermine the principle of mutual trust that calls for the free movement of judgments.
International public order comprises both substantive and procedural elements. The public policy exception would typically be triggered by a violation of fundamental human rights such as the essential procedural rights laid down in art. 6 of the European Convention on Human Rights. It may, however, also be triggered by the violation of fundamental principles of European Union law such as the principle of free competition.
A mere misinterpretation or misapplication of law, be it domestic law, European Union law or international law, will, however, not stand the test. Although certain economic principles may belong to the international public order of an EU Member State, the mere observation that the enforcement of a judgment will have serious financial implications for that Member State will also not be sufficient to apply the public policy exception. The Regulation itself also makes clear that the public policy exception may not be applied to the rules relating to jurisdiction (art. 45, section 3). Only in the case the refusal ground under (e) applies, a breach of the rules relating to jurisdiction may prevent recognition and enforceability.
In assessing whether the public policy exception applies, EU Member States should furthermore duly take account of the fundamental idea underpinning the Brussels I Recast Regulation that individuals are required, in principle, to use all the legal remedies made available by the law of the Member State of origin. This means that, save where specific circumstances make it too difficult or impossible to make use of the legal remedies in the Member State of origin, the individuals concerned must avail themselves of all the legal remedies available in that Member State with a view to preventing a breach of public policy before it occurs.
Key notes on procedure for refusal
The procedure for refusal and subsequent appeal is largely governed by the national law of the EU Member State where enforcement is sought (art. 41, section 1).
In the event of an application for refusal of enforcement of a judgment, the court in the Member State where enforcement is sought, may, on the application of the person against whom enforcement is sought (art. 44, section 1):
The competent authority in the Member State where enforcement is sought, shall, on the application of the person against whom enforcement is sought, suspend the enforcement proceedings where the enforceability of the judgment is suspended in the Member State of origin (art. 44, section 2).
The court to which an application for refusal of enforcement is submitted or the court which hears an appeal lodged may stay the proceedings if an ordinary appeal has been lodged against the judgment in the Member State of origin or if the time for such an appeal has not yet expired. In the latter case, the court may specify the time within which such an appeal is to be lodged (art. 51, section 1).
Interpretation of the Brussels I Regulation and the Brussels I Recast Regulation
On 16 January 2019, the European Court of Justice clarified that the incorrect application of the rules on lis pendens (i.e., in brief, the issue of courts of different EU Member States dealing with the same case) does not in itself constitute a valid reason to invoke the public policy exception. The European Court of Justice considers in this regard, among others, that a review of the application of the rules on lis pendens involves a review of the jurisdiction of the court of origin, which is in principle not allowed under the Brussels I Recast Regulation or its predecessor. With this ruling, the European Court of Justice confirms its strict stance on the outer limits of the public policy exception. The ruling was delivered in relation to the Brussels I Regulation but its application can be extended to the currently applicable Brussels I Recast Regulation.
It is still uncertain what precise impact Brexit will have on enforcement, especially pending the discussions about a deal with the EU. A detailed review of Brexit’s impact exceeds the scope of this contribution, yet it is worth noting a few key insights in relation to a no-deal scenario:
Upon the day of the UK’s exit, the Brussels I Recast Regulation would cease to apply in the UK and the UK would cease to be an EU Member State for such purposes.
Leaving aside the application of international conventions (such as the 2005 Hague Convention) and the application of an expected transitional regime put in place by UK domestic law mirroring the provisions of the enforceability regime included in the Brussels I Recast Regulation, this means in principle that:
recognition and enforcement in the UK of judgments rendered by courts of EU Member States will have to be assessed in accordance with English common law; and
recognition and enforcement in the EU of judgments rendered by courts in the UK will have to be assessed in accordance with national law (as the UK becomes a third state for the purposes of the Brussels I Recast Regulation).