Fanny Cornette on Brussels I

Letters Blogatory welcomes back IJA Brigade member Fanny Cornette, currently a researcher at TU Delft, with the second post in our two-part series on the new Brussels I regime.

This is the second of two posts concerning the new Brussels I a regulation. It deals with the rules related to recognition and enforcement of judgments. The background and preparatory works are explained by Pietro Franzina in his post concerning jurisdiction and parallel proceedings. As Pietro mentioned, the abolition of exequatur, which is the procedure for the declaration of enforceability of a judgment from another member state, is seen as the major change introduced by the new regulation. This change was presented both by the European Council and by the European Commission as the main improvement of the text and even as “a small revolution” by Viviane Reding, who is Vice-President of the European Commission and EU Commissioner for Justice.

Prior to introducing the content of the new rules, some remarks can be made. First, regulation No. 1215/2012 is not the only regulation that abolishes this procedure. All of the following regulations contain rules abolishing exequatur for some of the judgments falling within their scope: regulation N° 805/2004, creating a European enforcement order for uncontested claims, N°1896/2006, instituting a European order for payment procedure, N° 861/2007, instituting a European small claims procedure, N° 4/2009, concerning maintenance issues, and N°2201/2003, dealing with matrimonial matters and matters of parental responsibility.

Moreover, the abolition is limited only to judgments coming from the courts of member states of the European Union. For the decisions coming from other states, the applicable rules are those of the national law of the member state where enforcement or recognition is sought. E.g., the rules applicable to the recognition of a US judgement in France are the provisions of the French law and not the provision of the European regulation. Finally, we can say that this text is less ambitious than the proposal presented in 2010 by the European Commission and appears to be disappointing on many points (some of them can be found in Pietro Franzina’s post, such as the small changes concerning jurisdiction).

Concerning the content of the text, I decided to divide my post into two parts. First I want to explain the abolition of exequatur. Secondly, I will introduce the new procedure created by the regulation to replace exequatur.

The abolition of exequatur

The goal of abolishing exequatur is that “a judgment given by the court of a Member State should be treated as if it had been given in the Member State addressed.” (Recital 26 of regulation No. 1215/2012) To achieve this goal, the legislator decide to abolish all intermediate procedures.

Thus, for the execution of a decision under the new regulation, the applicant may apply directly to the competent authorities to carry out the execution. Contrary to the prior law, the new regulation does not require that the person seeking enforcement have his or her address in the State. It facilitates the procedure of recognition and enforcement, as the applicant does not need for example to appoint a lawyer who has an address in the requested state.

The applicant only need to provide a copy of the decision and the certificate issued by the competent authority of the country of origin certifying the enforceability of the decision authority (Art. 42 of regulation No. 1215/2012).
This certificate is the chore of the procedure. The document, filled in by the court that gave the underlying decision, must enable the competent authority to carry out the execution. It must contain all the information required. The preparatory works for the revision highlighted the role of the courts or authorities in charge of pronouncing exequatur under the current regulation N°44/2001. Most of the time, they have to deal with practical issues such as the calculation of the interest or the implementation of the decision. Thus, the suppression of the intermediate stage was accompanied with measures to enable the competent authorities to have the information needed to be able to carry out the enforcement proceedings.

The content of the certificate is now more detailed (see annex I of regulation No. 1215/2012). In particular, the new certificate includes provisions concerning the amount of the debt, due dates, currency and interest. To facilitate implementation, competent authorities “may, when necessary, require the applicant, … to provide a translation or a transliteration of the contents of the certificate.” (Art 42 of regulation No. 1215/2012). The authorities may also “require the applicant to provide a translation or a transliteration of the judgment,” but “only if it is unable to proceed without such a translation”.

Before any enforcement measures are taken, Article 43 of the new regulation provides that the certificate must be served on the person against whom the decision is to be executed. If it has not yet been served, the decision to enforce must also be served. Surprisingly, the regulation specifies the rule applicable to translation in Article 43 § 2. However, for the service of documents between Member States, EC regulation N° 1393/2007 of 13 November 2007 on service of documents among members States lays down the procedure for service, including rules for translation. Both texts are similar to the Service regulation, and it would have been easier if the new text only referred to the Service regulation for all aspects concerning service of documents, including translation. As the applicant informs the other party before any enforcement measure, there is no more surprise for the defendant. The recipient information appears necessary for him to challenge enforcement, but it may also encourage it to move his assets before the execution. In such a case, the applicant may have to seek enforcement in another state, possibly a third state.

Once the documents served, the competent authority carries out the execution by applying its own national law (Article 41 of regulation No. 1215/2012). The regulation itself does not contain any material rules related to the conduct of the proceeding. The regulation only specifies that if the measure or order to enforce is not known by the law of the State where it must be executed, the competent authorities “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 and which pursues similar aims and interests. Such adaptation shall not result in effects going beyond those provided for in the law of the Member State of origin” (Article 54 of regulation No. 1215/2012). The parties have the opportunity to challenge the choice of an equivalent measure (Article 54 of regulation No. 1215/2012) but the regulation is silent concerning the case in which there is no equivalent measure in the law of the requested states.

Finally, the abolition of exequatur, which appears, at a first glance, to simplify the circulation of judgments is in reality rather complicated. It was justified both on economic and political grounds.

The European Commission considers that exequatur proceedings cost as much as € 48 million for consumers and businesses. The idea behind abolition is to save part of this money. Moreover, one of the aims of the European Union was to abolish all intermediate procedure in order to have a “free” circulation of judgments to comply with the idea of mutual trust.

One of the arguments given by the European Commission is that 90% of the applications for enforcement are accepted under the current Brussels I Regulation, the procedure itself is then seen unnecessary and could be deleted. However, the last argument was unpersuasive. The efficiency of a procedure is a good argument to keep it unchanged. Anyway, the need to protect fundamental rights led the European Parliament to create a procedure to offer the opportunity to contest the recognition or enforcement of a judgment from another Member State.

The refusal of recognition or enforcement

In itself, the creation of a new proceeding reveals that it is not so easy to abolish any kind of control of the judgments from other member states. Contrary to the intentions of the European Commission in its initial project, intermediate proceedings have not completely disappeared, since the new regulation creates an opportunity for the party against whom the decision will be enforced to ask the courts of the requested State to refuse recognition or enforcement.

The abolition of exequatur without any mechanism to check the judgment from another member state is not yet possible among members of the European Union, especially because one of the functions of enforcement is to protect fundamental rights.

The new regulation creates an opportunity to challenge the execution or recognition of a judgment in the requested State. Once served, the person against whom the decision must be executed has the opportunity to challenge the recognition or enforcement in court. According to article 45 of regulation N°1215/2012, the grounds of objection are the same as the ones existing in the current Brussels I Regulation: contrary to public policy (ordre public), default of appearance of the defendant who was not duly served, incompatibility among decisions, and non-compliance with jurisdiction concerning insurance, consumer contracts and contracts of employment. Thus the jurisprudence of the European Court of Justice on the interpretation of these elements remains valid.

This new procedure replaces the exequatur and is not very different. The same arguments can be used before the judges. The same judges are competent, namely the judges of the requesting states. The main difference is that their intervention occurs only if the recognition of the enforcement is challenged. The hope is that most of the time people will not challenge the decision to be executed or recognized. If that hope is realized, we will be able to say that the exequatur is really abolished for the most part.

To conclude, we can say that as long as the procedural rules are not harmonized among the national laws of the member states, it seems impossible to abolish all the controls of the judgment to be executed in another member state. The new regulation is not the small revolution some expected, but it is a step further in the construction of an area of freedom, security and justice among the member states of the European Union.

The Recast of the Brussels I Regulation: Old and New Features of the European Regime on Jurisdiction and the Recognition of Judgments

Letters Blogatory warmly welcomes guest poster Pietro Franzina, Associate Professor at the University of Ferrara, with a post on the recast Brussels I. I think the European experience is likely to be of particular interest to American lawyers these days, with the current debates about the ratification and implementation of COCA and the renewed activity in the Hague concerning the “Judgments Project.” Welcome, Pietro! This post will be followed tomorrow by a contribution by IJA Brigade member Fanny Cornette, so stay tuned.

A body of uniform rules governing the jurisdiction of courts in cross-border cases and the recognition of judgments in civil and commercial matters has been in place in Europe since the 1970s, following the entry into force of the Brussels Convention of 27 September 1968. The Convention has subsequently been replaced by Regulation (EC) No. 44/2001 of 22 December 2000 (the Brussels I regulation), a legislative measure adopted by the European institutions pursuant to the competences that the Member States have since ceded to the European Union in the field of private international law (or ‘judicial cooperation in civil matters,’ as the discipline is officially known in the Union’s parlance).

The publication of a Green Paper in 2009 marked the beginning of the review process of the Brussels I Regulation. Following the presentation of a proposal by the European Commission in 2010, a new regulation—Regulation (EU) No. 1215/2012 (the Brussels I a regulation)—was adopted on 12 December 2012. The latter is in fact a recast of the existing provisions and is intended to replace the Brussels I Regulation altogether. It will apply as of 10 January 2015 to legal proceedings instituted (and to judgments rendered) on or after that date.

While retaining the overall structure of its predecessors, Regulation No. 1215/2012 brings about a number of innovations. The goal is to further simplify the movement of judgments from one Member State to another, to enhance legal certainty as regards the jurisdiction of Member States’ courts, and to ensure that lis pendens and other forms of transnational parallel litigation are effectively dealt with in Member States’ courts.

The purpose of this post is to provide a short account of the rules concerning jurisdiction and parallel proceedings laid down in the Brussels I a regulation. The new provisions relating to the recognition and enforcement of judgments—incidentally, the area where the most innovative amendments have been introduced—will be examined by Fanny Cornette in a separate post.
Continue reading The Recast of the Brussels I Regulation: Old and New Features of the European Regime on Jurisdiction and the Recognition of Judgments

Case of the Day: Prism Investments BV v. van der Meer

European Court of Justice buildingsConflict of had a post on a recent decision of the European Court of Justice, Prism Investments BV v. van der Meer. The facts were as follows: A Finnish bank loaned money to Arilco Opportune, which in turn lent the money to its Netherlands subsidiary, Arilco Holland. Arilco Holland transferred the funds to Prism Investments, another Netherlands company. The Rechtbank van Koophandel te Brussel (the Commercial Court of Brussels) ordered Arilco Opportune to repay the Finnish bank. Arilco Opportune appealed to the Hof van Beroep te Brussels (the Court of Appeals in Brussels), and in the appeal, Arilco Holland sought an order seeking reimbursement from Prism. The appellate court granted the order for reimbursement.

Later, Ariclo Holland was declared insolvent, and van der Meer, the receiver, sought an order from a Netherlands court, the Rechtsbank ‘s-Hertogenbosch, declaring the Belgian judgment against Prism on reimbursement to be enforceable (i.e., seeking recognition of the judgment). The court issued the order, and Prism sought to have it annulled on the grounds that Prism and Arilco Holland had already settled the matter in Belgium (the receiver “challenged that financial settlement in detail”, which I think means that he denied that the matter had been settled in the way Prism claimed). The Rechtsbank rejected Prism’s arguments on the grounds that under Article 45 of Regulation 44/2001, the grounds for non-recognition of the Belgian judgment were limited and did not include settlement of the underlying judgment. One of the few exceptions is for judgments that are manifestly contrary to public policy, and in its appeal to the Hoge Raad, Prism argued that public policy could not countenance recognition of a judgment that the defendant had already satisfied. The Hoge Raad was uncertain whether satisfaction of the judgment could be a defense to recognition, or whether it could only be a defense to an actual enforcement proceeding, and so it referred the question to the ECJ.

The ECJ held that because satisfaction of the judgment was not one of the specified grounds for non-recognition in Regulation 44/2001, the Netherlands court had to recognize the judgment. However, enforcement is another question.

According to the Court’s case-law, the enforceability of the judgment in question in the Member State of origin is a precondition for its enforcement in the Member State in which enforcement is sought. In that regard, although recognition must have the effect, in principle, of conferring on judgments the authority and effectiveness accorded to them in the Member State in which they were delivered, there is, however, no reason for granting to a judgment, when it is enforced, rights which it does not have in the Member State of origin or effects that a similar judgment given directly in the Member State in which enforcement is sought would not have.

This approach is the same approach that a state court in the US will (or should, at any rate) apply, I think, in determining the effect that the Full Faith and Credit Clause requires it to give to the judgment of a sister state that had already been satisfied. Under § 116 of the Restatement (Second) of Conflict of Laws, “A judgment will not be enforced in other states if the judgment has been discharged by payment or otherwise under the local law of the state of rendition.” But that is not to say the judgment is not entitled to recognition:

The recognition to which a foreign judgment is entitled will not usually be affected by its payment or other discharge. Following its discharge, the judgment will usually continue to have the same res judicata effect in the state of rendition, both as to the parties and the issues involved, that it enjoyed theretofore. The judgment will be given the same res judicata effect in other states that it has in the state of rendition subject to the considerations stated in §§ 94-95. As between States of the United States, the giving of such res judicata effect is required by full faith and credit.

It’s interesting to watch European solutions to problems of federalism converge, at least in this instance, on US solutions!

Photo credit: Razvan Orendovici (license)