Pitfalls Enforcing Judgments in New Member States

→ Alfred Siwy

After five enlargements, the EU is expecting to grow even further in the near future. The EU expects the accession of Croatia in 2013. Iceland, Montenegro, Serbia and Turkey have applied for membership, and at least some of them will likely accede in the second decade of the century.

The enlarge­ment of the EU also extends the com­mon “area of jus­tice” in which the EU will “facil­i­tate access to jus­tice, in par­tic­u­lar through the prin­ci­ple of mutu­al recog­ni­tion of judi­cial and extra­ju­di­cial deci­sions in civ­il mat­ter” (arti­cle 67(4) Treaty on the Func­tion­ing of the Euro­pean Union).

The Brussels Convention

Already in 1968 the first step towards the har­mon­i­sa­tion of the rules on juris­dic­tion of nation­al courts and the mutu­al recog­ni­tion and enforce­ment of their deci­sions was tak­en by the Brus­sels Con­ven­tion.¹ Under this treaty, it was for the first time pos­si­ble to enforce judg­ments ren­dered by the courts of any mem­ber state in any oth­er mem­ber state. This treaty was super­seded in 2002 by the Brus­sels I‑Regulation.² Both instru­ments pro­vide for a cat­a­logue of juris­dic­tion­al rules to be applied by the courts of each mem­ber state and for the pos­si­bil­i­ty of imme­di­ate enforce­ment of court deci­sions in all mem­ber states. EU enlarge­ment will there­fore also entail the pos­si­bil­i­ty to enforce judg­ments in the new mem­ber states and to recov­er debts from par­ties seat­ed there.

The Wolf Naturprodukte case

The recent deci­sion of the Euro­pean Court of Jus­tice in Wolf Natur­pro­duk­te³, how­ev­er, lim­its the tem­po­ral scope of appli­ca­tion of the enforce­ment mech­a­nism of the Brus­sels I‑Regulation. Accord­ing to arti­cle 66(1) of the Reg­u­la­tion, it only applies to legal pro­ceed­ings insti­tut­ed or to doc­u­ments drawn up after its entry into force. Sub­para­graph 2 of the arti­cle con­tains two excep­tions to this strict rule about the enforce­ment of judg­ments ren­dered after the entry into force of the Reg­u­la­tion, even if the pro­ceed­ings were ini­ti­at­ed before.

First, judg­ments will be enforced if the Brus­sels (or the par­al­lel Lugano) Con­ven­tion was in force both in the state of ori­gin and the state addressed when the pro­ceed­ings were ini­ti­at­ed.

Sec­ond, judg­ments will be recog­nised if the juris­dic­tion of the courts of the state of ori­gin were based on rules that accord­ed with those of the Brus­sels I‑Regulation or a bilat­er­al treaty con­clud­ed between the state of ori­gin and the addressed state. The thrust of these excep­tions is to avoid unnec­es­sar­i­ly restrict­ing the enforce­abil­i­ty of judg­ments based on rea­son­able juris­dic­tion­al rules, while at the same time ensur­ing that judg­ments based on exces­sive juris­dic­tion­al rules of nation­al law will not be enforced under Brus­sels I.

In Wolf Natur­pro­duk­te, the Aus­tri­an claimant had obtained a final judg­ment from an Aus­tri­an court on 15 April 2003 against a Czech respon­dent. The Czech Repub­lic then joined the EU on 1 May 2004. In May 2007, Wolf Natur­pro­duk­te sought enforce­ment of the Aus­tri­an judg­ment in the Czech Repub­lic. The appli­ca­tion was denied in two instances. The Czech Supreme Court then request­ed a pre­lim­i­nary rul­ing by the ECJ on the ques­tion of whether enforce­ment of a judg­ment under the excep­tions of arti­cle 66(2) requires that the Brus­sels I‑Regulation was in force in both the state of ori­gin and the addressed state when the judg­ment was ren­dered.

Arti­cle 66(2) of the Reg­u­la­tion mere­ly states that judg­ments will be enforced under the Reg­u­la­tion if they were ren­dered after the “entry into force” of the Reg­u­la­tion. How­ev­er, and this was the ques­tion pre­sent­ed to the ECJ, the Reg­u­la­tion does not spec­i­fy whether arti­cle 66(2) requires that the reg­u­la­tion is in force in the state of ori­gin, the addressed state or both when the reg­u­la­tion is ren­dered.

This ques­tion is of course of great prac­ti­cal rel­e­vance when a par­ty seat­ed in the EU is con­sid­er­ing claims against a par­ty seat­ed in an appli­cant state. If arti­cle 66(2) requires that the Reg­u­la­tion be in force also in the addressed state when the judg­ment is issued, the claimant will – if pre­scrip­tion allows – be well advised to ini­ti­ate pro­ceed­ings at a time that ensures that the judg­ment will be ren­dered only after the addressed state’s acces­sion to the EU. If the Reg­u­la­tion need only be in force in the state of ori­gin, the claimant could obtain a judg­ment (which usu­al­ly will extend pre­scrip­tion peri­ods con­sid­er­ably) and wait for acces­sion of the state in which the respon­dent is seat­ed.

The ECJ held that the Reg­u­la­tion must be in force in both the state of ori­gin and the addressed state when the judg­ment is ren­dered. It explained that the juris­dic­tion­al cat­a­logue of the Reg­u­la­tion pro­tects the defen­dant by ensur­ing that a judg­ment will be issued only by a court that has juris­dic­tion under arti­cles 2 and 5 through 7 of the Reg­u­la­tion and, there­fore, has a real con­nec­tion to the case. The juris­dic­tion­al cat­a­logue and the pos­si­bil­i­ty to enforce judg­ments are thus close­ly linked. So only judg­ments deliv­ered in accor­dance with the juris­dic­tion­al rules will be enforced.

Conclusion

This deci­sion is of great prac­ti­cal rel­e­vance for par­ties con­sid­er­ing the enforce­ment of their claims against respon­dents seat­ed in appli­cant states. If the claimant with­out a bilat­er­al enforce­ment treaty wants to ensure the enforce­abil­i­ty of the judg­ment under the Brus­sels I‑Regulation, it will need to time the pro­ceed­ings ascer­tain­ing the issue for after the acces­sion of the state in which the respon­dent is seat­ed. Alter­na­tive­ly, in par­tic­u­lar if pre­scrip­tion is pend­ing, the claimant will have to con­sid­er rais­ing the claim before the nation­al courts at the seat of the respon­dent (so nation­al rules of juris­dic­tion so pro­vide) – com­mon­ly a less attrac­tive option.

The recent decision of the European Court of Justice in Wolf Naturprodukte limits the temporal scope of application of the enforcement mechanism of the Brussels I-Regulation.

1

Con­ven­tion on Juris­dic­tion and the Enforce­ment of Judg­ments in Civ­il and Com­mer­cial Mat­ters

2

Reg­u­la­tion on Juris­dic­tion and the Recog­ni­tion and Enforce­ment of Judg­ments in Civ­il and Com­mer­cial Mat­ters, Coun­cil Reg­u­la­tion (EC) ⁴⁴⁄₂₀₀₁.

3

Wolf Natur­pro­duk­te GmbH v. DEWAR spol. s.r.o., Judg­ment 21 June 2012, Case no. C‑514/10.