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Call for creative enforcement strategies

29/04/2022
Call for creative enforcement strategies

In case C-568/20, J v. H Limited, the CJEU has left room for creative enforcement strategies by interpreting broadly the concept of judgment under the Brussels I (Recast) Regulation.

EU judgments

Judgments of EU Member States’ courts freely circulate in the EU under the Brussels I Recast Regulation. No exequatur proceedings are required.  A judgment given by the courts of a Member State should be treated as if it had been given in the Member State where one seeks to enforce it.

In this context, a judgment is defined as a judicial decision that has been or has been capable of being the subject, in the State of origin, of an inquiry in adversarial proceedings.

Only in exceptional circumstances can an interested party apply for the refusal of enforcement in a Member State where the judgment is relied on. For example, the recognition of a judgment will be refused if it is manifestly contrary to public policy in the Member State addressed.

Third State judgments

Judgments of third States’ courts do not freely circulate in the EU. In principle, a party relying on such a judgment should apply for its recognition or enforcement in the relevant EU Member State(s) prior to enforcing it. Whether and how a third State judgment will be recognised and enforced depends on the laws of the Member States, which have not been harmonised.

Therefore, a creditor wishing to enforce a non-EU judgment in several EU Member States will in principle have to obtain separate exequatur decisions in the relevant Member States.

Exequatur sur exequatur ne vaut

A decision in which a Member State recognises or allows the enforcement of a foreign decision does not circulate in the EU. In many cases such decisions are obtained ex parte and not as a result of adversarial proceedings. In any event, as the exequatur authorises enforcement in the relevant Member State itself (and not beyond its borders), it generally does not make sense to try to export such a sovereign decision.

Disguised exequatur

In its preliminary ruling of 7 April 2022, the CJEU has confirmed its broad reading of the concept of judgment. This concept includes an order for payment made by a court of a Member State on the basis of a final judgment delivered in a third State provided such an order results from adversarial proceedings in the Member State of origin and has been declared enforceable in that Member State.

Whereas a mere exequatur decision would not have circulated in the EU, the CJEU has allowed for the enforcement in Austria of a UK (pre-Brexit) court order based on two judgment delivered in Jordan. The UK court order resulted from adversarial proceedings and was based on the res iudicata of the Jordanian decisions. Even though this court order does not constitute an exequatur in the proper sense of the word, it clearly resembles one.

Safety valve

Logically, the CJEU has stressed that, whereas such a court order freely circulates in the EU, it follows from the Brussels I Recast Regulation that the party against whom enforcement is sought is not deprived of the right to oppose the enforcement of the order by relying on grounds for refusal in accordance with the Regulation.

In this context, the CJEU has given special attention to the possible violation of national public policy in which the debtor could not contest, in the Member State of origin, the substance of the claims at issue in the proceedings that resulted in the order. In such a case, the receiving Member State’s court could refuse enforcement. 

Call for creativity

In this preliminary ruling, the CJEU has left room for creative enforcement strategies regarding non-EU judgments. For example, the enforcement structure it confirmed could be used in situations where it would be difficult or burdensome to obtain exequaturs in several EU Member States.

Despite the UK now being outside the EU, similar enforcement strategies could be set up where the laws of the Member States allow a creditor to obtain a substantive payment order on the basis of a non-EU decision.

We are available for any creditor in need of a sounding-board and for foreign lawyers considering creative enforcement strategies within the EU.

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