Enforcement Of EU Member State Judgment

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Enforcement proceedings are not the appropriate avenue for appealing a foreign court judgment on the merits, and recognition and enforcement of an EU Member State judgment can only be refused in exceptional circumstances. In Dr Richard Barry Smith v Xavier Huertas (as administrateur judiciaire et commissaire a l'execution du plan mandataire ad hoc a la procedure to redressement judiciare of Valorum SA) [2015] EWHC 3745 (Comm), 21 December 2015, the Commercial Court dismissed an application for a declaration that a French court judgment should not be recognised and enforced under Council Regulation (EC) 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels Regulation) on the basis that the judgment was manifestly contrary to public policy. The Court rejected arguments based on actual or apparent bias of the French court and on the basis of alleged lack of procedural fairness. The Court also noted that the matters could and should have been pursued in France and/or before the European Court of Human Rights rather than at the enforcement stage before the English courts.

The applicant (Dr Smith) was sentenced by a French court (the Cour d'Appel D'Aix-en-Provence, the APCA) for an offence of fraudulent bankruptcy (committed while he was a director of a company subject to court-ordered liquidation receivership) and ordered him to pay a compensatory award to the judgment creditor. The judgment creditor in the French proceedings sought to enforce the APCA's decision against Dr Smith in England. Dr Smith argued that recognition and/or enforcement of the APCA judgment should be denied because it would be manifestly contrary to public policy.

Dr Smith alleged that: (i) the criminal proceedings against him were contrary to the right to a fair trial under Article 6 of the European Convention on Human Rights (ECHR) and/or amounted to a breach of natural justice under English law; and/or (ii) the French criminal courts were guilty of actual or apparent bias against him.

Should have raised arguments in appeal court

The court decided that, where the circumstances invoked as being contrary to public policy in England are factors which the court had already considered in the foreign jurisdiction or which could have been raised in that jurisdiction (eg, in an appeal), it was "self-evident that the foreign jurisdiction must be treated as the best place for those arguments to be raised and determined." To do otherwise would be contrary to the spirit of the Brussels Regulation regime for recognition and enforcement of judgments of EU Member States. Thus, the court essentially decided that enforcement proceedings under the Brussels Regulation were not the appropriate forum for making such arguments where Dr Smith could have raised these arguments elsewhere (eg, before the French Cour de Cassation and/or the European Court of Human Rights).

Very high threshold

The court also restated the high threshold for showing that recognition and/or enforcement of an EU Member State judgment would be "manifestly contrary to public policy" under the Brussels Regulation. In order to succeed in resisting enforcement of the APCA judgment on grounds of English public policy, Dr Smith would be required to overcome the strong presumption that the procedures in French courts, another EU Member State, are compliant with Article 6 of the ECHR. To meet this high threshold, Dr Smith would not only have to show "an exceptional case of an infringement of a fundamental principle constituting a manifest breach of a rule of law regarded as essential" in English law or of a right recognised in England as being "fundamental", but also prove that "the system of legal remedies in France did not afford a sufficient guarantee of his rights." The Court concluded that there was no manifest violation of public policy because the French legal system provided enough protections for Dr Smith's right to defend himself, and that matters raised by Dr Smith could and properly should have been pursued in France and/or before the ECtHR rather than raising the point at the enforcement stage only.

The Court ruled that judgment would be entered for the judgment creditor against Dr Smith, and a declaration would be made that the APCA judgment was recognised and enforceable in the English courts.
Comment: This judgment confirms the approach taken by English courts in recognition and enforcement proceedings relating to foreign judgments from other Member State courts.

Specifically, this judgment confirms the very high threshold that must be met for enforcement of an EU Member State judgment to be refused by the English courts under the Brussels Regulation. This Regulation has recently been updated (recast) by the new 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 Brussels Regulation) which applies to proceedings instituted on or after 10 January 2015. Thus, judgments rendered by courts of other EU Member States may be enforced in the UK under the 2001 Brussels Regulation or under the Recast Brussels Regulation, depending on the date on which the enforcement proceedings are commenced. The new regime introduced a simplified procedure for enforcement and recognition of judgments, but the exceptional grounds for refusing enforcement and recognition (Article 45 of the Recast Regulation) remain very similar to those under the Brussels Regulation (Article 34). In practice, therefore, the English courts will continue to apply the same high threshold for finding violations of public policy as restated in Smith v Huertas.)

The judgment also reminds us that parties should carefully consider any domestic remedies available for challenging a decision of a court in that country. If these avenues are not exercised, enforcement proceedings cannot provide a substitute for a review on the merits in the original jurisdiction.

As to judgments rendered by courts of a non-EU Member State, the relevant enforcement regime for those judgments will differ. For example:

  • enforcement of judgments rendered by courts in (broadly) other Commonwealth jurisdictions is subject to a specific statutory regime pursuant to various bilateral arrangements; and
  • there are several bilateral and multilateral conventions providing for mutual recognition and enforcement of judgments from certain jurisdictions (eg, the 2007 Lugano Convention would apply to the enforcement of judgments rendered by Icelandic, Norwegian or Swiss courts in England; the Hague Convention on Choice of Court Agreements (which came into force on 1 October 2015) may apply, eg, to enforcement of Mexican judgments by the English courts). It is anticipated that the Hague Convention will be ratified in further jurisdictions in due course.

Absent a special enforcement regime, English common law rules will apply. In fact, the decision is in line with another judgment rendered on the same day, Superior Composite Structures LLC v Parrish [2015] EWHC 3688 (QB, Admin), which rejected common law defences raised against enforcement of a U.S. judgment where appeal against the damages award could have been brought in the U.S. courts.

An understanding of the enforcement prospects of any resulting judgment or award is often a fundamental part of any analysis of which dispute resolution clause to include in a contract. Of course arbitral awards are subject to a specialised set of rules for their recognition and enforcement under the New York Convention.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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