Case law Developments in PIL

The CJEU on Double Exequatur

This post was contributed by Vincent Richard, who practices with Wurth Kinsch Olinger in Luxembourg.

On 7 April 2022, the Court of Justice delivered its judgment in case C‑568/20, J v. H Limited on the recognition in Austria of an English summary order to pay a debt recognised in a third State judgment. The case shows that the prohibition of “double exequatur” can be circumvented by resourceful litigants.

Facts of the Case

H Limited, a banking institution, obtained two judgments in Jordan in 2013 ordering J. to reimburse a loan. These judgments were subsequently presented to the English High Court of Justice which issued an order after summary proceedings stating that the debtor had to pay to the bank, a sum equivalent to what the Jordanian decisions ordered. The decision was issued in March 2019 when the country was still a Member State of the EU. This English summary order is not a direct recognition or enforcement of a foreign judgment but an English decision on the merits taking into account the foreign judgment’s res judicata. Consequently, the English court also issued the certificate referred to in article 53 of Regulation n° 1215/2012 for that summary judgment.

The creditor of judgment then tried to enforce this English summary order in Austria where the debtor resides. This action was successful at first. The Austrian first instance court authorised enforcement of the English order and, on appeal, the Austrian Regional Court of Linz dismissed the debtor’s arguments challenging the decision.

The debtor then appealed on a point of law before the Austrian Supreme Court, which in turn addressed three questions to the Court of Justice. In essence, those three questions aim to determine whether the English summary order issued based on the foreign judgment’s res judicata should be considered as a “judgment” according to Regulation n° 1215/2012 and whether it should be recognised in Austria.

Following the opinion of Advocate General Pikamäe, the Court of Justice declared that the English summary order is indeed a judgment according to art. 2a) and art. 39 of the Brussels I a) Regulation but it leaves open the possibility of challenging the compatibility of the summary order with Austrian public policy.

A Broad interpretation of “judgment” under the Regulation

The Court of Justice underlines that mutual trust implies a broad understanding of the notion of “judgment” in the Regulation. Any decision under national law is considered a judgment under the Regulation as long as the procedure leading to the judgment is adversarial in nature. This criterion is itself interpreted broadly (see C-394/07 Gambazzi and particularly AG Kokott’s opinion in the case). Besides that, article 2a) and chapter III of the Regulation leave no margin of interpretation to exclude judgments because of their content as long as they do not fall within the matters excluded from the scope of the whole regulation defined by article 1.

Consequently, the CJEU declares that the English summary order issued based on two Jordanian judgments is a decision susceptible to be enforced according to Brussels I a).

A Chain Is As Strong as the Weakest Link

At first glance, the decision of the Court of Justice is concerning because it opens the door to forum shopping tactics for foreign judgments creditors. What is peculiar in the case at hand is that the English summary order is barely distinguishable from a judgment enforcing a foreign judgment. And as the French would say “exequatur sur exequatur ne vaut” meaning that the recognition procedure does not apply to a decision that itself recognises a foreign judgment. Only the original foreign decision on the merits may be subject to recognition. This principle is explicitly mentioned by the Austrian Court in its request for a preliminary ruling. The logic of this reasoning is that the court of the requested State may only check that the judgment is eligible for recognition if it can read the judgment itself and not the appreciation of that judgment made by another court. This reasoning is all the more valid within the Brussels I system because it ensures a clear distinction between judgments originating from other Member States, which should be recognised broadly under uniform conditions and judgments originating from third States. For the latter, Member States remain free to define the conditions applicable to recognition and enforcement. Ruling otherwise would allow the creditors of the foreign judgment to try to have their judgment recognised in the State which is the most open to foreign judgments and to then bypass stricter requirements in the Member State where the debtor has assets. In the present case, it could be argued that the English procedure was used as a Trojan horse to enter Austria. However, the Brussels I a) Regulation does not explicitly exclude this scenario.

A Clever Application of Public Policy

The Court of Justice leaves open the possibility of refusing recognition of the English decision by challenging its compatibility with public policy. The Court of Justice states that recognition could be refused if the debtor manages to convince Austrian courts that he was unable to challenge, in the English procedure, the merits of the claim brought forward in Jordan. In essence, this argument amounts to considering that if the English judgment is a genuine English judgment, then there must have been a possibility for an adversarial debate on the merits. In the first part, the CJEU ruled that the English order was a judgment under the Regulation even though it was based on two Jordanian decisions. Therefore, the English judgment must be compatible with the public policy of the requested State regardless of the content of the Jordanian decisions. Or to put it the other way around, if the English proceedings lead to a European decision, then the English proceedings alone must conform to European standards.

A Question of Irreconcilability?

Finally, it must be pointed out that a simpler way to address similar issues would be for the debtor to pre-emptively seek a declaration of non-enforceability of the foreign decision in the Member State of enforcement when this is possible. Then, this decision could be used to block enforcement of the State of origin’s decision under article 45 1) d) of the Regulation on irreconcilable decisions. There may be good reasons why this possibility was not considered in the present case though.

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