Danish Supreme Court Refuses to Enforce Swedish Default Judgment
By a decision of 21 December 2023, the Danish Supreme Court held that a Swedish default judgment concerning a loan agreement could not be enforced in Denmark on the ground that the service procedure that preceded the judgment was inadequate in an international situation.
Background
In 2014, a Swedish bank filed a plaint in a Swedish court to sue a debtor for not fulfilling a loan agreement. As the defendant did not appear after the court had fulfilled the Swedish standards for service of documents, a default judgment was rendered. In 2022, the bank asked the Swedish court for a certificate under Article 53 of the Brussels I bis Regulation. With that certificate, the bank sought enforcement of the Swedish default judgment in a Danish court. Both the Danish court of first instance and the Danish court of appeal held that the Swedish judgment was enforceable in Denmark under the Brussels I bis Regulation. However, the Danish Supreme Court came to a different conclusion.
Decision
First, the Danish Supreme Court found that the lower instances’ application of the Brussels I bis Regulation was wrong as the Swedish proceedings had been initiated before 15 January 2015. Under Article 66 para. 1 of the Brussels I bis Regulation, it is the older Brussels I Regulation that applies for matters initiated before that date. Here, it can be noted that both regulations are applicable in Denmark despite Denmark’s special status in EU’s civil law cooperation due to a parallel agreement between the EU and Denmark.
The exceptions to the rule on presumption for enforcement of judgments from other member states in Article 45 follow from Articles 4 and 35 in the Brussels I Regulation. Article 34 para. states that it is a ground for refusal that a default judgment has been rendered without the defendant having been duly served. With reference to the CJEU’s judgments C-327/10, Hypoteční banka, EU:C:2011:745, and C-292/10, Cornelius de Visser, EU:C:2012:142, the Danish Supreme Court held that the Brussels I Regulation requires a court to investigate the domicile of the defendant to fulfil its service obligations. Though the domicile of the defendant was unknown to the Swedish court, it was clear to that court that the defendant was a Danish citizen. Nonetheless, the Swedish court made no investigations into whether the defendant was domiciled there. Consequently, the Danish Supreme Court held that the Swedish default judgment may not be enforced in Denmark.
Comment
The Danish Supreme Court decision is a good example of the practical application of the “principles of diligence and good faith” that the CJEU set as a standard for the investigations that a court must perform to trace a defendant. To investigate whether a defendant has regained domicile in a country where he or she is a citizen or to which he or she has a strong connection is probably an absolute minimum requirement.
Even if the presumption for recognition and enforcement has been changed between the old Brussels I Regulation and the Brussels I bis Regulation, it is noteworthy that the same ground for recognition exists also in Article 45 (1)(b) of the Brussels I bis Regulation.
Very interesting post, TXS Erik!
I have two questions:
1. What are the Swedish standards for service of documents?
2. Is it normal for Swedish banks to ask debtors to provide a secondary address when signing the contract, i.e. the address of a guardian ad litem residing in Sweden?
The Swedish standard used for service of documents in this case was “service by publication”. Under the Swedish Service Act (delgivningslagen), that is allowed when the defendant cannot be found (Section 48). That means in practice that the court announces the message both in its premises and in the Swedish official journal as well as in a local newspaper.
Swedish banks often require guarantors for loan agreements. If the creditor cannot be found, the bank can hold the guarantor responsible.
Thank you, Erik, for this interesting report. In addition to the very (valuable) questions of Anthimos, it must be stated that the judgment of the Danish Supreme Court seems to transgress the present case-law of the CJEU.
The refusal of the recognition of a judgment because the court of origin had not verified the (unknown) domicile of the defendant in other EU Member States has not yet been decided by the CJEU. I am not sure whether the non-recognition of the judgment under section 45 (1) (b) is a balanced solution here. Much depends on the possibilities of the court of origin to investigate the whereabouts/domicile of the defendant. In addition, there is no European ex officio obligation of the court of origin to engage in such inquiries. In this regard, the new Article 7 of Regulation 2020/1784 does not impose any obligation of the courts, but only provides for easier ways of inquiring the address of the defendant. This does not amount to any ex officio obligation of the court of origin to investigate the address of the defendant. And – if I may add this remark – imposing such an ex officio obligation would severily infringe the “procedural autonomy” and, therefore, the basic structure of civil proceedings in many EU Member States. Ex officio investigations are alien to civil proceedings.
Against this background, the non-recognition of the Swedish judgment appears as a very harsh reaction to a situation where a debtor obviously had not communicated his/her new domicile in another EU Member State (if I understand the post correctly). The result would amount to an unjustified privilege of the debtor while putting the burden of investigation on the creditor and the court of origin. I do not believe that the principles of “due diligence and good faith” as highlighted by the CJEU in case C-327/10 goes so far. In this regard, one still must regard the grounds of non-recognition as exceptions from the principle of the free movement of judgment under the Regulation – also in the cases of default judgments where approriate relief must be sought primarily in the courts of the Member State of origin.