UK Third Party Costs Orders Enforceable in Greece
INTRODUCTION
A UK third-party costs order [henceforth: TPCO] is a totally unknown procedural concept in Greece. In the course of exequatur proceedings, the Piraeus first instance court and the Piraeus court of appeal were called to examine the issue for the first time in Greece, both declaring that no obstacles, especially those intertwined with procedural public policy, are barricading the path towards the declaration of enforcement of a TPCO issued by a judge in the UK. [Piraeus Court of Appeal nr 183/2024, unreported].
FACTS
The case involved three parties: the claimants, who initiated proceedings before English courts, and sought recognition and enforcement in Greece [henceforth: C]; the defendants, who were the respondents in the first, and appellants in the second instance proceedings in England [henceforth: D]; the appellant, who was ordered to pay the costs of the English proceedings, and challenged the declaration of enforceability of the TPCO in Greece [henceforth: A].
ENGLISH PROCEEDINGS
The Claimants, owners of two chartered vessels, notified events of default and termination when the individual beneficially owning the defendant charterers, i.e., A, was declared by the U.S.A. a “Special Designated Global Terrorist”. A. was born in Syria, and resided in Greece. In the context of the exercise of his business activities, he founded four companies [i.e., D] as special purpose vehicles, for chartering ships by the claimants.
On August 2021, C. brought an action before the English High Court, to which, pursuant to the charter-party terms, exclusive jurisdiction to hear the disputes arising between the parties was granted. C. sought the following remedies:
(a) the recognition of the validity of the termination of the employment contracts, entitling them to the recovery of their ships;
(b) damages for the breach of the charter-party;
(c) compensation for the loss of their ships, and
(d) the issuance of delivery orders for the ships.
In a judgment of 4 March 2022 ([2022] EWHC 452), the High Court held that C. had given notice of the above-mentioned charter parties and that they were entitled to take over the possession of their ships. This decision was upheld by a judgment of the Court of Appeal of England and Wales in July 2022.
Due to non-compliance of the defendants with the Order of costs, C. submitted pursuant to Rule 48.2 Civil Procedure Rules (CPR), and Section 51 of the Supreme Court Act 1981 permission to amend the claim form (original claim), in order to include a request for an Order for Costs against A., as the ‘actual beneficiary’ of D. Permission was granted to amend the claim and to include A. in the proceedings.
The request was heard in absentia, and was granted by the Court, making A. a party to the main proceedings only in respect of the payment of costs. According to the reasoning of the judgment, A. was and remains the beneficial owner of the defendants before the English courts, being the person who financed the litigation process, and is furthermore responsible for the improper procedural conduct of the defendant companies, showing contempt for orders of the Court (world-wide freezing orders). The court issued an Order pursuant to which A. was ordered to pay to C. an advance payment of costs in the total sum of £ 1,200,000.
GREEK PROCEEDINGS
Following inaction by the judgment debtors and A., C. filed an application before the Piraeus Court of First Instance, requesting that the Judgment and the Order of the High Court be declared enforceable in Greece against the foreign companies, of which A. is the sole shareholder and manager.
The Piraeus Court of First Instance [decision nr 2578/2023, unreported] granted the application and declared the English Order enforceable in the Greek territory, pursuant to which A. was ordered to pay to the applicants an advance payment of costs aforementioned.
A. lodged an appeal against that decision, invoking misinterpretation and misapplication of the law, and misappraisal of the evidence, seeking its annulment. The Greek courts applied the Greek law of foreign judgments, i.e., Articles 323 and 905 Code of Civil Procedure, given that the Judgment and the Order were issued after the 31st of January 2020.
International jurisdiction.
The Greek court ruled that foreign court had jurisdiction to hear the application for a TPCO, in so far as it is a claim related to the main proceedings, which was submitted before the Court having jurisdiction to hear and determine the main proceedings. In any event, the English court had international jurisdiction by reason of implied estoppel, manifested by the unreserved appearance of D. and A. before the English Courts.
The Greek court noted that, as a general rule, the jurisdiction of the court of origin presupposes the existence of a pending case. Still, it is possible that the existence of pending proceedings extends to ancillary proceedings, even after the main proceedings have been concluded, e.g., in the case of the settlement of costs according to Article 191 Greek Code of Civil Procedure.
Consequently, the first ground of appeal, by which A. complained that the Court of First Instance, by accepting that the English Court had jurisdiction to hear the application of C. for the imposition of costs of the original proceedings, was dismissed as unfounded.
Due process.
Further, A. was summoned by the foreign court in order to become a party to the proceedings, and to put forward his views on the matter. The Greek court ruled that it was not shown that his right to be heard was affected, nor that he was deprived of the right to defend himself, and to participate in the proceedings before the foreign court, since he was duly summoned to appear in accordance with Rule 6.20 (1) (d) CPR 1998, namely by electronic service of documents on the registered English lawyers of the firm representing him.
Public policy.
The declaration of enforceability of the foreign Order, condemning A. as a third party to pay the costs, was found not to infringe Greek public policy. The procedure followed in England did not infringe fundamental procedural principles of law in the field of civil justice, having regard, in particular, to the fact that A. was not deprived at any stage of the proceedings before the English courts of his right to participate and to defend himself, while he was also able to exercise the remedy of stay of execution in the proceedings before the English Court of first Instance. The exceptional English procedural rule (Article 51 Senior Courts Act 1981) on the enforcement of the costs to a non-party to the main proceedings (Third Party Cost Order) was obviously intended to guarantee the effectiveness of the administration of civil justice, by ensuring payment of costs to the successful party. Otherwise, each party would probably be deterred from taking legal action, a situation which is unacceptable in the light of Article 6(1) ECHR.
In addition, a TPCO is issued only after certain criteria are found to be met (the non-party to the main proceedings was considered to be the ‘real party’ in control, i.e., it acted as an active subject capable of influencing the development of the proceedings).
The Piraeus Court of Appeal concluded that a TPCO is not, at least in principle, fully unknown in Greek law, as is evidenced in Articles 186 and 746 Greek Code of Civil Procedure. However, the principle of fault in the payment of court costs is based on a different ratio. Nevertheless, following the prevalent view in Greek case law, the CA underlined that, the fact that Greek provisions which, in terms of their reasoning, are different from those of English law, does not mean that the foreign judgment is contrary to international public policy.
Finally, the Piraeus CoA ruled that it had no jurisdiction to put the costs order to the public policy test with respect to the sum ordered to be paid by A. That would be equal to a revision on the merits. As long as the sum ordered does not amount to punitive damages, the path to recognition and enforcement is open, even if it is considered as excessive and disproportionate in the eyes of a Greek judge.