Green Ltd: A View from Kiel

This post was contributed by Denise Wiedemann, a Professor for Private Law with Focus on Family and Succession Law at the University of Kiel. This is the fourth contribution to the online symposium on Mr Green Ltd.

The circumstances and background of case C-198/24 have already been described by Daryna Shykeriava, Emilia Sandri and Carlos Santaló Goris. The following remarks therefore focus on the core issue raised by the judgment: the interpretation of Art. 7(1) Regulation No. 655/2014 and, more specifically, the requirement that there be an urgent need for an EAPO because there is a real risk that, without such a measure, the subsequent enforcement of the creditor’s claim will be impeded or made substantially more difficult.

Two points formed part of this preliminary ruling: the temporal aspect, and obstacles to enforcement in the debtor’s State. The ECJ held that Art. 7(1) does not preclude the competent court from taking into account conduct of the debtor which occurred several years before the application for an EAPO was made. Nor does it preclude the court from taking into account, as part of the relevant context, the existence in the Member State in which the debtor is established of legislation capable of hindering enforcement of the claim concerned. Further questions would have been interesting but were not before the Court. These include, first, whether the closing of an account may constitute conduct indicating a real risk to enforcement, and, secondly, whether special conditions apply where the creditor already has an enforceable title, in particular in cases involving an uncooperative debtor. Furthermore, Advocate General Emiliou raised procedural questions concerning preliminary references in summary proceedings.

Art. 7(1) Regulation No. 655/2014

The temporal aspect

The first point concerns the relevance of debtor conduct which predates the application by several years. Daryna Shykeriava has doubted whether the Court’s approach strikes the proper balance between the creditor’s and the debtor’s interests, whereas Emilia Sandri welcomed the flexibility introduced by the judgment.

I would side with the latter view. The purpose of enforcement is not to force the creditor to resort immediately to coercive measures. Enforcement remains a measure of last resort. A creditor may continue to hope for voluntary payment; there may even be negotiations with the debtor aimed at avoiding enforcement altogether. It would be undesirable if a creditor were compelled to apply for an EAPO immediately after the debtor’s relevant conduct, simply in order not to lose the possibility of relying on that conduct later. The Court’s approach therefore does not unduly weaken the requirement of urgency. Rather, it prevents that requirement from being transformed into a rigid time limit which Regulation No. 655/2014 does not contain.

Obstacles to enforcement in the debtor’s state

The second issue concerns the relevance of enforcement conditions in the state in which the debtor is established. The referring court did not ask whether the closing of a payment account is, in itself, sufficient to establish a real risk where the debtor still holds accounts in a state in which enforcement is difficult. Rather, it proceeded from the assumption that a real risk may exist if enforcement in the other state, here Malta, is subject to aggravated conditions. In my view, the referring court was correct to frame the question in this way. The point is not whether the creditor must prove that the debtor acted with the intention of frustrating enforcement. As the ECJ emphasised, the level of proof required under Art. 7(1) Regulation No. 655/2014 cannot be understood as being so high that the creditor would have to provide evidence that the debtor intends to avoid payment of the claim (para. 52 of the ECJ’s judgment). This is why I do not share Daryna Shykeriava’s concern that closing a payment account should not be regarded as triggering a “real risk” because the closing of a bank account is not in itself unlawful and because it would have to be shown that the debtor acted with the intention of evading payment.

The referring court merely asked whether the enforcement conditions in a Member State — in this case Malta — could be taken into account. The Court’s answer is again persuasive. Recital 14 Regulation No. 655/2014 mentions, by way of example, conduct of the debtor such as dissipating, concealing or destroying assets. But this does not mean that the assessment under Art. 7(1) must be limited to intentional conduct of the debtor alone. The debtor’s conduct must be assessed in its factual and legal context. It matters whether a debtor closes an account in a Member State and thereafter leaves the creditor with access only to accounts in a state in which enforcement is significantly more difficult (this could, for example, also be the case if the creditor was left only with an account in the Caribbean).

In that respect, the Maltese legislative context is relevant not as an independent and sufficient ground for an EAPO, but as part of the overall assessment of the risk created by the debtor’s conduct. This also addresses Daryna Shykeriava’s and Emilia Sandri’s concerns. The point is not that the creditor must prove a specific intention on the part of the debtor to frustrate enforcement. Nor is the existence of enforcement obstacles in Malta, taken in isolation, enough. Rather, those obstacles form part of the context in which the debtor’s earlier closing of the payment account must be evaluated. The ECJ did not need to decide whether the Maltese public-policy exception complies with the limits imposed by EU law. For the purposes of Art. 7(1) Regulation No. 655/2014, it was sufficient that there was a ‘risk’ that enforcement of the claim would be impeded or made substantially more difficult.

Conditions for creditors who already hold an enforceable title

A further question, discussed by Carlos Santaló Goris, concerns the position of a creditor who already has an enforceable title. This is indeed an important issue, but it was not before the Court.

In any event, the Regulation as it stands does not allow the requirement of a real risk to enforcement to be dispensed with entirely. Unlike the creditor’s burden to substantiate the claim under Art. 7(2), the urgency requirement under Art. 7(1) applies in all procedural situations. This includes cases in which the creditor has already obtained a judgment, court settlement or authentic instrument. De lege ferenda, one may well ask whether this solution is satisfactory. Where the creditor already has an enforceable title, national laws may in some situations provide more effective means of securing enforcement. The main advantage of the EAPO then lies in the fact that the creditor does not have to engage with the provisional enforcement mechanisms of a foreign legal system. The upcoming evaluation of the Regulation might therefore consider whether the urgency requirement should be relaxed in title-based cases.

A related question is whether a debtor’s lack of cooperation after the claim has already been established by an enforceable title may constitute relevant conduct for the purposes of Art. 7(1). That question was also not asked and therefore not to be decided in the present case. It is, however, de lege lata, more plausibly accommodated within the existing framework of the Regulation than a complete waiver of the urgency requirement, even though a different view has been taken by the German Higher Regional Court Hamm (14.1.2019 – 8 W 51/18).

Preliminary references in summary proceedings

Finally, the Opinion of Advocate General Emiliou raises a procedural point which was not to be resolved by the judgment but deserves attention. The EAPO procedure is summary and, in principle, ex parte. A reference for a preliminary ruling may sit uneasily with that procedural design, since the debtor may thereby become aware of the application before the preservation measure has been granted. The Advocate General therefore considered possible procedural adaptations, including a reference without hearing the debtor or a reference at a later stage, for example in proceedings for revocation or modification of the order. In any event, the summary nature of the procedure cannot in itself exclude the possibility — or, before a court of last instance, the obligation — to make a preliminary reference under Art. 267 TFEU (differently: Higher Regional Court Cologne (Germany), 16.2.2021 – 13 W 40/20). An exception for summary proceedings exists only where the legal question decided summarily can be fully re-examined in subsequent main proceedings. That is not the case for interpretative questions concerning the EAPO Regulation itself.

Conclusion

In my view, the judgment should be welcomed. In a field in which overly restrictive national case law has significantly reduced the practical attractiveness of the EAPO, the Court adopts a realistic and functional interpretation of Art. 7(1) Regulation No. 655/2014. It clarifies that a real risk to enforcement must be assessed in light of all relevant circumstances. Those circumstances may include older debtor conduct and legal obstacles to enforcement in the debtor’s state. The result is a flexible, but not unlimited, understanding of the real-risk requirement — one that better reflects the practical realities of cross-border enforcement.