Public Policy

From Max-EuP 2012

by Dieter Martiny

1. Notion and concept of public policy

In private international law and European law the notion of public policy is equivalent to ordre public. The doctrine of public policy is applied in multiple ways.

Public policy is a concept which is specifically articulated in the EU Treaty. In particular, it allows restrictions of the fundamental freedoms. According to European primary legislation, restrictions of the free movement of goods, the free movement of services and the freedom of establishment can be justified on grounds of public policy (Art 36 TFEU/30 EC, Art 62 TFEU/55 EC, Art 52 TFEU/46 EC). To the extent that violations of public policy exist national legislatures may adopt such restrictions. However, it is for the ECJ to determine whether a particular restriction is justified on this ground. Moreover, public policy is an important concept in public international law.

In the general part of private international law (PIL) and the law of international civil procedure public policy is used to limit the influence of foreign law on fundamental domestic concepts. According to the classical conception of private international law, public policy is an almost indispensable protection against the damaging impact of foreign norms and decisions on the domestic legal system. Therefore, it restricts the application of foreign law as well as the recognition of foreign procedural acts which are otherwise given equal value.

In addition to substantive public policy concerned with legal norms, there is procedural public policy which relates to civil procedure and which has a different legal source and a different scope of application. It is difficult to define the limits of a general legal concept as broad as public policy and it is, therefore, not surprising that problems have arisen across all legal fields.

The notion of public policy is sometimes, particularly in France, also used as a synonym for non-dispositive law, ie mandatory law (ordre public interne). However, unlike ordre public international, ordre public interne does not concern private international law.

2. Trends in legal development

In respect of substantive and procedural public policy, there are several intertwined fields of problems and—sometimes contradictory—developments. First, it has to be determined to what extent public policy is a concept that shares the supremacy of European law and how far it continues to be a domestic concept. Moreover, there is a lack of clarity as to the content of the concept. At the European level public policy is, increasingly, no longer only understood as an instrument for the protection of Member States’ values. On the contrary, the content of public policy has become increasingly European. It follows that public policy takes its meaning from basic values of primary EU law, and the European Convention on Human Rights (human rights and fundamental rights (ChFR and ECHR)). This European understanding of public policy limits the applicability of national conceptions of public policy.

In the EU, the European Commission seeks to limit the availability of a national public policy to refuse recognition of decisions made in other Member States. In the interest of a uniform judicial area there is to be unrestricted recognition; domestic and foreign decisions are to be put on the same footing. Ultimately, the success of this model depends on uniform standards of judicial protection throughout the Member States. In the meantime, several regulations have moved towards the Commission’s ideal of the abolition of public policy as a tool allowing Member States to deny recognition to foreign judgments.

Insofar as the public policy clause is still used, there are attempts to restrict its application to exceptional cases. In addition, attempts have been made to define as far as possible the cases where a violation of public policy can occur. This further reduces the incidence of public policy as a defence to the recognition of foreign judgments.

Public policy is increasingly (certainly in respect of the position of German authors) being viewed as a negative concept, ie it is only used as a defence instrument against foreign law. The positive role of public policy (positive public policy) aimed at the enforcement of domestic (mandatory) law finds less prominence. However, the same results are achieved by special conflict of laws rules based on international mandatory law or overriding mandatory provisions.

3. Public policy in private international law

Public policy plays a role if, according to choice of law rules, foreign law has to be applied and the result of the applicable (foreign) legal provision would be irreconcilable with the domestic legal order. The necessary rejection of foreign law is known as a public policy ‘reservation’ (Vorbehaltsklausel).

A public policy clause is a standard element of the Hague Conventions. They require a ‘manifest’ violation of a domestic norm before the application of public policy is permitted, for instance in Art 13 Hague Protocol of 2007, Arts 22, 30 Hague Convention on the International Recovery of Child Support and Other Forms of Family Maintenance of 2007 and equally in Art 22 Hague Convention on Protection of Children of 1996 referring to the best interests of the child.

The regulations on European international law of obligations, Rome I Regulation (Reg 593/ 2008) and Rome II Regulation (Reg 864/2007), include identical public policy clauses. The application of a provision of the law of any country specified by the respective regulation may be refused if such application is manifestly incompatible with the public policy (ordre public) of the forum (Art 21 Rome I Regulation and Art 26 Rome II Regulation). There is also a public policy clause in Art 12 Rome III Regulation (Reg 1259/ 2010). In certain situations, such as where the applicable law makes no provision for divorce or where it does not grant one of the spouses equal access to divorce or legal separation on grounds of their sex, the law of the court seized should nevertheless apply (Art 10 Reg 1259/2010). This, however, should be without prejudice to the public policy clause. Whilst it is not possible to define European public policy with any precision, all accounts of the concept would make reference to the fundamental freedoms, the European Economic Constitution in respect of restraints of competition and the ECHR.

In national conflict-of-laws rules there is also a public policy proviso which deals with the violation of basic domestic values. The influence of European Union law in the domestic conceptions of public policy is clearly felt and one could talk of an ‘Europeanization’.

According to German conflict rules a legal norm of another state is not to be applied where its application leads to a result which is manifestly incompatible with fundamental principles of German law (see Art 6 Introductory Law to the Civil Code). In particular, it is not to be applied where the application is manifestly irreconcilable with the basic constitutional rights. However, the reference to such constitutional rights has not gained an independent meaning. Following the Hague Conventions the infringement must be manifest before a reservation is permitted. Other national foreign codifications also include a public policy clause, see Art 16 Italian Statute on Private International Law. Often Islamic law is rejected, for instance because of violation of the equality of sexes. Generally, the supposed violation of public policy needs to be connected to the forum. (Inlandsbeziehung or, alternatively, Binnenbeziehung). Habitual residence or nationality of one of the parties often achieves this.

It is generally accepted that each case has to be decided on its own facts. The application of the foreign legal provision must lead to an intolerable result in the particular case before the court. It follows that it is not decisive whether the foreign law is based on the same principles as domestic legislation. It is not the foreign law as such but its application on the facts that is subjected to the public policy analysis. In other words, a foreign law that is offensive to the legal order of the forum in the abstract need not necessarily create intolerable results in practice.

It is also generally accepted that public policy is an exceptional doctrine. However, this unanimity opinion hides disagreement in assessing particular cases. Public policy has been described by Franz Kahn as ‘the still undiscovered and unfinished part of private international law’. Today, its application is avoided as far as possible; overriding mandatory provisions are used instead.

In consequence of the disapplication of foreign law because of public policy an alternative law has to be applied. Here a search for a connection according to other aspects of the case will sometimes be required before resort to domestic law is permitted (Art 16(2) Italian Statute on Private International Law).

4. Public policy in international civil procedure

In international civil procedure law public policy plays a role in several ways. The rules on recognition and enforcement of foreign judgments generally contain a corresponding impediment to recognition. Public policy is also relevant to the cross-border service of documents, international legal assistance and international insolvency law (insolvency (cross-border)).

A violation of public policy may bar the recognition of money judgments. Identical public policy clauses are laid down in Art 34 Brussels I Regulation (Reg 44/2001) for civil and commercial matters and in Art 22 Brussels IIbis Regulation (Reg 2201/2003) for matrimonial matters and parental responsibility. Recognition is refused if it is manifestly contrary to the public policy of the Member State in which recognition is sought. The court of the second state, however, no longer examines this ex officio. Article 26 of the Insolvency Regulation attempts to define public policy. According to this provision, any Member State may refuse to recognize insolvency proceedings opened in another Member State or to enforce a judgment handed down in the context of such proceedings where the effects of such recognition or enforcement (recognition and enforcement of foreign judgments) would be manifestly contrary to that state’s public policy, in particular its fundamental principles or the constitutional rights and liberties of the individual.

According to the European rules on recognition, public policy is also a barrier protecting basic values of national law. Procedural public policy ensures not only substantive, but also procedural justice. At stake is whether the course of proceedings in the state of origin—observed in the individual case—collides with basic values of the state in which enforcement is sought.

The ECJ has said in respect of Art 27 Brussels Convention that, while it is not for the Court to define the content of the public policy of a contracting state, it is none the less required to review the limits within which the courts of a contracting state may have recourse to that concept for the purpose of refusing recognition of a judgment emanating from another contracting state (ECJ Case C-38/98 – Renault [2000] ECR I-2973).

For the interpretation of European public policy the procedural safeguards of the ECHR have been taken into account. In particular, the defendant’s right to a fair trial (Art 6 ECHR) is an element of the public policy reservation. For example, the right to defence by counsel without the personal physical appearance of the defendant has been recognized. Thus, in Germany the recognition of a French judgment which disregarded this right could be denied (ECJ Case C-7/98 – Krombach [2000] ECR I-1935). To that extent it is possible to talk of a common European public policy reservation, in which the common constitutional traditions of the Member States and the general principles of law following from international treaties are also taken into account.

National public policy clauses in respect of the recognition of foreign decisions also concern violations of basic values and always require a result-oriented examination of the individual case. In this field there is more tolerance for deviation; public policy has only a limited or ‘attenuated’ effect (effet atténué). A public policy provision is laid down in German law in § 328(1) no 4 CCP which concerns the prerequisites for the recognition of foreign judgments. The recognition of a foreign judgment is excluded where the recognition of the judgment would produce a result which would be manifestly irreconcilable with fundamental principles of German law, especially where the recognition is irreconcilable with basic constitutional rights. Similar public policy provisions are laid down in other national regulations (see eg Art 64(g) Italian Statute on Private International Law). Here, it is not only differences in substantive law which are to be additionally examined. Gross procedural defects can also constitute a violation of public policy. Public policy presupposes domestic effects, particularly in the form of the nationality or the habitual residence of the concerned individuals. The consequence of the violation of public policy is the non-recognition of the foreign decision.

5. Abandonment of public policy

Some recent European regulations follow the principle of mutual recognition with no reference to public policy. Accordingly, the regulations on the European Enforcement Order of 2004 and on the European Order for Payment of 2006 do not contain any public policy clauses. Here, the expressly stated abolition of exequatur or, alternatively, ‘intermediate proceedings’ has restricted the examination of foreign decisions; domestic and foreign judgments are on the same footing. A public policy review is thus no longer possible; the only remedies for the debtor are now those in the context of the execution proceedings themselves. An abolition of exequatur can also be found in the Maintenance Regulation for judgments rendered in Member States which are bound by the Hague Protocol of 2007 (Art 17(1) Reg 4/2009).

As for other areas there is presently a controversial discussion about the abolition of the public policy clause in the European context. Some authors warn of a ‘system change’ of excessive dimension and think that public policy remains indispensable. The contrary argument of the EU Commission is based on mutual trust within the European judicial area. An intermediate view regards an abandonment especially in that arena as possible, where uniform standards in proceedings in the state of origin offer sufficient procedural safeguards and, in particular, guarantee the protection of the defendant. It goes without saying that trust in the proper administration of justice in the Member States is a reliable basis primarily where additional procedural guarantees (particularly notice to the defendant, participation in the proceedings and rectification of decisions) have been created.

The EU Commission proposal of December 2010 intends to abolish the exequatur procedure for all judgments covered by the Brussels I Regulation’s (Reg 44/2001) scope with the exception of judgments in defamation and compensatory collective redress cases. This abolition of exequatur would be accompanied by new procedural safeguards which aim to ensure that the defendant’s right to a fair trial and his rights of defence are protected. The defendant would have several remedies at his disposal through which he could prevent in exceptional circumstances that a judgment rendered in one Member State takes effect in another Member State. Inter alia, the defendant would be able to contest the judgment in the state of origin if he was not properly informed about the proceedings in that state (Art 45 Commission proposal). The proposal would also create an extraordinary remedy in the state of enforcement which would enable the defendant to contest any other procedural defects which might have arisen during the proceedings before the court of origin and which may have infringed his right to a fair trial (Art 46 Commission proposal). These safeguards apply in situations which are currently addressed by some of the existing grounds of refusal, particularly in order to ensure the protection of the rights of the defence, with the difference that public policy scrutiny is abolished as such.

Literature

Franz Kahn, ‘Die Lehre vom ordre public’ (1898) 39 JherJb 1 = Abhandlungen zum internationalen Privatrecht (1928) 194 ff; Paul Lagarde, ‘Public Policy’ in IECL III (1994) ch 11; Dieter Martiny, ‘Die Zukunft des europäischen ordre public im Internationalen Privat- und Zivilverfahrensrecht’ in Festschrift Hans Jürgen Sonnenberger (2004) 523; Jürgen Basedow, ‘Recherches sur la formation de l'ordre public européen dans la jurisprudence’ in Mélanges en l'honneur de Paul Lagarde (2005) 55; Philia Georganti, Die Zukunft des ordre public-Vorbehalts im europäischen Zivilprozessrecht (2006); Peter Hay, ‘The Development of the Public Policy Barrier to Judgment Recognition Within the European Community’ (2007) The European Legal Forum 289; Ioanna Thoma, Die Europäisierung und die Vergemeinschaftung des nationalen ordre public (2007); Gerte Reichelt, ‘Zur Kodifikation des Europäischen Kollisionsrechts—am Beispiel des ordre public’ in Gerte Reichelt (ed), Europäisches Gemeinschaftsrecht und IPR (2007) 5; Th M de Boer, ‘Unwelcome Foreign Law: Public Policy and Other Means to Protect the Fundamental Values and Public Interests of the European Community’ in Alberto Malatesta, Stefania Bariatti and Fausto Pocar (eds), The External Dimension of EC Private International Law in Family and Succession Matters (2008) 295; Teun HD Struycken, ‘L’ordre public de la Communauté européenne’ in Vers de nouveaux équilibres entre ordres juridiques—Liber amicorum Hélène Gaudemet-Tallon (2008) 617; Bartosz Sujecki, ‘Die Möglichkeiten und Grenzen der Abschaffung des ordre public-Vorbehalts im Europäischen Zivilprozessrecht’ (2008) 16 ZEuP 458.

Retrieved from Public Policy – Max-EuP 2012 on 19 May 2022.

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