Recognition and Enforcement of Foreign Judgments
1. Scope, purpose and terminology
According to the principle of territoriality, a civil judgment as an act of a sovereign state has legal effects only in its country of origin (rendering state). In another state (recognizing state), this is only the case when this state recognizes the judgment. In broad terms, recognition means the extension of the general effects of the foreign judgment to the domestic territory of the state of recognition. This extension enables the claimant to then execute the foreign judgment by making use of domestic enforcement mechanisms. Against this background, one has to distinguish (i) the conditions for recognition, (ii) the procedure of the declaration of enforceability of the foreign judgment by an institution of the state in which enforcement is sought (the so-called exequatur proceeding), and (iii) the subsequent enforcement of the judgment in the other country by using domestic enforcement mechanisms. The precise prerequisites of recognition and enforcement of foreign judgments may vary according to the type of judgment or field of law concerned.
The recognition and enforcement of foreign judgments is rooted in two general principles. The first is the idea that the judicial sovereignty of foreign states should be mutually respected. The second is that foreigners must also be respected as subjects under the law. These principles were not widespread in the ancient world. Judgments rendered in states outside of the Roman Empire were not recognized and enforced. Yet, one passage of the Digest at Ulpian (D. 42, 1, 15, 1) indicates that judgments rendered in Rome could at least be enforced in the Roman provinces. In the course of the development of territorial states and the flourishing of international trade, the need for recognition of foreign judgments grew stronger; the emerging nation-states, however, impeded the development of a liberal law of recognition as they feared this would impair their sovereignty. The 17th-century doctrine of comitas gentium developed by Paul and Johannes Voet as well as Ulrich Huber, according to which the recognition of a foreign judgment should be a matter of ‘courtesy’ (at least in cases of reciprocity), did little to change the situation. Thus, even in present times, each sovereign state can in principle decide for itself if and under which conditions it recognizes a foreign judgment.
The precise legal consequence of the recognition of a foreign decision has been controversial for a long time. The controversy stems from the fact that national procedural laws assign very different effects to judgments. Should a foreign judgment be attributed the same authority and effect in the recognizing state as in the rendering state (extension of a foreign decision’s effects)? Or should it be equated to an equivalent domestic act (principle of equalization)? Alternatively, it would also be possible to cumulate the different legal consequences of both the rendering and the enforcing state to ensure that, on the one hand, the judgment does not have further effect in the recognizing state than was intended by the rendering state and, on the other hand, that it has no more effect than an equivalent domestic judgment of the recognizing state. In European law, the ECJ leans toward the first solution (ECJ Case 145/86 Hoffmann v Krieg  ECR 645, para 11).
2. Trends of European legal development
European integration (European internal market) has led to an immense increase of cross-border transactions and consequently also to a multitude of cross-border litigations. This development has also affected the field of recognition and enforcement of foreign judgments. It fostered the understanding that a multitude of differing national laws with wide grounds for non-recognition often prevent a claimant, who won before a court in an EEC or EFTA state, from enforcing this judgment in another European state thus forcing him often to litigate the matter twice.
For example, in many Nordic states foreign money judgments in civil matters are only recognized as far as prescribed by international treaties. Most states in Europe allow, however, for the recognition and enforcement of foreign judgments irrespective of whether a bilateral enforcement treaty has been concluded or not, but subject to very rigid conditions for recognition. Often, the recognizing state examines whether the rendering court had adjudicatory jurisdiction (PIL). This procedure is supposed to prevent the recognition of judgments based on so-called exorbitant grounds for jurisdiction. A number of states, including Germany, base this examination on the so-called mirror image rule (Spiegelbildprinzip). According to this principle, the state of recognition projects its grounds for jurisdiction on the state in which the judgment was rendered in order to evaluate whether it had jurisdiction in the international sense (§ 328(1) no 1 ZPO (German Act on civil procedure)). The foreign judgment can only be recognized if the rendering court had jurisdiction according to the (hypothetically applied) jurisdiction rules of the recognizing state. Another group of legal systems focuses on a more flexible approach in order to determine the adjudicatory jurisdiction of the rendering court. As an example, French courts acknowledge the jurisdiction of a foreign court if there is no violation of an exclusive jurisdiction according to French procedural law, if there is a sufficient connection to the forum and if the choice of the court seized with the matter is not fraudulent (Cour de Cassation, Cass. civ. 1er (6 February 1985), Bull. civ. I., no 54, 55 – Simitch).
Apart from the re-examination of adjudicatory jurisdiction, further grounds for non-recognition that in principle are accepted in all European legal orders include the violation of the right to be heard, the infringement of national public policy (ordre public) as well as the existence of an irreconcilable prior decision in the same matter and between the same parties. Some states will only enforce foreign judgments if reciprocity is established between the two nations, ie the judgments of each other’s courts are enforced under essentially the same conditions. In theory, the requirement of reciprocity shall induce foreign states into a generous practice of recognition. In practice, it punishes private litigants as they usually cannot influence the requirements under which the rendering state enforces foreign judgments.
Due to the enactment of a European system of recognition and enforcement over the last years, national rules on recognition and enforcement have only a limited scope of application today. They cover primarily the enforcement of judgments rendered in non-EU/EFTA countries. Before the enactment of European legislation, the regime for recognition and enforcement of judgments rendered in (then) EC/EFTA states was primarily regulated by international Conventions. After the transfer of competences to the EU in the area of civil procedural law through the Treaty of Amsterdam (European civil procedure), some of them were transformed into EU-instruments. Thus, the so-called Brussels I Regulation (Reg 44/2001) supersedes the (Brussels) Convention on jurisdiction and the enforcement of judgments in civil and commercial matters of 1968. Moreover, the Lugano Convention of 1988 was revised in 2007. This Convention primarily extends the Brussels I regime to EFTA states (except Liechtenstein).
Yet the Union did not only modernize pre-existing international Conventions, but also passed further secondary legislation to ensure a free circulation of judgments in many fields of civil and commercial law. Apart from the so-called Brussels IIbis Regulation (Reg 2201/2003) which governs the recognition and enforcement in matrimonial matters and matters of parental responsibility, the Union introduced simplified rules for the enforcement of particular kinds of claims or judgments. Among this ‘new generation’ of legal instruments creating a uniform European area of justice are the regulation creating a European enforcement order for uncontested claims (Reg 805/2004), the regulation creating a European order for payment procedure (Reg 1896/2006) and the regulation establishing a European small claims procedure (Reg 861/2007).
There is no conceivable end to this rapidly progressing Europeanization of procedural law. In December 2008, a regulation on the recognition and enforcement of maintenance obligations was passed (Reg 4/2009), and there is also work in progress on a legal instrument concerning a European order for the attachment of bank accounts (COM(2011) 445 final). Due to a reservation (Art 69 EC/Protocol no 22, annex to the TFU about the position of Denmark), Denmark is not bound by any Union instrument in the field of judicial cooperation in civil matters. A Danish court can apply these instruments only when Denmark and the Union have concluded an international Convention that a given regulation shall also be applicable in Denmark. This is for example the case with regard to the Brussels I Regulation.
3. Basic structure of the Union regime
Traditionally, the core of the recognition and enforcement law of the Union is the ‘Brussels’ model. It is based on a facilitated exequatur procedure which has significantly fewer ‘control mechanisms’ than is the case in the national legal systems of the Member States. Besides the Brussels model, simplified procedures with no exequatur proceeding have been introduced for certain types of judgments where the legislature presumed that the debtor is in less of a need for protection.
The Union intends to further simplify the free circulation of judgments by further reducing the grounds for non-recognition and finally by abolishing the exequatur for all types of judgments in civil and commercial matters. A desirable precondition for such a step, however, is a far-reaching harmonization of private international law (PIL) in Europe, as well as the development of some uniform basic procedural safeguards. The latter seems desirable as each improvement in the recognition of judgments curtails the debtor’s defences against the claim waged against him.
a) Traditional model: exequatur proceeding
The traditional model of the Union regime is laid down in the Brussels I Regulation. It also applies, with certain trade-offs, to the Brussels IIbis Regulation (with regard to decisions in matrimonial matters and matters relating to parental responsibility in general) and to the revised Lugano Convention. According to the traditional model, judgments rendered in EU/EFTA states are principally recognised ipso iure. However, before a local judge is allowed to declare the judgment to be enforceable, he has to examine in a harmonized exequatur proceeding whether a number of formal requirements have been complied with. Only on appeal by the debtor, is it possible to review certain grounds for non-recognition.
The Brussels model not only harmonizes the procedure of enforcement and the grounds for non-recognition, but also the grounds for adjudicatory jurisdiction (PIL). The rationale for this is that if the rendering court has based its jurisdiction on a ground of jurisdiction laid down in the relevant regulation/convention, the recognition of the judgment in all other EU/EFTA states corresponds to the mirror principle. In order to additionally facilitate recognition, the European legislature went even further: even when the judgment is based on a national ground for jurisdiction, other Member States are obliged to recognize it (Art 35(3) Brussels I Regulation/Revised Lugano Convention; Art 24 Brussels IIbis Regulation). Recognition therefore cannot be refused where the judgment is based on an exorbitant ground of jurisdiction of national law. An exception applies to particular exclusive grounds of jurisdictions in insurance and consumer matters (Art 35(1) Brussels I Regulation/Revised Lugano Convention).
Furthermore, the recognizing state can refuse recognition in cases of especially serious violations of the right to be heard through the wrongful service of documents initiating proceedings (Art 34(2) Brussels I Regulation/Revised Lugano Convention; Art 22(b), 23(b)–(d) Brussels IIbis Regulation). Another ground for non-recognition is the existence of a conflicting judgment in the same matter. If two foreign enforceable judgments are irreconcilable, the earlier of these two judgments prevails. In the case of a conflict between a foreign and a domestic judgment, the latter always takes priority (Art 34(3), (4) Brussels I Regulation/Revised Lugano Convention; Art 22(c), (d) Brussels IIbis Regulation). Finally, a judgment will not be recognized if it is inconsistent with the public policy (ordre public) of the state in which recognition is sought (Art 34(1) Brussels I Regulation/Revised Lugano Convention; Art 22(a), 23(a) Brussels IIbis Regulation). The ordre public-clause must, however, be interpreted in light of the basic legal principles of the European Union as enshrined in the [[fundamental freedoms and provisions on human rights (human rights and fundamental rights (ChFR and ECHR)). In this sense, it is possible to talk about a Europeanization of public policy.
It is important to note that the European Commission is considering simplifying the traditional Brussels model in the current review process concerning the Brussels I Regulation. Against the background of almost always successful applications for declarations of enforceability, the European Commission has, inter alia, proposed to abolish the traditional exequatur procedure under the Brussels I Regulation and to replace it by a limited ex-post review procedure as a safeguard to the debtor’s rights (COM(2010) 748 final), thus bringing the traditional model closer to the simplified procedures.
b) Simplified procedures: no exequatur proceeding
Besides the traditional model, EU law provides for simplified procedures which do not encompass an exequatur proceeding. Currently, these simplified enforcement procedures apply to judgments relating to uncontested claims, judgments enforced by the European order for payment, judgments concerning small claims and access and return orders in child abduction cases covered by the Brussels IIbis Regulation.
i) European enforcement order for uncontested claims
Regulation 805/2004 is supposed to facilitate the enforcement of uncontested claims in civil and commercial matters, ie such pecuniary claims the debtor has expressly agreed to or has not objected to during the court proceedings in the rendering state. A judgment on an uncontested claim is certified as a European enforcement order by the Member State of origin. Certification is carried out by means of a standard form as a European Enforcement Order (EEO). In order for the court of the Member State of origin to certify the EEO, the following requirements have to be met (Art 6(1) Reg 805/2004): first, the judgment must be enforceable in the Member State of origin. Furthermore, the judgment must not conflict with the grounds of jurisdiction in insurance matters or on exclusive jurisdiction laid down in the Brussels I Regulation. If the creditor received his title due to the fact that the debtor never objected to the claim, the court proceedings in the Member State of origin must further meet certain procedural standards for a judgment on an uncontested claim to be certified. In the specific case that the debtor is a consumer and the uncontested claim originates from a consumer contract, it has also to be examined whether the judgment was given in the Member State in which the debtor is domiciled. An EEO can be enforced by the creditor in all Member States (except Denmark) on the basis of the national law without exequatur proceeding. The debtor can only apply for a review of the judgment in the country of origin if particular procedural rights were violated (Arts 12 ff Reg 805/ 2004). Additionally, the court in the Member State of enforcement can refuse the enforcement if there is an irreconcilable judgment about the same matter between the same parties (Art 21(1) Reg 805/2004). In the current review process of the Brussels I Regulation the Commission has proposed that the amended Regulation 44/2001 should replace Regulation 805/2004 with regard to most judgments in civil and commercial matters in order to streamline the growing body of European enforcement law (COM(2010) 748 final).
ii) European order for payment
Regulation 1896/2006 gives creditors the possibility of enforcing their pecuniary claims in cross-border civil and commercial matters by means of a European Payment Order (EPO). An EPO is issued on the basis of the application of the creditor. After the one-month time limit for objection has expired, the EPO is declared enforceable in all Member States (except Denmark) and its recognition cannot be opposed (Art 19 Reg 1896/2006. However, the debtor is entitled to apply for a review of the European order for payment before the competent court in the Member State of origin. The grounds for review are essentially the same as under Reg 805/2004, but furthermore enable the reviewing court to declare the order for payment void if it was clearly wrongly issued (Art 20(2) Reg 1896/2006). In addition, upon application of the debtor, enforcement can be refused if the EPO is irreconcilable with an earlier decision or if the defendant has paid the amount awarded (Art 22 Reg 1896/2006).
iii) Small claims procedure
Regulation 861/2007 has introduced a European procedure for cross-border cases in civil and commercial matters for claims in which the disputed sum does not exceed €2,000. Standard forms and unified deadlines are intended to simplify the procedure. Judgments given according to the Reg 861/2007 are recognized and enforced in all Member States (except Denmark) without the need for a declaration of enforceability. According to Art 18 Reg 861/2007, the debtor is entitled to apply for a review of the judgment in the Member State in which the judgment was rendered. The grounds for review essentially correspond to those set out in Art 19 Reg 805/2004 and Art 20(1) Reg 1896/2006. Moreover, in the enforcement state, the enforcement of a judgment may, upon application of the debtor, be refused because of another irreconcilable judgment in the same matter.
iv) Brussels IIbis: child abduction
With regard to court orders concerning rights on access to a child or orders requiring the return of an abducted child, the Brussels IIbis Regulation has established an enforcement system which differs considerably from the traditional model applicable to judgments in matrimonial matters and matters relating to parental responsibility in general. In child abduction cases the courts of the enforcing state do not possess much power to block the enforcement of access and return orders as long as some basic formal requirements are met. Not only can those orders be enforced without a declaration of enforceability (Arts 41, 42 Brussels IIbis Regulation), the courts of the enforcing states are also barred from conducting a public policy review (ECJ Case C-491/10 PPU – Aguirre Zarraga v Pelz nyr, para 75). Legal remedies against such orders must therefore primarily be pursued before courts of the rendering state.
4. International uniform law
The development on the European level outlined above has lowered the importance of having a uniform law in the area of recognition and enforcement of foreign judgments. This distinguishes the recognition and enforcement of judgments from the recognition and enforcement of arbitral awards as the latter is governed by an important international Convention (the New York Convention of 1958), which over 140 states have adhered to. Attempts to pass a widely accepted general recognition and enforcement Convention for judgments at the Hague Conference on Private International Law have not been successful. The last effort was initiated during the 1990s and failed due to transatlantic disagreements. The European delegations argued in favour of a Convention with jurisdiction and enforcement rules (a so-called convention double), structured in a way similar to the Brussels Convention of 1968. Such a Convention would have prevented the enforcement of judgments based on claimant-friendly grounds of jurisdictions as are known in US law. In turn, the US delegation had in mind a convention mixte with a wide grey area for non-unified and, above all, non-prohibited grounds for jurisdiction to ensure a broad recognition of US judgments. Consequently, the negotiations were doomed to fail from the start. In the end, only the Convention of 30 June 2005 on Choice of Court Agreements was passed, which has a very narrow scope of application. It covers only exclusive choice of court agreements. Whether this Convention will prove of significance for commerce is not foreseeable at this point in time.
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