Guest Editorial: Hay on Recognition of a Recognition Judgment under Brussels I?
Prof. Peter Hay is one of the most distinguished comparative law scholars in the US. He was Alumni Distinguished Professor of Law and dean at the University of Illinois before joining Emory in 1991.
Since 1975 he has been an honorary professor at the University of Freiburg in Germany. In 1989 Dean Hay received the research prize of the Alexander von Humboldt Foundation in Germany. He was elected a titular member of the International Academy of Comparative Law, a member of the American Law Institute in 1984, and a member of the American Academy of Foreign Law in 1986.
Dean Hay’s research has focused on the fields of conflict of laws, European Community law, comparative law, contracts and sales, and jurisprudence. From 1994 to 2000 he held, concurrently with his Emory appointment, the chair for Civil Law, Foreign and International Private Law, and Comparative Law at the University of Dresden, Germany, where he served as dean of its law faculty from 1997 to 2000.
Recognition of a Recognition Judgment under Brussels I?
Should recognition by a Member State of a non-member state’s judgment itself be entitled to recognition in other Member States under the Brussels I Regulation?
The question is hardly new, and the standard answer has usually been a rather undifferentiated, but nonetheless resounding “no”. Both question and answer may bear at least some reexamination.
The great majority of Continental writers follows Kegel’s view of “exequatur sur exequatur ne vaut” (Festschrift Müller-Freienfels 377, 1986, by him attributed to Gavalda, Clunet 1935, 113): “It has always been accepted” that a recognition judgment “cannot … be the object of further recognition …” (Wautelet, in Magnus/Mankowski, eds., Brussels I Regulation, Art. 32 at no. 33 (2007). Only isolated voices disagree, often cautiously and subject to limitations (references in Kegel, at nn. 6 and 10). The ECJ has not addressed the question directly – Owens Bank Ltd. v. Bracco (C 129/92, [1994] ECR 1) did not decide the point, but dealt with matters now addressed by Arts. 27-28 of Brussels I. Advocate General Lenz had, however, examined the question in his Submissions and concluded that the exequatur of an exequatur is not envisioned by the (then) Brussels Convention (id., Submissions at No. 20 et seq.). The recognition – the declaration of enforceability, the exequatur – extends only to the recognizing state’s own territory and not beyond, as confirmed, in his view, by the language of what is now Art. 38(1), that the judgment “has been declared enforceable there” (emphasis added).
It seems axiomatic not to give a judgment greater force than it itself claims. And it is also true that the traditional exequatur only certifies the foreign judgment to be enforceable locally; it neither changes it into a local judgment nor substitutes a local judgment for it or adds one to it. But that is the Continental view of judgment recognition and enforcement. The common law tradition sees it differently. (On accommodation of common law approaches generally, see also this comment by Gilles Cuniberti).
In the common law, a foreign-country judgment is a claim. That claim is enforced (thereby recognized) by a proceeding (the old actio judicati), leading to the issuance of a judgment. In the issuing state, this is a judgment like any other: Dicey/Morris/Collins, Conflict of Laws 570 (14th ed. 2007); Scoles/Hay/Borchers/Symeonides, Conflict of Laws § 24.3 et seq. (4th ed. 2004); Whincop, 23 Mel. U. L. Rev. 416, 424 (1999). This is also the case when a modern registration procedure replaces the common-law suit on a judgment: there is now a local judgment. Dicey/Morris/Collins, supra, at 645-46. If the (local) issuing state does not attribute a different (lesser) effect to the judgment upon the foreign (judgment) claim, why – on what basis – should the present court deny it recognition? Yet it is said that “the same rule [non-recognition, as in the case of an exequatur Continental-style] must apply [in the case of an] actio judicati” (Wautelet, supra at no. 35). Why?
If it were otherwise, it is said, the present court could no longer check whether the original court observed procedural (due process) requirements or whether its judgment perhaps violates the present state’s ordre public. Id. at no. 34. This kind of review would be precluded by required recognition of the recognition judgment. True – and why shouldn’t it be? Procedural defects in the original proceeding were or could have been reviewed in the first recognition court. When such an opportunity existed, these issues would be precluded thereafter: that would be the result in the United States (Juenger, 1983 Rev. crit. dr. int. priv. 37, 48 n. 30), in Canada (Saldanha v. Beals, [2003] 3 S.C.R. 416), and in inter-EU cases. See, e.g., OLG Köln, 12 January 2004, 16 W 20/03, unalex DE-470; OLG Frankfurt/M, 16 December 2004, 20 W 507/04, unalex-DE 451; Hay in [2007-6] Eu L F I-289, at I-290-92 nn. 10, 31-36).
The public policy defense is also relatively narrow under Brussels I (Hay, supra, at I-290 et seq., I-293). An English judgment awarding exemplary damages to an English plaintiff presumably would not be denied recognition in another Member State on public policy grounds. Should an English judgment recognizing an American award of punitive damages in favor of an English plaintiff fare less in another Member State when – presumably – the recognizing English court had concluded that the award was within the ambit of exemplary-damage law and did not offend English public policy?
The isolated cases and comments approving of recognition of a recognition decree point to the circumstance that the (first) recognizing court had expressly pronounced a damage award (parallel to the original award) or had added an award of interest: OLG Frankfurt/M, 13 July 2005, 20 W 239/04; OLG Hamm, RIW 1992, 939; see Wautelet, supra, no. 35). Why this emphasis on the specific tenor of the recognizing judgment (and a common law court’s recognition will of needs reduce the claim for recognition to a judgment)? Is it to be sure that the recognizing court had paid attention?
Kegel wrote (supra at 392), “one trusts one’s friends, but not the friends of one’s friends.” He made the statement in the context of recognition treaties. The recognition command under Brussels I is more than that. It has become, more than the Brussels Convention for which it had been asserted, the EU’s “Full Faith and Credit Clause.” (Bartlett, Int’l & Comp L Q. 24 (1975) 44). As that Clause serves a unifying function in the United States, it should also in the EU: its Members should “trust” each other – in the present context, to have undertaken the proper review of the original judgment before according it recognition. The third-country judgment thereby becomes “transformed” into an EU judgment (for additional discussion, see H. Patrick Glenn, in Basedow et al. (eds.), Aufbruch nach Europa (2001) 705, 709-12, also with respect to the transformation of Mexican judgments in the United States under NAFTA).
The European Small Claims Procedure and the Enforcement Order Regulation – in their limited fields of application – no longer envision exequatur. The Commission favors departing from it generally. Until that happens and to the extent that a state’s action extends recognition to a foreign judgment only to its territory, Brussels I indeed does not require its recognition by another EU state. But this is not because “recognition of a recognition judgment” is not possible, but because the recognition judgment itself claims no greater force: its effect is the same as where rendered. When recognition action does take the form of a judgment, it seems that it should be treated as such: defenses under Brussels I Art. 34 then apply to it and not to the underlying judgment.
Very interesting post.
May I offer an additional reason why, in principle, exequatur sur exaqutur ne vaut? This is because exequatur is about enforcement, and not so much about recognition. It directs enforcement authorities to use force (for instance, to seize assets). Under international law, this must fall within the sole jurisdiction of the state where enforcement will be sought, that is potentially where force will be used. This is too important to allow the court of any other state to make the decision instead of the courts of the relevant state (ie where enforcement will be sought).
Now, I agree with you the principle of mutual trust in the EU may well one day change all this. Actually, it seems unavoidable.
The ECJ held in Krombach v Bamberski Case C-7/98, [2000] E.C.R. I-1935 that the standard for the non-recognition of a judgment on public policy grounds is to be measured in accordance with the European Convention on Human Rights and Fundamental Freedoms (ECHR).
An example of non-recognition based on public policy might be where an
applicant seeks to enforce a judgment for multiple damages awarded in another jurisdiction. This issue was addressed in Lewis v Eliades [2004] 1 W.L.R. 692; 18 U.S.C. 1964(c); [2003] 1 All E.R. (Comm) 850, where the boxer Lennox Lewis sought to enforce an award in England, which had been given in the United States in the amount of $8,065,805 and included triple damages of $1,188,246 for a breach of the Racketeer Influenced and Corrupt Organisations Act (“RICO”). The respondent argued that the English courts should refuse to enforce the award because a judgment for multiple damages could not be registered in England under the Protection of Trading Interests Act 1980. Lewis ultimately abandoned his claim to damages under RICO, when the matter came before the Court of Appeal. It is likely, however, that the RICO element would have been disallowed by the court as being unenforceable. This is because of the penal nature of multiple damages. A general principle exists under Common Law that a court will not enforce a foreign judgment for a penalty. It has long been established that a court in Ireland or England will not enforce the revenue debt of a foreign state because of the penal nature of the claim. The Brussels I Regulation particularly excludes revenue, customs and administrative matters from its scope. This type of action, therefore, could not be enforced under the Regulation, nor could such a judgment be converted to a European Enforcement Order.
Very interesting editorial, as is the connection between European and US academics in the development of the principal of mutual recognition of judgments.
A Dutch academic was one of the first to set out the principles of international sovereignty, which formed the basis for the conflict of laws rules which are still used today. Ulrich Huber (in his work De Conflictu Legum) set out the three basic principles of international law. These are based on the idea of territorial sovereignty and international comity. Huber’s work was translated by the American, Joseph Story in his Commentaries on the Conflict of Laws, which had a great influence on American jurisprudence. In his work, Story set out a system of jurisdictional rules governing conflicts of law, choice of law and the recognition of foreign judgments. His ideas, in combination with the Charming Betsy presumption, were instrumental in the formulation of the ‘territoriality presumption.’ This is the presumption that the US Congress only have power to legislate within the United States and was later refined to mean that laws passed by Congress only applied within the territory of the United States of America.
The Full Faith and Credit Clause (in Article IV of the United States Constitution) was enacted to end the practice whereby independent states (of the United States of America) could effectively act as foreign and independent States. Before then, each State was free to make their own laws and free to ignore the laws and judgments of other States. The effect of Article IV of the US Constitution, therefore, is that that each State within the United States must recognise and enforce judgments of another US State in the same way as one of their own decisions is recognised and enforced. This rule has been extended by the US Congress to provide for the recognition of judgments in the federal system in the United States. This provides for the ‘comity’ rule as set out by Huber and Story. The full faith and credit clause is founded on the principle that requiring national states (of the United States) to recognise and enforce judgments of other US states promotes a sense of national unity.
Article IV provides for no such right, privilege or immunity in respect to the judgments of foreign states or nations, but in Hilton v. Guyot, the US Supreme Court considered whether the judgment of a French court should be recognised in the United States based on the comity principle. Gray J. defined the principle in the following manner:
“The recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws.”
He went on to address the second fundamental idea in the full faith and credit clause, which is respect for the finality of judgments. This is based on the public policy interest in precluding parties from re-litigating issues which have already been decided by the courts. In the words of Gray J.:
“Where there has been opportunity for a full and fair trial abroad before a court of competent jurisdiction, conducting the trial upon regular proceedings, after due citation or voluntary appearance of the defendant, and under a system of jurisprudence likely to secure an impartial administration of justice between the citizens of its own country and those of other countries, and there is nothing to show either prejudice in the court, or in the system of laws under which it was sitting, or fraud in procuring the judgment, or any other special reason why the comity of this nation should not allow it full effect, the merits of the case should not, in an action brought in this country upon the judgment, be tried afresh, as on a new trial or an appeal, upon the mere assertion of the party that the judgment was erroneous in law or in fact.”
The principles set out by the US Supreme Court in Hilton v. Guyot continued to resonate. Since its foundation, the European Union has accorded the highest importance to judicial co-operation between States. It became apparent to the founding Member States of the EEC that in order to promote the four fundamental freedoms, provision also needed to be made for the free movement of judgments.
The drafters of the 1968 Brussels Convention recognised the importance of the principle of the mutual recognition and enforcement of judgments and the full faith and credit clause was inserted into the Convention.
It will be interesting to see how the ‘recognition of a recognition judgment’ is dealt with in future under Brussels I.
The practice of “rubber stamping” a second hand judgment (i.e. the recognition of a recognition judgment) has been criticized by some as the “laundering of foreign judgments” (See, Morgan Stanley & Co International Ltd v Pilot Lead Investments Ltd [2006] 4 HKC 93; [2006] HKCFI 430 (High Court of the Hong Kong Special Administrative Region); Clarke v. Fennoscandia Ltd [2004] SC 197 (Scottish Outer House), per Lord Kingarth at ¶ 31.).
I am delighted that my little piece has sparked some interest and generated some posts, albeit mainly disapproving or skeptical. They prompt me to respond in turn:
Gilles Cuniberti (comment no. 1) is of course right that an exequatur is an enforcement measure and, as such, local (for reasons of territorial sovereignty or whatever). All ascribe to this. In Justice Scalia’s colloquial way of putting it, “enforcement measures do not travel…” (concurring in Baker v. General Motors Corp., 522 U.S. 222, at 241 (1998)). I do not dispute this. My point was and is quite different: when the first EU state recognizes a third-country judgment by way of its own judgment, a second EU state should treat that judgment like any other EU state judgment and not, by looking behind it (!), treat it as a local exequatur. As a judgment, if that is what the first EU state rendered (e.g., England in the case of an American judgment), it is to be recognized and enforced like any other judgment of the rendering state (i.e. also enforced by whatever local enforcement procedures may apply to EU state judgments). Whether separate local enforcement measures will continue to exist or, over time, disappear and become to be more automatic (as in the case of the European Enforcement Order) is speculative, and opinions as to the desirability of such a development will differ. But that does not touch upon the question discussed.
But, it is objected: my suggestion would open the door to “judgment laundering”: see the comment by Antonin I. Pribetic (comment no. 4) and the helpful citations supplied by him. An American court expressed the same sentiment: recognizing a Louisiana recognition of a Canadian judgment would extend recognition through the “back door.” Reading and Bates Constr. Co. v. Baker Energy Resources Corp., 976 S.W.2d 702 (Tex. App. 1998). These statements are descriptions of a situation, not reasons why it should or should not be so. “Forum shopping,” similarly, has a bad name: an advantage is sought, possibly obtained, in one forum, although not available in another one which also has jurisdiction, indeed perhaps is even the “better,” more convenient forum. Yet, on the merits of this practice there are indeed those who regard forum shopping as a natural part of a multijurisdictional world (see Juenger, What’s Wrong With Forum Shopping?, 18 Sydney L. Rev. 5 (1994)). In my view, the Texas decision in Reading and Bates, supra, is wrong under American full-faith-and-credit principles (see Scoles. Hay, Borchers, Symeonides, Conflict of Laws § 24.13 n. 7 (4th ed. 2004)). I suggest, similarly, that the Brussels I Regulation requires no less than recognition of the other EU state’s judgment by giving it the same effect as it has in the rendering state and then enforcing it by whatever domestic law measures apply. “Back door” entry of undesirable law or results is now no longer a matter involving the third state judgment, but of the other EU member state’s judgment (after all: no revision au fond! Art. 36). If the latter judgment, but only the latter, offends the present state’s public policy, Art. 34(1) provides a defense (although I readily admit that I take a rather narrow view of its scope – see [2007] Eur. L.F. 289, 294).
Professor Hay,
Your argument concerning the Brussels I Regulation is highly persuasive, particularly in light of the mutual trust and reciprocity obligations among Member States.
My sense is that there are only two strategic concerns for a successful party seeking to enforce a judgment (and similarly a foreign arbitral award): (1) exigibility of the debtor’s assets and (2) limitation periods.
In respect of point (1), one could avoid the “laundering of judgments” argument by simply “chaining” the judgment by simultaneously filing in each jurisdiction where the debtor’s assets have been identified or located, with the prospect of obtaining either a Mareva or Norwich order, if injunctive relief is allowable (cf. Brussels I Regulation and the prohibition against injunctions, generally, including anti-suit injunctions in the ECJ’s pending opinion in West Tankers discussed on this blog).
With respect to point (2), as you know, both the NY Convention and the Brussels I Regulation are silent on the applicable limitation period for exequatur of a foreign judgment, which is, at least in Canada, a substantive, rather than procedural, issue (I demur on whether civil law jurisdictions take a similar approach to homologation of a foreign judgment outside of the Lugano or Brussels regimes.)
By the way, the Alberta Court of Appeal has recently affirmed that the two-year limitation period under s.3 of Alberta’s Limitations Act, R.S.A. 2000, c. L-12, governs when a party seeks the recognition and enforcement in Alberta of a foreign arbitral award (see: Yugraneft Corporation v. Rexx Management Corporation, 2008 ABCA 274 (CanLII)).
The Ontario Court of Appeal has also recently held that a foreign judgment is not equivalent to a domestic judgment, unless there is reciprocal enforcement legislation from the originating jurisdiction granting judgment (see Lax v. Lax (2004) 70 O.R. (3d) 520 (Ont. C.A.)). This exception has limited applicability in circumstances where the debtor has no physical presence in Ontario, but simply has assets there. In any event, the new limitation period for most actions commenced after December 31, 2003 in Ontario and most other common law Canadian provinces is also 2 years.
The plaintiff, Yugraneft has recently filed an application for leave to appeal to the Supreme Court of Canada on August 6, 2008: http://cases-dossiers.scc-csc.gc.ca/information/cms/docket_e.asp?32738.
“an exequatur is an enforcement measure and, as such, local (for reasons of territorial sovereignty or whatever).”
I agree with Peter Hay that whether enforcement is local and whether an American judgment declared enforceable by one EU state ought to travel within the EU as an EU judgment are two different issues. This is not to say, however, that they are necessarily unrelated. It may well that it matters to know why exequatur is limited to one territory in order to determine whether an exequatur order can travel.
So, for instance, if one decides that exequatur exists as a safeguard to sovereignty, this might mean that an exequatur order is NOT a general declaration of enforceability, but rather a leave given specifically to the enforcement authorities of the first enforcing state.
Arguably, a general declaration of enforceability could be recognized elsewhere, while it would not make sense to recognize a specific declaration directed to local enforcement authorities only.
In other words, if the purpose of exequatur is to assess whether the foreign judgment is acceptable (thus not so much for reasons of sovereignty), as opposed to controlling the use of force, then exequatur sur exequatur pourrait certainement valoir (a declaration of enforceability could be enforced in a third state).
The reciprocal of this question has now become relevant due to the ECJ decision in Apostolides v. Orams, discussed in a report on this Web site at http://bit.ly/2VoR0
Given the infirmities of the Orams decision it has been asked whether a Republic of Cyprus judgment (founded in trespass, etc.) against an investor or resident of Northern Cyprus might be enforced, say, in a U.S. state under the Uniform Foreign Country Money-Judgment Recognition Act or in Canada under the Canada and United Kingdom Reciprocal Recognition and Enforcement of Judgments Act. R.S., c. 52, s. 1.
The failure of Vassilios Skouris to recuse himself spontaneously in the ECJ (he was not asked to do so) has reminded some of another, purely British, fiasco: “The Plumber” (Paul Davidson) case http://bit.ly/tySBf . The original hearing in that case collapsed following ex parte contact between one of the administrative-law judges and the the head of the FSA’s Regulatory Decisions Committee while the latter while walking his dog early one morning after the hearing had begun. Skouris made an unexplained visit to Nicosia.
Also, the ruling on (non-)re-opening of the default judgment in the Orams case by the original Cyprus court was at least harsh, if not rising to due process levels.
Another question is whether this apparently private-law case is not really a public-law matter, with the parties as proxies for the respective governments of the South and the North.
I understand that the European Commission submission by F. Hoffmeister and A.?M. Rouchaud (mentioned at para. 40 of the judgment) addressed not only the Accession Treaty protocol point but also the effect enforcement is likely to have on progress towards reconciliation and political solution. A month before the judgment was issued Turkish Cypriot President Mehmet Ali Talat had expressed hope for a political solution by April 2010 ( http://bit.ly/j1RcY , Reuters).
Lastly, I am reminded of something I saw often enough as a supporting diplomat at treaty negotiations: the occasional use of vague and ambiguous terminology to hide disagreement as to meaning, and to leave precision to subsequent negotiation or determination by the courts or competent authority.