Tag Archive for: reciprocity

No reciprocity for Swiss and German judgments in Jordan

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Two recent rulings of the Supreme Court of the Hashemite Kingdom of Jordan refused recognition and enforcement of  German and Swiss judgments on maintenance on grounds of no reciprocity.

I. First case: No reciprocity with Germany

  1. The facts

The applicant was the wife of the respondent, both Jordanian nationals. She filed several applications before German courts in Stuttgart, and obtained a number of final judgments ordering payments for alimony to her benefit. Due to non payment by the husband, she filed an application for the recognition and enforcement of the German judgments in Jordan.  The Court of first instance declared the judgments enforceable in Jordan in 2009. The husband appealed. The Amman Court of Appeal issued its decision January 2015, revoking the appealed decision. The wife filed a second appeal (cassation).

  1. The ruling of the Supreme Court of Cassation

Initially, the Supreme Court underlined the lack of a judicial cooperation agreement between the Hashemite Kingdom of Jordan and Germany, which leads to the application of the Jordan law on the recognition and enforcement of foreign judgments. The Supreme Court stressed out that for the purposes of a foreign judgment being executed in Jordan, the conditions stipulated in the Law on Execution of Foreign Judgments No. (8) of 1952 must be met. It then referred to the provisions of Article (7/2) of the law, which states that the court may reject the application requesting the execution of a judgment issued by a court of any country whose law does not allow the recognition of judgments issued by the courts of the Hashemite Kingdom of Jordan.

The Supreme Court refers then to the order of the Amman Court of Appeal to the applicant, by virtue of which the latter was invited to provide evidence whether German laws allow the recognition of judgments issued by Jordanian courts. Based on the letter received by the Ministry of Justice in December 2014, the Court of Appeal concluded that there is no reciprocity between Jordan and Germany to recognize judgments issued by their courts.

On the grounds aforementioned, the Supreme Court dismissed the cassation and confirmed the ruling of the Amman Court of Appeal [Jordan Court of Cassation, the Hashemite Kingdom of Jordan, Ruling issued at 9/2 /2020].

II. Second case – No reciprocity with Switzerland

  1. The facts

The parties were a Romanian wife (applicant in Jordan and claimant in Switzerland) and a Jordanian husband (defendant in Switzerland and appellant in Jordan). The applicant obtained a set of decisions against the respondent, including the right of guardianship over the child resulting from their marriage, and maintenance. In 2019, the wife filed an application for the recognition and enforcement of a number of judgments issued by Zurich courts. Both the North Amman Court of First Instance and the Amman Court of Appeal allowed the recognition of the Swiss judgments. The husband lodged a second appeal in March 2020, invoking a number of grounds for cassation. The focus is on the 9th and 10th ground, namely the following:

a.       The instance courts erred and violated the text of Article 7/2 of the Foreign Judgment Execution Law by not responding to his request, that Swiss courts do not recognize judgments issued by Jordanian courts.

b.      The Court of Appeal was mistaken by not allowing evidence to be presented, demonstrating that Swiss courts do not accept rulings issued by Jordanian courts

  1. The ruling of the Supreme Court of Cassation

In response to the above, the Supreme Court stated that for the purposes of the foreign judgment being executed within the Kingdom, it is imperative that the recognition meets the conditions stipulated in the Law on Execution of Foreign Judgments No. (8) of 1952. By referring to the provisions of Article (7/2) of the same law, the Supreme Court reproduced the wording of the provision, namely, that the court may also reject the application requesting the execution of a judgment issued by one of the courts of any country whose law does not permit the recognition of judgments issued by the courts of the Hashemite Kingdom of Jordan. What is learned from this text, the Supreme Court continues, is that reciprocity must be available, and the ruling does not violate public order.

The Supreme Court granted the appeal with the following reasoning:

  • the Court of Appeal omitted to examine whether there was reciprocity between Jordan and Switzerland to mutually recognize judgments issued by their courts;
  • it also failed to address the Ministry of Justice to clarify whether there was reciprocity, and that the judgments issued by the Jordanian courts are recognized by the courts of Switzerland, and then to evaluate the respective evidence.

Based on the above, the Supreme Court decided to refuse recognition of the Swiss judgments [Jordan Court of Cassation, the Hashemite Kingdom of Jordan, Ruling issued at 21/9/2020].

Recognition of Foreign Bankruptcy and the Requirement of Reciprocity (Swiss Federal Court)

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The Swiss Federal Court recently issued a noteworthy judgment (scheduled for publication in the official reports) concerning the requirement of reciprocity with respect to the recognition of foreign bankruptcy decrees. The judgment (in German) is available here.

Marjolaine Jakob, the author of the following summary and comment, is a researcher at the University of Zurich, Faculty of Law.

Introduction

Under Swiss international bankruptcy law, the access of a bankruptcy administrator to a bankruptcy debtor’s assets located in Switzerland requires a successful recognition of the foreign bankruptcy order by the competent Swiss court. The recognition of a foreign bankruptcy order and the effects of such recognition (including the opening of mandatory secondary insolvency proceedings over the assets located in Switzerland) are regulated by art. 166 et seq. SPILA (Swiss Private International Law Act). According to art. 166 para. 1 lit. c SPILA a foreign bankruptcy order shall be recognized provided that, amongst other prerequisites, reciprocity is granted by the state in which the order was rendered. In the decision of the Swiss Federal Supreme Court discussed hereinafter, it was disputed whether Dutch law grants reciprocity.

Summary of the facts of the case

The parent company C Ltd., Rotterdam (the Netherlands), filed a claim in the debt-restructuring moratorium over the company B Ltd., Zug (Switzerland). The respective claim was for the most part provisionally admitted by the trustees and for the remaining part contested.

By judgment of August 6, 2012 the district court of Rotterdam opened bankruptcy proceedings over C Ltd. and appointed A as bankruptcy administrator.

By judgment of February 18, 2013 the cantonal court of Zug approved a composition agreement entered into between B Ltd. and the creditors.

On September 13, 2013, the foreign bankruptcy administrator (A) filed a request for recognition of the Dutch bankruptcy order of August 6, 2012 with the cantonal court of Zug.

By judgment of October 8, 2013 the cantonal court of Zug rejected the request for recognition of the Dutch bankruptcy order by reasoning that the prerequisite of reciprocity (art. 166 para. 1 lit. c SPILA) is not granted by Dutch law. After rejection of the appeal by the High Court of the Canton Zug, A filed an appeal in civil matters to the Swiss Federal Supreme Court and requested annulment of the judgment of the High Court of the Canton of Zug, recognition of the Dutch insolvency order of August 6, 2012 and in consequence of the latter, the opening of secondary bankruptcy proceedings over C Ltd.’s assets located in Switzerland.

Considerations

The Swiss Federal Supreme Court refers to earlier case law, according to which the prerequisite of reciprocity is to be interpreted in a broad sense. Reciprocity is granted if the law of the state concerned recognizes the effects of Swiss bankruptcy proceedings on similar (but not necessarily on identical) grounds. In other words, it suffices if the foreign law recognizes a Swiss bankruptcy order under conditions not considerably stricter than those established by Swiss law regarding the recognition of a foreign bankruptcy order.

The decision furthermore refers to the European trend of abolishing the prerequisite of reciprocity, which is also reflected in Swiss legislation. Since September 1, 2011 the Swiss Financial Market Supervisory Authority (FINMA) may recognize under certain conditions foreign bankruptcy orders and insolvency measures pronounced against banks abroad without a mandatory opening of secondary bankruptcy proceedings in Switzerland (cf. art. 37g para. 2 Swiss Banking Act) and without the state in which the bankruptcy order was rendered granting reciprocity (cf. art. 10 para. 2 Regulation on Banking Insolvencies by the Swiss Financial Market Supervisory Authority). As a consequence thereof, the Swiss Federal Supreme Court acknowledges that the bar should not be set too high regarding the prerequisite of reciprocity where it still exists.

In the Netherlands, the opening of foreign bankruptcy proceedings cannot be formally recognized and no formal and comprehensive effects of seizure occur. Thus, according to Dutch law a foreign bankruptcy administrator has to “compete” with other creditors, since their rights over seized assets are to be respected. However, the foreign bankruptcy administrator has rights of action and enforcement rights on Dutch territory. Furthermore, he is able to directly access the bankruptcy debtor’s assets located in the Netherlands. Consequently, the Dutch international bankruptcy law appears to be equal in qualitative terms, although technically differing fundamentally from Swiss international bankruptcy law. According to the decision of the Swiss Federal Supreme Court, with regard to the prerequisite of reciprocity, it is not decisive that the formal recognition of a foreign bankruptcy order and an overall liquidation of local assets are alien to Dutch international bankruptcy law. Instead, the quality of mutual assistance is decisive. Moreover, the Swiss Federal Supreme Court acknowledges that a foreign bankruptcy administrator is not in a worse position but presumably in numerous cases even in a better position in the Netherlands compared to the position of a foreign bankruptcy administrator in Switzerland.

In consequence thereof, the Swiss Federal Supreme Court concludes that Dutch law grants reciprocity according to art. 166 para. 1 lit. c SPILA and provided that the remaining prerequisites are fulfilled, the Dutch bankruptcy order shall be recognized.

Comment

It has to be welcomed that the Swiss Federal Supreme Court has adopted a liberal interpretation based on a contemporary understanding of tendencies in international insolvency law and especially in Swiss international banking insolvency law. The former case law of the Swiss Federal Supreme Court was shaped by a highly restrictive interpretation of art. 166 et seq. SPILA insisting on a protective interpretation of Swiss international insolvency law. The present decision delivers the impression that the Swiss Federal Supreme Court finally considers international trends and – even more important – trends in Swiss law. However, it is incomprehensible and intolerable that Swiss international banking insolvency law contains a far more liberal regulation than Swiss international insolvency law; the latter being applicable much more frequently. This unsatisfactory legal situation is the result of the uncoordinated process of revising and adopting Swiss legislation. Hopefully, the Swiss Federal Supreme Court will continue to follow international trends and adopt a more generous approach also on other issues of Swiss international insolvency law, for example with regard to the power of the bankruptcy administrator in Switzerland.