Problems of enforcement of european law - Fifth session
Enforcement of Commercial Judgments (Regulation 44/2001 of 22 December 2000)
Moderator : Pieter Neleman, Vice-President, Hoge Raad, The Hague.
Justice Teresa Bielska-Sobkowicz, Supreme Court of Poland , was the keynote speaker. She provided a detailed analysis of the enforcement of foreign court judgements by Polish courts. The recognition and enforcement of foreign court judgements in Poland depended on whether a variety of conditions relating to the foreign judgement were met (e.g. whether the foreign court judgement was final in the country of origin and the judgement did not conflict with Polish law principles). In addition, the principle of reciprocity was fundamental to whether a Polish court would recognise and enforce the foreign judgement.
An amendment to the Polish Code of Civil Procedure, dated March 1, 1996, had greatly altered the Polish regulations. The new regulation allowed for the “free movement of court judgements,” regardless of whether the request was made by a State with which Poland had an agreement concerning the recognition and enforcement of judgements. In addition, international law agreements took precedence over internal Polish law.
The process by which a foreign court judgement was enforced in Poland, was generally two-fold. First, a Polish court declared the judgement enforceable and then another court granted the enforcement formula. These decisions could be appealed to a Court of Appeal. With respect to the enforcement of a decision, in a few instances, the decision of the appellate court could be appealed to the Supreme Court but the same was not true of the decision concerning the enforcement formula.
On February 1, 2002, the Lugano Convention on Jurisdiction and Enforcement of Judgements in Civil and Commercial Matters had come into effect in Poland. To the extent the Convention was applicable, the Convention governed. For all other matters, the Polish procedure remained effective. The proceedings under the Convention constituted a modern, simplified way of granting exequatur to foreign court judgements. Due to the differences between the Convention and the Polish procedure, it was important that cases be properly classified at an early stage.
Since Poland’s accession to the EU on May 1, 2004, there existed in Poland a third regime, Regulation 44/2001, concerning the recognition and enforcement of judgements. To date, Poland had no experience with proceedings under the Regulation.
As the first intervenor, Justice Agnès Pethone Dr. Kovacs, Supreme Court of Hungary, presented an overview of the Hungarian procedural system concerning the recognition and enforcement of foreign judgements. An application for the enforcement of a foreign judgement or arbitral award was made with the appropriate local court of first instance. Appeals could be made to the relevant court of second instance and, in certain cases, those decisions could be appealed to the Supreme Court. Regulation 44/2001 took precedence over Hungarian procedures. However, since Hungary’s accession to the EU on May 1, 2004, only one case had been brought under that Regulation.
Dr. Igna Schmidt-Syassen, Judge, Oberlandesgeritch Hambourg , was the second intervenor. She explained that Germany had had more experience with the Regulation as compared to the newer Member States. German proceedings were similar to Polish proceedings. There had been one case dealing with the reciprocity requirement where it had been held that the Plaintiff had to procure evidence of reciprocity. A debtor could appeal a decision within one month of delivery of the decision and cases were rarely appealed to the Supreme Court. As for arbitration awards, the Civil Procedure Act provided for special rules and arbitral awards could be enforced quickly. The defendant could always object to the enforcement of a decision (e.g. on the grounds of improper service, lack of jurisdiction, infringement of public policy).
Justice Valentinas Michelenas, Supreme Court of Lithuania , acted as the final intervenor. He explained that in Lithuania, prior to May 1, 2004, recognition and enforcement of foreign judgements was governed either by bilateral treaties or the Code of Civil Procedure. As amended, the Code now contemplated that one judge of the Court of Appeals could hear the case. The decision could be appealed to a panel of three judges on the Court of Appeals and that decision could in turn be appealed to the Supreme Court. As with many of the newer Member States, Lithuania had no experience with the Regulation. Article 34(1) concerning the public policy exception was a controversial provision. The Regulation was only one step towards unification.
A general discussion followed concerning the public policy provision. Contributions included those from the keynote speaker, the intervenors and the moderator as well as Lord Justice Mance, Court of Appeal, London, and Mr. Justice Colman, High Court of Justice, London.
Enforcement of Foreign Courts’ Judgments before Polish Courts
Where it deals with the recognition or enforcement of foreign courts’ judgments, the Polish Code of Civil Procedure makes a clear distinction between the judgments which have been pronounced by Polish courts and those pronounced by foreign ones. The procedure provided for the recognition of foreign courts’ judgments deals with those foreign judgments which do not have to be carried out by enforcement. They are, among others, constitutive judgments, i.e. those shaping legal relations between parties (for example, judgments dissolving companies), or those which declare the existence or the non-existence of particular legal relationships or rights. The procedure provided for the declaration of enforceability deals with the court judgments constituting the enforcement titles which may be carried out by way of compulsory enforcement, for example, the judgments which award performances. Both the recognition and the declaration of the enforceability of foreign courts’ judgments in the territory of Poland depend, as it has been provided for in the Code of Civil Procedure, on the results of the special proceedings which are required to be carried out in order to check whether there exist the specific prerequisites for such judgments to be recognised or enforced. The said proceedings deal with both the recognition of a judgment and the declaration of its enforceability. However, the proceedings regarding the two above indicated categories of judgments as provided for by the Code of Civil Procedure are separate.
Both the recognition of a foreign court’s judgment and the declaration of its enforceability are admitted on condition of reciprocity. The principle of reciprocity is based on the concept of retorsion, as it is known in the international public law. The ground for introducing that condition was the necessity to create a so-called “safety valve” for protection of Polish court judgments against their possible discrimination in foreign states. Nowadays, the said idea is more and more often criticised in the doctrine of the procedural law since, as a result, it is against the interests of own nationals. As a consequence, they cannot have foreign courts’ judgments recognised or declared enforceable in their own state due to the fact that Polish courts’ judgments are not recognised or enforced in the state of origin. But, de lege lata the condition of reciprocity exists and is treated as fundamental. Thus, where the absence of reciprocity is revealed, the Polish court is under the obligation to dismiss the application. In court practice, the existence of reciprocity is usually confirmed by way of providing the relevant information by the Ministry of Justice. The existence of reciprocity is an issue of fact of the case. In one of its judgments, the Supreme Court recognised that, where reciprocity in the relations between Poland and a given state has once been declared, it is not necessary to check it again during the court examination of another case having origin in the same state. In the states of federal structure, where various legal systems exist (e.g. the USA), it is indispensable to have the existence of reciprocity confirmed with each individual state. It is essential whether the reciprocity exists at the time at which the application for recognition or declaration of enforceability is being considered by the Polish court.
But, regardless of the criticism concerning the principle of reciprocity made in the doctrine of procedural law, I have to point out that its introducing in the Code of Civil Procedure, by amendment of March 1, 1996, made significant difference in the Polish legal regulations in this respect as compared to the formerly applicable ones. Before that date, both the recognition and the declaration of the enforceability of foreign courts’ judgments in Poland were effectuated provided that relevant international agreements to that end had earlier been made. Additionally, the relevant proceedings were instituted in Poland only in respect of those foreign courts’ judgments which were pronounced after the date on which particular agreements came into force. Under that regime, it was very difficult to enforce foreign courts’ judgments in Poland and Polish courts’ judgments in other states. The new legal regulation was adopted in order to make the so-called “free movement of court judgments” easier, irrespective of whether made in a state with which Poland has signed an agreement on the recognition and enforcement of court judgments, or not. The principle of reciprocity regarding the enforcement of judgments in alimony matters had been applied much earlier.
In court practice, we can see the tendency to seek a possibility to facilitate the enforcement of foreign courts’ judgments in Poland. As an example, let me quote the present reading of the interpretation of Art. 1150 of the Code of Civil Procedure according to which the enforcement of foreign courts’ judgments may be carried our on condition of reciprocity. In its judgment of March 15, 2000, the Supreme Court stated that the regulation in question was also applicable to those foreign courts’ judgments which had been pronounced before the March 1, 1996 amendment came into force. The matter of the proceedings in that case was the enforceability in Poland of the judgment of November 29, 1993 pronounced by Landesgericht Traunstein (Germany) awarding the amount of DM 1, 440, 995 from two Polish nationals conducting business to the German R.E.I. GmbH company as the mutual settlement of business accounts. The application for declaration of the enforceability of the German court’s judgment was lodged after the date of entry of the amendment to Art. 1150 of the Code of Civil Procedure into force, but dealt with the judgment pronounced before that date. During the proceedings for the declaration of enforceability, the debtors pointed to the fact that there was no relevant agreement signed between Poland and the Federal Republic of Germany. While admitting the enforceability of the judgment, the Supreme Court took into account the principle of direct effect with regard to the new law, as well as the objective of the new law, which were to enable an easier enforcement of foreign courts’ judgments in Poland and enforcement of Polish courts’ judgments in other states. While considering if the admission of the enforcement of a foreign judgment in such circumstances did not violate the constitutional principle lex retro non agit, the Supreme Court set such a risk aside. In the situation in question, the participants in the proceedings being conducted before the German court could have decided to resign from undertaking active defence on the ground that they could have expected that the court judgment in question would be found unenforceable in Poland due to the absence of the relevant agreement between Poland and Germany. However, the Supreme Court found that for undertaking active defence it was sufficient that there was a possibility of enforcement of the court’s judgment in the state of origin or in a third state. The conclusion was that during the proceedings in which the application for declaration of enforceability was lodged after the entry of the March 1, 1996 law into force, the prerequisite to be considered was not the existence of a relevant international agreement but exclusively the existence of reciprocity, irrespective of the date of pronouncement of the judgment.
However, it should be emphasised that Polish law provides for the precedence of the international agreements to which Poland is a party over the laws adopted at the national level. Polish courts apply provisions of international agreements both where international agreements deal with the questions which have not been regulated by the Code of Civil Procedure and where they regulate a given matter in a different way. Polish law is, then, applicable only if an international agreement does not stipulate otherwise. Should there be a conflict between an act of law and an international agreement, the absolute precedence is that of an agreement. Besides, as it results from Art. 91 § 3 of the Constitution,if an agreement, ratified by Poland, establishing an international organization so provides, the laws established by it are applied directly and have precedence in the event of a conflict of laws. This provision constitutes the ground on which Polish courts apply the community law. Thus, where there is an international agreement which does not make the recognition or the enforcement of a foreign court judgment conditional upon reciprocity, such an agreement will apply.
Now, having made the above introductory remarks, I will continue my analysis focusing on the issue of enforceability of foreign courts’ judgments and put aside the issue of their recognition.
One of the specificities of the proceedings conducted with the view to have a foreign court’s judgment enforced in Poland is their two-stage structure and the requirement of obtaining two court decisions. First decision, which is to be made after carrying out the relevant required proceedings, is to declare the enforceability of the court judgment in question. As a result, the judgment becomes an enforcement title in Poland. The second decision grants to it the enforcement formula and, then, the foreign enforcement title becomes an enforceable title constituting the ground for enforcement. The enforcement titles are only those final foreign courts’ judgments in civil and commercial matters (as well as in family matters) which are liable to enforcement, that is, those which award performances liable to compulsory enforcement. Therefore, the declaration of enforceability is not applicable to the courts’ judgments which dismiss suits. The judgments to which the procedure of declaration of enforceability is applicable are also the final provisional enforcement judgments issued during the proceedings conducted in order to secure claims, as well as the foreign courts’ judgments on declaration of bankruptcy.
Pursuant to the Code of Civil Procedure, the declaration of enforceability procedure is applicable only to those foreign courts’ judgments which are final and enforceable in the states of their origin and those which have been pronounced in the civil and commercial matters liable to recourse to law in Poland (Art. 1150). The declaration of enforceability is applicable to both the foreign courts’ judgments, including those of the courts of conciliation, and to the amicable settlements which have been made before foreign courts. Official documents may not be matters of court proceedings.
Proceedings for declaration of enforceability are initiated upon a relevant application, which may be accompanied by another application, one for granting the judgment the enforcement formula.
The court competent to recognise such an application is a circuit court having jurisdiction over the place of residence or seat of the debtor and, in the absence of such a court, the circuit court within the circuit of which the enforcement is to be carried out. The declaration of enforceability is to be adjudicated by a court of three career judges.
The creditor should attach to its application : an official copy of the judgment, its certified translation into the Polish language, the statement that the court judgment in question is final in the state of its origin, and, where the judgment has been pronounced in default, also the statement that the summons have been duly served on the defendant. The application is liable to a temporary fee (PLN 60 – 200). The final court fee is determined by the final court judgment. In order to determine the fee, the court takes into account the value in dispute as determined in the course of the proceedings.
The proceedings are of adversary nature. The judgment to be pronounced with regard to the declaration of enforceability is conditional upon carrying out a trial.
As it has been pointed out above, pursuant to Art. 1150 of the Code of Civil Procedure, the declaration of the enforceability of a judgment pronounced by a court, or by a court of conciliation, may be made on condition of reciprocity. Generally speaking, that condition may be admitted to have been fulfilled where the state of origin has declared the enforceability of similar Polish judgments and where it does not impose in their respect more rigorous requirements than those provided for in that respect by Polish law, in particular, where the state of origin does not require checking them as regards their contents. Apart from observance of the principle of reciprocity, the proceedings to recognise foreign courts’ judgments require checking whether the following conditions have been fulfilled :
- if the judgment has the status of a final court judgment in the state of origin ;
- if, under Polish law or under an international agreement, the matter in question does not belong to the exclusive jurisdiction of Polish courts or to the jurisdiction of the courts of a third state ;
- if a party has not been deprived of the possibility to defend itself, and, where not having capacity to be a party in a civil case, to be duly represented at court ;
- if the final court judgment made in the matter in question has not already been pronounced by a Polish court or if the proceedings in the matter in question had not been initiated before a competent Polish court, before the foreign court’s judgment has become final ;
- if the court judgment is not in conflict with the principal rules of the Polish legal order ;
- if, upon the pronouncement of the judgment in the matter to which Polish law should have been applied such law has been applied, unless the foreign law applied to it is not significantly different from Polish law.
On condition of reciprocity, an amicable settlement made before a foreign court constitutes an enforcement title provided that the settlement is enforceable in the state in which it has been made and that it is not in conflict with the fundamental principles of the Polish legal order.
A judgment of the first instance court pronounced in respect of the declaration of enforceability may be appealed against with a court of appeal. The Code of Civil Procedure is not one hundred percent clear as regards the regulation of the question of admissibility of cassation (ultimate appeal) against the judgment of the second instance court. This is in contrast to the procedure provided for the proceedings for recognition of a judgment of a foreign court, in which cassation is admitted (Art. 1148 § 3). The Supreme Court has several times admitted cassation against such judgments (See its judgment of April 27, 2001 r. (III CZ 4/01, OSNC 2001, nr 12, item 184).
It is possible to lodge a complaint against a final court judgment for re-trial.
Once declared, the enforceability of a court judgment gives rise to a new legal situation. An earlier ineffective judgment of a foreign court now becomes one having the same force as a judgment pronounced by a Polish court. It begins to function as an enforcement title which, after being granted the enforceability formula, becomes liable to enforcement. The application for granting the enforcement formula may be lodged together with the application for the declaration of enforceability. It may also be lodged separately. But, the enforcement formula may only be granted after the judgment declaring the enforceability of a foreign court’s judgment becomes final. The creditor should attach to its application for granting the enforcement formula the documents referred to above, as well as the certificate confirming that the title in question is liable to enforcement in the state of origin. At this stage of the proceedings, the court acts single person. Its judgment is pronounced at a closed sitting, without the participation of the parties. The application for granting the enforcement formula is liable to an office fee in the amount of PLN 6.00 for each page of the document being issued. The judgment regarding granting the enforcement formula may be appealed against with a court of appeal. Cassation in respect of the second instance court judgment is not admissible.
During the course of the proceedings for declaring the enforceability of a foreign court’s judgment, the debtor has no right to question the reasons for the judgment as regards its subject matter. The proceedings may by no means be aimed at a revision of the subject matter contents of the judgment. The debtor’s objections may only regard the conditions of enforceability i.e. the debtor may try to prove that the court judgment in question does not belong to the enforceable court judgments category, or that there are no positive grounds for it or, still, that there are negative ones. In practice, debtors often indicate the circumstances which have occurred after the date of the court judgment, e.g. the objection on the ground that the given obligation is no longer binding in whole or in part due to having been performed, or the objection on the ground that some of the instalments awarded by the court have become limited, etc. Such objections cannot be a matter of proceedings for the declaration of enforceability, unless an international agreement, if existing, justifies opposite conclusions. However, after the judgment declaring enforceability becomes final, such objections may be lodged by the debtor, alike against final Polish court judgments, in a separate action to be brought against the enforcement.
On February 1, 2000, the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters made in Lugano on September 16, 1988 came into force with regard to Poland. The Convention, as provided for in its Art. 55, superseded the agreements hitherto applicable to the relations between Poland and Austria, France, Greece and Italy.
Poland has raised objection to Art. 16 point 1 b, stating that it reserved itself the right not to recognise or enforce court judgments pronounced in other states, where the jurisdiction of the state of origin under that Article was based solely on the fact that the defendant’s place of residence was located in that state and the real estate in question was situated in Poland.
The court being competent to recognise the application in Poland is a circuit court.
After the Convention came into force, the proceedings for the declaration of the enforceability of foreign courts’ judgments is regulated within two parallel legal regimes functioning in legal transactions. There are two kinds of proceedings the tasks of which are to recognise requests for granting exequatur, the scope of application of each of which is different. The scope of application of the Convention is limited to the court judgments and to other deeds which come from the states being participants to the Convention, and which deal with a given category of matters. As regards other matters, the regulations to be applied are those of the Code of Civil Procedure. The two regimes function in accordance with the principle that the proceedings for declaring enforceability under a convention have precedence over the proceedings conducted under the code. Hence, within the scope of the applicability of the Convention, the procedure provided for in it is the only procedure being prescribed for the declaration of the enforceability of foreign courts’ judgments. From the point of view of the Code of Civil Procedure, the procedure provided for in the Convention is a specific one. At the same time the regulation of the Convention is not comprehensive, since, in accordance with Art. 31 at seq., complementary procedural regulations of the state of enforcement are required to be applied, and the enforcement proceedings aimed at the implementation of the court judgment or of another official act are in their entirety subject to the regulations of the state of enforcement.
The proceedings conducted under the Convention constitute a modern, simplified version of a procedure carried out with the view to grant exequatur to court judgments or other documents issued by relevant authorities of foreign states, as compared to the procedure of the declaration of the enforceability of foreign courts’ judgments provided for by the Code. In the legal writing regarding this subject matter, the regulation under the Code as compared to the regulation under the Convention is said to be conservative. The proceedings regulated by the Code demonstrate significant differences in comparison with the simpler proceedings regulated by the Convention. The main differences are as follows :
- the adversary nature of the first instance proceedings,
- the proceedings deal only with final court judgments,
- official documents are excluded,
- entering into force of the judgment on enforceability being a condition for granting a foreign court’s judgment the enforcement formula and a condition for the initiation of the enforcement on its ground,
- the scope of the objections which the debtor may raise upon appeal.
In addition, an appeal against the court judgment concerning the declaration of enforceability in the course of proceedings conducted under the Convention may be lodged directly with the court of appeal, while the appeal made in the course of the proceedings conducted under the Code may be lodged by means of the court which has pronounced the judgment which is being appealed against.
The differences between those two kinds of proceedings impose on the chairman of the department to which the application for the declaration of the enforceability of a foreign court’s judgment has been filed, the specific duty to appropriately classify the case at its very early stage. The wrong evaluation of the case and classifying the proceedings to be conducted under the Convention as ones to be conducted under the Code of Civil Procedure, may deprive the applicant of the element of surprise on the part of the debtor, the court writ being delivered and the trial being fixed where the proceedings conducted under the Convention should have been carried out ex parte (art. 34. 1 and art. 39.2). On the other hand, classifying the case as subject to the Convention procedure while its proceedings should have been conducted under the Code of Civil Procedure, may deprive the debtor of the possibility to defend its rights before the first instance court, which, in consequence, will render the proceedings null. Thus, it is necessary to be careful at the early stage of classification of the application for the declaration of the enforceability of a foreign court’s judgment and its classification as regards the appropriate procedure.
The Supreme Court has had considered the Lugano Convention several times. So far, however, the subject of its considerations has always been jurisdiction. But, no doubt, the Convention constitutes the basis for the declaration of the enforceability of foreign courts’ judgments in Poland. I am sure it will be applied in the Polish day-to-day court practice.
Teresa Bielska - Sobkowicz