Posts Tagged non-doms
Vik v Deutsche Bank. Court of Appeal confirms High Court’s view on Article 24(5) – jurisdiction for enforcement.
The Court of Appeal has now confirmed in  EWCA Civ 2011 Vik v Deutsche Bank that permission for service out of jurisdiction is not required for committal proceedings since the (now) Article 24(5) rule applies regardless of domicile of the parties. See my posting on Dar Al Arkan and the one on Dennis .
Gross LJ in Section IV, which in subsidiary fashion discusses the Brussels issue, confirms applicability to non-EU domicileds however without referring to recital 14, which confirms verbatim that indeed non-EU domicile of the defendants is not relevant for the application of Article 24.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 22.214.171.124.
Court of Appeal suggests in Dal Al Arkan that Choudhary reading of Article 22(5) Brussels I was per incuriam. (Exclusive jurisidiction for enforcement).
Postscript 24 November 2017 Dal Al Arkan was confirmed in Deutsche Bank AG v Sebastian Holdings Inc & Alexander Vik  EWHC 459 and in Dennis v TAG Group  EWHC 919 (Ch). Permission for service out of jurisdiction is not required since the (now) Article 24(5) rule applies regardless of domicile of the parties.
In Dar Al Arkan, the Court of Appeal has suggested that the Court’s reading of Article 22(5) of the Brussels I-Regulation in Choudhary was per incuriam (meaning, in short, without reference to relevant statutory law and case-law and hence not subject to the rule of precedent).
Article 22(5 provides for ‘exclusive jurisdiction’ ‘regardless of domicile’, ‘in proceedings concerned with the enforcement of judgments’, established for the ‘courts of the Member State in which the judgment has been or is to be enforced’. The key word for this exclusive jurisdictional ground is ‘enforcement’. ‘Proceedings concerned with the enforcement of judgments’ means ‘those proceedings which can arise from recourse to force, constraint or distraint on movable or immovable property in order to ensure the effective implementation of judgments and authentic instruments‘ (Raport Jenard).
Difficulties arising out of such proceedings come within the exclusive jurisdiction of the courts for the place of enforcement, as was already the case in a number of bilateral Treaties concluded between a number of the original States, and also in the internal private international law of those States.
The Jenard report does not quote a specific reason for the reasoning behind this exclusivity, however one assumes that such proceedings are so intimately linked to the use of judicial authority and indeed force, that any complications in their enforcement ought to be looked at exclusively by the courts of the very State whose judicial authorities are asked to carry out the enforcement. In the words of the Court of Justice: ‘the essential purpose of the exclusive jurisdiction of the courts of the place in which the judgment has been or is to be enforced is that it is only for the courts of the Member State on whose territory enforcement is sought to apply the rules concerning the action on that territory of the authorities responsible for enforcement.’ [Case C-261/90 Reichert v Dresdner Bank,  ECR 2149, para 26.).
Neither Convention, Regulation or Report Jenard clarify specifically for Article 22(5) whether the Article applies against non-EU domiciled defendants. In Choudhary, the Court of Appeal had held that it does not. However it had refrained from citing any relevant statutory or (ECJ) case-law authority. In Dar Al Arkan, the Court suggests that this renders judgment in Choudhary per incuriam in line of ECJ and scholarly authority. This is the right approach: the raison d’etre for Article 22(5) is a specific and narrowly construed one, as it is for all other parts of Article 22, in particular per the extract from Reichert, above. (A convincing case for Gleichlauf between court and applicable law).
For instance, the Article 22(5) ground for jurisdiction must not thwart jurisdiction of other courts who would have jurisdiction had the case not been brought as part of an enforcement difficulty. Therore, by way of example, the court which has jurisdiction on the basis of Article 22(5), cannot hear the defence against enforcement which is based on a request for compensation with a different mutual debt (Case 220/84, AS-Autoteile Service). Neither does Article 22(5) trump the enforcement Title of the Regulation.
Within those narrow confines, there is no reason not to extend the jurisdictional rule to defendants domiciled outside of the EU. Their non-dom status is immaterial to the proceedings. (Note that the issue on the ‘reflexive’ nature of 22(5) is not resolved by this judgment. Neither by the Brussels I recast, which does clarify (recital 14) that indeed non-EU domicile of the defendants is not relevant for the application of Article 24 of the new Brussels I-Regulation).
Schmid v Hertel: ECJ confirms ‘extraterritorial’ reach of insolvency Regulation’s Seagon extension – Actio Pauliana
(Postscript April 2015: The ECJ confirmed these principles in C-295/13, H v HK).
Less is more, I know – Apologies for the long title and thank you to Matthias Storme for highlighting the case. In Case C-328/12 Ralph Schmid v Lilly Hertel, Schmid was the German liquidator of the debtor’s assets, appointed in the insolvency proceedings opened in her regard in Germany on 4 May 2007. The defendant, Ms Hertel, resides in Switzerland. Mr Schmid brought an action against Ms Hertel before the German courts to have a transaction set aside, seeking to recover EUR 8 015.08 plus interest as part of the debtor’s estate.
In Case C-339/07 Seagon the ECJ had ruled that the courts of the Member State within the territory of which insolvency proceedings have been opened have jurisdiction to decide an action to set a transaction aside (actio pauliana) that is brought against a person whose registered office is in another Member State. However does Seagon also apply where insolvency proceedings have been opened in a Member State, but the place of residence or registered office of the person against whom the action to have a transaction set aside is brought is not in a Member State, but in a third country?
The ECJ held that it does. Bob Wessels has a very good analysis here and I am happy to refer. Let me just add one or two things. The Brussels I Regulation, the overall Regulation on jurisdiction on civil and commercial matters, displays bias in favour of the defendant: actor sequitur forum rei. The overall jurisdictional angle of the Insolvency Regulation is different: avoiding forum shopping to the detriment of creditors is its main aim, and its insistence on verifiable and predictable criteria to determine COMI (which in turns determines jurisdiction) needs to be seen in that light. That non-EU domiciled defendants get caught up in EU proceedings on the basis of COMI is not generally seen as problematic within the context of the Regulation.
The ECJ is rather realistic with respect to the potential recognition and enforcement problems associated with judgments under the Regulation held against non-domicileds. In the absence of assets in the EU held by the non-dom (if there were, enforcement would be straightforward), classic bilateral treaties may come to the rescue and if there is no such treaty, so be it: the Regulation’s jurisdictional rules should not be held up by potential problems end of pipe.
An important judgment for the reach of the Insolvency Regulation.