Posts Tagged Ordre Public International

ZDF: A German refusal of Polish judgment based on ordre public. (And prof Hess’ comment on same).

Many of you will have already seen (e.g. via Giesela Ruehl) the German Supreme Court (Bundesgerichtshof – BGH)’s refusal to recognise and enforce a Polish judgment under the Brussels I Regulation (application was made of Brussels I but the Recast on this issue has not materially changed). The BGH argued that enforcement would violate German public policy, notable freedom of speech and freedom of the press as embodied in the German Constitution.

Giesala has the necessary background. Crux of the refusal seemed to be that the Court found that to require ZDF to publish by way of a correction /clarification (a mechanism present in all Western European media laws), a text drafted by someone else as its own opinion would violate ZDF’s fundamental rights.

Refusal of course is rare and in this case, too, one can have misgivings about its application. The case however cannot be decoupled from the extremely strong sentiment for freedom of speech under German law, for obvious reasons, and the recent controversy surrounding the Polish law banning the use of the phrase ‘Polish concentration camps’.

I am very pleased to have been given approval by professor Burkhard Hess to publish the succinct comment on the case which he had sent me when the judgment was issued. I have included it below.

Geert.

European private international law, second ed. 2016, Chapter 2, 2.2.16.1.1, 2.2.16.1.4

 

The German Federal Civil Court rejects the recognition of a Polish judgment in a defamation case under the Brussels I Regulation for violation of public policy

 

Burkhard Hess, Max Planck Institute Luxembourg

 

In 2013, the German broadcasting company ZDF (a public body) broadcast a film about Konzentrationcamps. In the film, it was (incorrectly) stated that Auschwitz and Majdanek were “Polish extermination camps”. Further to the protests made by the Polish embassy in Berlin, ZDF introduced the necessary changes in the film and issued an official apology. However, a former inmate of the KZ, brought a civil lawsuit in Poland claiming violation of his personality rights. With his claim he sought remedy in the form of the broadcasting company (ZDF) publishing on its Internet home page both a declaration that the history of the Polish people had been falsified in the film and a statement of apology. Ultimately, the Cracow Court of Appeal ordered the publication of the declaration on the company’s home page. While ZDF published the text on its website visibly for one month, it did not post it on its home page.

Consequently, the plaintiff sought the recognition of the Polish judgment in Germany under the Brussels I Regulation. However, the German Federal Court denied the request for recognition on the grounds that it would infringe on German public policy (article 34 No 1 Regulation (EU) 44/2001). In its ruling, the Court referred to the freedom of the press and of speech (article 5 of the Constitution) and to the case-law of the Constitutional Court. The Court stated that the facts had been incorrectly represented in the film. However, it held that, under German law, ordering a declaration of apology qualifies as ordering a declaration of opinion (Meinungsäusserung) and that, according to the fundamental freedom of free speech, nobody can be obliged to make a declaration which does not correspond to his or her own opinion (the right to reply is different as it clearly states that the reply is made by the person entitled to the reply). As a result, the Polish judgment was not recognized.

BGH, 19 July 2018, IX ZB 10/18, The judgment can be downloaded here.

To my knowledge, this is one of the very rare cases where a foreign judgment was refused recognition in Germany under article 34 no 1 of the Brussels I Regulation (now article 45 (1) (a) Brussels Ibis Regulation) because substantive public policy was infringed.

Speaking frankly, I’m not convinced by the decision. Of course, the text  which the ZDF, according to the Cracow court, had to make as its own statement represented a so-called expression of opinion. Its imposition is not permissible under German constitutional law: requiring the ZDF-television to making this expression its own would have amounted to an infringement of the freedom of speech as guaranteed by article 5 of the Constitution.

However, it corresponds to well settled principles of the recognition of judgments to substitute the operative part of the foreign judgment by a formula which comes close to it. This (positive) option is totally missing in the formalistic judgment of the Federal Civil Court. In this respect I’m wondering why the BGH did not simply order that the operative part of the Polish judgment as such was declared enforceable. My proposed wording of a declaration of enforceability would be drafted as follows: “According to the judgment of the Appellate Court of Krakow the ZDF is required to publish the following decision:…”

This solution would have solved the problem: No constitutional conflict would have arisen and the political issues would have mitigated. Seen from that perspective, the judgment appears as a missed opportunity.

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Ordre Public in Bankruptcy. The Amsterdam Court of Appeals in Yukos.

Michael Broeders and Ulrike Verboom have excellent overview of the decision back in May by the Amsterdam Court of Appeal not to recognise the Russian liquidation order of 1 August 2006 regarding OAO Yukos Oil Company. The refusal to recognise is based on ordre public: in particular, a finding was made that the Russian order contravenes the principles of due process hence also ordre public. Reference was made in extenso to decisions by the European Court of Human rights against Russia in related cases in 2011 and 2014.

Michael and Ulrike also refer to previous case-law of the Dutch Supreme Court which held that on the basis of the lex concursus (here: Russian), there is no principled objection to the Russian trustee in bankruptcy to exercise his powers as such trustee in The Netherlands.

Geert.

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A little pousse-cafe. Gaz de France v STS: annulment of arbitral award on grounds of ordre public.

Something to digest quietly, to start this new year: in Gaz de France v STS the French Conseil d’Etat annuled an arbitral award for breach of ordre public. The Conseil objected in particular to the panel’s denial of mandatory French (administrative) law. Reed Smith have analysis here, including of the issue on jurisdiction (Conseil d’Etat or Court de Cassation).

Upon reading the judgment, my question is this (just putting it in the group, as it were): does the Conseil have terminology right where it seems to classify breach of mandatory law as a violation of ordre public (it is the latter only which justifies annulment under the New York Convention)? Incidentally (at 5) it also refers to the possibility of mandatory EU law being part of this interpretation of ordre public. This structure is clearly inspired by the Rome I Regulation where, as I have noted before, the presence of mandatory law, overriding mandatory law, and ordre public, is causing confusion.

Happy New Year, happy reading, Geert.

 

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Meroni: Mareva orders are compatible with EU law (ordre public).

For the facts of the case, and the reasoning of the AG in C-559/14 Meroni, I refer to my earlier posting. At the end of May (I am indeed still hoovering up the queue) the Court held very much alongside Kokott AG’s Opinion, I shall therefore not repeat its reasoning here. The CJEU does insist that if third parties rights are directly affected with the intensity as in the case at issue, that third person must be entitled to assert his rights before the court of origin (which English courts provide for), lest one runs the risk of the injunction being refused recognition under ordre public. As I had feared, the Court does not address the AG’s concern whether Mareva orders actually constitute a ‘judgment’ for the purposes of the Regulation.

Post Brexit, this considerable attraction of English courts in interlocutory proceedings might become a lot less real. (Like many of us, I am working on a short review of Brexit consequences for European private international law).

Geert.

(Handbook of) European private international law, second ed. 2016, Chapter 2, 2.2.16.1.1, 2.2.16.1.4

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Kokott AG on the notion of ‘judgment’ and the compatibility of Mareva orders with EU law (ordre public).

In Kokott AG’s words, ‘following the West Tankers case…in the present case the Court is once again confronted with a specific procedural feature of the Anglo-American legal system.’

Article 34 of the Brussels I Regulation (Article 35 in the recast) enables a court, by way of derogation from the principles and objectives of the Regulation, to refuse to recognize a judgment given by a court of another Member State. The whole starting point of the Regulation and its antecedents was to avoid much recourse to refusal of recognition. Free movement of judgments lies at the very core of the foundations of European private international law.

Little wonder then that the Regulation leaves limited freedom for Member States authorities (including courts) who are asked to recognise and enforce another State’s judgment. As I noted at the time, in Trade Agency the CJEU insisted that refusal of recognition on the basis of ordre public is only possible after review of the individual merits of the case. Courts in other EU Member States may not decide that the English system as such as contrary to public policy in the state of enforcement. Relevant case-law was most recently summarised by (the same) Kokott AG in fly LAL and also in Diageo.

The exequatur procedure of the Brussels I Regulation has been amended in the Brussels I Recast. However it is exactly on issues of the rights of the defence that exequatur can never be entirely automatic, even among EU Member States.

In Case C-559/14 Meroni, at issue are Mareva injunctions: (sometimes) worldwide freezing orders issued by English courts (among others), designed to prevent a creditor being deprived of access to the debtor’s assets as a result of a prior disposal of those assets. However, as is often the case, the reputation of Mareva injunctions far exceeds their actual bite. There is no one size fits all such injunction and a number of tools are at the disposal of both the debtor affected, and third parties, to have the order varied or indeed lifted. The rights of third parties in particular are quite relevant in the current review with the CJEU. Part of the injunction are often the debtor’s participations in companies: for the recalcitrant debtor may find all sorts of useful ways to spirit value away from his companies and into vaults safe from prying English or European eyes – especially if the debtor is sole or majority shareholder.

In the case at issue, Mr A.L. is prohibited, inter alia, from disposing of assets which can be attributed directly or indirectly to his property. The injunction extends to  interests in the Latvian company VB. Mr A.L. has a direct interest in that company with only one share. According to the referring court, however, he is also the ‘beneficial owner’ of shares in at least one other company (‘Y’), which itself has substantial interests in VB. Mr Meroni is part of the management of Y. Following a seizure ordered by the relevant Latvian office, he also acts as the bailee for the interests in Y. for which Mr A.L. is the beneficial owner. Mr Meroni claims that the freezing injunction prevents the shareholder Y. from exercising its voting rights in respect of VB. This affects constitutionally protected property rights, especially since the company was not heard in the English proceedings. This, it is argued, is contrary to the principle of the right to a fair trial.

The AG Opined differently. At 44, she argues that it is not clear to what extent that injunction might be contrary to basic principles of Latvian substantive law or procedural law, especially since, as the referring court acknowledges, the Latvian legal order does permit judgments as provisional measures without a prior hearing of the party against whom enforcement is sought. Consequently measures such as Mareva orders cannot be said to be fundamentally against the Latvian ordre public. At 45: ‘ Aside from this, the English freezing injunction at issue does not provide for any irreversibly drastic measures for its enforcement overseas, in particular in so far as third persons who were not parties to the proceedings in England are concerned. Rather, the freezing injunction claims legal effects on third persons resident in other countries — and thus the companies controlled by Mr A.L. — only subject to strict requirements: first, it is to have legal effects on a without notice basis only where this is permitted by the foreign law; second, anyone served with the freezing injunction may apply to the court to vary or discharge it; and, third, compliance with contractual obligations in other countries is still to be possible notwithstanding the freezing injunction.‘ (footnotes omitted)

There is no evident breach of basic principles of the legal order of the State in which enforcement is sought – breach of ordre public must therefore be rejected.

Now, earlier in the judgment, the AG also considers albeit more or less obiter (the CJEU is certain not to entertain it) what may in fact be the more important (for it tends to be less sub judice at the CJEU) part of her Opinion: whether the Mareva orders actually constitute a ‘judgment’ for the purposes of the Regulation. Ms Kokott suggests that the Denilauler criteria (easily fulfilled in the case at issue: see para 31) ought to be relaxed under the Regulation, as opposed to the stricter approach under the 1968 Convention. That is because following judgment in ASML, notwithstanding defects in service, if the person concerned fails to commence proceedings in the State of origin of the judgment to challenge the judgment issued upon default, when it was possible for him to do so, recognition may not be refused. The AG suggests to extend the ASML rule to provisional measures.

Geert.

European private international law, second ed. 2016, Chapter 2, 2.2.16.1.1, 2.2.16.1.4

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Lithuanian Supreme Court refuses recognition based on Ordre Public – Right of the Child to be heard

The Lithuanian Supreme Court held on 30  April 2013 that a Russian Federation judgment granting child custody, could not be recognised in Lithuania for reasons of Ordre Public. The 7-year-old  child had not been heard (including on his opinion with whom of the parents he’ld prefer to live) either directly or indirectly  in the underlying proceedings. Hearing the child, the Court held, was however prerequisite under international human (children’s) rights Conventions.

Recourse to Ordre Public is not common, as readers will be aware. The judgment therefore is quite significant (and correct in my view), particularly as the European Commission is currently trying to map its use across the Member States (within the EU or vis-a-vis relations with third States, such as here).

Thank you to Sigita Fomičiova for the tip-off and copy of the judgment.

Geert.

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