Posts Tagged Ordre Public International
The Prestige recognition tussle puts the spotlights on (now) Article 45 Brussels Ia, and on the relation between competing arbitral awards and judgments in ordinary.
Spain v The London Steam-Ship Owners’ Mutual Insurance Association Ltd  EWHC 142 (Comm) reports on the CMR (case management conference) re what promises to be interesting litigation. A Spanish judgment concerning liability for the pollution damage caused when the vessel PRESTIGE broke in two off the coast of Spain in 2002, needs to be enforced in the UK. Brussels Ia’s contestation of recognition is involved: particularly Articles 34(1) and (3).
At 2 Teare J summarises the story so far:
The parties have been in dispute about liability for many years. Criminal proceedings were brought against the master of PRESTIGE in Spain in 2002 and, after the conclusion of the investigative stage of the proceedings, civil proceedings were brought against the master, the Owners of PRESTIGE and the Club, as liability insurer of the Owners, in 2010. (I am told that in addition to Spain there are some 264 other claimants.) In 2012 the Club commenced arbitration proceedings in London against Spain and in February 2013 obtained an award from the sole arbitrator Mr. Alistair Schaff QC which declared that, as a result of the “pay to be paid” clause in the policy the Club had no liability to Spain. In this court Spain challenged the jurisdiction of the arbitrator but the court (Hamblen J. as he then was) held in 2013 that the arbitrator had jurisdiction. Later that year the court in La Coruna dismissed the civil claim against the master, Owners and Club but convicted the master of the crime of disobeying orders by the Spanish authorities to accept a tow of the vessel. In 2015 the English Court of Appeal upheld the decision of Hamblen J. In 2016 the Spanish Supreme Court reversed the decision of the court in La Coruna and held that the master had been seriously negligent and that the Owners and Club were liable for the damage caused. In execution proceedings in Spain, the court in La Coruna declared the Spanish State entitled to enforce a claim up to approximately €2.355 billion against the defendants in the Spanish proceedings and declared the master, Owners and the Club liable in respect of the claims, although subject (in the case of the Club) to a global limit of liability in the sum of approximately €855 million.’
Thus the Club has an arbitration award in its favour but Spain has a judgment of the Spanish Supreme Court in its favour. Spain obtained an order from Master Cook pursuant to which the Spanish judgment was registered so that it could be enforced here against the Club. The Club seeks to appeal from that order. One of the grounds on which it seeks to appeal is that the Spanish judgment is irreconcilable with the judgment of Hamblen J. and the Court of Appeal (A34(3) BIa). Another ground is that recognition of England is contrary to the public policy of England (A34(1)).
This particular CMS concenrs disclosure requirements: the Club’s seeking of disclosure from Spain is resisted by the latter on grounds that is clashes with BIa’s intention of swift recognition.
One of the issues on which disclosure is sought, is Spain’s position under the insurance title of BIa: “Are the English Judgments not qualifying judgments within article 34(3) because the English Judgments conflict with Section 3 of Chapter II of the Brussels 1 Regulation ? In particular …(b) Is the respondent [Spain] entitled to rely on the exclusive rules for jurisdiction in Section 3 of Chapter II. In particular: (i) Is the respondent [Spain] a qualifying party that is entitled to the protective rules in Section 3 ?” Reference is made to Aspen Underwiting: the Club states that it is necessary for Spain to show that it is a member of the class protected by Section 3, which (per Aspen Underwriting, GAVC] excludes “professionals in the insurance sector or entities regularly involved in the commercial or otherwise professional settlement of insurance related claims who voluntarily assumed the realisation of the claim as part of its commercial or otherwise professional activity”. Aspen Underwriting in the meantime (Teare J’s judgment was issued in January; it has been in the blog queue) has been varied by the Supreme Court.
It will therefore be necessary, submitted counsel for the Club, for Spain to disclose documents which show “the class of business” conducted by it. If it is a member of the relevant class it can rely on section 3. If it is not, it cannot.
The second class of document of which disclosure is sought is very different and relates to the public policy defence. Did the Spanish Courts refuse to allow the master to participate in an underwater investigation of the strength of the vessel’s hull and refuse to disclose the results of the investigation (so that there was a breach of the master’s right to equality of arms and to be able to prepare a defence) or were the results disclosed to the master in sufficient time to allow him to prepare his defence. The Club therefore seeks disclosure of the documents relating to that question held by Spain. Here Teare J at 21 assumes that Spain’s evidence can be expected to support its case and to rely upon the documents which show when the results were disclosed to the master and in what terms. If the evidence does not deal with this issue then Spain will be unable to advance its factual case. ‘I therefore consider it very likely that no disclosure under this head will be required. In the unlikely event that it is required a focused application can be made after Spain has provided its evidence.’
The Order eventually imposes a timetable for exchange of evidence (including expert reports) and later settlement of disclosure issues should they arise. Hearing in principle in December 2020.
This could turn out to be a most relevant case.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 18.104.22.168, Heading 22.214.171.124, Heading 2.2.16.
Lenkor Energy: Textbook application of the (common law of) recognition and assessment of ordre public. (Re: Dubai judgment).
In  EWHC 75 (QB) Lenkor Energy Trading v Irfan Iqbal Puri, Davison M rejected the ordre public arguments made by claimant against recognition of a money judgment of the Dubai First Instance Court.
Reflecting global understanding of ordre public, it is the judgment and not the underlying transaction upon which the judgment is based which must offend (here: English) public policy. That English law would or might have arrived at a different conclusion is not the point (Walker J in Omnium De Traitement Et De Valorisation v Hilmarton  2 Lloyd’s Rep 222).
The ordre public arguments made, were (1) illegality, (2) impermissible piercing of the corporate veil and (3) penalty.
Re (1), the argument is that the underlying transaction is illegal. Master Davison acknowledged there are circumstances where an English court might enquire into the underlying transactions which gave rise to the judgment. However such court must do so with extreme caution and in the case at issue, defendant’s familiarity with Dubai and its laws argued against much intervention by the English courts.
On (2), the veil issue, submission was that defendant was being made personally liable for the debts of IPC Dubai, which was the relevant party (as guarantor) to the Tripartite Agreement and the holder of the account upon which the cheques were drawn. The cheques had not been presented or had been presented out of time – or there was at least an issue about that. The combination of these matters was, it was suggested, to impose an exorbitant liability on Mr Puri for sums which he had not agreed to guarantee – in contravention of established principles of English law.
Here, too, Davison M emphasised defendant’s familiarity with Dubai law. The case against Mr Puri in Dubai was resolved according to the rules which the laws of Dubai apply to Dubai companies and to individuals who write cheques on Dubai accounts. Dubai law may be different than English law on this point, but not repugnantly so.
Finally on (3) the sums in particular the interest charged were suggested to be exorbitant hence a form of unenforceable punitive damages. However, 9% interest is only 1% higher than the judgment debt rate in England and only ¼% higher than the current rate under the Late Payment of Commercial Debts (Interest) Act 1998. (At 31) ‘In the light of this, to characterise the interest rate of 9% as amounting to a penalty is unrealistic.’
Thank you Pailler Ludovic for signalling the French Supreme Court’s judgment in 18-24.261 A and X v et al B and Y et al. The Court annulled the Court of Appeal’s (Versailles) decision which had accepted for recognition and enforcement a Cameroonian judgment in a Cameroonian-French adoption case.
Legal basis for the refusal is Article 34 of the relevant 1974 FR- Cam Treaty. Specically, the classic ordre public international hurdle to recognition and enforcement: ‘Elle ne contient rien de contraire à l’ordre public de l’Etat où elle est invoquée ou aux principes de droit public applicables dans cet Etat.’
The Supreme Court held that absence of Agrément does not infringe French ordre public international (Agrément is required by French adoption law and needs to be sought by the prospective adoptant). Yet fraus (fraude à la loi) might and needs to be properly examined, which the Court of Appeal had failed to do. Suggestion is made in the case that the adoption was engineered with the sole purpose of facilitating the French rights of residence of the adopting father’s partner, who is the mother of the children.
The case emphasises the relevance of fraus omnia corrumpit. Whether of course fraus will be proven in the new proceedings before the Paris Court of Appeal remains to be seen.
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.
European private international law, second ed. 2016, Chapter 2, 126.96.36.199.1, 188.8.131.52.4
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.
Belgium’s Lernout & Hauspie case recently entered a further stage in its civil law chapter. The case is part of Belgium’s (and especially Flanders’) collective memory as an illustration of what can go wrong when markets and investors alike are fooled by corporate greed. Is it world-famous, in Belgium: for those outside, Wiki should help.
Of interest to this blog is the recent judgment of the Gent criminal court on the civil chapter of the case: see my colleague proximus Stefaan Voet’s analysis here. Stefaan has helpfully translated the most relevant sections of the judgment, in particular the court’s rejection of the argument that the US opt-out class action settlement were contrary to Belgium’s ordre public. The court, in my view entirely justifiably, holds that Belgium’s Private international law act does not oppose recognition and enforcement. Of note is the extensive comparative reference which the court makes not just to existing Belgian law on class actions (the Belgian legal order can hardly oppose what it tentatively has introduced itself), but also to a European Recommendation on comparative class action law in the EU (a sort of Ius Commune idea).
Recognition and enforcement rarely makes it to substantive review in Belgian case-law. This judgment is one of note.