61983J0178

CONVENTION ON JURISDICTION AND THE ENFORCEMENT OF JUDGMENTS - ENFORCEMENT - APPEAL AGAINST DISMISSAL OF AN APPLICATION FOR ENFORCEMENT - OBLIGATION TO HEAR THE PARTY AGAINST WHOM ENFORCEMENT IS SOUGHT - SCOPE

( CONVENTION OF 27 SEPTEMBER 1968 , ARTICLE 40 , SECOND PARAGRAPH )

THE COURT HEARING AN APPEAL BY THE PARTY SEEKING ENFORCEMENT IS REQUIRED TO HEAR THE PARTY AGAINST WHOM ENFORCEMENT IS SOUGHT , PURSUANT TO THE FIRST SENTENCE OF THE SECOND PARAGRAPH OF ARTICLE 40 OF THE CONVENTION OF 27 SEPTEMBER 1968 ON JURISDICTION AND THE ENFORCEMENT OF JUDGMENTS IN CIVIL AND COMMERCIAL MATTERS , EVEN THOUGH ( A ) THE APPLICATION FOR AN ENFORCEMENT ORDER WAS DISMISSED SIMPLY BECAUSE DOCUMENTS WERE NOT PRODUCED AT THE APPROPRIATE TIME AND ( B ) THE ENFORCEMENT ORDER IS APPLIED FOR IN A STATE WHICH IS NOT THE STATE OF RESIDENCE OF THE PARTY AGAINST WHOM ENFORCEMENT IS SOUGHT .

IN CASE 178/83

REFERENCE TO THE COURT , UNDER ARTICLE 1 OF THE PROTOCOL OF 3 JUNE 1971 ON THE INTERPRETATION BY THE COURT OF JUSTICE OF THE CONVENTION OF 27 SEPTEMBER 1968 ON JURISDICTION AND THE ENFORCEMENT OF JUDGMENTS IN CIVIL AND COMMERCIAL MATTERS , FROM THE OBERLANDESGERICHT ( HIGHER REGIONAL COURT ) FRANKFURT AM MAIN FOR A PRELIMINARY RULING IN THE PROCEEDINGS PENDING BEFORE THAT COURT BETWEEN

FIRMA P .

AND

FIRMA K .

ON THE INTERPRETATION OF ARTICLE 40 OF THE CONVENTION OF 27 SEPTEMBER 1968 ,

1 BY AN ORDER OF 12 AUGUST 1983 , WHICH WAS RECEIVED AT THE COURT REGISTRY ON 18 AUGUST 1983 , THE OBERLANDESGERICHT ( HIGHER REGIONAL COURT ) FRANKFURT AM MAIN REFERRED TO THE COURT OF JUSTICE FOR A PRELIMINARY RULING UNDER ARTICLES 2 ( 2 ) AND 3 ( 2 ) OF THE PROTOCOL OF 3 JUNE 1971 ON THE INTERPRETATION BY THE COURT OF JUSTICE OF THE CONVENTION OF 27 SEPTEMBER 1968 ON JURISDICTION AND THE ENFORCEMENT OF JUDGMENTS IN CIVIL AND COMMERCIAL MATTERS ( HEREINAFTER REFERRED TO AS ' ' THE CONVENTION ' ' ) A QUESTION ON THE INTERPRETATION OF THE FIRST SENTENCE OF THE SECOND PARAGRAPH OF ARTICLE 40 OF THE CONVENTION .

2 THAT QUESTION WAS RAISED IN THE COURSE OF LITIGATION BETWEEN FIRMA P . ( HEREINAFTER REFERRED TO AS ' ' THE PLAINTIFF ' ' ) AND FIRMA K . ( HEREINAFTER REFERRED TO AS ' ' THE DEFENDANT ' ' ); IT CONCERNS THE NECESSITY OR OTHERWISE OF SUMMONING THE DEFENDANT TO APPEAR BEFORE THE OBERLANDESGERICHT IN PROCEEDINGS FOR THE ENFORCEMENT OF A DEFAULT JUDGMENT GIVEN ON 20 JANUARY 1982 BY THE ARRONDISSEMENTSRECHTBANK , ROTTERDAM .

3 BY THAT JUDGMENT THE DEFENDANT WAS ORDERED TO PAY TO THE PLAINTIFF THE SUM OF 678 095 SAUDI RIYALS OR THE EQUIVALENT OF THAT SUM IN US DOLLARS , TOGETHER WITH INTEREST AS REQUIRED BY LAW . ON THE GROUND THAT THE DEFENDANT HAD A BANK ACCOUNT IN FRANKFURT AM MAIN , THE PLAINTIFF APPLIED TO THE LANDGERICHT ( REGIONAL COURT ) FRANKFURT AM MAIN FOR AN ORDER FOR THE ENFORCEMENT OF THE JUDGMENT .

4 BY AN ORDER MADE ON 10 JANUARY 1983 WITHOUT THE DEFENDANT ' S HAVING BEEN SUMMONED TO APPEAR , THE PRESIDENT OF THE THIRD CIVIL DIVISION OF THAT COURT DISMISSED THE APPLICATION ON THE GROUND THAT THE PLAINTIFF HAD FAILED TO PRODUCE THE DOCUMENTS REQUIRED BY ARTICLE 46 ( 2 ), NAMELY :

' ' THE ORIGINAL OR A CERTIFIED TRUE COPY OF THE DOCUMENT WHICH ESTABLISHES THAT THE PARTY IN DEFAULT WAS SERVED WITH THE DOCUMENT INSTITUTING THE PROCEEDINGS , ' '

AND BY ARTICLE 47 ( 1 ) OF THE CONVENTION , NAMELY :

' ' DOCUMENTS WHICH ESTABLISH THAT , ACCORDING TO THE LAW OF STATE IN WHICH IT HAS BEEN GIVEN , THE JUDGMENT IS ENFORCEABLE AND HAS BEEN SERVED . ' '

5 THE PLAINTIFF APPEALED AGAINST THAT ORDER TO THE OBERLANDESGERICHT ; IN SUPPORT OF ITS APPEAL IT PRODUCED SUPPLEMENTARY DOCUMENTS WHICH , IN ITS VIEW , SHOWED THAT THE STATEMENT OF CLAIM AND THE DEFAULT JUDGMENT HAD BEEN PROPERLY SERVED .

6 CONSIDERING THAT THE RESULT OF THE PROCEEDINGS BEFORE IT DEPENDED ON THE INTERPRETATION OF ARTICLE 40 OF THE CONVENTION , THE OBERLANDESGERICHT STAYED THE PROCEEDINGS AND REFERRED THE FOLLOWING QUESTION TO THE COURT OF JUSTICE :

' ' IS THE APPELLATE COURT REQUIRED TO HEAR THE PARTY AGAINST WHOM ENFORCEMENT IS SOUGHT UNDER THE FIRST SENTENCE OF THE SECOND PARAGRAPH OF ARTICLE 40 OF THE CONVENTION ON JURISDICTION AND THE ENFORCEMENT OF JUDGMENTS IN CIVIL AND COMMERCIAL MATTERS IF ( A ) THE APPLICATION FOR AN ENFORCEMENT ORDER WAS DISMISSED SIMPLY BECAUSE DOCUMENTS WERE NOT PRODUCED AT THE APPROPRIATE TIME AND ( B ) THE ENFORCEMENT ORDER IS APPLIED FOR IN A STATE WHICH IS NOT THE STATE OF RESIDENCE OF THE PARTY AGAINST WHOM ENFORCEMENT IS SOUGHT , SO THAT THE LATTER PERSON WILL NORMALLY BE ABLE TO ESTABLISH AGAINST WHICH ASSET ( IN THE PRESENT CASE : A CLAIM AGAINST A BANK ) ENFORCEMENT IS TO TAKE PLACE IN THAT STATE AND THUS BE IN A POSITION TO DISPOSE OF THAT ASSET BEFORE EXECUTION IS LEVIED?

' '

7 ARTICLE 40 OF THE CONVENTION PROVIDES THAT :

' ' THE PARTY AGAINST WHOM ENFORCEMENT IS SOUGHT SHALL BE SUMMONED TO APPEAR BEFORE THE APPELLATE COURT . IF HE FAILS TO APPEAR , THE PROVISIONS OF THE SECOND AND THIRD PARAGRAPHS OF ARTICLE 20 SHALL APPLY EVEN WHERE HE IS NOT DOMICILED IN ANY OF THE CONTRACTING STATES . ' '

8 IT SHOULD BE NOTED THAT THE WORDING OF THAT ARTICLE DOES NOT PROVIDE FOR ANY EXCEPTION .

9 THE OBERLANDESGERICHT NONE THE LESS ASKS WHETHER SUCH AN EXCEPTION SHOULD BE ACKNOWLEDGED TO EXIST BY REASON OF THE FACT THAT , ON THE ONE HAND , THE LANDGERICHT DISMISSED THE APPLICATION FOR AN ENFORCEMENT ORDER FOR THE SOLE REASON THAT THE DOCUMENTS WERE NOT PRODUCED BY THE PLAINTIFF AT THE PROPER TIME AND , ON THE OTHER HAND , THE SYSTEM POSTULATED BY ARTICLE 40 IS UNSUITED TO THIS CASE SINCE ENFORCEMENT IS TO TAKE PLACE IN A STATE WHICH IS NOT THE STATE OF DOMICILE OF THE PARTY AGAINST WHOM IT IS SOUGHT .

10 IN THE CONTEXT OF THIS CASE , THE POSITION TAKEN BY THE OBERLANDESGERICHT MAY BE EXPLAINED BY THE FACT THAT , IN ORDER TO FULLY SAFEGUARD THE SURPRISE EFFECT OF THE ENFORCEMENT PROCEEDINGS AT THAT LEVEL , THE LANDGERICHT COULD HAVE GONE FURTHER IN ITS EXAMINATION OF THE CASE AND SOUGHT TO OBTAIN THE INFORMATION WHICH WAS LACKING IN ORDER TO ARRIVE AT A DECISION ON THE SUBSTANCE OF THE CASE .

11 IT IS NONETHELESS TRUE THAT THE CONVENTION FORMALLY REQUIRES THAT BOTH PARTIES SHOULD BE GIVEN A HEARING AT THE APPELLATE LEVEL , WITHOUT REGARD TO THE SCOPE OF THE DECISION IN THE LOWER COURT . THAT PROVISION IS IN ACCORDANCE WITH THE SPIRIT OF THE CONVENTION , WHICH SEEKS TO RECONCILE THE NECESSARY SURPRISE EFFECT IN PROCEEDINGS OF THIS NATURE WITH RESPECT FOR THE DEFENDANT ' S RIGHT TO A FAIR HEARING ( SEE THE JUDGMENT OF THE COURT OF 21 . 5 . 1980 , CASE 125/79 , DENILAULER V COUCHET FRERES , ( 1980 ) ECR 1553 ). THAT IS WHY THE DEFENDANT IS NOT ENTITLED TO BE HEARD IN THE LOWER COURT , WHEREAS ON APPEAL HE MUST BE GIVEN A HEARING . THERE CAN BE NO EXCEPTION TO THAT RULE IN A SITUATION WHERE , FOR REASONS WHICH MAY BE ASCRIBED TO THE PLAINTIFF , THE LOWER COURT HAS DISMISSED AN APPLICATION FOR ENFORCEMENT ON PURELY FORMAL GROUNDS . THERE IS NO GROUND FOR APPROACHING THIS MATTER DIFFERENTLY ACCORDING TO WHETHER THE DEFENDANT ' S HABITUAL RESIDENCE OR REGISTERED OFFICE IS IN THE STATE WHERE ENFORCEMENT IS SOUGHT OR IN ANOTHER STATE .

12 AS A RESULT , THE REPLY TO THE QUESTION REFERRED BY THE NATIONAL COURT SHOULD BE THAT THE COURT HEARING AN APPEAL BY A PARTY SEEKING ENFORCEMENT IS REQUIRED TO HEAR THE PARTY AGAINST WHOM ENFORCEMENT IS SOUGHT , PURSUANT TO THE FIRST SENTENCE OF THE SECOND PARAGRAPH OF ARTICLE 40 OF THE CONVENTION , EVEN THOUGH THE APPLICATION FOR AN ENFORCEMENT ORDER WAS DISMISSED SIMPLY BECAUSE DOCUMENTS WERE NOT PRODUCED AT THE APPROPRIATE TIME AND THE ENFORCEMENT ORDER IS APPLIED FOR IN A STATE WHICH IS NOT THE STATE OF RESIDENCE OF THE PARTY AGAINST WHOM ENFORCEMENT IS SOUGHT .

COSTS

13 THE COSTS INCURRED BY THE GOVERNMENT OF THE FEDERAL REPUBLIC OF GERMANY AND BY THE COMMISSION OF THE EUROPEAN COMMUNITIES WHICH HAVE SUBMITTED OBSERVATIONS TO THE COURT , ARE NOT RECOVERABLE . AS THESE PROCEEDINGS ARE , IN SO FAR AS THE PARTIES TO THE MAIN PROCEEDINGS ARE CONCERNED , IN THE NATURE OF A STEP IN THE ACTION PENDING BEFORE THE NATIONAL COURT , THE DECISION ON COSTS IS A MATTER FOR THAT COURT .

ON THOSE GROUNDS ,

THE COURT ( SECOND CHAMBER ),

IN ANSWER TO THE QUESTION REFERRED TO IT BY THE OBERLANDESGERICHT FRANKFURT AM MAIN BY ORDER OF 12 AUGUST 1983 , HEREBY RULES :

THE COURT HEARING AN APPEAL BY THE PARTY SEEKING ENFORCEMENT IS REQUIRED TO HEAR THE PARTY AGAINST WHOM ENFORCEMENT IS SOUGHT , PURSUANT TO THE FIRST SENTENCE OF THE SECOND PARAGRAPH OF ARTICLE 40 OF THE CONVENTION ON JURISDICTION AND THE ENFORCEMENT OF JUDGMENTS IN CIVIL AND COMMERCIAL MATTERS , EVEN THOUGH THE APPLICATION FOR AN ENFORCEMENT ORDER WAS DISMISSED SIMPLY BECAUSE DOCUMENTS WERE NOT PRODUCED AT THE APPROPRIATE TIME AND THE ENFORCEMENT ORDER IS APPLIED FOR IN A STATE WHICH IS NOT THE STATE OF RESIDENCE OF THE PARTY AGAINST WHOM ENFORCEMENT IS SOUGHT .