Appeal judges allow registration of EU member state judgment despite ‘lacuna in the law’

Commercial litigants who were seeking to enforce an award of payment from a court in Belgium have successfully appealed against a judge’s decision to cancel the registration of the judgment in the Court of Session due to an apparent “lacuna” in the law.

 

The Lord Ordinary had allowed an appeal against the grant of warrant for registration after it emerged that the relevant part of the Rule of Court which relates to recognising judgments from courts of other member states in the European Union was “no longer in existence” when the warrant for registration was granted, but the Inner House of the Court of Session ruled that the application had a “competent purpose”.

 

The Lord President, Lord Carloway, sitting with Lord Brodie and Lord Drummond Young, heard that the petitioners Drika BVBA, Roger van Craen and NV Malu sought registration of a judgment of the Court of First Instance of the judicial district of Antwerp from December 2013, which was granted in their favour for payment of a sum of money due to them by the respondent Clare Giles.

 

 

The petition was presented under the provisions of Rule 62.28 of the Rules of the Court of Session 1994 in the form of petition for registration of a judgment under section 4 of the Civil Jurisdiction and Judgments Act 1982, or under Article 38, Article 57 or Article 58 of Council Regulation (EC) No 44/2001 on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters.

 

By interlocutor dated 16 February 2017 Lord Boyd of Duncansby granted warrant to register a copy of the judgment, but the respondent appealed.

 

Prior to the substantive hearing before Lord Brailsford, notes of argument were lodged in which it was agreed between the parties that there was a “lacuna in the law” as the relevant part of Rule of Court 62.28 was no longer in existence when warrant for registration was granted, as a result of an apparent “error” by the Rules Council.

 

Regulation (EC) 44/2001 requires that a judgment be registered for enforcement in the manner specified by the law of the relevant Member State, but Part V of Chapter 62 of the Rules of the Court of Session was amended by Act of Sederunt (Rules of the Court of Session Amendment) (Regulation (EU) SI No 1215/2012 2015, which came into force on 7 February 2015 and provides that Chapter 62 is no longer to apply to cases brought under the Council Regulation.

   

Counsel for the petitioners submitted that there were two means whereby the intention of Regulation (EC) 44/2001 could be implemented. The first was that the Regulation was plainly of “direct effect” and therefore conferred a jurisdiction on this court to entertain applications for registration of judgments from other member states. His second submission was that in any event the court had an “inherent power” and indeed a “direct responsibility” to ensure that a mechanism existed for the registration of decrees emanating from the court of another member state.

 

The submission of the respondent was to the effect that the repeal of the application of Regulation (EC) 44/2001 had been expressly provided for by Act of Sederunt. The present petition had therefore been presented in reliance upon a provision which was no longer in existence. The present application was therefore “incompetent” because the court had “no jurisdiction” to entertain the application, but the common law remedy of decree conform could be relied on, or an application to the nobile officium of the Court of Session.

  

 

Allowing the appeal and cancelling the registration, Lord Brailsford observed that the circumstances which led to the petition being presented to the court were “highly unusual”.

 

The Lord Ordinary said he could think of no plausible reason why the Rules of Court had been amended in a way which seemed to impede the ability to register certain decrees of courts of member states of the European Union. While the position was “unsatisfactory”, he felt he was unable to conclude that there had been an error on the part of the Rules Council. The implication was that there is “no mechanism” in the Rules of Court for registration of a decree such as the one in the present petition. 

 

The judge accepted that Brussels I had direct effect, but one had to have regard to Article 40 which provided that the procedure for making the application shall be governed by the law of the Member State in which enforcement is sought. While the court had some inherent power to regulate matters of practice, the scope to interfere or innovate in relation to procedure controlled by the Rules of Court was more limited. He therefore did not feel able to rely on the inherent power in the way that had been suggested by counsel, and considered that the petitioners would have no option but to seek decree conform.

 

However, the reclaimers argued that the Lord Brailsford had erred. It was submitted that the court had an “inherent power” to entertain an application such as the present where (i) an exigency has arisen as a result of a lacuna in the procedural rules caused by an apparent drafting error, and (ii) to decline to do so would amount to a breach of the United Kingdom’s international obligations. Such exercise of the court’s inherent jurisdiction would involve “no significant innovation on established procedure”.

 

On behalf of the respondent, counsel reminded the court that the petition purported to proceed under RCS 62.28, whereas parties were agreed that as at the date of presentation of the petition RCS 62.28 did not provide for an application to register a decree such as the judgment; the petitioners had chosen to use a procedure which is no longer available. The dispute between the parties was not as to whether there was a procedure which could be used but whether this particular procedure could be used.

 

 

Allowing the appeal, the appeal judges held that the procedure set out in Chapter 14 of the Rules of Court, which could be applied to any petition, offered a solution.

 

Delivering the opinion of the court, Lord Brodie said: “At paragraph [9] of his Opinion the Lord Ordinary records his conclusion that, although he could not think of any plausible reason as to why this should be so, there was no mechanism in the Rules of Court for registration of a decree in a transitional case. Before this court, both parties agreed with this ‘unsatisfactory position’, as the Lord Ordinary had described it. Where parties differed was where, outside of the Rules of Court, a solution was to be found. For the petitioners it lay in an exercise of the court’s inherent jurisdiction. For the respondent there was no alternative but to raise an action for decree conform. With great respect we cannot agree with any of this.”

 

He continued: “In common with the other chapters of the Rules which make special provision for certain sorts of application, chapter 62 is structured as an exception to the generality of chapter 14; some rules are disapplied and particularly apposite requirements are added. As has already been noticed, prior to 7 February 2015 chapter 62 made special provision for applications to register judgments to which Brussels I applied. 

 

“However, while special provision for applications for registration of judgments to which the 1982 Act and the Lugano Convention continued to be made under part V of chapter 62 and special provision was made under part VA for the various applications required by Brussels I Recast, the effect of the amendments to the Rules of Court effected by the Act of Sederunt of 2015 is that there is no longer any special provision made for the transitional cases regulated by Brussels I. Given the structure of the Rules, that means that an application of which the present case is an example falls to be made by reference to the general provisions as to applications by way of petition which are largely to be found in chapter 14; if an exception no longer applies then one reverts to the generality.

 

“Now, the precise terms of the petition and the interlocutors in the petition process do not explicitly recognise the basis upon which this application can still competently be made. We consider that this does not matter. The purpose of the petition is plain. It is a competent purpose. Given the flexibility of the petition process it may be appropriate to borrow or mirror procedural steps from elsewhere than chapter 14. Essentially that is what the respondent did in making her appeal ‘in terms of Rule of Court 62.34’ and the Lord Ordinary did in granting that appeal and, ‘in terms of Rule of Court 62.39’, cancelling registration of the Judgment.

 

“The respondent has no substantive objection to the registration of the judgment for enforcement in Scotland. Her objection was limited to the procedure adopted in making the necessary application for registration. We consider that objection to be unsound for the reasons we have given. We shall accordingly allow the reclaiming motion. We shall recall the interlocutor of the Lord Ordinary of 20 October 2017. We shall refuse the respondent’s appeal against registration of the judgment.”