C-125/79

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origin and under various procedures, court without the party against whom of an inquiry in adversary they are directed having been proceedings. summoned to appear and which are 2. The conditions imposed by Title III intended to be enforced without prior of the Convention on the recognition service on that party. It follows that and the enforcement of judicial this type of judicial decision is not decisions are not fulfilled in the case covered by the system of recognition of provisional or protective measures and enforcement provided for by Title which are ordered or authorized by a III of the Convention.

In Case 125/79

REFERENCE to the Court under 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 by the Oberlandesgericht [Higher Regional Court] Frankfurt am Main, for a preliminary ruling in proceedings pending before that court between BERNARD DENILAULER, 26 Spessartstraße, 6204 Taunusstein 2

defendant and appellant, and

S.N.c. COUCHET FRÈRES, Andrézieux-Bouthéon (France) plaintiff and respondent,

JUDGMENT

Facts and Issues

Denilauler lodged an appeal against that order before the Oberlandesgericht By an application of 19 February 1979 to Frankfurt am Main seeking as a principal the Landgericht [Regional Court] claim to set aside the order on the

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ground that the application to the Land- addition to the rule contained in the gericht Wiesbaden should have been second paragraph of Article 34 of dismissed under Articles 27 (2) and 46 the Convention, exercises the appeal (2) of the Convention because the available under the first paragraph of application of 7 February 1979 to the Article 36 of the Convention against Tribunal de Montbrison had not been authorization of enforcement of a served on him. As a subsidiary claim he provisional protective measure within requested that enforcement be allowed the meaning of Article 24 of the only as regards FF 55 000, that is, by Convention, plead objections to the subtracting from the sum of FF 120 000 claim itself irrespective of the time at the sum of FF 65 000 which he had which the grounds for the objection unsuccessfully sought before the French arose; in cases of this sort can court as a set-off against his debt. He therefore the party against whom claims that the fact that the debt which enforcement is sought set off a claim he seeks to set off against Couchet arose which he already possessed against before the date (7 February 1979) when the applicant before the provisional the French court made the attachment measure was taken in the first State? order is irrelevant in this regard.

DENILAULER ν COUCHET FRÈRES

Agent Adolfo Maresca, assisted by the sufficient time to enable him to arrange Avvocato dello Stato, F. Favara, and the for his defence". Commission of the European Communities, represented by its Agent, G. Behr, assisted by W. D. Krause-Ablass of the Düsseldorf Bar, lodged 'written According to Article 46 (2) a party observations pursuant to Article 5 of the seeking recognition or applying for Protocol of 3 June 1971 in accordance enforcement of a judgment must produce with Article 20 of the Statute of the "In the case of a judgment given in Court of Justice of the EEC. default, the original or a certified true copy of the document which establishes that the party in default was served with the document instituting the On hearing the report of the Judge- proceedings." Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any According to Article 47 (1) a party preparatory inquiry. applying for enforcement must also produce: "Documents which establish that, according to the law of the State in which it has been given, the judgment is enforceable and has been served". II — O b s e r v a t i o n s u n d e r A r t i c l e 20 of the P r o t o c o l on the S t a t u t e of the C o u r t of J u s t i c e of the E E C 1. Observations of the plaintiff in the main action (Couchet)

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object of a protective measure that the attachments without the knowledge of grant of enforcement under the the other party. Convention cannot be made dependent upon the document instituting the proceedings having been served on the other party. Such a requirement would As to (a), the United Kingdom thinks impair the effectiveness and surprise that the language of Articles 46 (2) and effect upon which the success of such 47 (1) of the Convention is clear and proceedings depends. Since the mandatory. It also draws support for its Convention regards interim or protective argument from the words of the third judicial measures as judgments capable paragraph of Article 33 which provides of being recognized and enforced in that the documents referred to in Articles another Contracting State, those 46 ' and 47 shall be attached to the judgments must have the same application. Finally, as endorsed by legal effectiveness in the State where the commentators, Article 27 (2) is directed measure is to be enforced as they have in not only at default judgments proper, but the State of origin. also at all other judgments given as a result of proceedings in which the defendant has not appeared.

These considerations must lead to the The British Government thinks that the admission that a French attachment national court is correct in observing that order must be made enforceable under if the strict application of Article 27 (2) the Convention even when that order has is necessary for, and is intended to not been previously served in accordance ensure that, the court of the State with Article 47 (1) of the Convention. addressed verifies whether the rights of the defence have been sufficiently protected in the State of origin, this application leads to the further, unintended, result of depriving the plaintiff of the surprise effect which is 2. Observations of the United Kingdom most often necessary for the success of Government protective measures and which justifies the ex parte nature of such proceedings.

Convention as well as to the ordinary first importance that a defendant meaning of the terms used; and the subjected to such a measure, and any ordinary meaning, which is unambiguous other interested person, should have the in this case, can only be displaced if its chance within a very short period of result were manifestly absurd or putting forward his arguments before the unreasonable. court which imposed it. This will be possible only if that court is geo- graphically close, if it operates a legal susytem with which the affected party is familiar, and if there are no linguistic difficulties. In other words, the effect of surprise provisional protective measures ordered on an ex parte application without the defendant's having any As to (b), the interpretation which the knowledge of them, should as a general United Kingdom Government proposes, rule be limited to the State in which the far from leading to unreasonable results, order is made. would on the contrary lead to results meeting the needs of commercial practice. Provisional protective measures, in particular the freezing of a bank account, are often drastic in their effect, particularly for commercial undertakings which, following proceedings of which they have no knowledge, find accounts This interpretation would in practice blocked which hold sufficient funds to make it necessary for an applicant for honour obligations abroad without even provisional protective measures who having had the chance to make other wishes to take the defendant by surprise, arrangements to meet the presentation of to make his application in the State bills or for payments to be made. Thus where the measure is to be enforced, not only the interests of the defendant even though the courts of that State do but also those of third parties may be not have substantive jurisdiction and seriously affected. If serious prejudice to according to the United Kingdom the rights of such other persons is to be Government Article 24 of the prevented and uncertainty avoided for Convention confirms that such is indeed commercial transactions, it is essential the appropriate solution in the context of that protective measures of this kind the Convention on Jurisdiction. should rapidly be brought to the notice of all concerned and that they should have opportunities for taking immediate counter-action.

at present only if they are ancillary to an and 46 (2) extend to protective action justiciable in national courts. proceedings. The need to deal with cases However, amendments to the law on this of urgency has led the national' point are under consideration. legislatures of the Contracting States, notably in Italy, to confer upon their courts the power to give judgment The United Kingdom therefore proposes inaudita altera parte in certain circum- that the first and second questions put to stances. It is not possible to speak of the Court of Justice should be answered "default" by the defendant in such cases as follows: since his participation in that stage of the judgment is not required by procedural law. The formal conditions laid down by Articles 27 (2) and 46 (2), taking account "Articles 27 (2), 46 (2) and 47 (1) of the also of the first paragraph of Article 34 Convention apply to proceedings in of the Convention, should not therefore which provisional protective measures apply to the enforcement of a protective have been ordered without hearing the measure adopted in the initial stage of opposite party in the same way as they the trial during which oral argument by apply to other default judgments." both sides is not required by the law of the State to which the court which adopted that measure belongs. However, this initial ex parte stage must be 3. Observations by the Italian followed by argument from both sides Government within a very short while.

DENILAULER ν COUCHET FRÈRES

surprise effect which they are government experts mainly had in intended to achieve. Refusal to mind judgments by default and the recognize and enforce these measures Jenard Report (Official Journal 1979, affects an important category of C 59, p. 42) provides no support for judgments and the Contracting States holding that those provisions must be cannot have intended to restrict the extended to applications for the field of application of the Convention enforcement of protective measures to that degree. adopted in the State of origin without the other side's being heard.

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visional measures were granted in the he has in his own State as regards the State of origin. Article 14 (1) of the attachment ordered against him. German Law of 29 July 1972 implementing the Convention (BGBl. 1972, I, p. 1328) states that the debtor may in his appeal (Beschwerde) also raise In fact according to Articles 917 et seq. objections to the claim itself, in so far as of the German Code of Civil Procedure they arose only after the foreign objections to the substance of the claim judgment was given". can only be examined in the defence to the main action and therefore do not in principle affect the enforceability of the attachment order. The court of the State addressed may moreover make the Denilauler thinks that the set-off on enforcement which it orders conditional which he relies is admissible upon security being given, which safe- notwithstanding the fact that the debt guards the interests of the party whose due to him arose before the order of assets are attached. 7 February 1979; he argues that the factor determining whether the facts on which the main defence rests arose before or after the order was made is the Even if the raising of objections against time when the set-off was pleaded and the claim were regarded as permissible, not the time when the two debts could any objections which the other party has first be set off one against the other, already made in the proceedings which he has brought in the State of origin must still be barred by the principle of lis pendens.

1. Observations by the plaintiff in the main action 2. Observations of the United Kingdom Government

a matter to be raised before the court of Convention are not intended to change origin and not before the court the normal criteria for distributing addressed. jurisdiction among the courts of the various Contracting States or between the courts within each Contracting State. The view to be preferred is therefore that If the Court shares this view on Question the decision on the appeal referred to in 3, Question 4 will not arise for decision. Article 36 can only be intended to If, however, a decision on this question establish whether the conditions laid is necessary, the United Kingdom would down by the Convention for the issue of submit that the fact that an appeal has the enforcement order are fulfilled and been lodged in the court of origin is an consequently to allow enforcement additional reason for not allowing the proceedings to be undertaken. matters raised in that appeal to be argued before the court addressed in the appeal against enforcement because of the lis alibi pendens rule. The appeal judgment is in substance nothing more than a continuation of the judgment upon the application for the grant of an enforcement order. This judgment seems to consist of two stages: The United Kingdom therefore submits first, one in which "the party against that Questions 3 and 4 be answered as whom enforcement is sought" (Article 40 follows: of the Convention) is not called upon to participate and may not even intervene "to make any submissions" (first paragraph of Article 34 of the "The respondent in enforcement Convention) and a possible second stage proceedings is not permitted to plead in begun by an appeal under Article 36 of those proceedings a set-off which arose the Convention. before judgment was given in the court of origin; and a fortiori if he has already raised that issue in an appeal against the decision in the State of origin". Supporting arguments may also be based on Articles 38 and 39 of the Convention which merely specify periods for enforcement and the provision of security. 3. Observations of the Italian Govern- ment The Italian Government consequently proposes that the answer to Questions 3 and 4 should be that: According to the Italian Government Questions 3 and 4 concern the purpose of the appeal referred to in Article 36 of the Convention and consequently the "Preliminary objections or defence limits of the jurisdiction of the court submissions other than those concerning before which that appeal is brought. The the grant of the order for enforcement special nature of the appeal against the are not permissible in the appeal order for enforcement gives reason to procedure referred to in Article 36 of the believe that Articles 36 et seq. of the Brussels Convention".

III — O r a l p r o c e d u r e On the basis of the order of the Bun- desgerichtshof of 16 May 1979 cited above, the Commission is of the opinion At the sitting on 26 February 1980 the that it is only during the proceedings defendant, represented by Dr. G. H. before the court of the State of origin or Schroer, Rechtsanwalt of Frankfurt am at the time of separate proceedings in Main, the Commission of the European which a definitive ruling is given upon Communities, represented by Dr W.-D. the claim in dispute that the defendant Krause-Ablass,' Rechtsanwalt of Düssel- may present its defence as to the dorf, and the Government of the United substance and not during the Kingdom, represented by K. M. proceedings to enforce the protective Newman, C. B., Under Secretary, Lord measure, otherwise the court ruling upon Chancellor's Office, presented oral enforcement would encroach upon the argument. power of decision of the court having jurisdiction to give a definitive ruling The Advocate General delivered his upon the claim in question. opinion at the sitting on 26 March 1980.

DENILAULER ν COUCHET FRÈRES

Decision

1 By an order of 25 July 1979 received at the Court on 6 August 1979 the Oberlandesgericht [Higher Regional Court] Frankfurt am Main referred to the Court under the Protocol 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) (Official Journal 1978, L 304, p. 36) four questions relating to the interpretation of Articles 24, 27 (2), the second paragraph of Article 34, the first paragraph of Articles 36 and Articles 46 (2) and 47 (1) of the Convention.

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4 These questions first seek to know whether decisions of the judicial auth- orities of a Contracting State ordering provisional and protective measures, where the party against whom they are directed has not been summoned to appear and does not become aware of them until after their enforcement, may be recognized and made enforceable in another Contracting State without prior service on the party against whom they are directed (Questions 1 and 2). They secondly seek clarification of the objections which the party against whom enforcement is sought may raise when lodging the appeal against the enforcement order as provided by Article 36 of the Convention (Questions 3 and 4).

Q u e s t i o n s 1 and 2

5 Questions 1 and 2, which should be answered together, read as follows:

" 1 . Do Articles 27 (2) and 46 (2) also apply to proceedings in which pro- visional protective measures are taken without the opposite party's being heard?

2. Is Article 47 (1) of the Convention to be interpreted as meaning that the party applying for enforcement must also produce the documents which establish that the judgment of which enforcement is sought has been served, even if that judgment concerns a provisional and purely protective measure?"

The United Kingdom Government, on the other hand, is of the opinion that the recognition and the enforcement of these judgments must be subject to the conditions set out in Articles, 27, 46 and 47 as regards service on the other party. It acknowledges that this requirement removes the surprise effect peculiar to such decisions and destroys all their practical value so that it virtually amounts to a refusal to recognize and enforce the decisions in question. However, it feels that the effect of this is not so serious as what it regards the intolerable risks which would have to be run by undertakings having assets in different Contracting States as a result of a procedure which obliges the courts of the State addressed to authorize measures freezing assets located in that State without the owner of those assets having ever had the opportunity to put forward his version of the case either before the court of the State of origin or before the court of the State addressed when such assets may have been legitimately intended to meet other obligations. Only the court having jurisdiction in the State in which the assets are located is in a position to determine, in the full knowledge of the facts of the case, the necessity to authorize this type of provisional or protective measure. The United Kingdom government further contends that its point of view does not create a lacuna in the scheme of the Convention because Article 24 enables any party to apply to the courts of a Contracting State for such provisional or protective measures as may be available under the law of that State, even if the courts of another Contracting State have jurisdiction as to the substance of the matter.

10 However, it cannot be inferred from the fact that Articles 27 (2), 46 (2) and 47 (1) cannot apply to decisions of the type in question, save by distorting their substance and scope, that such decisions must nevertheless be recognized and enforced in the State addressed. It is necessary to consider whether judicial decisions of this type, having regard to the scheme and objects of the Convention, may be dealt with under the simplified procedure for recognition and enforcement provided by the Convention.

1 1 In favour of an affirmative answer, the Commission and the Italian government maintain that, according to Article 25, the Convention covers all decisions given by the courts of the Contracting States without distinguishing between those involving adversary proceedings and those given without the other party's being summoned to appear. As is apparent from Article 24 the field of application of the Convention embraces protective and provisional measures which, under the law of the different Contracting States and by reason of their very nature or their urgency are often adopted without the opposite party's having first been heard. The Contracting States cannot have

DENILAULER ν COUCHET FRÈRES

intended to restrict the field of application of the Convention to such an extent without express mention being made to that effect. Finally, it may clearly be seen from Article 34 of the Convention, which states that in the proceedings for an enforcement order "the party against whom enforcement is sought shall not at this stage of the proceedings be entitled to make any submissions on the application", that the Convention itself recognizes that proceedings in which only one party is heard are, where circumstances justify them, in keeping with the basic principle of the rights of the defence.

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tunity to protect his assets against any enforcement measures, the surprise effect is attenuated since the unilateral proceedings are based on the assumption that both parties will have been heard in the State of origin.

15 An analysis of the function attributed under the general scheme of the Convention to Article 24, which is specifically devoted to provisional and protective measures, leads, moreover, to the conclusion that, where these types of measures are concerned, special rules were contemplated. Whilst it is true that procedures of the type in question authorizing provisional and protective measures may be found in the legal system of all the Contracting States and may be regarded, where certain conditions are fulfilled, as not infringing the rights of the defence, it should however be emphasized that the granting of this type of measure requires particular care on the part of the court and detailed knowledge of the actual circumstances in which the measure is to take effect. Depending on each case and commercial practices in particular the court must be able to place a time-limit on its order or, as regards the nature of the assets or goods subject to the measures contemplated, require bank guarantees or nominate a sequestrator and generally make its authorization subject to all conditions guaranteeing the provisional or protective character of the measure ordered.

16 The courts of the place or, in any event, of the Contracting State, where the assets subject to the measures sought are located, are those best able to assess the circumstances which may lead to the grant or refusal of the measures sought or to the laying down of procedures and conditions which the plaintiff must observe in order to guarantee the provisional and protective character of the measures ordered. The Convention has taken account of these requirements by providing in Article 24 that application may be made to the courts of a Contracting State for such provisional, including protective, measures as may be available under the law of that State, even if, under the Convention, the courts of another Contracting State have jurisdiction as to the substance of the matter.

Costs

20 The costs incurred by the Government of the Italian Republic, the Government of the United Kingdom and 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 action 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.

OPINION OF MR MAYRAS — CASE 125/79

On those grounds,

T H E COURT

in answer to the questions referred to it by the Oberlandesgericht Frankfurt am Main by order of 25 July 1979 received at the Court on 6 August 1979, hereby rules :

Mr President, Regional Court] Frankfurt am Main in Members of the Court, the Federal Republic of Germany concerning a dispute between S.n.c. This reference for a preliminary ruling is Couchet Frères, a French transport made by the Oberlandesgericht [Higher undertaking, and a German customer, 1 — Translated from the French.