C-258/83

on t h e interpretation of t h e second p a r a g r a p h of Article 37 a n d t h e second p a r a g r a p h of Article 38 of t h e Convention of 27 September 1968 o n Jurisdiction a n d t h e E n f o r c e m e n t of J u d g m e n t s in Civil a n d C o m m e r c i a l Matters,

T H E C O U R T (Fourth C h a m b e r )

composed of: G. Bosco, President of C h a m b e r , P . Pescatore, A. O'Keeffe, T . K o o p m a n s and K. B a h l m a n n , Judges,

Advocate general: Sir G o r d o n Slynn Registrar: H . A. Rühi, Principal Administrator

gives the following

JUDGMENT

office at Pastrengo, Verona, in Italy, and desgerichtshof under the second para­ Wendel GmbH Schuhproduktion Inter­ graph of Article 37 of the Convention. national (hereinafter referred to as Brennero considers that the interim "Wendel") which has its registered office order is unlawful in so far as it requires at Detmold in the Federal Republic of a security to be provided without at Germany. the same time judgment being given on Wendeľs appeal and that it should By order of 17 June 1983, which was therefore be set aside. declared enforceable within Italian territory, the Tribunale [District Court], Verona, authorized Brennero to seize 2. Article 37 of the Convention pro­ the movable and immovable assets in vides as follows: Wendeľs possession up to an amount "An appeal against the decision auth­ of LIT 700 000 000 in respect of the orizing enforcement shall be lodged in princial amount together with any accordance with the rules governing pro­ interest accrued or accruing thereon. cedure in contentious matters: On 7 July 1983 the President of the Fourth Civil Chamber of the Landgericht [Regional Cort], Detmold, pursuant to in the Federal Republic of Germany, Article 31 of the Convention of 27 with the Oberlandesgericht, September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (hereinafter re­ The judgment given on the appeal may ferred to as "the Convention"), issued an be contested only by an appeal in order for the enforcement of the cassation or, in the Federal Republic of judgment given by the Italian court. The Germany, by a 'Recbtsbeschwerde'." order was issued by an officer of the court with the proviso that enforcement Articles 38 and 39 of the Convention are should not go beyond the protective worded as follows: measures required until the creditor "Article 38 produced a certificate showing that enforcement could proceed without re­ The court with which the appeal under striction. the first paragraph of Article 37 is lodged may, on the application of the appellant, Wendel appealed against that decision stay the proceedings if an ordinary ap­ under Article 36 et seq. of the Con­ peal has been lodged against the judg­ vention and submitted an application ment in the State in which that judgment under the second paragraph of Article 38 was given or if the time for such an of the Convention, whereupon the Ober- appeal has not yet expired; in the latter landesgericht [Higher Regional Court], case, the court may specify the time Hamm, by interim order of 15 July 1983 within which such an appeal is to be made enforcement of the order issued lodged. by the Tribunale, Verona, conditional on Brennero providing security of D M The court may also make enforcement 1 200 000. It is clear from the order conditional on the provision of such making the reference that the Oberlan- security as it shall determine. desgericht did not at the same time give judgment on the appeal. Article 39 During the time specified for an appeal Brennero lodged a Recbtsbeschwerde [ap­ pursuant to Article 36 and until any such peal on a point of law] against the Ober- appeal has been determined, no measures Iandesgericht's order with the Bun­ of enforcement may be taken other than

protective measures taken against the exceptions to that rule is applicable in property of the party against whom en- the present case. However, that pro- forcement is sought. vision would be overridden if it were permissible, under the Convention, to The decision authorizing enforcement lodge a Rechtsbeschwerde (second para- shall carry with it the power to proceed graph of Article 37) against an order to any such protective measures." concerning the provision of security not only where the order is issued as part of Taking the view that an interpretation of the judgment on the appeal and is the second paragraph of Article 37 and contestable with it but also where it is the second paragraph of Article 38 was issued merely as an interim measure necessary to enable it to resolve the during the appeal proceedings, whether dispute, the Bundesgerichtshof referred or not such an order is possible under the following questions to the Court of the Convention. Justice for a preliminary ruling:

ceedings? Federal Republic of Germany, rep- resented by Christof Böhmer, Mini- 2. May a Rechtsbescbwerde (appeal on a sterialrat at the Federal Ministry of point of law be lodged with the Justice, acting as Agent; by the Govern- Bundesgerichtshof either directly ment of the Italian Republic, represented under the second paragraph of by Arnaldo Squillante, President of Article 37 of the Convention, or by Chamber at the Council of State, Head analogy therewith, against an order of the Department for Contentious concerning the provision of security Diplomatic Affaire at the Ministry of issued by the Oberlandesgericht on Foreign Affairs, acting as Agent, assisted the basis of the second paragraph of by Oscar Fiumara, Avvocato dello Stato; Article 38 of the Convention as an and by the Commission of the European interim measure during the appeal Communities, represented by Jörn Pip- proceedings?" kom, a member of its Legal Department, acting as Agent, assisted by Wolf- In the grounds set out in the order Dietrich Krause-Ablass, of the Düssel- making the reference, the Bundes- dorf Bar. gerichtshof points out that under Para- graph 567 (3) of the German Code of Upon hearing the report of the Judge- Civil Procedure, a Rechtsbeschwerde Rapporteur and the views of the lodged against an order of the Ober- Advocate General, the Court decided to landesgericht would be dismissed as open the oral procedure without any inadmissible and that none of the preparatory inquiry.

Brennero also draws attention to a factor which was not expressly raised in the questions submitted. It considers that First question Article 38 of the Convention is inap- plicable in proceedings for the en- forcement of an interim order, such as the protective seizure order issued by the Brennero, the appellant in the main action, Tribunale, Verona, in the present case. contends that neither the wording of the Seizure is by definition a measure which second paragraph of Article 37 nor the has only temporary effects before final system established by the Convention judgment is given on the substance of the permit the issue of an interim order case. A provisional suspension of the concerning the provision of security effects of an interim order of that kind under the second paragraph of Article or an order requiring a creditor effecting 38, before judgment is given on the seizure to provide security for the same appeal in accordance with the first amount would be tantamount to can- paragraph of Article 36 and Article 37 of celling out the effects of the original the Convention. The second paragraph interim order by a protective measure of Article 37 does not apply to interim having the opposite effect. In that orders or interlocutory judgments. If a respect, such a measure would amount to court were permitted to issue an interim a review of the substance of the original order under Article 38 before giving judgment, something that is expressly judgment on the appeal, Article 39 prohibited by the last paragraph of would be rendered devoid of purpose. Article 34 of the Convention. An interim That provision lays down precisely that protecitvc measure creates, in so far as it the decision authorizing enforcement prejudges the final decision, a risk which permits the creditor to take protective the court of the State in which the measures during the period specified for original judgment was given must assess lodging an appeal against the decision at the time when it authorizes the authorizing enforcement and until judg- seizure. ment has been given on the appeal. As long as the court of first instance's decision authorizing enforcement is not enforceable itself, that is to say whilst the appeal proceedings are in progress, it is Brennero points out that suspension of inappropriate to issue an interim order enforcement and the provision of se- curity are typical measures relating to under Article 38. It is only once the the enforcement of judgments on the appeal proceedings are over that it may substance of a case and they do not prove necessary to make the decision apply to measures intended to provide authorizing enforcement — if it has been interim legal protection.

The legal traditions of the Member sought solely in view of the provisional States, which were followed in bilateral nature of the foreign judgment. The international agreements, always de- provisions of Article 39 provide adequate manded as a pre-condition for en- guarantees for the duration of any ap- forcement that the judgment should have peal proceedings. become final (res judicata). Although the Convention departs from that tradition by providing that judgments which are open to appeal are also enforceable, it takes account in Article 38 of the possible consequences of enforcing a judgment which is subsequently re- The Commission weighs the conflicting viewed. The decisive reason for limiting interests of the creditor and of the the scope of the measures provided for debtor. Under Article 34 of the Con- by Article 38 exclusively to judgments vention, the court of first instance on the substance of a case is that hearing the creditor's application for an enforcement proper produces irrevocable enforcement order is obliged to give its effects on the debtor's assets, with the decision without delay and without result that precautionary measures are hearing the debtor. Although the pro- needed pursuant to Article 38 in cases tective measures which the creditor may where the judgment in question may still take in accordance with Article 39 in the be amended. However, that does not event of an appeal by the debtor are not apply where the measures are intended themselves sufficient to satisfy the merely to provide interim legal pro- creditor's claim, they may none the less tection. on their own already create substantial economic difficulties for the debtor, for example by freezing his bank accounts. In view of the debtor's right of recourse against the creditor if the decision auth- orizing enforcement is subsequently reversed, the debtor has an interest in The Italian Government and the Com- obtaining an order that the creditor must mission also consider that the court provide security. Conversely, where no hearing an appeal against a decision such obligation is imposed by the authorizing enforcement may require the original foreign judgment, it constitutes provision of security under Article 38 of an additional burden for the creditor. the Convention only when it gives judg- ment on the appeal.

either to stay the proceedings where an ordinary appeal has been lodged in the The German Government considers that State in which the judgment was given or the court hearing an appeal against a where the period for lodging such an decision authorizing enforcement may, appeal has not yet expired; under the second paragraph of Article 38 of the Convention, make an interim order for the provision of security during the appeal proceedings. It contends that or to give judgment forthwith on the Article 38 provides for the possibility appeal lodged with it and, if it upholds the enforcement order, to authorize of staying the proceedings or making enforcement with or without provision of enforcement conditional on the provision security. of security. A stay of proceedings is by its very nature an interim measure. Since a measure of that kind may cause sub- stantial harm to the creditor, for example However, a restrictive interpretation of where the debtor becomes bankrupt that kind does not deny a debtor the whilst the proceedings arc suspended, the possibility of defending his legitimate second paragraph of Article 38 provides interests. If the debtor, after lodging an as an alternative the possibility of appeal in the State in which the proceeding with enforcement in return judgment was given, considers that the for the provision of security. In the light powers conferred by Article 38 are inad- of the purpose of Article 38 which is to equate for the purpose of protecting his diminish as far as possible the risks to interests, he may apply to the competent which creditors and debtors arc exposed, courts of the State in which the judg- an order for the provision of security is ment was given in order to obtain either also an interim measure which comes to an order suspending enforcement an end with the final judgment in the altogether or the provision of security. main proceedings pending in the State in Those are the courts empowered to which the original judgment was given. consider whether and to what extent a Once the uncertainty concerning the judgment that has not yet become final outcome of the main proceedings has may be enforced. been dispelled, the court hearing the appeal in the State of enforcement can finally decide whether the enforcement Furthermore, to recognize that the court order was issued on valid grounds or hearing the appeal in the State of whether it is necessary to quash it at the enforcement is empowered to issue an debtor's request. interim order concerning the provision of security before giving judgment is incompatible with Article 39 of the Convention. The creditor is entitled Second question under that provision to take protective measures during the time specified for lodging an appeal and until the appeal has been determined. To issue an interim Brennero considers that it must be poss- order concerning the provision of se- ible to contest any judgment by a

national court hearing an appeal against In the German Government's opinion, a decision authorizing enforcement given there is no need for the second para- pursuant to the Convention, including an graph of Article 37 to be applied by interim order, by a Rechtsbeschwerde (ap- analogy to interim orders. In certain peal on a point of law) pursuant to the national legal systems there is sometimes second paragraph of Article 37. Brennero no right of appeal against interim orders. contends that this means of redress is not Increasing the number of means of provided for by German national law but redress merely enhances the risk of was introduced and is governed by the delays in proceedings and thus con- Convention and performs a specific stitutes an obstacle to the "free function thereunder. In connection with movement" of judgments which is the such an appeal, therefore, the Bundes- objective of the Convention. gerichtshof is not exercising its general function under German procedural law but is performing the specific function conferred upon it by the Convention, which is to review any judgment given Ill — Oral procedure by a court on an appeal. If it were impossible to lodge a Rechtsbeschwerde against a judgment given by such a court, the uniform interpretation of the At the sitting on 29 May 1984 oral Convention would be jeopardized since argument was presented by the fol- under the Protocol of 3 June 1971 on lowing: Alberto Miele, advocate at the the interpretation of the Convention only Italian Court of Cassation, for Brennero, the Bundesgerichtshof is obliged to the appellant in the main action; F. submit a question to the Court of Justice Rössler, of the Detmold Bar, for for a preliminary ruling. Wendel, the respondent in the main action; Oscar Fiumara, Avvocato dello Stato, for the government of the Italian Republic; and W.-D. Krause-Ablass, of According to the Commission, the second the Düsseldorf Bar, for the Commission paragraph of Article 37 allows a Rechts- of the European Communities. beschwerde to be lodged only against the final judgment on the appeal. To allow a Rechtsbeschwerde to be lodged against an At the sitting, the representative of the interim order concerning the provision Italian Government pointed out — whilst of security would, in the Commission's acknowledging that there was no opinion, be incompatible with the reference to this problem in the questions objective that the proceedings in the submitted — that the seizure order State of enforcement should be con- issued by the Tribunale, Verona, is an ducted swiftly. interim protective measure and cannot therefore be contested by an appeal under Italian law. Since that interim measure is definitive as such, Article 38 The Italian Government considers that of the Convention is inapplicable. while the Convention does not provide for the possibility of lodging an appeal in cassation against an interim order issued during the appeal proceedings, it does Wendel, which did not submit any not rule out that possibility in so far as written observations, contended at the an appeal in cassation is provided for by sitting that the need to afford the debtor each national system. sufficient protection in the manner

2 Those questions arose in a dispute between two shoe manufacturers, Brennero and Wendel, which have their registered offices in Italy and the Federal Republic of Germany respectively. Brennero obtained judgment against Wendel in an Italian court and is now seeking to have that judgment enforced in the territory of the Federal Republic of Germany, in accordance with the provisions of the Convention.

3 The President of the Fourth Civil Chamber of the Landgericht [Regional Court], Detmold, issued an order for the enforcement of the judgment in

JUDGMENT OF 27. 11. 1984 — CASE 258/83

question and, at the same time, authorized the adoption of protective measures covering the assets of the German undertaking. Wendel appealed against that decision under the first paragraph of Article 36 of the Convention whereupon the Oberlandesgericht [Higher Regional Court], Hamm, before giving judgment on the appeal, made enforcement of the Italian judgment conditional on Brennero providing security even if enforcement was restricted to the adoption of protective measures.

4 Brennero lodged a Rechtsbeschwerde (appeal on a point of law) against the Oberlandesgerichťs order under the second paragraph of Article 37 of the Convention. It contended that a court with which an appeal has been lodged against a decision authorizing enforcement cannot require security to be provided without at the same time giving judgment on the appeal.

s The Bundesgerichtshof, before which the Rechtsbeschwerde was brought, held that the Oberlandesgericht had not given judgment on the appeal against the decision authorizing enforcement but had instead, in accordance with Wendel's suggestion, given a preliminary decision concerning the provision of security. Since, in those circumstances, the decision given by the Ober- landesgericht was an interim order, it was uncertain whether it could be contested by a Rechtsbeschwerde. Under the German law of civil procedure, an appeal of that kind is inadmissible if its purpose is to challenge an interim order issued by an Oberlandesgericht. It can therefore be reviewed by the Bundesgerichtshof only if the Convention provides for such an appeal.

? Brennero, the Italian Government and the Commission of the European Communities consider that under Article 38 of the Convention a court with which an appeal has been lodged against a decision authorizing enforcement could not make an interim order requiring security to be provided without giving judgment on the appeal. The power to make an order of that kind excluded by the wording of Article 38 which states that the court with which the appeal was lodged could make "enforcement" conditional on the provision of security, such enforcement being possible only after the dismissal of the appeal. Moreover, in their view, the exercise by the court with which the appeal had been lodged of the power to make an interim order requiring security to be provided is contrary to one of the objectives of the Convention which is intended precisely to render the procedure for the enforcement of a judgment given in another Contracting State as straightforward and as rapid as possible.

s The German Government considers that the power of the court with which the appeal had been lodged to make an order for the provision of security during the appeal proceedings was such as to prevent the debtor from being exposed to risks inherent in the uncertainty surrounding the outcome of the proceedings in the State in which the original judgment was given, since Article 38 applied only where the judgment to be enforced did not yet have the force of res judicata in the State in which it was given.

9 At the hearing, Wendel expressed its agreement with that view particularly on the ground that although Article 38 applies to cases where the judgment to be enforced could still be contested by an appeal in the State in which that judgment was given, Article 39, which authorizes the adoption of interim protective measures, applies only in cases where that judgment had become final under the law of the State in which it was given. In cases such as the present, therefore, only Article 38 is relevant whilst Article 39 is inapplicable.

12 That is the context in which the second paragraph of Article 38 of the Convention, under which the court with which the appeal has been lodged may "make enforcement conditional on the provision of such security as it shall determine", must be set. The whole significance of that provision lies in the fact that, as soon as the court gives judgment on the appeal, the restrictions provided for by Article 39 cease to be applicable. Enforcement measures may therefore be taken while that judgment can still be contested by an appeal in cassation or by a Rechtsbeschwerde, in accordance with the second paragraph of Article 37, and while even the original judgment given in the first State can still be contested by an appeal, which is a possibility expressly provided for by Article 38. That is the time when the protection of the debtor's interests may require enforcement to be made conditional on the provision of security.

1 3 It follows that the second paragraph of Article 38 of the Convention must be interpreted as meaning that a court with which an appeal has been lodged against a decision authorizing enforcement, given pursuant to the Convention, may make enforcement conditional on the provision of security only when it gives judgment on the appeal.

BRENNERO v WENDEL

S e c o n d q u e s t i o n ( A r t i c l e 37)

u Brennero observes that the uniform interpretation of the Convention would be jeopardized if an interim or interlocutory order issued by the court with which the appeal has been lodged could not be contested by an appeal in cassation or by a Rechtsbeschwerde. However, according to the Commission and the German Government, the second paragraph of Article 37 of the Convention states categorically that a Rechtsbeschwerde can be lodged only against the final judgment given on the appeal.

pean 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.

On those grounds,

T H E C O U R T (Fourth Chamber)

in reply to the questions submitted to it by the Bundesgerichtshof by order of 12 October 1983 hereby rules:

1. The second paragraph of Article 38 of the Convention of 27 Sep- tember 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters must be interpreted as meaning that a court with which an appeal has been lodged against a decision auth- orizing enforcement, given pursuant to the Convention, may make enforcement conditional on the provision of security only when it gives judgment on the appeal;

2. The second paragraph of Article 37 of the Convention of 27 Sep- tember 1968 must be interpreted as meaning that an appeal in cassation and, in the Federal Republic of Germany, a Rechts- beschwerde may be lodged only against the judgment given on the appeal.