By Oliver Browne and Hanna Roos

The English High Court has refused to recognise a Spanish default judgment because the judgment debtors had not been served with the documents which instituted the Spanish proceedings, as required under Regulation 44/2001 (the Original Brussels Regulation).

Background

In Corcoz & Anor v Molina (9 July 2015, unreported), Corcoz and [Anor] (the Defendants) and Molina (the Claimant) were personal guarantors of a Spanish company’s liability to a bank for monies advanced. The Claimant issued proceedings against the Defendants in the Spanish court and purported to serve originating documents at their address. The Defendants appeared to have moved from Spain to the UK and were no longer at their Spanish address and did not file a response to the claim. The Claimant therefore secured a “deemed service” order and the Spanish court entered judgment against them. The Spanish court considered that the Defendants had elected not to take part in the proceedings.

English court’s refusal to recognise the Spanish judgment

Molina successfully applied to register the Spanish judgment in England and Wales under Part 74 “Enforcement of Judgments in Different Jurisdictions” of the Civil Procure Rules (the CPR). The Defendants appealed and Molina did not resist the appeal. The issue was whether the registration order should be set aside.

The High Court allowed the appeal and set aside the registration order on the basis that the judgment could not be recognised. The Spanish judgment made it clear that service had been deemed under Spanish law. However, at the time of the decision, the relevant provisions in force (CPR 74.1) referred to the Original Brussels Regulation which provides that a default judgment shall not be recognised

“if the defendant was not served with the document which instituted the proceedings or with an equivalent document in sufficient time and in such a way as to enable him to arrange for his defence, unless the defendant failed to commence proceedings to challenge the judgment when it was possible for him to do so.” (Article 34(2)).

The High Court held that although the Claimant had secured “deemed service”, actual or sufficient service had not occurred to enable the Defendants to arrange their defence (applying Reeve v Plummer [2014] EWHC 4695 where the High Court found that registration of a Belgian default judgment had been appropriate under the Original Brussels Regulation). It followed that the prerequisites for recognising the judgment were not present and the only proper course was to allow the appeal and set aside the registration order.

Position under the Recast Brussels Regulation

For proceedings instituted on or after 10 January 2015, the revised Regulation 1215/2012 (the Recast Brussels Regulation) applies and indeed the reference in the relevant CPR provisions, CPR 74.1, is now to the Recast Brussels Regulation. The equivalent provision to Article 34(2) (above) is contained in Article 45(1)(b) of the Recast Brussels Regulation. The language is identical to Article 34(2) save for adding the clarification that any “interested party” can apply for the recognition of a judgment to be refused.

Practical consequences

The Original and Recast Brussels Regulations cover both the recognition and enforcement of judgments. Broadly:

  • “recognition” is a court’s acknowledgement of the legal force of a judgment, and
  • “enforcement” means recognising as well as effecting the judgment.

If the judgment contains no enforceable element, it simply needs to be recognised. For example, a judgment may dismiss a claim without imposing any cost orders, and a defendant may want to have the judgment recognised as res judicata to preclude further claims on the same issue. Enforcement goes further than recognition in effecting performance of the liability found but always impliedly involves a recognition of the judgment. Failure to secure recognition can therefore have serious adverse consequences for the judgment creditor.

Corcoz & Anor v Molina has the effect that a company looking to commence proceedings in any EU Member State court needs to bear in mind that a default judgment may fail to be recognised and enforced in the UK or any another EU Member State if the claimant does not serve the documents with plenty of time and in a way that permits the defendant to organise his defence according to the procedural laws of that Member State. Recognition may be denied even if no issue was raised in the default proceedings by the defendant or the court delivering the default judgment.

Every EU Member State court will apply the same Article 34(2)/45(1)(b) test to recognising default judgments. Therefore, if recognition is refused in one EU Member State, the claimant would likely fail to secure recognition and enforcement in any other EU Member State as well. Ultimately the claimant’s only option may be to begin fresh proceedings in the original EU Member State, seeking a new default judgment. This would be both costly and time-consuming.

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