Interim WFOs: recognition and enforcement in EU member states after Brexit

Kendrah Potts and William Harman |

Enforcement of Worldwide Freezing Orders after Brexit: this article explores the profound changes to the regime for the recognition of English judgments and interim orders on the European continent following the UK’s departure from the EU, with a particular focus on interim Worldwide Freezing Orders. The article provides practical guidance for those looking to enforce an interim order in proceedings commenced after 31 December 2020.

Introduction

  1. Enforcing interim worldwide freezing orders (WFOs) abroad, including in EU member states, is a common feature of fraud proceedings. However, the UK’s departure from the EU has brought about profound changes to the regime for the recognition and enforcement of English judgments and interim orders on the European continent. This article: (i) summarises the position under the old European enforcement regime, which will continue to apply to interim orders made in English proceedings instituted before and during the transition period[1]; and (ii) considers the position, and provides practical guidance, for those looking to enforce an interim order in proceedings commenced after the transition period.

Proceedings instituted before and during the transition period

  1. Whilst a WFO will immediately bind the respondent – even if they are not in the jurisdiction – most WFOs provide that they are not binding on third parties outside the jurisdiction unless certain conditions are met. This reflects an acknowledgement that the English courts do not have jurisdiction over third parties based abroad who have not been brought into proceedings such that a jurisdictional gateway has been satisfied. The standard form wording for a WFO[2] therefore provides that the terms of a WFO do not affect or concern anyone outside the jurisdiction other than, inter alia, a person in a country where “the order is declared enforceable by or enforced by a court in that country or state”.
  2. The recognition and enforcement of judgments and orders made in English proceedings instituted before and during the transition period in EU member states is governed by the Recast Brussels Regulation[3] and the 2001 Brussels Regulation.[4] The processes for enforcing judgments under the Recast Brussels Regulation and the 2001 Brussels Regulation extend to interim freezing orders that have been obtained (i) on notice to the defendant, or (ii) without notice but following service of the judgment on the respondent in the English proceedings prior to enforcement.[5]
  3. This presents the significant advantage that the process for enforcing a WFO in Europe is relatively straightforward and uniform. In summary, under the Recast Regulation, a judgment creditor is entitled to enforce an English judgment or WFO as if it were a local judgment after serving the judgment, a standard form certificate from the English court and a translation (if requested) on the judgment debtor.[6] The procedures and principles for enforcing an English judgment under the 2001 Brussels Regulation are broadly similar to those under the Recast Brussels Regulation. The main difference is that the enforcing party is required to obtain a declaration of enforceability in the enforcing state.[7]
  4. Another advantage of the process under the Brussels Recast Regulation and 2001 Regulation is that the local court cannot revisit the merits or the jurisdiction of the original court under the Recast Brussels Regulation save in specific and limited circumstances.[8]
  5. Once the relevant enforcement procedure under the Regulations has been followed, the English judgment is binding on third parties in EU states.[9]

Proceedings instituted after the transition period

  1. From the end of the transition period, the Recast Brussels Regulation and the 2001 Brussels Regulation ceased to apply to and in the UK save to the extent that the Withdrawal Agreement provides that those instruments continue to apply. The position is currently as follows:
  2. First, a WFO obtained after 31 December 2020 in proceedings issued before that date can still be enforced under the Regulations. This is the effect of Article 67 of the Withdrawal Agreement[10], which provides that the Recast Brussels Regulation continues to apply to judgments (including interim WFOs) given in English proceedings instituted before 1 January 2021. The European Commission has confirmed that the effect of Article 67 of the Withdrawal Agreement is that the 2001 Brussels Regulation will also continue to apply even after the transition period.[11]
  3. Secondly, the recognition and enforcement of judgments and WFOs obtained in English proceedings instituted after the transition period will now be governed by the local law of each enforcing state and/or other applicable conventions or treaties.[12] Unfortunately, the Hague Convention[13] (which contains provisions relating to enforcement of judgments in disputes involving exclusive choice of court agreements and will continue to apply in the UK after the transition period)[14] does not assist in the context of WFOs because it does not apply to WFOs.[15]
  4. Given the absence of a simple, uniform framework for the enforcement of WFOs, forward planning will be more important than ever. Claimants will want to identify as early as possible where the defendant has or might have assets and to obtain local law advice.
  5. The first question will be whether to seek a WFO and enforce it in relevant local jurisdictions or whether to commence separate actions for relief in support of the English proceedings in the local jurisdictions. A WFO still presents significant advantages: (i) it is likely to be the most efficient option as it avoids the cost and time involved in separate proceedings; and (ii) critically, the defendant is required to provide disclosure of their assets worldwide, which may reveal assets in other jurisdictions.
  6. On the other hand, where it is known that a defendant has considerable assets in another jurisdiction, it should be considered whether those assets could be restrained (i) more quickly, and (ii) without notice, by issuing a claim for relief in support of the foreign (English) proceedings in the relevant jurisdiction[16]. The ability to restrain assets without putting the defendant on notice may be a significant advantage, particularly if, for example, enforcing the WFO in the local jurisdiction would require the respondent to have been put on notice.
  7. Assuming that the claimant wants to apply for a WFO, applicants who are aware of assets in EU member states where enforcement is likely to be sought would be well-advised to engage local lawyers before making an application to the English court. This should consider: (i) what are the conditions for enforcement of a WFO in the local jurisdiction (for example, will a WFO obtained without notice be enforced? Must it have been served?), and (ii) what can be put in place before the WFO application is made or the interim WFO is served on the respondent to the English proceedings in order to speed up enforcement locally. If jurisdictions with assets have been identified, the claimant may want to seek permission to enforce the WFO in that jurisdiction at the time of applying for the WFO.
  8. Some international guidance is available on the procedures for enforcing judgments in the main jurisdictions for commercial dispute resolution worldwide. For example, the SIFoCC[17] has published a multilateral memorandum which provides information on enforcement in France, Germany, the Netherlands and the Republic of Ireland in addition to various non-EU countries.[18] However, such guidance tends to be high-level and typically should not be relied on as legal advice.

The 2007 Lugano Convention: the next phase?

  1. On 8 April 2020, the UK applied to accede in its own right to the 2007 Lugano Convention[19] (having previously been bound by virtue of its membership of the EU). At time of writing, the three EFTA parties to the 2007 Lugano Convention (Iceland, Norway and Switzerland) have indicated that they will support the UK’s candidacy but the EU has given no firm indication either way. If and at such time as the UK accedes to the 2007 Lugano Convention, the regime for enforcing English judgments and orders such as WFOs in EU member states will be very similar to the regime under the 2001 Brussels Regulation.

Kendrah Potts and William Harman

 

Disclaimer: this article is not to be relied upon as legal advice. The circumstances of each case differ and legal advice specific to the individual case should always be sought.

© Kendrah Potts and William Harman of 4 New Square, April 2021.

 

[1] 11.00pm (UK time) on 31 January 2020 to 11.00pm (UK time) on 31 December 2020.

[2] See Annex to Practice Direction 25.

[3] Council Regulation (EU) 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, for English judgments and orders given in proceedings instituted on or after 10 January 2015.

[4] Council Regulation (EC) 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, for English judgments and orders given in proceedings instituted before 10 January 2015.

[5] Article 32 of the 2001 Brussels Regulation and Article 2 of the Recast Brussels Regulation. In each case, the effect of the Regulation is extended to WFOs by including such orders in the definition of a “judgment”. “For the purposes of Chapter III, ‘judgment’ includes provisional, including protective, measures ordered by a court or tribunal which by virtue of this Regulation has jurisdiction as to the substance of the matter. It does not include a provisional, including protective, measure which is ordered by such a court or tribunal without the defendant being summoned to appear, unless the judgment containing the measure is served on the defendant prior to enforcement.”

[6] The procedure for obtaining the certificate from the English court is set out in CPR 74.12-13 and PD 74A.

[7] See Articles 38-52 of the 2001 Brussels Regulation.

[8] See Article 45 of the Recast Brussels Regulation. See also Krones AG v Samskip GmbH (Case C-456/11).

[9] See, for example, Meroni v Recoletos Ltd (Case C-559/14) EU:C:2016:359) in relation to the enforcement of an English freezing order in Latvia.

[10] Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community (2019/C 384 I/01).

[11] The European Commission’s Notice to Stakeholders: Civil justice (“judicial cooperation in civil and commercial matters”) (UPDATE) dated 27 August 2020.

[12] For example, Norway and the UK have agreed that the 1961 Convention – a bilateral agreement between the UK and Norway relating to the recognition and enforcement which was later superseded by the 2007 Lugano Convention – will continue to apply to the extent that, and during the period that, the UK is not a signatory to the 2007 Lugano Convention. Although this does not apply to WFOs.

[13] The Hague Convention on Choice of Court Agreements.

[14] Section 3D of the Civil Jurisdiction and Judgments Act 1982 introduced by the Private International Law (Implementation of Agreements) Act 2020). However, there is some doubt surrounding the scope of its application: in particular whether it applies to one-way jurisdiction clauses and whether courts in Europe will give effect to judgments in proceedings from the date on which the EU acceded to the Convention or only the date of the UK’s accession.

[15] Article 4(1) of the Hague Convention.

[16] In the event there is an exclusive jurisdiction clause, consideration would need to be given as to whether it precludes such applications or proceedings.

[17] The Standing International Forum of Commercial Courts.

[18] Multilateral Memorandum on the Enforcement of Commercial Judgments for Money.

[19] 2007 Lugano Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.