No absolute entitlement to domestic freezing order as protective measure when appeal pending against registration of foreign judgment

Katharine Lammiman

In Cyprus Popular Bank Public Co Ltd v Vgenopoulos and others, the High Court held that a claimant who had obtained an order for the registration of a foreign judgment had no absolute entitlement to protective measures (in the form of a domestic freezing order) under Article 47 of the 2001 Brussels Regulation.  The High Court decided that conventional principles should apply to the grant of protective measures and that it had a discretion whether to grant a freezing order.

Background

The claimant, a Cypriot bank, obtained a worldwide freezing order in the Cypriot courts against the defendants. It applied to the English High Court to register the Cypriot freezing order as a judgment pursuant to Article 38 of the 2001 Brussels Regulation, so it could be enforced as a judgment of the English court.  A registration order was granted.  The claimant wrote to Union Bancaire Privée (“UBP”), with whom the defendants held accounts, notifying them of the freezing order. The defendants appealed against the registration order, arguing that the Cypriot freezing order was not fully effective and enforceable immediately on the making of the registration order, and would only become so following determination of their appeal.  The High Court held (Cyprus Popular Bank Public Co Ltd v Vgenopoulos and others [2016] EWHC 1442 (QB); see our post here) that that a freezing order granted by another EU Member State did not become immediately fully effective and enforceable after a registration order was made by the English court; it only became enforceable on the determination of an appeal against the registration order (or the expiry of the two month time limit for bringing an appeal).

Subsequently, in order to protect its position pending the appeal against the registration order, the claimant applied to the English High Court for a domestic freezing order under Article 47 of the 2001 Brussels Regulation. Article 47(2) provides that a “declaration of enforceability” (which includes a registration order made for the purposes of enforcement in the UK) shall carry with it the power to proceed to any protective measures.  Article 47(3) provides that no protective measures shall be sought during the time specified for an appeal against a declaration of enforceability or until any appeal is determined, save for protective measures against the property of the party against whom the enforcement is sought.  The claimant was concerned that once UBP learned of the judge’s ruling that the Cypriot freezing order was not enforceable immediately on the making of the registration order, it would act on any instructions from the defendants to pay money out of their accounts.

The claimant argued that the court had no discretion as to whether to grant protective measures and that it was entitled to the domestic freezing order as of right, relying on passages in Capelloni and Aquilini v Pelkmans (Case 119/84) and Banco Nacional de Comercio Exterior SNC v Empresa De Telecommunicaciones de Cuba SA [2007] EWCA Civ 662.  It maintained that it would be incompatible with the 2001 Brussels Regulation for the court to refuse relief.

High Court’s decision

Mr Justice Picken granted a domestic freezing order until the determination of the appeal, applying conventional principles for the grant of such relief.

No absolute right to protective measures

Picken J rejected the argument that the domestic courts have no discretion as to whether or not to grant a freezing order which is sought by way of protective measures. He did not accept the claimant’s interpretation of Capelloni and Banco Nacional, instead referring to Lord Justice Tuckey’s comment in Banco Nacional that an applicant for protective measures “must take them as he finds them in the jurisdiction where he seeks to enforce his judgment” – this included the possibility that the domestic court had no available protective measures of the kind sought by the applicant.  Picken J considered that “the position cannot be that an applicant which has a foreign judgment is in a better position than an applicant with an English judgment” and emphasised that the applicant was not entitled to such relief as a matter of right.

As a matter of principle, Picken J considered it could not be right that a judge in the English High Court should be asked to make a freezing order without applying conventional principles to the grant of such relief. He acknowledged that, as with any post-judgment case involving an English judgment or a foreign judgment, the court would more readily grant a freezing order when compared with an application at the a pre-judgment stage, but that was not the same thing as saying that the judge had no discretion in the matter at all.

A freezing order was a serious form of relief and it could not emanate from a High Court judge without the judge himself or herself considering the appropriateness of granting such relief: “In my therefore, whether the relief sought ought to be granted is a matter which entails the court applying conventional principles applicable to the grant of freezing order relief“.

Delay

Picken J rejected the defendants’ submission that lengthy delay in the case “call[ed] into question the genuineness of the claimant’s belief that there is a real risk of dissipation” and indicated that the claimant was using the applications for freezing orders to oppress the defendants.  He also declined to accept their argument that the delay was so considerable and unexplained that he should refuse to grant the freezing order as a matter of discretion.

He acknowledged that, if there were no evidence of any risk of dissipation, then the largely unexplained delay would justify the view that the claimant did not actually perceive any risk of the defendant dissipating its assets (and therefore it would be inappropriate to grant the freezing order). However, that was not the case, as there was solid evidence of dissipation – in particular that payment instructions had been given to UBP, if not by the defendants, then by parties closely related to them, on the day the Cypriot freezing order and registration order were served on the defendants.  Although the delay in this case was “regrettable“, it did not amount to showing that the claimant had no genuine belief in the risk of dissipation, such that the court should exercise its discretion and refuse the freezing order.

Comment

The confirmation in this case that protective measures under Article 47 of the 2001 Brussels Regulation are not available as of right, but are subject to conventional principles and the court’s discretion is to be welcomed. As Picken J observed, it cannot be right that an applicant seeking a freezing order as a protective measure in support of a foreign judgment should be in a better position than one with an English judgment.

It is worth noting that the Recast Brussels Regulation (Regulation 1215/2012), which applies to proceedings commenced on or after 10 January 2015, introduced a new and simplified procedure under which the judgment of another EU Member State court will be enforceable in the UK without the need for a registration order. Article 40 of the Recast Regulation provides for the availability of protective measures in relation to an enforceable judgment.  It is likely that Article 40 will be interpreted in the same way as Article 47 of the 2001 Regulation was in this case.

Cyprus Popular Bank Public Co Ltd v Vgenopoulos and others [2016] EWHC 1695 (QB)

Post By Katharine Lammiman (2 Posts)

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