#5063 - Trade Agency - Conflict of Laws BCL

Trade Agency

Facts

The reference has been made in proceedings between Trade Agency Ltd ('Trade Agency') and Seramico Investments Ltd ('Seramico') concerning the recognition and enforcement in Latvia, under Regulation No 44/2001, of a judgment in default delivered by the High Court of Justice of England and Wales, Queen's Bench Division (United Kingdom).

Seramico brought an action before the High Court of Justice against Trade Agency and Hill Market Management LLP to obtain payment of GBP 289 122.10. As is clear from the file and the information provided by the High Court of Justice, the originating application was served on the defendants on 10 September 2009.

However, when no defence to the action was filed by Trade Agency the High Court of Justice delivered a judgment in default of appearance on 8 October 2009 ordering Trade Agency to pay a total sum of GBP 293 582.98 based on the following grounds: 'You have not replied to the claim form, which was served on you. It is therefore ordered that you must pay the claimant GBP 289 122.10 for debt [and interest to the date of the judgement] and GBP 130.00 for costs. You must pay to the claimant a total of GBP 293 582.98'.

On 28 October 2009 Seramico submitted to the Rigas pilsetas Ziemelu rajona tiesa (District Court North Riga) (Latvia) an application for recognition and enforcement in Latvia of the High Court judgment.

Trade Agency then brought an appeal in cassation before the Augstakas tiesas Senats (Senate of the Supreme Court) (court of cassation), arguing that the application for recognition and enforcement in Latvia of the judgment of the High Court of Justice should be rejected on the ground that its rights of defence had been breached during the proceedings in England, since it had not been informed that legal proceedings had been instituted before the High Court of Justice and that the latter's judgment was manifestly contrary to Latvian public policy since it did not give any reasons.

Question

Is a decision given in default of appearance, which disposes of the substance of a dispute without examining either the subject-matter of the claim or the grounds on which it is based and sets out no reasoning as to the substantive basis of the claim, compatible with Article 47 of the Charter and does it not infringe the defendant's right to a fair hearing, laid down by the provision?

Holding

By its second question, the referring court asks essentially whether Article 34(1) of Regulation No 44/2001, to which Article 45(1) refers, enables the court of the Member State in which enforcement is sought to refuse enforcement of a judgment given in default of appearance, which disposes of the substance of the case but which does not contain any assessment of the subject-matter or the basis of the action and which is devoid of any argument on the merits thereof, on the basis of the clause relating to public policy on the ground that it infringes the right of the defendant to a fair trial referred to in Article 47 of the Charter.

Recourse to the public-policy clause in Article 34(1) of Regulation No 44/2001 can be envisaged only where recognition or enforcement of the judgment given in another Member State would be at variance to an unacceptable degree with the legal order of the State in which enforcement is sought inasmuch as it would infringe a fundamental principle. The infringement would have to constitute a manifest breach of a rule of law regarded as essential in the legal order of the State in which enforcement is sought or of a right recognised as being fundamental within that legal order (see Krombach, paragraph 37; Renault, paragraph 30; and Apostolides, paragraph 59).

As regards the right to a fair trial, to which reference is made in the question referred, it must be recalled that that right results from the constitutional traditions common to the Member States and was reaffirmed in the second paragraph of Article 47 of the Charter, which corresponds, as is clear from the explanations relating to that article, to Article 6(1) of the ECHR (see Case C-279/09 DEB [2010] ECR I-13849, paragraph 32).

In that connection, the Court has held that the observance of the right to a fair trial requires that all judgments be reasoned to enable the defendant to see why judgment has been pronounced against him and to bring an appropriate and effective appeal against it (see, to that effect, ASML, paragraph 28).

It follows that the Member State in which enforcement is sought is entitled to take the view, in principle, that a judgment given in default of appearance which does not contain any assessment of the subject-matter, basis and merits of the action, is a restriction on a fundamental right within the legal order of that Member State.

Legitimate aim and disproportionate restrictions

In the present case, the United Kingdom Government stated that a judgment given in default of appearance, such as that given by the High Court of Justice in the main proceedings, cannot be obtained until, first, the applicant serves the claim form and the particulars of claim, containing a detailed description of the pleas in law and the material facts, to which the judgment itself impliedly refers, and, second, the defendant, although he has been informed of the legal proceedings instituted against him, does not appear or does not...