B. J. van Dalfsen and others v B. van Loon and T. Berendsen (C-183/90)

Contents

Judgment of the Court (Sixth Chamber)4 October 1991^noteIn Case C-183/90,REFERENCE to the Court pursuant to the Protocol of 3 June 1971 on the interpretation by the Court of Justice of the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (Official Journal 1978 L 304, p. 36) by the Hoge Raad der Nederlanden for a preliminary ruling in the proceedings pending before it betweenB.J. Van Dalfsen,J.Timmerman,H. Van Dalfsen,J.Harmke,G. Van DalfsenandB. Van Loon,T. Berendsen,THE COURT (Sixth Chamber),composed of: G. F. Mancini, President of Chamber, T. F. O'Higgins, C. N. Kakouris, F. A. Schockweiler and P. J. G. Kapteyn, Judges,Advocate General: W. Van Gerven,Registrar: J. A. Pompe, Deputy Registrar,after considering the written observations submitted on behalf of— the German Government, by Christof Böhmer, Ministerialrat at the Federal Ministry of Justice;— the Netherlands Government, by B. R. Bot, Secretary-General at the Ministry of Foreign Affairs; and— the Commission of the European Communities, by B. J. Drijber, a member of its Legal Service, acting as Agent;having regard to the Report for the Hearing,after hearing the Commission's oral observations submitted at the hearing on 18 June 1991,after hearing the opinion of the Advocate General at the sitting on 11 July 1991,gives the following

Judgment

1By order dated 1 June 1990, which was received at the Court on 11 June 1990, the Hoge Raad der Nederlanden referred to the Court for a preliminary ruling pursuant to the Protocol of 3 June 1971 on the interpretation by the Court of Justice of the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (Official Journal 1978 L 304, p. 36) (hereinafter referred to as ‘the Convention’) three questions on the interpretation of the second paragraph of Article 37 and the first paragraph of Article 38 of the Convention.

2Those questions arose in the context of proceedings pending before that court between B. J. Van Dalfsen, J. Timmerman, H. Van Dalfsen, J. Harmke and G. Van Dalfsen (hereinafter referred to as ‘Van Dalfsen’), residing in the Netherlands, on the one hand, and B. Van Loon and T. Berendsen (hereinafter referred to as ‘Van Loon’), residing in Belgium, on the other.

3It appears from the documents before the Court that, by judgment of 21 October 1986, the Vrederechter van het Kanton Herentals (Belgium) dismissed the principal claim, for the annulment of a tenancy agreement between the parties to the main action, brought by Van Dalfsen against Van Loon, and accepted in principle the substance of Van Dalfsen's alternative claim that Van Loon should be ordered to repay the cost of Van Dalfsen's capital expenditure on the premises rented, and ordered an expert's report to determine the exact amount thereof. Giving judgment on Van Loon's counterclaim, the Vrederechter ordered Van Dalfsen to pay to Van Loon the sum of BFR 2700000 arrears of rent plus interest. The court declared the judgment to be ‘provisionally enforceable notwithstanding any appeal and without security’.

4On 17 December 1986, Van Dalfsen appealed to the Rechtbank van Eerste Aanleg te Turnhout (Belgium) against the part of the judgment relating to the counterclaim.

5Van Loon, for their part, applied to the presiding judge of the Arrondissementsrechtbank te Zwolle (Netherlands) pursuant to Article 31 of the Convention for an order for the enforcement in the Netherlands of the Belgian Vrederechter's judgment. By decision of 23 January 1987 the presiding judge of the Arrondissementsrechtbank made the order requested.

6On 2 April 1987 Van Dalfsen, pursuant to Article 36 of the Convention, appealed to the Arrondissementsrechtbank te Zwolle against that decision, applying merely for a stay of the proceedings on that appeal in pursuance of the first paragraph of Article 38 of the Convention, on the ground that they had appealed against the judgment given by the Vrederechter te Herentals and provided a bank guarantee as security for the amount which they had been ordered by that judgment to pay to Van Loon; they also emphasized that their alternative claim for payment had been accepted in principle and assessed in a provisional expert report at BFR 477954.

7By judgment of 13 April 1988, the Arrondissementsrechtbank te Zwolle dismissed the application to stay the proceedings on the ground that Van Dalfsen had not cited, in support of their application, any arguments other than those which the foreign court had been able to consider in its decision. By the same judgment the Arrondissementsrechtbank declared the appeal unfounded and hence ordered enforcement in the Netherlands of the judgment given by the Belgian Vrederechter, whilst deciding, of its own motion, to make enforcement conditional, under the third paragraph of Article 38 of the Convention, upon the provision by Van Loon of a bank guarantee in the sum of BFR 478000 until the final judgment on Van Dalfsen's alternative claim.

8Van Dalfsen appealed in cassation against that judgment to the Hoge Raad der Nederlanden under the second paragraph of Article 37 of the Convention. Their sole submission was to the effect that the Arrondissementsrechtbank based its decision on an incorrect interpretation of the scope of the powers conferred by Article 38 of the Convention on the ‘court with which the appeal... is lodged’. According to Van Dalfsen, a court giving judgment under that article must take account of all the circumstances which the foreign court has already been able to take into account in its decision and must in particular assess the chances of success of the ordinary appeal which has been or is to be lodged in another Contracting State.

9The Hoge Raad der Nederlanden first considered whether the judgment appealed against must be regarded as a ‘judgment given on the appeal’ within the meaning of the second paragraph of Article 37 of the Convention. If not, Van Dalfsen's appeal in cassation would be inadmissible. On the other hand, if that question is answered in the affirmative, it would be necessary to consider the substance of the appeal in cassation and the question of the scope of the powers conferred by Article 38 of the Convention on the ‘court with which the appeal is lodged’ would then arise.

10The Hoge Raad, taking the view that the action therefore raised questions concerning the interpretation of the Convention, decided, by order of 1 June 1990, in pursuance of the Protocol of 3 June 1971 on the interpretation by the Court of Justice of the Convention, to stay the proceedings until the Court had given a preliminary ruling on the following questions:1. Can decisions of “the court with which the appeal under the first paragraph of Article 37 is lodged” as to whether or not use should be made, or whether use should be made in a particular way, of the powers conferred on it by Article 38 of the Brussels Convention be regarded as “the judgment given on the appeal” against which an appeal in cassation may be lodged in the Netherlands under the second paragraph of Article 37 of the Brussels Convention?2. Does it make any difference to the answer given to Question (1) whether or not the decisions based on Article 38 of the Brussels Convention which are referred to in that question are set out in the (final) judgment ruling on the appeal?3. May “the court with which the appeal under the first paragraph of Article 37 is lodged” make use of the powers conferred on it by the first paragraph of Article 38 of the Brussels Convention:(a) where the party lodging the appeal states no grounds for its application for the proceedings to be stayed or for enforcement to be made conditional on the provision of security other than grounds that the foreign court could have taken into account in its decision;(b) only where the application in question is based partly or exclusively on submissions not put forward in the proceedings before the foreign court; or(c) only where the application is based partly or exclusively on submissions which could not have been put forward in the proceedings before the foreign court because the party lodging the appeal was at that time unaware of the facts on which those submissions are based?’

11Reference is made to the Report for the Hearing for a fuller account of the facts of the case before the national court, the course of the procedure and the written observations submitted to the Court, which are hereinafter mentioned or discussed only in so far as is necessary for the reasoning of the Court.

12It should first be recalled that the second paragraph of Article 37 and the first paragraph of Article 38 of the Convention are part of Section 2 of Title III of the Convention, on enforcement of judgments which are enforceable in the Contracting State in which they have been given.

13Under Article 31 of the Convention, such decisions are to be enforced in another Contracting State when, on the application of any interested party, the order for its enforcement has been issued there, by the competent court referred to in Article 32 of the Convention and in accordance with the rules laid down in Articles 33 to 35 and 42 to 45 thereof. It should be observed in particular that under Article 34 of the Convention the party against whom enforcement is sought is not, at this stage of the proceedings, entitled to make any submissions, that the application for enforcement may be refused only for one of the reasons specified in Articles 17 and 28 of the Convention and that the foreign judgment may in no circumstances be reviewed as to its substance.

14If enforcement is authorized, the party against whom enforcement is sought may, under Article 36 of the Convention, appeal against the decision to one of the courts referred to in the first paragraph of Article 37 thereof. Article 39 of the Convention provides that, during the time specified for an appeal and until any such appeal has been determined, no measures of enforcement may be taken other than protective measures taken against the property of the party against whom enforcement is sought.

15If an ordinary appeal has been lodged in the State in which the foreign judgment was given against its enforcement, or if the time for such an appeal has not yet expired, Article 38 of the Convention provides that the court of the State in which enforcement is sought may, on the application of the party who has lodged the appeal under Article 36, stay the proceedings thereon. In pursuance of the third paragraph of Article 38 of the Convention, that court may however also make enforcement subject to the provision of security by the party seeking the enforcement order.

16Under the second paragraph of Article 37 of the Convention, the judgment given on the appeal may be contested only by an appeal in cassation or a similar form of appeal.

The first and second questions

17The court of reference, in its first two questions, which it is appropriate to consider together, substantially seeks to determine whether the second paragraph of Article 37 of the Convention is to be interpreted as meaning that a decision taken under Article 38 of the Convention, by which the court with which the appeal is lodged against an order for the enforcement of a judgment given in another Contracting State has refused to stay the proceedings and has ordered the party to whom the enforcement order was granted to provide security, constitutes a ‘judgment given on the appeal’ under the second paragraph of Article 37 of the Convention and may accordingly be contested by an appeal in cassation or a similar form of appeal. The court also asks whether the answer to that question varies according to whether or not the decision based on Article 38 of the Convention and the ‘judgment given on the appeal’ within the meaning of the second paragraph of Article 37 of the Convention are set out in the same judgment.

18It should first be observed that the Convention gives no definition of what is to be understood by ‘judgment given on the appeal’ within the meaning of the second paragraph of Article 37.

19Secondly it should be noted that the Court has stated in the judgment in Case 258/83 (Brennerov Wendel [1984] ECR 3971, paragraph 15), that the concept of ‘judgment given on the appeal’ appearing in the second paragraph of Article 37 of the Convention must be restrictively interpreted and has ruled that under the general scheme of the Convention, and in the light of one of its principal objectives which is to simplify procedures in the State in which enforcement is sought, that provision cannot be extended so as to enable an appeal in cassation to be lodged against a judgment other than that given on the appeal, for instance against a preliminary or interlocutory order requiring preliminary inquiries to be made.

20The committee of experts set up on the occasion of the drafting of the Convention (Official Journal 1979 C 59, p. 1) also emphasized the need for a strict interpretation of the second paragraph of Article 37 of the Convention. According to that report, ‘an excessive number of avenues of appeal might be used by the losing party purely as delaying tactics, and this would constitute an obstacle to the free movement of judgments which is the object of the Convention’.

21It follows from the foregoing that, since the object of the Convention is to facilitate the free movement of judgments by establishing a simple and rapid procedure in the Contracting State in which application is made for the enforcement of a foreign judgment, the expression ‘judgment given on the appeal’ in the second paragraph of Article 37 of the Convention must be interpreted as denoting only judgments deciding on the substance of the appeal lodged against an order for the enforcement of a judgment given in another Contracting State, to the exclusion of judgments given under Article 38 of the Convention.

22It should be added that even where the decision refusing to stay the proceedings or requiring the provision of security is contained in the same judgment as the decision on the substance of the appeal against the enforcement order, the procedure under Article 36 and that under Article 38 nevertheless have a different object.

23In fact the appeal procedure envisaged by Article 36 relates to the legal question of whether, regard being had to the reasons exhaustively specified in Articles 27 and 28 of the Convention, the enforcement order has been lawfully issued, whereas the decision relating to a stay of proceedings or the provision of security under Article 38 constitutes a subsidiary measure designed to settle the subsequent course of the procedure, which implies a balancing of the respective interests of the creditor and the debtor.

24In those circumstances, a judgment given under Article 38 of the Convention cannot be assimilated to a judgment allowing or dismissing the appeal lodged against the order for enforcement despite the fact that in form it constitutes part of the same judgment.

25It follows that, even when a decision based on Article 38 of the Convention appears in the same judgment as the decision on the substance of the appeal lodged against the enforcement order, such a decision is not to be regarded as a ‘judgment given on the appeal’ within the meaning of the second paragraph of Article 37 of the Convention and cannot therefore be the subject of an appeal in cassation.

26The answer to the first and second questions of the court of reference should therefore be that the second paragraph of Article 37 of the Convention is to be interpreted as meaning that a decision taken under Article 38 of the Convention by which the court with which an appeal has been lodged against an order for the enforcement of a judgment given in another Contracting State has refused to stay the proceedings and has ordered the party to whom the enforcement order was granted to provide security does not constitute a ‘judgment given on the appeal’ within the meaning of the second paragraph of Article 37 of the Convention and may not, therefore, be contested by an appeal in cassation or similar form of appeal. The position is the same where the decision taken under Article 38 of the Convention and the ‘judgment given on the appeal’ within the meaning of the second paragraph of Article 37 of the Convention are in fact given in a single judgment.

The third question

27In its third question, the court of reference seeks substantially to determine whether the first paragraph of Article 38 of the Convention is to be interpreted as meaning that the court with which the appeal is lodged against an order for the enforcement of a judgment given in another Contracting State may take into consideration, in its decision concerning an application for the proceedings to be stayed under that paragraph, only such submissions as the appellant was unable to make before the court of the State in which the judgment was given, or whether that court may also take into consideration in such a decision submissions which were already before the foreign court, as well as arguments of which the court was unaware at the time of its judgment because the party lodging the appeal had failed to put them before it.

28It must first be pointed out that the first paragraph of Article 31 of the Convention lays down the principle that a judgment given in a Contracting State and enforceable in that State may be enforced in another Contracting State even if it has not yet become res judicata.

29An exception is made to that principle by the power to stay the proceedings, conferred by the first paragraph of Article 38 of the Convention on the court with which the appeal was lodged against an order for the enforcement of a judgment given in another Contracting State. As may be seen from the report of the committee of experts prepared on the occasion of the drafting of the Convention, the object of that exception is to protect the party against whom enforcement is sought against any damage which might result from the enforcement of a judgment which has not yet become res judicata and might be amended, and it therefore serves as a counterbalance to the unilateral nature of the procedure for enforcement laid down by Article 31 et seq. of the Convention.

30It follows that the first paragraph of Article 38 of the Convention, since it constitutes a derogation, must be strictly interpreted so as not to prejudice the effectiveness of Article 31 of the Convention and detract from its object, namely to permit the free movement of judgments by allowing judgments given in a Contracting State and enforceable in that State to be enforced in another Contracting State.

31It should next be recalled that the basic principle of the third paragraph of Article 34 of the Convention is that a foreign judgment may in no circumstances be reviewed as to its substance by the courts of the State in which enforcement is sought.

32If the court with which the appeal is lodged were able to take into consideration, in giving its decision on an application for a stay of proceedings under the first paragraph of Article 38 of the Convention, submissions already put before the foreign court, there would be a real risk of its proceeding, directly or indirectly, to review the foreign judgment as to its substance, which is expressly prohibited by the Convention. The position would be the same if that court were empowered to assess the chances of success of an ordinary appeal lodged or to be lodged in the State in which the judgment was given.

33In those circumstances, the first paragraph of Article 38 of the Convention cannot be interpreted as meaning that the court with which the appeal is lodged may take into consideration, in a decision concerning an application for a stay of proceedings, submissions already put before the foreign court.

34As regards the question whether the court with which the appeal is lodged may take into consideration, in a decision concerning an application for a stay of proceedings under the first paragraph of Article 38 of the Convention, arguments unknown to the foreign court at the time of its judgment because the appellant had failed to put them before it, it should be remembered that in its judgment in Case 145/86 (Hoffmann v Krieg [1988] ECR 645) the Court ruled, in connection with Article 36 of the Convention, that a party who had not appealed was precluded, at a later stage in the proceedings, from relying on a ground which he could have pleaded in such an appeal.

35It must be stated that this principle applies equally as regards the first paragraph of Article 38 of the Convention. The scheme of the Convention and in particular the principle of the free movement of judgments, which is one of the Convention's essential objects, prevents a party from invoking before the court called upon to decide, under the first paragraph of Article 38, upon an application for a stay of the proceedings in the appeal lodged against the enforcement order, grounds which he could have pleaded before the foreign court.

36Accordingly, the first paragraph of Article 38 of the Convention cannot be interpreted, either, as meaning that the court with which the appeal is lodged can take into consideration, in a decision regarding a stay of proceedings under that paragraph, submissions which were not known to the foreign court at the time of its judgment because the appellant had failed to put them before it.

37It follows from all the foregoing considerations that the answer to the third question from the court of reference must be that the first paragraph of Article 38 of the Convention is to be interpreted as meaning that a court with which an appeal is lodged against an order for the enforcement of a judgment given in another Contracting State may take into consideration, in a decision concerning an application for the proceedings to be stayed under that paragraph, only such submissions as the appellant was unable to put before the court of the State in which the judgment was given.

Costs

38The costs incurred by the German and Netherlands Governments and by the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. Since these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the proceedings pending before the national court, the decision on costs is a matter for that court.

Operative part

On those grounds,THE COURT (Sixth Chamber),in answer to the questions referred to it by the Hoge Raad der Nederlanden, by order of 1 June 1990, hereby rules:

1.The second paragraph of Article 37 of the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters is to be interpreted as meaning that a decision taken under Article 38 of the Convention by which the court with which an appeal has been lodged against an order for the enforcement of a judgment given in another Contracting State has refused to stay the proceedings and has ordered the party to whom the enforcement order was granted to provide security does not constitute a ‘judgment given on the appeal’ within the meaning of the second paragraph of Article 37 of the Convention and may not, therefore, be contested by an appeal in cassation or similar form of appeal. The position is the same where the decision taken under Article 38 of the Convention and the ‘judgment given on the appeal’ within the meaning of the second paragraph of Article 37 of the Convention are given in a single judgment.

2.The first paragraph of Article 38 of the Convention is to be interpreted as meaning that a court with which an appeal is lodged against an order for the enforcement of a judgment given in another Contracting State may take into consideration, in a decision concerning an application for the proceedings to be stayed under that paragraph, only such submissions as the appellant was unable to make before the court of the State in which the judgment was given.

Delivered in open court in Luxembourg on 4 October 1991.