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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Cyprus Popular Bank Public Co Ltd v Andreas Vgenopoulos & Ors [2018] EWCA Civ 1 (12 January 2018) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2018/1.html Cite as: [2018] WLR(D) 18, [2018] EWCA Civ 1, [2018] 2 WLR 1330, [2018] QB 886 |
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ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
MR JUSTICE PICKEN
Strand, London, WC2A 2LL |
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B e f o r e :
LORD JUSTICE FLAUX
and
LORD JUSTICE HOLROYDE
____________________
CYPRUS POPULAR BANK PUBLIC CO LTD Under resolution pursuant to the provisions of the Resolution of Credit and Other Institutions Law 2013 N.17(I)/2013 (acting by its Special Administrator) |
Appellant |
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- and - |
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(1) ANDREAS VGENOPOULOS (2) EFTHIMIOS BOULOUTAS (3) KYRIACOS MAGEIRAS (4) MARFIN INVESTMENT GROUP HOLDINGS S.A. and others |
Respondents |
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Mr James Evans (instructed by Humphries Kerstetter LLP) for the Second to Fourth Respondents
Hearing date: Wednesday 13 December 2017
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Crown Copyright ©
Lord Justice Flaux:
Introduction
Factual background
"iv (1) Save as provided in paragraph (2) above, the conditions of this Order do not affect or concern anybody outside the jurisdiction of the Courts of the Republic of Cyprus.
(2) The conditions of this Order affect the following persons which are found in a country or state outside the jurisdiction of the Courts of the Republic of Cyprus:
…
b Any person, including any banking institution or other financial organization,
…
ii in relation to which this Order has been determined as being applicable and/or otherwise executable by the Courts of a country which has jurisdiction on the said person or on the assets of this person."
"1. The Judgment dated 23 May 2014 of the District Court of Nicosia, Cyprus, with Action No. 8400/2012 between the Claimant/Applicant and the Defendants/Respondents 1, 2, 3 and 12 (which itself made final and absolute until trial or further order the interim orders dated 8 May 2013 of the District Court of Nicosia, Cyprus, with Action No. 8400/2012 between the Claimant/Applicant and the Defendants/Respondents 1, 2, 3 and 12) may be registered as a judgment of the Queen's Bench Division of the High Court of Justice of England and Wales pursuant to Article 38 of the Judgments Regulation (Council Regulation (EC) No. 44/2001 of 22 December 2000), for enforcement in England and Wales.
2. Respondents 1, 2, 3 and 12 pay the Applicant's costs of this application to be assessed if not agreed, with a payment on account thereof to be made within 28 days of service of this order in the total sum of £10,000.00.
3. The party entitled to the benefit of the judgment is Cyprus Popular Bank Public Co Ltd (also known as 'Laiki') under resolution pursuant to the provisions of the Resolution of Credit and Other Institutions Law 2013 N. 17(I)/2013 (acting by its Special Administrator, Andri Antoniadou, from Nicosia, Cyprus) and its address for service within the jurisdiction is the address of its instructed solicitors Eversheds LLP at One Wood Street, London EC2W 7WS (Ref: FLACKD/300174.000001).
4. Respondents 1, 2, 3 and 12 have the right to appeal against this Order by making an appeal within 2 months after the date of service of this order on them. No measures of enforcement will be taken by the party entitled to the benefit of the judgment before the end of that period, other than measures ordered by the court to preserve the property of the judgment debtors."
"7. We seek your written confirmation by 5 pm on 5 February 2016 that, in respect of any assets of the Defendants in your custody, possession or power, you will not permit the Defendants to remove these from England and Wales or to dispose or to deal with them or to diminish their value. In the absence of hearing from you, we may apply to the court without further notice to you.
…
9. For the avoidance of doubt, you are now considered to be on notice of each of the May 2013 Order, the Cypriot Judgment and the English Order. Should you fail to comply with the terms of those orders and judgment you may be found in contempt of court."
"While it is obviously not for us to advise you, our client's position is as follows:
1 By Order of the English Court dated 26 February 2015, the Judgment of the District Court of Nicosia in Action no. 8400/2012 dated 23 May 2014 (the 'Cypriot Judgment') was registered as a judgment of the High Court of England and Wales.
2 The effect of …registration is that the Cypriot Judgment takes effect in England and Wales as though it were a judgment rendered by a Court in this jurisdiction. Accordingly, having received notice of it, UBP are bound by the English Order and must ensure that its terms are complied with.
3 Paragraph 4 of the English Order, which provides for certain of the Respondents to have a right of appeal, does not impact on the Order's validity or enforceability as against the Respondents (or you). The purpose of that provision is to allow a period in which enforcement against an executory judgment may not take place, but this does not impact on the prohibition on disposition, which is [a] measure designed to prevent the Respondents from taking any steps that may prejudice a final judgment. That prohibition falls within the category of 'measures ordered by the court to preserve the property of the judgment debtor'.
4 Accordingly, and as communicated to you in our letter of 4 February, our client's position is that the English Order is a fully effective and enforceable order of the English Court that is binding on UBP."
It is accepted by Mr Samek QC that the last sentence of paragraph 3 was incorrect.
The legal framework
"Application may be made to the courts of a Member State for such provisional, including protective, measures as may be available under the law of that State, even if, under this Regulation, the courts of another Member State have jurisdiction as to the substance of the matter."
It thus reflects the earlier provision for "interim relief" to be available under section 25 of the Civil Jurisdiction and Judgments Act 1982.
"1. A judgment given in a Member State and enforceable in that State shall be enforced in another Member State when, on the application of any interested party, it has been declared enforceable there.
2. However, in the United Kingdom, such a judgment shall be enforced in England and Wales, in Scotland, or in Northern Ireland when, on the application of any interested party, it has been registered for enforcement in that part of the United Kingdom."
"Article 40.1
The procedure for making the application shall be governed by the law of the Member State in which enforcement is sought.
Article 41
The judgment shall be declared enforceable immediately on completion of the formalities in Article 53 without any review under Articles 34 and 35. The party against whom enforcement is sought shall not at this stage of the proceedings be entitled to make any submissions on the application.
Article 42.1
The decision on the application for a declaration of enforceability shall forthwith be brought to the notice of the applicant in accordance with the procedure laid down by the law of the Member State in which enforcement is sought.
Article 43.1
The decision on the application for a declaration of enforceability may be appealed against by either party."
"1. When a judgment must be recognised in accordance with this Regulation, nothing shall prevent the applicant from availing himself of provisional, including protective, measures in accordance with the law of the Member State requested without a declaration of enforceability under Article 41 being required.
2. The declaration of enforceability shall carry with it the power to proceed to any protective measures.
3. During the time specified for an appeal pursuant to Article 43(5) against the declaration of enforceability and until any such appeal has been determined, no measures of enforcement may be taken other than protective measures against the property of the party against whom enforcement is sought."
"(1) In this Order—
"the Act" means the Civil Jurisdiction and Judgments Act 1982;
"the Regulation" means Council Regulation (EC) No. 44/2001 of 22nd December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters;"
"Schedule 1 to this Order (which applies certain provisions of the Act with modifications for the purposes of the Regulation) shall have effect."
"(2) A judgment registered under the Regulation shall, for the purposes of its enforcement, be of the same force and effect, the registering court shall have in relation to its enforcement the same powers, and proceedings for or with respect to its enforcement may be taken, as if the judgment had been originally given by the registering court and had (where relevant) been entered.
(3) Sub-paragraph (2) is subject to Article 47 (restriction on enforcement where appeal pending or time for appeal unexpired), to paragraph 5 and to any provision made by rules of court as to the manner in which and conditions subject to which a judgment registered under the Regulation may be enforced."
"Registration Orders
74.6—(1) An order granting permission to register a judgment ("registration order") must be drawn up by the judgment creditor and served on the judgment debtor…
(3) A registration order must state—
(a) full particulars of the judgment registered;
(b) the name of the judgment creditor and his address for service within the jurisdiction;
(c) the right of the judgment debtor—
…
(ii) in the case of registration following an application under the 1982 Act or under the Judgments Regulation, to appeal against the registration order;
(d) the period within which such an …appeal may be made; and
(e) that no measures of enforcement will be taken before the end of that period, other than measures ordered by the court to preserve the property of the judgment debtor.
Appeals
74.8—(1) An appeal against the granting or the refusal of registration under the 1982 Act or the Judgments Regulation must be made in accordance with Part 52, subject to the following provisions of this rule
(4) The appellant's notice must be served—
(a) where the appeal is against the granting of registration, within—
…
(ii) where service is to be effected on a party not domiciled within the jurisdiction, two months, of service of the registration order;
Enforcement
74.9—(1) No steps may be taken to enforce a judgment—
(a) before the end of the period specified in accordance with rule 74.6(3)(d), or that period as extended by the court; or
(b) where there is an application under rule 74.7 or an appeal under rule 74.8, until the application or appeal has been determined.
(2) Any party wishing to enforce a judgment must file evidence of the service on the judgment debtor of—
(a) the registration order; and
(b) any other relevant order of the court.
(3) Nothing in this rule prevents the court from making orders to preserve the property of the judgment debtor pending final determination of any issue relating to the enforcement of the judgment."
The judgment below
"Commonsense seems to me to dictate that if "measures of enforcement" cannot be taken, then, the "judgment" is not, in a real and practical sense, fully effective and enforceable. Put another way, it is difficult to see how a claimant could say, on the one hand, that it has a "judgment" which is enforceable whilst also saying, on the other hand, that it cannot take "measures of enforcement" in relation to that "judgment". "
"Furthermore, I struggle to see why a claimant which has obtained a declaration of enforceability should find itself in a better position pending an appeal, or in the two month period when an appeal can be brought if an appeal is, in the event, not brought, than a claimant would be in if an appeal were to be brought within the two month period and that appeal were to prove to be successful. Until it is known whether an appeal is to be brought and, if it is, whether it is going to succeed, it seems to me that it is appropriate that the position should, in effect, be neutral. The logical consequence of Mr Samek QC's and Mr McWilliams's submission being accepted is, however, that the claimant is in a better position simply by dint of having obtained a registration order on a without notice basis, and nothing more than that. I see no justification for adopting such an approach. This is all the more the case, given that Articles 47.2 and 47.3 both expressly permit a claimant, having obtained a registration order or, more accurately, using the language of Articles 47.2 and 47.3, a "declaration of enforceability", to take "protective measures", in the case of Article 47.3 specifically pending the resolution of any appeal. In view of this, pending an appeal a claimant has an appropriate level of protection and its position is safeguarded, provided obviously that it can persuade the Court in this jurisdiction to grant it relevant protective relief. In my view, there can be no justification for Article 38 effectively being used in such circumstances as, to use Mr Malek QC's and Mr Evans's label, a "short cut" to the obtaining of a freezing order in this jurisdiction. It cannot be right, and it would be wholly at odds with the scheme of the Judgments Regulation, were a claimant to be able to achieve the immediate freezing of bank accounts in this jurisdiction by obtaining an order pursuant to Article 38 without, pending an appeal, having to persuade the Court (in this jurisdiction) that it ought itself to grant a freezing order on conventional grounds."
"My conclusion, in the circumstances, is that the Cypriot Freezing Order is not currently fully effective and enforceable, and nor did it become fully effective and enforceable on the making of the Registration Order, but that it will only become fully effective and enforceable on determination of the Defendants' appeal against the Registration Order. It follows from this that I reject the submission made by Mr Samek QC and Mr McWilliams that, by virtue of what was stated in the Cypriot Freezing Order about it applying to "Any person, including any banking institution or other financial organization, …in relation to which this Order has been determined as being applicable and/or otherwise executable by the Courts of a country which has jurisdiction on the said person or on the assets of this person", the Cypriot Freezing Order is currently fully effective and enforceable as regards UBP in accordance with its terms. I do not consider, in the circumstances, that it can be right to suggest that it "has been determined" in this jurisdiction that the Cypriot Freezing Order is "applicable" or that it is "otherwise executable". All that has so far happened is that the Claimant has obtained an order on a without notice basis and, in circumstances, where the Defendants are seeking to appeal against the Registration Order."
"By 'protective measures' Article 39 of the Convention envisages those forms of relief available under the law of the enforcing State to prevent the judgment debtor from removing the assets on which execution is to be levied. By 'measures of enforcement' which may not be taken, Article 39 means, in consequence, all other measures of enforcement, which usually take the form of the sequestration of the judgment debtor's property.
… The object of Article 39 is 'to ensure at the enforcement stage a balance between the rights and interests of the parties concerned, in order to avoid either of them suffering any loss as a result of the operation of the rules of procedure'. That balance may be safeguarded, not threatened, by the adoption of protective measures. Article 39, thus, does not exclude protective measures which have the same effect as an order for protective measures in the judgment sought to be enforced merely because they do give effect to that order. These are not the sort of measures which are prohibited by Article 39."
"…in effect insisting on the immediate freezing of UBP's bank accounts in the face of a threat of immediate contempt proceedings. In context, bearing in mind that the underlying "judgment" is a worldwide freezing order, I am confident that what the Claimant has done in the present case amounts to a "measure of enforcement". As the Advocate-General observed in his opinion in the Brennero case at page 66:"Enforcement is the carrying out of the original judgment". In my judgment, by sending the Cypriot Freezing Order to UBP, the Claimant has carried that order out and, as such, should be regarded as having taken a "measure of enforcement" in relation to it."
"[18] As the first paragraph makes clear, during this period the party in question cannot proceed with measures of enforcement strictly so-called but must, if he considers it necessary, confine himself to taking protective measures against the property of the party against whom enforcement is sought. As the second paragraph states, the power to take such protective measures arises from the decision authorising enforcement.
[19] The manifest purpose of this provision is to enable the party who has obtained authorisation for enforcement, but who cannot yet proceed to take enforcement measures, to prevent the party against whom enforcement is sought from disposing of his property in the meantime so as to render future enforcement unsuccessful or even impossible.
[20] However, as in relation to enforcement proper, also with regard to the protective measures referred to in Article 39 the Convention confines itself to stating the principle that the party seeking enforcement may proceed with such measures during the period indicated in that Article. On the other hand the Convention leaves the task of settling any matter which is not the subject of specific provisions in the Convention to the procedural law of the court in question."
"Authorities which deal with how a money "judgment" is enforced, in other words through Court processes, provide no assistance in a case such as the present for the simple reason that, in the case of a money "judgment", merely sending it to a party (whether the defendant or a third party), even if combined with a request (to the defendant but not presumably to the third party) that the relevant sum of money is paid, clearly does not entail any element of enforcement. Service of a money judgment, even on the judgment debtor, has no effect other than to serve as confirmation that the judgment creditor or claimant requires that payment is made. The same cannot be said about a worldwide freezing order because, in contrast to a money judgment, it is the service of a freezing order, or notification of its terms, which makes it effective as against third parties and which, in practical terms, carries the freezing order into effect and so represents, or entails, enforcement of it. This is sufficient without more to warrant the conclusion which I have reached, but that conclusion is all the more justified given that DLA Piper LLP not only served UBP with the Cypriot Freezing Order but went further, asking that UBP confirm that payments would not be made out of relevant accounts in the light of the Cypriot Freezing Order."
"If anything, it seems to me that what is stated at [49] supports the Defendants' position more than it does the Claimant's position. The reference to it being "for the applicants seeking to enforce the order to ensure that the third persons concerned are duly notified of the order" confirms that it is notification (or service) of the worldwide freezing order which makes it effective as against third parties and that this is why an applicant "seeking to enforce" it must notify (or serve) the freezing order on third parties. In these circumstances, in my view, consistent with the reasoning which I have set out earlier in this judgment, notification or service itself amounts to the carrying into effect, and so the enforcement, of a worldwide freezing order. That seems to me to be all the more the case when (as happened in the present case) that notification or service is accompanied by threats of contempt for any failure to comply. I acknowledge that, if contempt proceedings are brought, that will entail enforcement also. This does not mean, however, that in the case of a worldwide freezing order the involvement of the Court through contempt proceedings is the only means by which that type of order can be carried into effect and enforced. I do not accept, in short, that in a case concerning a worldwide freezing order it is only when contempt proceedings are initiated, and not before, that a measure of enforcement can be regarded as having been taken."
The grounds of appeal
(1) That the judge was wrong to conclude that the Cypriot Freezing Order did not become "fully effective and enforceable" on the making of the Registration Order and would only become "fully effective and enforceable" on determination of the respondents' appeal against the Registration Order. The effect of the relevant provisions of the Judgments Regulation is that the Cypriot Freezing Order once registered was as effective and enforceable as any other judgment of the High Court, save that no "measures of enforcement" could be taken by the appellant in the appeal period.
(2) That the judge was wrong to conclude that "measures of enforcement" as referred to in paragraph 4 of the Registration Order included service of the Cypriot Freezing Order and/or notification of its terms to third parties. The judge had been wrong not to follow European jurisprudence which demonstrated that at least in the context of a freezing order, "measures of enforcement" refers to Court process or Court ordered enforcement and service and notification of an order is a condition precedent to enforcement not enforcement per se. The judge had also been wrong not to recognise that as a matter of English law (which applied because European law is that it is for the law of the state where enforcement is sought to determine the procedures for enforcement) enforcement is a Court ordered process and service or notification of an order is not enforcement and thus not a "measure of enforcement".
The parties' submissions
"Recognition must have the result of conferring on judgments the authority and effectiveness accorded to them in the State in which they were given."
"It follows that the answer to be given to the national court's first question is that a foreign judgment which has been recognized by virtue of Article 26 of the Convention [the predecessor of Article 33 of the Judgments Regulation] must in principle have the same effects in the State in which enforcement is sought as it does in the State in which judgment was given."
"A plaintiff who has obtained an order for enforcement may, under the Convention, proceed to those measures by whatever route national law provides. If national rules enable him, e.g., to seize property without further order, he may do so. If national rules require a further order of the court, such an order must be obtained either from the court authorising enforcement or from some other competent court."
Analysis and conclusions
"However, the Convention confines itself to governing the procedure for obtaining authorization for enforcement, and does not contain any provisions concerning enforcement properly so called, which, as stated in the judgment of 2 July 1985 (Case 148/84 Deutsche Genossenschaftsbank (1985) ECR 1987), is subject to the national law of the court hearing the proceedings."
"By 'protective measures' Article 39 of the Convention envisages those forms of relief available under the law of the enforcing State to prevent the judgment debtor from removing the assets on which execution is to be levied. By 'measures of enforcement' which may not be taken, Article 39 means, in consequence, all other measures of enforcement, which usually take the form of the sequestration of the judgment debtor's property."
It is clear from that passage that the other measures of enforcement he is referring to in the second sentence are those available under the law of the enforcing state.
"If a party wishes to freeze his opponent's bank account, he cannot do so without the intervention of the court. Having obtained a freezing order and notified the bank, the applicant can expect that any responsible bank will respect the order. But he does not rely on the bank doing so. Rather, like anyone else who obtains a court order, he relies on the court being able to enforce its orders. So the applicant relies on the court ensuring that the bank does not flout its order and punishing the bank for contempt if it does. That is, after all, the assistance which the law provides to someone who shows that his opponent's assets should be frozen."
Conclusion
Lord Justice Holroyde
Lord Justice McCombe