Report for the Hearing in Case C-183/90

I — Facts and written procedure

1. On 26 December 1985 the applicants in the main proceedings (hereinafter referred to as ‘Van Dalfsen’), residing in the Netherlands, brought an action before the Vrederechter van het Kanton Herentals (Belgium) against the defendants in the main proceedings (hereinafter referred to as ‘Van Loon’). Van Dalfsen's principal claim was for the annulment of a tenancy agreement between the parties and an order that Van Loon should pay BFR 5560086 and HFL 200000. In the alternative, they claimed confirmation of the termination of that agreement and discharge of the security they had provided and reimbursement of their capital expenditure. Van Loon counterclaimed for arrears of rent.

2. By judgment of 21 October 1986, the Vrederechter dismissed Van Dalfsen's principal claim. As regards their alternative claim, the court confirmed the termination of the agreement, dismissed the application for discharge of the security and ordered that an expert's report be drawn up with regard to the claim for reimbursement of capital expenditure. With regard to Van Loon's counterclaim, the Vrederechter ordered Van Dalfsen to pay Van Loon BFR 2700000 plus interest. The judgment was declared to be ‘provisionally enforceable notwithstanding any appeal and without security’.

3. On 17 December 1986, Van Dalfsen appealed against that judgment to the Rechtbank van Eerste Aanleg te Turnhout (Belgium).

4. Van Loon, for their part, applied to the presiding judge of the Arrondissementsrechtbank te Zwolle (Netherlands) for an order for the enforcement in the Netherlands of the judgment of the Vrederechter te Herentals in pursuance of Article 31 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. 32, hereinafter referred to as ‘the Convention’). By decision of 23 January 1987, the presiding judge of the Arrondissementsrechtbank made such an order.

5. On 2 April 1987, Van Dalfsen, in pursuance of Article 36 of the Convention, appealed to the Arrondissementsrechtbank te Zwolle against that decision. That court found that, in their appeal against the presiding judge's order, Van Dalfsen had not challenged the legality of the order for enforcement. However, they had asked the Arrondissementsrechtbank to stay the proceedings on the appeal, in pursuance of the first paragraph of Article 38 of the Convention. In support of that application they pointed out that they had appealed against the judgment of the Vrederechter te Herentals and provided a bank guarantee for the amount that judgment had ordered them to pay to Van Loon. They pleaded in addition that the Vrederechter had declared their counterclaim for the reimbursement of capital expenditure justified and had ordered that an expert's report be drawn up to determine the amount thereof. In that connection they had produced a provisional report from an expert fixing the amount due from Van Loon in respect of capital expenditure at BFR 477954. By judgment of 13 April 1988 the Arrondissementsrechtbank dismissed the application for a stay of proceedings, declared the appeal unfounded and authorized the enforcement in the Netherlands of the Belgian Vrederechter's judgment whilst, of its own motion, making that order, under the third paragraph of Article 38 of the Convention, conditional upon the provision by Van Loon of a bank guarantee in the sum of BFR 478000 (or the equivalent in Netherlands currency) until final judgment on Van Dalfsen's alternative claim.

6. Van Dalfsen appealed in cassation, pursuant to the second paragraph of Article 37 of the Convention, against the judgment of the Arrondissementsrechtbank. By their sole submission in cassation Van Dalfsen claimed that the judgment under appeal was based upon an incorrect interpretation of the extent of the powers conferred by Article 38 of the Convention on ‘the court with which the appeal is lodged’. According to them, a court giving judgment under that article must take into account all circumstances which the foreign court may already have taken into account in arriving at its judgment and in particular assess the chances of success of the ordinary appeal which has been or may be lodged against the foreign judgment.

7. The Hoge Raad der Nederlanden first considered whether the judgment under appeal 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, the appeal in cassation lodged by Van Dalfsen would be inadmissible. If the answer to that question is in the affirmative, it would be appropriate to consider the substance of this appeal in cassation and the question would then arise of the scope of the powers conferred by Article 38 of the Convention on ‘the court with which the appeal is lodged’.

8. Taking the view, therefore, that the dispute raised questions relating to the interpretation of Community law, the Hoge Raad der Nederlanden, by order of 1 June 1990, decided, 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?’

9. The Hoge Raad's order for reference was received at the Court Registry on 11 June 1990.

10. In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the EEC, written observations were submitted on 30 August 1990 by the Commission of the European Communities, represented by B. J. Drijber, a member of its Legal Service, acting as Agent, on 21 September 1990 by the German Government, represented by Christof Böhmer, Ministerialrat at the Federal Ministry for Justice, and on 25 September 1990 by the Netherlands Government, represented by B. R. Bot, Secretary General at the Ministry of Foreign Affairs.

11. Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiry.

12. In pursuance of Article 95(1) and (2) of the Rules of Procedure, the Court, by decision of 24 April 1991, assigned the case to the Sixth Chamber.

II — Written observations submitted to the Court

1. (a) With regard to the first two questions, the German Government first points out that, by their appeal in cassation, Van Dalfsen are challenging the judgment of the Arrondissementsrechtbank in so far as, on the one hand, it declared unfounded the appeal lodged against the enforcement order and, on the other hand, did not stay the proceedings but made its order conditional on the provision of security. According to the Federal Government, the first part of that judgment was ‘given on the appeal’, within the meaning of the second paragraph of Article 37 of the Convention and could therefore be contested, in accordance with that article, by an appeal in cassation. As far as the second part of that judgment is concerned, however, the Convention does not mention the possibilities of contesting the judgment given under Article 38 of the Convention. It is true that, in the judgment in Case 258/83 Brennero v Wendel [1984] ECR 3971, the Court ruled that, under the general scheme of the Convention, and in the light of one of its principal objectives, which is to simplify proceedings 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 (paragraph 15). It follows that an appeal lodged against a judgment given in pursuance of the first paragraph of Article 38 of the Convention cannot be contested by an appeal in cassation. However, the question whether a judgment given in pursuance of Article 38 of the Convention may be contested by an appeal in cassation when it is given at the same time as the judgment given on the appeal has not yet been settled. Three possibilities may be envisaged, namely that an appeal in cassation is in any event excluded, that the judgment given in pursuance of Article 38 of the Convention may be contested only if the appeal in cassation relates also to the granting or dismissal of the application for an enforcement order or, finally, that the judgment given under Article 38 of the Convention may be contested in its entirety by an appeal in cassation if it is given at the same time as the judgment given on the appeal. The German Government adds that the Jenard Report (Official Journal 1979 C 59, p. 1) states, with regard to Article 37 of the Convention, that ‘the appellant may also plead Article 38 if he has lodged an appeal against the judgment whose enforcement is sought in the State in which it was given’. This might militate in favour of the third possibility mentioned above, but the German Government takes the view that that sheds no light on the extent of admissibility of the appeal in cassation. It follows both from the main object of the Convention, which is to provide in the State in which enforcement is sought a rapid, simple and uniform procedure, and from the grounds of the judgment in Brennero v Wendel, cited above, that it is only the judgment given on the appeal lodged under Article 36 of the Convention against the enforcement order which may be contested by an appeal in cassation under the second paragraph of Article 37 of the Convention. Hence a judgment given under Article 38 of the Convention cannot be regarded as a ‘judgment given on the appeal’ within the meaning of the second paragraph of Article 37. In the German Government's opinion, that answer to the first two questions from the court of reference ought to constitute sufficient ground for declaring inadmissible the appeal in cassation lodged in the main proceedings so that it is not necessary to raise the question whether the first paragraph of Article 38 of the Convention may be interpreted as meaning that the ‘court with which the appeal is lodged’ within the meaning of that paragraph may also be the court with which the appeal in cassation is lodged, with jurisdiction to take a decision either on a first application under Article 38 of the Convention or, where the court with which the appeal is lodged under Article 36 has already given judgment on an application under Article 38, on a new application under Article 38 on the basis of new facts. (b) The German Government adds that in view of that answer the third question from the court of reference is no longer relevant. For the sake of completeness, the German Government states in this respect that the considerations which the court must take into account to give a decision under the first paragraph of Article 38 of the Convention are clear from the object of that provision. On the one hand the object of the Convention is to guarantee a simple, rapid and uniform procedure for the enforcement of judgments, with a minimum of formalities, for all Contracting States. On the other hand, as the Court stated in the judgment in Case 43/77 Industrial Diamond Supplies v Riva [1977] ECR 2175, it is desirable to ensure that a judgment is not recognized and enforced in another Contracting State at a time when there is still the possibility that it may be set aside or amended in the State in which it was given. In that judgment, moreover, the Court pointed out that according to the Convention the court before which recognition or enforcement is sought is not under a duty to stay the proceedings but merely has the power to do so, so that that court is enabled to stay the proceedings whenever reasonable doubt arises with regard to the fate of the decision in the State in which it was given (paragraphs 32 and 33). It follows that the court referred to in the first paragraph of Article 37 of the Convention must take a decision under the first paragraph of Article 38 thereof on the basis of its power of assessment and accordingly take account both of the chances of success of the ordinary appeal in the State in which the judgment was given and of those of the appeal in the State in which enforcement is sought. That court must therefore examine all objections which are admissible in the context of the procedure on the appeal, such as the conditions laid down by the Convention determining the enforceable nature of the judgment and the arguments against the application itself in so far as, regard being had to the prohibition of a review as to the substance of the foreign judgment, such arguments are based on facts subsequent to the foreign judgment. Finally, when the foreign judgment is provisionally enforceable, the court's power to stay the proceedings or make enforcement conditional upon the provision of security, taking into account the possibility that the judgment may be amended in the State in which it was given, shows that the court with which the appeal is lodged may take account of objections raised against the application in that State. That means that in the procedure on the appeal it is possible to rely on matters of fact without any limitation. Such a possibility exists in particular when the procedure in the State in which enforcement is sought is based simply upon a conditionally enforceable claim. In these circumstances the court with which the appeal is lodged and which is requested to stay the proceedings or to require the provision of security by the party seeking enforcement is not prevented from basing its judgment on considerations which the foreign court might also have taken as the basis of its judgment and which must be considered afresh in the State in which the judgment was given during the procedure on the appeal. That court is, a fortiori, not prevented from taking account of facts which could not be put forward at the time of the proceedings before the court of the State in which the judgment was given. (c) In conclusion the German Government proposes the following answer to the questions raised by the Hoge Raad der Nederlanden. ‘(1) Judgments given by the court with which the appeal is lodged within the meaning of Article 38 of the Brussels Convention are not to be regarded as “judgments given on the appeal”; accordingly they cannot be contested by an appeal in cassation under the second paragraph of Article 37 of the Brussels Convention. (2) A judgment given under Article 38 of the Brussels Convention cannot be contested even though it was given at the same time as the judgment on the appeal. (3) The “court with which the appeal is lodged” may, in the event of a claim which is simply provisionally enforceable, avail itself of the powers conferred upon it by the first paragraph of Article 38 of the Brussels Convention, even where the appellant bases his application for a stay of the proceedings, or for enforcement to be made conditional on the provision of security, solely upon grounds on which the foreign court may have based its judgment. It may take all facts into account, irrespective of when they arose.’

2. (a) As regards the first question from the court of reference the NetherUnds Government first states that it appears from the judgment under appeal that in the main proceedings the appeal was not based on a challenge to the substance of the enforcement order but that its purpose was solely to apply for a stay of the proceedings under Article 38 of the Convention because in the meantime an ordinary appeal had been lodged against the foreign judgment. The Netherlands Government further states that, in paragraph 15 of the judgment in Case 258/83 Brennero v Wendel, previously cited, the Court gave a restrictive interpretation of the expression ‘judgment given on the appeal’ in the second paragraph of Article 37 of the Convention. Moreover, it appears from the opening words of the first paragraph of Article 38 of the Convention and from the Jenard Report on that article that the draftsmen of the Convention wished to make a distinction between the appeal referred to in Article 36 and the application for a stay of the proceedings under Article 38. An application for a stay of proceedings may be made only as an addition to an appeal lodged by the same party. On the other hand, such an application cannot be regarded as itself constituting an appeal, which must necessarily be directed against the judgment granting the enforcement order. Hence a party who has not lodged an appeal against the enforcement order cannot make an application for the proceedings to be stayed. It follows that under Article 38 of the Convention there is no general right to ask the court to which application is made for an enforcement order to stay the proceedings on that application simply on the ground that an appeal has been lodged against the foreign judgment. That conclusion follows also from the object of the Convention, which is to promote the free movement of judgments by simplifying proceedings in the State in which enforcement is sought. The Netherlands Government draws the conclusion that since, in the main proceedings, no appeal was lodged, within the meaning of Article 36 of the Convention, against the enforcement order, the appeal in cassation is inadmissible. (b) The Netherlands Government suggests that the second question from the court of reference should be answered in the negative. Even if, in the main proceedings, the appeal in cassation had been admissible as having been lodged against an appeal based, for example, on one of the reasons specified in Articles 27 and 28 of the Convention, the position would still be that judgments given under Article 38 of the Convention are not in themselves judgments given on the appeal within the meaning of the second paragraph of Article 37. They would be interlocutory judgments or, in the case of the third paragraph of Article 38, secondary measures whose purpose is to settle, temporarily, the subsequent course of the proceedings. Regard being had to the limited scope of such decisions and the Convention's object of simplifying proceedings in the State in which enforcement is sought, decisions under Article 38 cannot be contested by an appeal in cassation. (c) With regard to the third question, the Netherlands Government points out that neither Article 38 of the Convention nor the Jenard Report mentions any restrictions as to the factors which the court must take into consideration in giving judgment under that article. Thus the court from which enforcement is sought should not be subject to one of the restrictions referred to in the question, and is in those circumstances free to take into account even submissions which may already have been made before the foreign court. The prohibition of a review as to the substance of the foreign judgment plays no part in this respect since the prohibition concerns only the question whether or not it is appropriate to order the enforcement of that judgment. The Netherlands Government concludes that only the alternative contained in subparagraph (a) of the third question may be accepted.

3. The Commission first emphasizes that Articles 38 and 39 of the Convention are an exception to the principle of the enforcement in one Contracting State of judgments given in another Contracting State. It follows from the Jenard Report that the purpose of these provisions is to establish a balance between the interests of the creditor and those of the debtor in cases in which a judgment which is enforceable in the State in which it is given has not yet become res judicata. (a) As regards the first question, the Commission points out that under Article 38 of the Convention the court with which the appeal is lodged in the State in which enforcement is sought has four possible courses: simply to grant enforcement (hereinafter referred to as ‘the first decision’), to make enforcement conditional on the provision by the creditor of security (‘the second decision’), to stay the proceedings (‘the third decision’) or finally to allow the debtor a time-limit for lodging an ordinary appeal (‘the fourth decision’). According to the Commission, the answer to this first question is to be found in a combination of Articles 38 and 39 of the Convention, but varies according to the decision in question. Thus the first decision is to be regarded as a ‘judgment given on the appeal’ within the meaning of the second paragraph of Article 37 of the Convention, whereas the fourth decision is not. As regards the second decision, the Court ruled in paragraph 13 of the judgment in Case 258/83 Brennero v Wendel, previously cited, that a court with which an appeal has been lodged against a decision authorizing enforcement, given pursuant to the Convention, may make enforcement conditional on the provision of security only when it gives judgment on the appeal. Finally, the third decision does not constitute a judgment given on the appeal. The proceedings before the court of the State in which enforcement is sought are not thereby brought to an end since the court must decide at a later stage whether or not the appeal is well founded. Until then that court, under Article 39 of the Convention, may take only protective measures. On the other hand, the court's refusal to stay the proceedings amounts to granting the enforcement order and is accordingly equivalent to a decision of the first category. The Commission concludes that the party against whom enforcement is sought may avail himself of the legal remedy envisaged in the second paragraph of Article 37 of the Convention in the case of the first and second decisions referred to above, but not in the case of the third and fourth decisions. Similarly, the party who has sought enforcement can avail himself of this remedy against the second decision but not against the third decision. The Commission takes the view that the judgment at issue in the main proceedings belongs to the second category and may therefore be contested by an appeal in cassation. (b) As regards the answer to the second question, the Commission is of the opinion that it is the substance and not the form of the judgment which is significant for determining whether or not it is a ‘judgment given on the appeal’ within the meaning of the second paragraph of Article 37 of the Convention. The important point is whether the court actually gave judgment on the appeal rather than the name given to the decision in question or its procedural status. In these circumstances, the answer to the first question is not affected by whether or not the judgment in question has the form of a final decision. (c) The Commission takes the view that the Hoge Raad limited its third question, relating to the power of assessment of the court of the State in which enforcement is sought, to judgments referred to in the first paragraph of Article 38 of the Convention relating to the application for a stay of proceedings. It is not possible to deduce from the grounds of judgment in Case 43/77 Industrial Diamond Supplies v Riva, previously cited, which related essentially to the meaning of the concept of ‘ordinary appeal’ within the meaning of the Convention, that the court with which the appeal is lodged can avail itself of an extensive use of the power to stay the proceedings so as to be in a position to make a better assessment of the chances of success of an appeal lodged or to be lodged abroad. The Commission thinks, on the contrary, that that court must be sparing in the use of its power to stay the proceedings on the appeal. The Convention is based on the principle that judgments which are enforceable in the State in which they were given are enforceable also in the State in which enforcement is sought. If the court were to assess the chances of success of an appeal lodged abroad it would in fact be engaging, directly or indirectly, in a review as to the substance of the foreign judgment, which is prohibited by the Convention. Furthermore, the purpose of Articles 38 and 39 of the Convention is to ‘compensate’ the party against whom enforcement is sought for the unilateral nature of the procedure for enforcement contained in Article 31 et seq. of the Convention. If the court with which the appeal is lodged could stay the proceedings on the appeal on grounds which were already known to the court of the State in which the judgment was given, there would be a risk that the procedural balance would be disturbed to the detriment of the party who has obtained the enforcement order. The Commission draws the conclusion that the court with which the appeal is lodged cannot grant an application for a stay of proceedings on the appeal when that application is based on grounds which the foreign court has taken into account in its judgment. That would on the contrary be possible only when the opposite party was putting forward grounds which he was not able to put before the foreign court because he was unaware of them. Only thus would it be possible to avoid unnecessarily complicating the enforcement of a decision declared enforceable abroad and thereby impairing the effectiveness of Article 31 of the Convention. In this respect the Commission further refers to paragraph 4 of the operative part of the judgment in Case 145/86 Hoffmann v Krieg [1988] ECR 645, according to which ‘Article 36 of the Convention must be interpreted as meaning that a party who has not appealed against the enforcement order referred to in that provision is thereafter precluded, at the stage of the execution of the judgment, from relying on a valid ground which he could have pleaded in such an appeal against the enforcement order, and that that rule must be applied of their own motion by the courts of the State in which enforcement is sought’. Similarly, a party who has, under Article 36 of the Convention, lodged an appeal against an enforcement order cannot assert a valid reason which he would have been able to put forward in the proceedings leading to the judgment in the State in which it was given which is the subject of the enforcement order. The free movement of judgments requires that that party should be deemed to have forfeited the right to assert such a reason at the enforcement stage. It follows that the appellant can put forward in support of his application for a stay of proceedings only new facts or facts which for valid reasons were unknown to him. (d) In conclusion, the Commission suggests that the following answers should be given to the questions raised by the Hoge Raad der Nederlanden: ‘(1) The second paragraph of Article 37 of the Brussels Convention must be interpreted as meaning that the judgment of the court of the State in which enforcement is sought, dismissing an application for a stay of the proceedings on the appeal lodged under the first paragraph of Article 38 of the Brussels Convention but making the enforcement order, under the third paragraph of Article 38, conditional upon the provision of security by the party seeking enforcement is to be regarded as a “judgment given on the appeal” which may be contested by the appeal referred to in the said paragraph — in the Netherlands an appeal in cassation — irrespective of whether that judgment has the form of a final judgment. (2) The first paragraph of Article 38 of the Brussels Convention must be interpreted as meaning that the court with which the appeal is lodged in the State in which enforcement is sought may, on the application of the appellant, decide to stay the proceedings only if that decision is based on reasons which the said party was unable to put forward in the proceedings before the court of the State in which the judgment was given.’

F. A. Schockweiler

Judge-Rapporteur

1 Language of the case: Dutch.