What Constitutes a "Measure of Enforcement" and When does a Foreign Judgment Registered in the UK become "Effective and Enforceable"

(Cyprus Popular Bank Public Co Ltd v (1) Andreas Vgenopoulos, (2) Efthimos Bouloutas, (3) Kyriacos Mageiras, (4) Marfin Investment Group Holdings [2018] EWCA Civ 1)

On 23 May 2014, the Special Administrator of Cyprus Popular Bank Public Co Ltd ("Cyprus Bank") obtained a final worldwide freezing order against the Respondents in the District Court of Nicosia, Cyprus (the "Freezing Order").

On 12 February 2015, Cyprus Bank issued an application to the High Court of Justice of England and Wales to register the Freezing Order under Article 38 of the Judgments Regulation. An order was made by Master Leslie on 26 February 2015 ("English Order") registering the Judgment for enforcement in England and Wales and advising the Respondents of their right to appeal within 2 months after the date of service of the order on them. It further stated  that no measures of enforcement could be taken before the end of the 2 months other than measures ordered by the court to preserve the property of the judgment debtors (Respondents).

Almost a year later, Cyprus Bank's solicitors wrote to Union Bancaire Privée referring to the Freezing Order and the English Order and putting it on notice not to allow the removal/disposal of any assets from England and Wales, the Respondents appealed.

On appeal Picken J declared that:

  1. The Order of 23 May 2014 did not become immediately fully effective and enforceable by the appellant in England and Wales as a judgment of the High Court of Justice, Queen's Bench Division on the making of an Order by Master Leslie. It would only become fully effective and enforceable on the final determination of the appeal against the Order of Master Leslie issued by the Respondents.
  2. The appellant, Cyprus Bank, was prohibited from taking any "measures of enforcement" which includes service/notification/provision of the Judgment and/or the Order of Master Leslie to third parties in order to give effect to the Judgment as a judgment of the High Court of Justice, Queen's Bench Division.

The Appeal

Cyprus Bank appealed and argued that the judge was wrong to conclude the Freezing Order did not become "fully effective and enforceable" on the making of the English Order and would only become fully effective and enforceable on determination of the Respondents' appeal. The effect of the relevant provisions of the Judgments Regulation is that the 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.

It further claimed that the judge was wrong to conclude that "measures of enforcement" included service of the Freezing Order and/or notification of its terms to third parties.  European jurisprudence 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 and not enforcement per se.

Decision on Appeal

It was submitted and the Court of Appeal agreed that the judge's conclusion that the Freezing Order once registered was not immediately effective and enforceable was contrary to the scheme of the Judgments Regulation itself and also to paragraph 2 of Schedule 1 of the Civil Jurisdiction and Judgments Order 2001. A judgment once registered in the High Court of Justice "shall, for the purposes of its enforcement be of the same force and effect…as if the judgment had originally been given by [the High Court]".

The conclusion that the Freezing Order once registered was as fully effective and enforceable as an English judgment would be, subject only to the appellant not being entitled to take measures of enforcement other than protective measures pending determination of the Respondents' appeal as mandated by the terms of the Civil Jurisdiction and Judgments Order 2001 but also by the Rules of Court applying to registration of judgments under the Judgments Regulation.

Regarding the second question of the appeal, it was held the starting point is that European law recognises that the question of what constitutes a "measure of enforcement" is a matter for the domestic law where enforcement is sought. Service of a registration order cannot be a "measure of enforcement" given that it is required and not prohibited.

In Customs and Excise Commissioners v Barclays Bank plc [2006] UKHL 28; [2007] 1 AC 181 it was held where a third party bank is notified of the terms of a freezing order the party which obtained the order no doubt expects that the bank will respect the order. If it does not, then the party relies on the court enforcing its order for example by proceedings for contempt. Notification of the terms of a judgment or order may be necessary for subsequent enforcement but it is not enforcement per se.

It was therefore held that the appeal must be allowed and the Order of Picken J dated 22 June 2016 set aside. 

This article was written by Alan Bennett.

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