CYPRUS POPULAR BANK PUBLIC CO LTD v (1) ANDREAS VGENOPOULOS AND ORS (2016)

The court had to determine issues on the meaning and enforceability of a worldwide freezing injunction which the claimant bank had obtained in proceedings against the defendants in Cyprus.

 

The bank had applied to have the freezing injunction registered as a judgment of the instant court, pursuant to Regulation 44/2001 art.38. The court made a registration order in February 2015. Paragraph 4 of the order provided that the defendants had two months in which to bring an appeal, and that no “measures of enforcement” could be taken by the bank before the end of that period. Paragraph 4 was intended to echo art.47(3) of the Regulation, which provided that “During the time specified for an appeal … 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 was sought”. In February 2016 the bank wrote to another bank (U) notifying it of the freezing injunction and of its registration pursuant to art.38, and warning that if it failed to comply with the requirement to freeze the defendants’ accounts, it could be found in contempt of court. U complied with the freezing injunction. The defendants’ appeal against the registration order was pending.

 

The defendants argued that art.47(3) had the effect that the freezing injunction was not enforceable immediately on the making of the registration order. They submitted that where the judgment which was made the subject of an order for registration was a worldwide freezing injunction, then it was the giving of notice of the freezing injunction to third parties which represented enforcement. They argued that the bank had used art.38 as an alternative to seeking a freezing injunction in this jurisdiction, notwithstanding that that route had been open to it by virtue of art.47(2) and art.47(3), which made it clear that a claimant could take “protective measures”. The defendants submitted that the bank should not be permitted, in effect, to translate the freezing injunction into the equivalent of a freezing order obtained in England and Wales. The bank contended that the defendants’ argument failed to distinguish between a judgment being “declared enforceable” in a Member State, which was the language used in art.38(1), art.41, art.43(1) and art.47, and “measures of enforcement”, as referred to in art.47(3). The bank argued that that distinction meant that the freezing injunction became enforceable immediately once the registration order was made.

 

HELD: (1) It was artificial and unrealistic to seek to distinguish between a judgment which was enforceable and a judgment in relation to which “measures of enforcement” could legitimately be taken. It was difficult to see how a claimant could say that it had a “judgment” which was enforceable whilst also saying that it could not take “measures of enforcement” in relation to it. Furthermore, art.47(3) was absolute in its prohibition on “measures of enforcement” being taken during the time specified for an appeal against the declaration of enforceability and until any such appeal had been determined. It was very clear that a claimant was not at liberty to enforce notwithstanding the declaration of enforceability which had been obtained. When art.39 to art.46 were taken into account, and it was appreciated that the defendant had no entitlement to make submissions on the claimant’s application for a declaration of enforceability, and its only entitlement was to bring an appeal, that served to underline the inappropriateness of the suggested distinction between enforceability and the claimant’s ability to take “measures of enforcement”. There could be no justification for art.38 effectively being used as a shortcut to the obtaining of a freezing injunction in England and Wales. It could not be right, and it would be wholly at odds with the scheme of the Regulation, if a claimant could achieve the immediate freezing of bank accounts in England and Wales by obtaining an order pursuant to art.38 without, pending an appeal, having to persuade the court that it ought itself to grant a freezing injunction on conventional grounds. The freezing injunction in the instant case had not become fully effective and enforceable on the making of the registration order. It would only become fully effective and enforceable on determination of the defendants’ appeal against the registration order, Calzaturificio Brennero SAS v Wendel GmbH Schuhproduktion International (258/83) [1984] E.C.R. 3971 and Banco Nacional de Comercio Exterior SNC v Empresa de Telecomunicationes de Cuba SA [2007] EWCA Civ 662, [2008] 1 W.L.R. 1936 considered (see paras 26-34 of judgment).

 

(2) In relation to an underlying order which was a worldwide freezing injunction, included in the description of “measures of enforcement” was service of the freezing injunction and notification of its terms to third parties. It was artificial and wrong to limit “measures of enforcement” to measures which involved a party in the bank’s position going to the court and obtaining further orders of an enforcement nature after obtaining an order for registration. What the bank had done, by serving the freezing injunction and the registration order on U and seeking U’s compliance, including threatening contempt proceedings, constituted “measures of enforcement” within the ambit of art.47(3), Meroni v Recoletos Ltd (C-559/14) EU:C:2016:349 considered. If the bank’s submissions were correct, there would be no need for it to pursue “protective measures” in the form of a freezing injunction obtained in England and Wales as permitted, and expressly envisaged, by art.47(2) and art.47(3) in the context of any appeal. That could not be what was intended by the Regulation (paras 35-48).

 

Judgment accordingly

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