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Court of Appeal confirms that notification of a third party of a foreign freezing order registered as a English judgment does not amount to a “measure of enforcement”

  • United Kingdom
  • Financial services disputes and investigations
  • Litigation and dispute management - Freezing Orders

12-02-2018

Cyprus Popular Bank Public Co Ltd (acting by its Special Administrator) v Andrea Vgenopoulos & Ors [2018] EWCA Civ 1

Facts of the case

– the Appellant (“A”) was granted (after a final inter partes hearing) a worldwide freezing order and other relief in Cyprus against some of the Respondents (the “Cypriot WFO” and the “Rs”)

– A applied to the English High Court to have the Cypriot WFO registered as an English judgment under Article 38 of the Judgment Regulation (Council Regulation (EC) 44/2001). A’s application was successful and it received an order registering the Cypriot WFO as an English judgment (the “Registration Order”). The Registration Order permitted a window of two months after service for the Rs to appeal against registration, which the Rs did

– At the time of service on the Rs, A also served the Registration Order and Cypriot WFO on a third party bank in the UK. A maintained that the effect of the Registration Order was the same as if A had sought a domestic freezing order and required the third party bank to immediately freeze any assets falling within the form of the Registration Order. The Rs sought declatory relief from the English High Court which found that:

– the Cypriot WFO did not become fully effective and enforceable as an English judgment until determination of the Rs’ appeal against the Registration Order

– the notification of the Registration Order and Cypriot WFO to third parties was a prohibited “measure of enforcement” under Article 47(3) ofthe Judgment Regulation. This states that “during the time specified for an appeal … against the declaration of enforceability and until any such appeal has been determined, no measure of enforcement may be taken other than protective measures against the property of the party against whom enforcement is sought”

– A appealed to the Court of Appeal

The decision

The Court of Appeal overturned the earlier High Court decision and held that:

– subject only to Article 47(3), the Registration Order was immediately effective and enforceable on the basis of paragraph 2 of Schedule 1 of the Civil Jurisdiction and Judgments Order 2001. This provides that a judgment once registered in the High Court “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”. This is also in line with the provisions of CPR 74.6(3)(e)

– notification of a third party of the Cypriot WFO and Registration Order was not a “measure of enforcement” for the purposes of Article 47(3), but rather a necessary step for subsequent enforcement and one required by CPR 74.6(1)

Analysis and practical advice

– this is a welcome decision by the Court of Appeal since it promotes certainty for financial institutions that regardless of whether a freezing order is domestic or results from the registering of a foreign order it is immediately effective against the bank when sent and the bank’s usual processes when served with the freezing order should been gaged– the court also confirmed that notification would not amount to enforcement even where the applicant brought to the third party’s attention the penal notice and the consequences of a breach of the order, i.e. contempt proceedings. Even if such notification was intended as a threat, it could not amount to a “measure of enforcement”

– as to what would amount to “enforcement”of judgment, the court noted that the strong suggestion was that it would need to entail the invocation of the English Court. However, it was not necessary for the purposes of this case to determine the issue definitely and therefore the court did not rule out that other measures such as self-help measures (i.e. those where no further reference is necessary to the court) might also be caught

 

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