THEMIS

Semi-final C: EU Civil Procedure

Tuesday 6th June 2017 – Thursday 8th June 2017

Vilnius, Lithuania

ASSESSING THE CONSEQUENCES OF THE EXHAUSTION OF REMEDIES MECHANISM:

THEORETICAL AND PRACTICAL PERSPECTIVES ON THE RECENT CASE LAW OF THE COURT

OF JUSTICE OF THE EUROPEAN UNION

Constance Marécheau, Michaël Da Lozzo, Ghislain Guillaume

National School for the Judiciary (École Nationale de la Magistrature)

FRANCE

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The Area of Freedom, Security and Justice (AFSJ) is a recent field of cooperation in the history

of the European Union (EU). It was initially part of the third pillar in the Maastricht Treaty, but

its development as a genuine EU policy dates from the 1999 Tampere Summit. The Lisbon

Treaty further dedicates a chapter of the Treaty on the Functioning of the European Union

(TFEU) to the AFSJ1.

Indeed, article 81 §1 TFEU describes the principle of mutual recognition of judgements as the

basis for judicial cooperation in civil matters and article 67 §4 as a tool ensuring access to

justice. Surprisingly, the TFEU does not mention the principle of mutual trust, which is the

foundation of access to justice and mutual recognition of judgements in civil and commercial

matters in cross-border disputes within the European Union. The 2004 Treaty establishing a

Constitution for Europe mentioned the principle of mutual recognition in the guidelines for the

AFSJ. However, after its rejection, the mutual recognition principle was not taken up in the

Lisbon Treaty.

Mutual trust, mutual recognition, access to justice: the three intertwined principles of the

AFSJ. Mutual trust within the EU refers to the idea that the rules and institutions of the

Member States are fungible and therefore, even if not the same, at least equivalent. All

Member States should indeed ensure the same level of protection of fundamental rights and the

implementation of EU law. They are all members of the European Convention on Human

Rights (ECHR) and one of the Copenhagen criteria for entry to the EU is precisely the respect

of human rights (art. 49 TEU).

In the Joseba Andoni Aguirre Zarraga ruling, the Court of Justice of the European Union

(CJEU) reminds us that mutual trust derives from the fact that Member States “are capable of

providing an equivalent and effective protection of fundamental rights, recognised at the

European level, in particular, in the Charter of Fundamental Rights”2.

This reasoning is very much the same as the one developed by the European Court of Human

Rights (ECtHR) in the Bosphorus ruling, stating the equivalence of protection guaranteed by

the Convention and EU laws3.

The agreement on common judicial rules through the adoption of European instruments also

contributes to mutual trust. Many regulations cover the jurisdiction of national judges and

mutual recognition of judgements in cross-border disputes in various fields. They go from the

Brussels I Regulation in 20004 (revised in 2012) dealing with jurisdiction, recognition and

1 TFEU, Chapter V: art. 67 and following. 2 CJEU 22 Dec. 2010, Joseba Andoni Aguirre Zarraga v. Simone Pelz, C-491/10 PPU, spec. n°70. 3 ECtHR 30 June 2005, Bosphorus Hava Yollari Turizm Ve Ticaret Anonim Sirketi v. Ireland, no. 45036/98. 4 Council Regulation 44/2001 of 22 Dec. 2000 on Jurisdiction and the Recognition and Enforcement of

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enforcement of decisions in civil and commercial matters to the latest regulation of 24 June

2016 (applicable law, recognition and enforcement of decisions in matters of property

consequences in registered partnerships).

Some of these instruments do mention mutual trust in their recitals: Brussels II a Regulation5,

the recast regulation on insolvency proceedings6, the regulation creating a European

Enforcement Order7 and the regulation creating a European Order for Payment Procedure8.

Though they are not binding, the recitals aim at legitimising these instruments and providing

grounds for their binding norms, among which features the principle of mutual recognition of

judgements. Mutual trust also justifies the limited number of reasons to refuse mutual

recognition. The public order clause is the essential hypothesis justifying such refusal and the

CJEU strictly controls this motive9, admitting it “only in exceptional cases”.

Therefore, the mutual recognition of judgements is the judicial translation of the principle of

mutual trust. It is a tool that ensures effective access to justice in the EU. It allows a decision,

rendered in one Member State, to have effect in the judicial sphere of another.

Mutual recognition: a tool rather than a genuine principle. The mutual recognition principle

originates in the common market. The 1979 “Cassis de Dijon”10 ruling refers to the mutual

recognition principle to ensure free circulation of goods within the common market. It forbids

the host State to apply any national measure resulting in disadvantaging goods, services or

people from another Member State.

However, the principle of mutual recognition in the ASFJ differs from that of the internal

market. It rather guarantees a right to cross-border enforcement of judgements and

circumscribes the possibility for a judge in the addressed Member State to refuse their

enforcement.

At the Tampere summit of 1999, which launched reflexion on the ASFJ, mutual recognition is

referred to as its “foundation stone”. There follows in 2001 a draft programme for measures to

implement mutual recognition in civil and commercial matters11. The Hague, Stockholm and

Judgements in Civil and Commercial Matters, OJEC L12/1, 16.01.2001. 5 Council Regulation n°2201/2003 of 27 November 2003 concerning jurisdiction and the recognition and enforcement of judgements in matrimonial matters and the matters of parental responsibility, repealing Regulation n°1347/2000, OJEC L338/1, 23.12.2003, recital 21. 6 Council Regulation n°2015/848 of 20 May 2015 on insolvency proceedings, OJ L 141, 5.6.2015, recital 65. 7 Regulation n°805/2004 of 21 April 2004 creating a European Enforcement Order for uncontested claims, OJEU L143/15, 30.04.2004, recital 18. 8 Regulation n°1896/2006 of 12 Dec. 2006 creating a European Order for Payment Procedure, OJEU L399/1, 30.12.2006, recital 27. 9 ECJ 28 Apr. 2009, ASML Netherlands BV v. Semiconductor Industry Services GmbH (SEMIS), C-283/05, n°55. 10 ECJ 20 Feb. 1979, Rewe-Zentral AG v. Bundesmonopolverwaltung für Branntwein, 120/78. 11 Draft programme of measures for implementation of the principle of mutual recognition of decisions in civil and commercial matters, OJEC C12/1, 15.01.2001.

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recent Brussels programmes set out guidelines to deepen the ASFJ for the periods 2005-10,

2010-14 and 2015-20 and aim at achieving the mutual recognition programme in civil and

commercial matters through new regulation proposals.

However, some authors defend the idea that access to justice is a more appropriate foundation

for the construction of the ASFJ than the principle of mutual recognition, as suggested by

article 67 §4 TFEU. Effective access to justice is indeed necessary before the recognition and

enforcement of judgements. It involves ensuring real access to courts in other Member States

without conditions preventing or dissuading foreign parties from having such access. Granting

access to justice is consequently a broader aim, and mutual recognition contributes to its

achievement at the enforcement stage.

The meaning of mutual trust for the CJEU: a broad interpretation. The CJEU checks the

enforcement of mutual recognition by Member States and may sanction defiance between

them. The preliminary ruling for interpretation is a privileged mechanism for the clarification

of EU law and assesses the protection of fundamental rights by a Member State, on which

mutual trust relies. A substantial breach in the protection of fundamental rights by a Member

State, which would allow the others to set aside the mutual trust principle, is however rarely

characterised. The CJEU seems to favour the free circulation of judgements and, in doing so,

only reluctantly calls into question the principle of mutual trust.

The reality of mutual trust has however already been challenged in the field of cooperation in

criminal matters. In a ruling of 15 December 201512, the German Supreme Court refused to

comply with a European arrest warrant issued in application of the 2002 EU Framework-

decision, arguing insufficiency in the Italian procedure regarding the rights of the defence in

second hearings.

The CJEU developed a dynamic case law based on the mutual trust principle to ensure real

circulation of judgements in the EU. The CJEU extended the effect of mutual trust to the

determination of national judges’ jurisdiction. In the Gasser13 and Turner14 decisions, invoking

mutual trust between Member States, it refused to rule out lis pendens rules and to admit an

anti-suit injunction.

Based on new interpretation of the mutual trust principle, the CJEU has recently promoted the

concentration of all remedy procedures in the Member State of origin (I). The new system is in

line with the mutual trust principle, but its practical impact triggers various difficulties (II).

12 Bundesverfassungsgericht, 15 Dec. 2015, 2 BvR 2735/14. 13 ECJ 9 Dec. 2003, Erich Gasser GmbH v. MISAT Srl, C-116/02. 14 ECJ 27 Apr. 2004, Gregory Paul Turner v. Felix Fareed Ismail Grovit, Harada Ltd and Changepoint SA, C-159/02.

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The practical implications of this evolution in case law for litigants necessitate a review of

some of the existing legal instruments and political endeavours, as well as imagining new

solutions (III).

I. THE EXHAUSTION OF REMEDIES MECHANISM: A STEP FURTHER IN THE

APPLICATION OF THE MUTUAL TRUST PRINCIPLE

Recent CJEU case law demonstrates the significant step taken by EU judges in the construction

of an effective area of civil justice. Thus, the CJEU has adopted strict application of the mutual

trust principle (a) which is at the heart of the aim sought and conforms with human rights (b).

a. Strict application of the mutual trust principle within the context of the Brussels I

Regulation

A new condition: the necessary use of “all legal remedies” before the court of origin

(art. 34 §1). While article 34 §1 of the Brussels I Regulation only states that a “judgement shall

not be recognised if such recognition is manifestly contrary to public policy in the Member

State in which recognition is sought (…)”15, the CJEU has recently added a further condition.

As a matter of fact, it has considered that to be allowed to raise the public policy exception

provided for by art. 34 §1 in the Member State in which recognition is sought, the defendant

must have used all legal remedies made available to him by the law of the Member State of

origin. It nevertheless sets an exception in the case where “specific circumstances make it too

difficult or impossible to make use of the legal remedies in the Member State of origin”.

The reasoning of the CJEU – which originated in the Diageo Brands case16 and was confirmed

in the Meroni case17 – starts by emphasising “the fundamental importance”18 of the principle of

mutual trust in the administration of justice in the European Union. “It is that trust which the

Member States accord to one another’s legal systems and judicial institutions which permits

the inference that, in the event of the misapplication of national law or EU law, the system of

legal remedies in each Member State, together with the preliminary ruling procedure provided

for in Article 267 TFEU, affords a sufficient guarantee to individuals”19. Thus, in the

continuation of that assumption, it seems only natural for all legal remedies to be concentrated

in the Member State of origin, that is to say prior to the circulation of the decision, in order to

ascertain the free movement of judgements in the AFSJ. Furthermore, this interpretation would 15 Now art. 45 §1 (a) Brussels I recast Regulation. 16 CJEU 16 July 2015, Diageo Brands BV v. Simiramida-04 EOOD, C-681/13 ; Opinion of Advocate General SZPUNAR, 3 March 2015, n°64 and following. 17 CJEU 25 May 2016, Rüdolfs Meroni v. Recoletos Limited, C-559/14. 18 CJEU 16 July 2015, Diageo Brands BV, C-681/13, op. cit., n°40. 19 CJEU 16 July 2015, Diageo Brands BV, C-681/13, op. cit., n°63.

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be coherent with the restrictive powers granted to the Member State where enforcement is

sought (i.e. art. 35 and 45 of the Regulation, the restrictive nature of the public order exception

present in article 34 §1 of the Regulation, and so on).

This feeling of coherence is also provided for by the recast version of the Brussels I

Regulation20. As a matter of fact, the Brussels I recast Regulation has fostered the mutual trust

principle in suppressing the exequatur procedure and in emphasising the primary nature of the

remedies before the court of origin and the exceptional nature of the remedies before the

Member State where enforcement of the judgement is sought. Such architecture of legal

remedies is certainly inspired by sector-specific legal instruments for which the principle of

mutual trust is instrumental, such as, for instance, the regulations creating a European

Enforcement Order or a European Order for Payment Procedure and more recently, a European

Account Preservation Order21.

A broader understanding of “the proceedings to challenge a judgement” (art. 34 §2). While

the emphasis placed on the principle of mutual trust has recently provided grounds for the

contemporary evolution of the judicial cooperation in civil and commercial matters by, for

instance, adopting a strict understanding of the public policy clause of article 34 §1, it has also

been achieved by broadening understanding of “the proceedings to challenge a judgement”

contained in article 34 §222.

This evolution stems from the Lebek23 case and particularly attracts attention since it was

issued against the opinion of Advocate General KOKOTT24.

In this case, the CJEU extends the concept of “proceedings to challenge a judgement”, referred

to in Article 34 §2 of the Brussels I Regulation, to applications for relief when the period for

bringing an ordinary challenge has expired. In taking this view, the CJEU has adopted a broad

interpretation of article 34 §2 of the Regulation considering that relief proceedings are part of

the “proceedings to challenge a judgement” since they aim “to ensure proper respect for the

rights of the defence of defendants who have failed to enter an appearance”25. Such an analysis

was not obvious since, from a strictly technical point of view, and as Advocate General

KOKOTT points out, “in circumstances in which relief proceedings may be contemplated it is

no longer possible, as things stand, for the defendant to commence proceedings to challenge

20 Regulation n°1215/2012 of 12 Dec. 2012 on jurisdiction and the recognition and enforcement of judgements in civil and commercial matters (recast), OJEU L351/1, 20.12.2012. 21 Regulation n°655/2014 of 15 May 2014 establishing a European Account Preservation Order procedure to facilitate cross-border debt recovery in civil and commercial matters, OJEU L189/59, 27.06.2014. 22 Now art. 45 §1 (b) Brussels I recast Regulation. 23 CJEU 7 July 2016, Emmanuel Lebek v. Janusz Domino, C-70/15. 24 Opinion of Advocate General Kokott, 7 Apr. 2016. 25 CJEU 7 July 2016, Lebek, C-70/15, op. cit., n°43.

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the actual judgement itself”26.

While it could be argued that this interpretation would seriously disrupt the fundamental

principle of equality of arms – which derives from the principle of a right to a fair trial – since

it implies procedural, financial and practical complications for the defendant27, the CJEU

considers, on the contrary, that it “guarantees respect for the right to a fair hearing and

provides a fair balance between, on the one hand, the need to ensure that judgements given in

a Member State are, as a rule, recognised and declared enforceable automatically in another

Member State and, on the other hand, respect for the rights of the defence”28.

Thus, the CJEU makes it clear that, in order to achieve the internal market, it aims at finding

the right balance between sometimes opposing principles, namely an effective area of civil

justice and the rights of the defence. This is implicitly emphasised by the mention that

fundamental rights, such as respect of the defence, “do not constitute unfettered prerogatives

and may be subject to restrictions”29 as long as they correspond to the objective of public

interest pursued by the measure in question and do not constitute a disproportionate

interference with the rights, thus, guaranteed30.

Consequently, from a practical perspective, a defendant who, after the expiry of the time limit

for appeal, becomes aware that a judgement has been given against him without his

knowledge, now has the duty to apply for relief in the Member State of origin. Should he

decide not to do so, the judgement against him will be enforceable.

b. Strict application of the mutual trust principle apparently compliant with

fundamental rights

Such an approach has been challenged upon consideration of human rights both at EU level

through the Charter of Fundamental Rights of the European Union (CFREU) and at the

Council of Europe level, through the European Convention on Human Rights (ECHR). Even if

the relevant courts have ruled in favour of an absence of a breach of fundamental rights, their

reasoning differs.

Compliance with the CFREU. While the decision to adopt a strict understanding of the

principle of mutual trust within the context of the Brussels I Regulation is coherent with the

EU aspiration to achieve an effective area of civil justice, the question of the conformity of its

procedural consequences with article 47 of the CFREU can legitimately be asked.

26 Opinion of Advocate General Kokott, 7 Apr. 2016, n°19. 27 Opinion of Advocate General Kokott, 7 Apr. 2016, n°27. 28 CJEU 7 July 2016, Lebek, C-70/15, op. cit., n°48. 29 CJEU 7 July 2016, Lebek, C-70/15, op. cit., n°37. 30 Ibid ; adde. CJEU 17 Nov. 2011, Hypoteční banka a.s. v. Udo Mike Lindner, C-327/10.

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As a matter of fact, the CJEU recently held in the Rüdolfs Meroni case that the position

adopted in the Diageo Brands case complies with article 47 of the CFREU. In essence, the

issue at stake is to determine whether the recognition and enforcement of an order issued by a

court in a Member State without a prior hearing of a third person whose rights may be affected

by that order, must be regarded as manifestly contrary to public policy (i.e. art. 34 §1, Brussels

I Regulation) in the Member State in which enforcement is sought and manifestly contrary to

the right to a fair trial within the meaning of article 47 of the CFREU.

After recalling – and thus validating – the latest reasoning it adopted in the Diageo Brands case

regarding article 34 §1, the CJEU considers that as long as there are procedural guarantees

“giving any third persons concerned a genuine opportunity of challenging a measure adopted

by a court of the State of origin”31, such a system complies with article 47 of the CFREU.

Thus, as long as the third party has (or has had) the opportunity to assert his rights before the

court of origin, the recognition or enforcement of the decision in another Member State cannot

be regarded as contrary to public policy or the right to a fair trial.

Such a decision clearly confirms the contemporary trend in case law regarding the necessary

concentration of legal remedies in the Member State of origin, including the need for third

parties to raise a possible prior breach of public policy. Furthermore, this decision goes further

in considering that as long as the third parties have had the opportunity to ascertain their rights

in the Member State of origin, it is not contrary to the fundamental principle of the right to a

fair trial to allow the free circulation of the contested decision and thus, its recognition and

enforcement in another Member State.

This is a reasoning that has not been taken up by the European Court of Human Rights

(ECtHR), although in similar circumstances, it did not rule in favour of an infringement of the

right to a fair trial.

Apparent compliance with the ECHR. While the contemporary position of the CJEU

regarding the role of a court in the Member State where the enforcement of a decision is sought

complies with article 47 of the CFREU, the question of its compliance with article 6 §1 of the

ECHR must also be raised, since all Member States have signed this Convention.

In Avotins v. Latvia 32, the Grand Chamber of the ECtHR had to deal with compatibility

between the restrictive role given to the court of the Member State where the enforcement of

the decision was sought within the context of the Brussels I Regulation, and the ECHR. In this

case, Mr Avotins, the applicant, contested the enforcement by a Latvian judge of a default

31 Op. cit. n°50. 32 ECtHR 23 May 2016, Avotins v. Latvia, n°17502/07.

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decision rendered in Cyprus, when he was never aware of the proceedings.

In rendering a rare decision on the compatibility of the EU’s mutual recognition doctrine with

the ECHR, the ECtHR set out its reasoning which differs from the one adopted by the CJEU.

Firstly, the ECtHR starts by upholding the Bosphorus presumption of equivalent rights within

the context of the European Union. However, such presumption can be rebutted when the

protection of the right guaranteed by the ECHR was “manifestly deficient” in which case “the

interest of international cooperation would be outweighed by observance of the Convention as

a ‘constitutional instrument of European public order’ in the field of human rights”.

Secondly, the ECtHR carries on with a thorough analysis of the mutual recognition principle.

In doing so, it highlights the contradiction that can arise between, on the one hand, the residual

role that is given to the jurisdiction where enforcement is sought to review the observance of

fundamental rights by the State of origin in a decision and, on the other hand, the obligation

that national courts have to apply the ECHR. As such the ECtHR held that “the Court must

satisfy itself, where the conditions for application of the presumption of equivalent protection

are met (…), that the mutual recognition mechanisms do not leave any gap or particular

situation which would render the protection of the human rights guaranteed by the Convention

manifestly deficient”.

Having stated that, the ECtHR goes on to check whether there was a manifest deficiency in the

case in question. In doing so, it starts by stating that “the requirement to exhaust remedies

arising from the mechanism provided for by Article 34 §2 of the Brussels I Regulation as

interpreted by the CJEU (the defendant must have made use of any remedies available in the

State of origin in order to be able to complain of a failure to serve him with the document

instituting the proceedings), is not in itself problematic in terms of the guarantees of Article 6

§1 of the Convention”33.

Furthermore, the applicant could theoretically have benefited from the wording of article 34 §2

of the Brussels I Regulation in not having been made aware of the proceedings. Nevertheless,

the fact that he had a “perfectly realistic opportunity of appealing despite the length of time

that had elapsed since the judgement had been given”34 in the Member State of origin but that

he did not seize upon it, legitimately precludes him from being successful in his claim. Hence,

the ECtHR considers that there is no infringement of article 6 §1 of the ECHR.

Finally, the ECtHR also considers that given the expertise of the applicant and the choices (i.e.

choice of law clause, or choice of jurisdiction) he made concerning the debt in question, he

33 Op. cit., §118. 34 Op. cit., §122.

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should have been more thoughtful and active in the defence of his interests.

As a consequence, the ECtHR considers that the presumption of equivalent rights should not be

rebutted and that article 6 §1 of the ECHR has not been violated.

Therefore, if, as a matter of circumstances, CJEU and ECtHR case law seems to be aligned

from a factual perspective, the underlying reasoning is different. There may well come a day

when a national court refuses to enforce a decision from another Member State on the grounds

of article 6 §1 of the ECHR arguing a manifest deficiency in the protection of human rights.

II. THE EXHAUSTION OF REMEDIES MECHANISM: FOCUS ON THE

DRAWBACKS OF THE PRINCIPLE

The Diageo Brands and Rüdolf Meroni decisions modify the way enforcement works within

the AFSJ. On the one hand, this change may be positively seen from a theoretical perspective

since this area is grounded on the principle of mutual trust. On the other hand, this change

brings new burdens on the parties in practice, especially in a case where the defendant did not

appear before the courts of the Member State of origin. Several consequences may be

highlighted. Firstly, one may underline the material consequences: they are not created by the

exhaustion of remedies mechanism, but it does emphasise them (a). Secondly, there are also

legal difficulties that may arise from this new system (b).

a. Material difficulties over the exhaustion of remedies mechanism

The exhaustion of remedies mechanism creates or emphasises material difficulties. There are

two main issues that may be stressed: one concerning legal aid and a second regarding the

method of transmission of documents that may influence the opportunity for the defendant to

actually take part in proceedings to avoid a Rüdolf Meroni-like situation.

A higher cost not covered by legal aid. One may raise the issue of the material consequences

of the CJEU’s new approach: proceedings will be more expensive. As with the Rüdolf Meroni

case, a party against whom the decision is enforced in the Member State of enforcement will

not be able to use art. 34 §1 of Brussels I Regulation even if s/he was not party to the trial in

the Member State of origin (see infra pt. II, B). This situation applies to a third party whether

or not s/he was informed of the trial in progress and the defaulting defendant. In both cases, the

party did not have the opportunity to be part of the trial and defend his/her point of view. With

the exhaustion of remedies, the party will be obliged to go to another Member State with all the

implied costs: paying to go to the Member State of origin (travel expenses); hiring at least one

lawyer – or two, one in the home Member State and another in the Member State of origin

(lawyers’ fees and expenses); translating documents to present his/her defence to the court in

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charge (translation fees); and paying for an interpreter to make sure s/he understands and is

understood by the judge(s) (interpreting fees). Overall, it will be quite costly. The CJEU

perhaps relies wrongly on the assumption that the AFSJ is, almost, a judicial area with a

complete system of rights, especially regarding legal aid and its associated tools: Council

Directive 2003/8/EC on the one hand, and art. 47 §3 of the CFREU and art. 6 §1 of the ECHR

on the other.

Council Directive 2003/8/EC: important but not enough. The Council Directive recognises

that both the claimant and the defendant should have effective access to justice (recital 6). This

instrument harmonises several procedural aspects of cross-border situations. Firstly, Member

States are obliged to offer appropriate legal aid to persons who are unable to meet the costs of

proceedings35. Secondly, the Council Directive determines what costs must be covered by such

legal aid36. Finally, the instrument imposes a transmission procedure between national

authorities37. Nonetheless, this is not enough. Several issues may be underlined. Only natural

persons are covered by the Council Directive. Moreover, while the principle of legal aid is

protected by the instrument, its amount is still freely set by each Member State, as are the

conditions relating to financial resources38 – and most of the time, the threshold is quite low39;

it is not very likely that a natural person earning a little more than the set threshold will be able

to cover all the expenses linked to a trial in another Member State. Hence, the amount and level

allowing legal aid will differ from one Member State to another. In such conditions, access to

justice is not the same for all natural persons.

Fundamental rights: another path to legal aid. Article 47 §3 of the CFREU is clear:

everyone, including legal persons40, is entitled to legal aid. This fundamental right – which is

somehow equivalent to art. 6 §1 ECHR41 – is difficult to implement because there is no legal

instrument detailing its application. Hence, a person that is not entitled to legal aid may bring

an action against the reluctant Member State (apart from the action that is going on before the

courts of another Member State). This person must provide evidence that his/her revenue does

not allow him/her to gain effective access to justice. The following reasoning must be used by

a court: access to justice is not an absolute right – restrictions may be justified by mandatory

reasons as long as they do not deprive the right of its mere substance. This is very classical

35 Art. 3 and 5 Council Directive 2003/8/CE. 36 Art. 6 to 11 Council Directive 2003/8/CE. 37 Art. 12 to 16 Council Directive 2003/8CE. 38 Even if the elements that must be taken into account are provided by art. 3 §2 Council Directive 2003/8/EC. 39 In France, full legal aid is granted to a natural person if his/her revenue is inferior or equal to 1 007 € a month. 40 See: CJEU 22 Dec. 2010, DEB, C-279/09 ; CJEU, order, 13 June 2012, GREP, C-156/12. 41 See: ECtHR 9 Oct. 1979, Airey v. Ireland, no. 6289/73.

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reasoning, close to that applied by the CJEU through mutual trust and the exhaustion of

remedies. In both cases, the difficulty is to prove that the restriction (or the exhaustion of

remedies) actually deprives a person of access to justice. In Diageo Brands and Rüdolf Meroni,

the CJEU relies on systemic issues in the Member State of origin – such as the N.S. case law

dealing with the Dublin Regulations42 – to allow the use of art. 34 §1 of the Brussels I

Regulation. Hence, the burden of proof required to be exonerated from the exhaustion of

remedies is pretty high. Moreover, this possibility is clearly an exception to the exhaustion of

remedies mechanism in the CJEU’s mind. Thus, it should be strictly interpreted. As a matter

fact, it will be very difficult for one party to obtain enough evidence of such a situation to

restrain the enforcement of a decision rendered by another Member State.

Service of documents: a major issue. The exhaustion of remedies mechanism is mainly based

on the assumption that the parties will be aware of the trial going on abroad. The CJEU relies

on the transmission of documents system that is provided for by Regulation 1393/2007 and

some provisions of the unified European procedures43. Basically, EU procedural rules provide

for a system of transmission of documents, especially the document instituting proceedings,

which constitutes the basis for the defendant to exercise his/her defence rights. This system

presents guarantees: for instance, the judge may stay proceedings in a case where the defendant

does not appear before the court44, until evidence is provided that the defendant has been

notified of the trial in progress. In theory, this safeguard ensures that (1) the defendant is

always aware of a trial going on against him before the courts of another Member State; and

(2) the defendant is active from a procedural point of view, as the CJEU claims all parties to a

trial must be45. These conditions are absolutely necessary for the exhaustion of remedies

mechanism to work. However this comment leads to two remarks.

The “overly” liberal methods of transmission in Regulation 1393/2007. In cross-border

situations, the service of documents instituting proceedings is mainly regulated by Regulation

1393/2007 in articles 4 and 12 to 15. They include very liberal methods, such as transmission

by registered post with acknowledgement of receipt. The CJEU approved this somehow fragile

method and even ruled in the Henderson case 46 that the absence of acknowledgement could be

42 CJEU 21 Dec. 2011, N. S. (C-411/10) v Secretary of State for the Home Department and M. E. and Others (C-493/10) v. Refugee Applications Commissioner and Minister for Justice, Equality and Law Reform. 43 Regulation n°805/2004 European Enforcement Order, op. cit.; Regulation n°1896/2006 European Payment Order, op. cit.; Regulation n°861/2007 European Small Claims Procedure, op. cit.; Regulation n°655/2014 European Account Preservation Order, op. cit.. 44 Art. 26 §2 Brussels I Regulation; art. 19 §1 Regulation 1393/2007. 45 See: CJEU 25 May 2016, Rüdolf Meroni, C 559/14, op. cit.; CJEU 7 July 2016, Lebek, C 70/15, op. cit. 46 CJEU 2 March 2017, Andrew Marcus Henderson v. Novo Banco SA, C-354/15.

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compensated by a document from the postal services attesting delivery47. There is no other

choice than to blindly trust them. This assessment relies on a presumption of delivery until the

addressee proves otherwise. But how can the addressee bring proof to the contrary? It is

materially very difficult – even impossible – to evidence.

The “even more” liberal methods of transmission in unified European procedures. The

unified European procedures provide for “service without proof of receipt”48, especially postal

service without any registration or acknowledgement of receipt. This possibility only works

when the addressee has a postal address in the Member State of origin49. In this case, no proof

is required and a simple letter is therefore enough to transmit a document that is necessary to

get a European certificate. As these instruments are based on mutual trust, any remedy may be

introduced before the courts of the Member State of origin. But such remedies are strictly

limited.

For instance, in a case where a dispute is resolved using the Small Claims Procedure, the

possibility of an appeal is not compulsory50. Hence, if the defendant is not aware of the

procedure going on, s/he might end up without a remedy. Moreover, in a case in which the

defendant is not properly served, the judge may continue proceedings as opposed to resorting

to traditional dispute settlement proceedings based on the Brussels I Regulation or Regulation

1393/2007. The only “backdoor” is a “review in exceptional cases” when service without proof

have been used. This possibility is only available in the Member State of origin and only works

in two situations, in particular when the defendant was aware but did not have enough time to

prepare his/her defence. In this case, if there is no proof that the defendant was served, how is

it that he/she did not have enough time to prepare his/her defence? With such flexible service,

there is a risk that the defendant was aware but did not want to take part initially because s/he

was not ready; or that s/he really did not know that a trial was taking place.

The system implemented in the unified European procedures paves the way to what could

happen one day based on mutual trust. For the moment, interpretation of the CJEU is not so

strict. However, it clearly diminishes access to justice from a material perspective. Apart from

the material difficulties aggravated by the exhaustion of remedies mechanism, legal difficulties

should also be taken into account.

47 In this case, the Irish postal service was able to provide an electronic table under which the letter was signalled as delivered. 48 Art. 14 Regulation 805/2004; art. 14 Regulation 1896/2006; art. 13 Regulation 861/2007. 49 The English version talks about “his address”, but looking at other versions, it seems the regulations designate “one address”: hence it may not be the addressee’s permanent residence but could be a secondary home. 50 Member States may allow appeal on such a decision, but Regulation 861/2007 does not oblige them.

13

b. Legal difficulties over the exhaustion of remedies mechanism

Apart from the legal training of legal practitioners, there are mainly two different kinds of legal

difficulties that may arise from the new exhaustion of remedies mechanism: the issues dealing

with the absence of unity of EU procedural rules within the AFSJ; and the issues linked to the

lack of harmonisation of national procedural rules which still apply.

Geographical scope: a chopped-up area. The geographical scope of EU law on judicial

cooperation in civil and commercial matters is not the same everywhere within the European

Union since Denmark does not participate in the AFSJ and the United Kingdom (for no more

than two years) and Ireland benefit from an opt-in/opt-out system.

In Denmark, only the Brussels I Regulation and Regulation 1393/2007 apply. The exhaustion

of remedies mechanism also applies, including art. 19 §4 of Regulation 1393/2007 and the

possibility to request relief from a time limit. However, the ancillary instruments which are

supposed to ease the process do not apply: especially Council Directive 2003/8/EC. Hence,

Danish law is not harmonised regarding legal aid. This means Denmark decides on its own

what should be covered by legal aid and how legal aid is distributed in cross-border cases. The

transmission system implemented by the Directive does not apply in Denmark. Consequently a

Danish citizen may not have his/her application for legal aid to another Member State

transmitted through the Council Directive system – and the other way round. Fortunately,

Denmark is party to two international conventions51. However, they only provide for a non-

discrimination principle and for a transmission system of legal aid applications. Hence,

problems may arise. For instance with Malta, which is not party to the same conventions. In the

case of a situation involving parties domiciled in both Denmark and Malta, no simplified way

permits the transmission of their legal aid applications and the scope of the legal aid they could

apply for is not guaranteed. The only harmonisation comes from fundamental rights (CFREU

or ECHR) – but the results depend on case law and lack predictability. The effect of mutual

trust is therefore doubtful.

Geographical scope: a multi-speed Europe. The Amsterdam and Lisbon Treaties have

introduced an enhanced cooperation procedure, allowing the adoption of legislative acts that

will only be binding towards participating Member States52. The AFSJ is therefore an area

where not all Member States apply the same EU legislation. This creates de facto a multi-speed

51 Hague Convention of 1 March 1954 on civil procedure and the European Agreement on the Transmission of Applications for Legal Aid of 27 Jan. 1977. 52 The first regulation adopted on this basis comes from the judicial cooperation competence of the EU: Council Regulation n°1259/2010 of 20 Dec. 2010 implementing enhanced cooperation in the area of the law applicable to divorce and legal separation.

14

Europe. How do mutual trust and the exhaustion of remedies mechanism apply in this context?

For the moment, the idea of enhanced cooperation is still fictional: all the instruments dealing

with jurisdiction, recognition and enforcement of decisions in civil and commercial matters

apply in all the participating Member States of the AFSJ. But the level of integration of the

Member States could start to become an issue.

Conflict between national procedural rules and mutual trust. The exhaustion of remedies

mechanism may conflict with the principle of procedural autonomy. Indeed, Member States

remain free to develop their own procedural rules to determine the functioning of their judicial

institutions. Thus, national rules may set out requirements to participate in an action, even in

the application of art. 19 §4 of Regulation 1393/2007. Difficulty may arise when the action is

brought by a third party to the initial trial. In the Rüdolf Meroni case, Mr. Meroni was not party

to the trial in the Member State of origin, but had an interest in the Member State of

enforcement. The CJEU concluded that Mr. Meroni would have to bring his claim before the

UK Courts if he wished to oppose any public policy contradiction. In theory, mutual trust is

respected and the solution advocates for real free movement of judicial decisions. In practice,

the lex fori may recognise no procedural status for Mr. Meroni in the initial proceedings,

because he is considered as a third party. Hence, the question arises as to whether Mr. Meroni

would be able to participate in the trial. On the one hand, where the time limit to appeal the

decision is not over, Mr. Meroni’s procedural status will be determined entirely by the lex fori.

However, what happens if UK procedural rules recognise no status at all? Mr. Meroni’s action

will therefore be dismissed – as will his access to justice. On the other hand, if the time limit to

appeal the decision has expired, would Mr. Meroni be entitled to use art. 19 §4 of Regulation

1393/2007? Indeed, this provision only refers to the “defendant” – which is not Mr. Meroni’s

procedural status. Eventually, if Mr. Meroni is authorised to participate in proceedings, he will

face all the above-mentioned material difficulties.

Lack of legal training. Legal difficulties set aside, an issue might arise from the lack of

training of legal practitioners in EU law and, in particular, in European judicial cooperation.

For instance, in May 2011, 51% of judges in the EU never participated in training in EU law

while 74% of cases raise EU law questions. Hence, while the exhaustion of remedies

mechanism may bring legal issues on its own, there is an initial lack of knowledge. There is,

therefore, a possibility that judges may not be aware of the legal consequences of the new

mechanism in their national procedures.

Obviously, these difficulties in practice are not exhaustive. Nevertheless, they call into

question the equation between mutual trust and access to justice.

15

III. THE EXHAUSTION OF REMEDIES MECHANISM: IMPROVING AND

RETHINKING THE SYSTEM

The concentration of all legal remedies in the Member State of origin, along with what seems

to be a very hypothetical exception where “specific circumstances mak[es] it too difficult or

impossible” for a given remedy to be exercised in the Member State of origin, triggers the

question of the available remedies that can be thought of to minimise such negative output. As

such, focus needs to be placed not only upon the actual tools and endeavours (a) but also on

the, as yet, unthought-of alternatives (b).

a. Improving existing legal instruments and political endeavours

Several actions have been undertaken by EU institutions to counterbalance the drawbacks of

stricter application of the principle of mutual trust. Thus, focus must be placed upon legal aid,

dematerialisation and legal training of practitioners. Moreover, solutions appear to exist in

order to foster the harmonisation of the AFSJ.

Legal aid. As seen supra in pt. II, A, while the Council Directive has the virtue of harmonising

the various Member States’ systems, it dates back to 2003 and would usefully enjoy several

amendments to foster effective procedural protection of the parties. First of all, as it stands, it

only applies to natural persons, while SMEs are a central stakeholder in the achievement of the

internal market and as such, could, on many occasions, enjoy legal aid in certain cross-border

proceedings lodged against bigger companies. Furthermore, expanding the scope of the

directive would be consistent with the recent willingness of companies to ease the recovery of

cross-border debts through legal instruments such as the EU Account Preservation Order.

Another aspect of the Council Directive which could usefully be amended in order to provide

effective access to justice is the means criteria of the persons seeking legal aid. Currently,

article 5 §2 of the Council Directive states that the competent authority of the Member State in

which the court is sitting must assess the economic situation of the person applying for legal

aid, taking into account objective factors such as income, capital or family situation. Similar to

article 4 of the recent Directive 2016/1919 of 26 October 2016 on legal aid for suspects and

accused persons in criminal proceedings and for requested persons in European Arrest Warrant

proceedings, the 2003 Directive could add the standard of living in the Member State to its

“means test” to assess whether the person applying for legal aid is eligible for it. Since the

situations at stake are cross-border and that the standard of living may differ significantly from

one Member State to another, this would restore a certain balance in the assessment made.

Eventually, an amendment that would foster both the principles of access to justice and mutual

16

trust could be the creation of proper EU legal aid dedicated to cross-border disputes. This could

be handled directly by the EU Commission or any other European institution or agency and

funded by the EU budget. But financial issues are crucial and current estimations are between

247 and 382 million euros per year which would indeed be a major expense that the EU budget

could not afford, at least not yet.

Dematerialisation. Creating an effective AFSJ pragmatically implies tackling the question of

drawbacks in cross-border procedures (costs, translations, legal disparities and so on),

emphasised by the exhaustion of remedies mechanism. Therefore, developing new

technological tools would allow the parties to minimise their proceedings costs. As a matter of

fact, since the EU cannot afford to fund proper EU legal aid, it has to rely on actions that can

be implemented at national level. As such, one way to launch EU actions without having to

support the cost of the cross-border nature of proceedings would be to make use of new

technologies. This is, for instance, the aim of the Multiannual European E-Justice Action Plan

2014/2018 which sets out the strategy to be put in place. It is thus only natural to see increasing

space dedicated to “modern communication technologies” in the wording of recent regulations

(e.g. the European Account Preservation Order Regulation, which, in recital 41, ostensibly

gives considerable weight to new technologies at various steps of the procedure).

One of the problems with developing modern communication technologies amongst 27 or 28

Member States is the interoperability of the systems used among them. This is a problem that

has been identified and is well known by European institutions. Thus, since 2010, EU

institutions have co-funded several projects (e-Codex – e-Justice Communication via Online

Data Exchange –, e-Sens and now Me-Codex) for more than 60 million euros. These projects

have gathered more than twenty Member States as well as representatives of European legal

professions. This has helped to achieve the current version of the e-Justice portal, the creation

of a Court Database and European directories to find a lawyer, a notary or a bailiff in various

Member States of the European Union. It has also helped in the development of an

interoperable system between several Member States designed to allow the European Account

Preservation Order procedure to be handled electronically.

This succession of EU-funded projects to develop interoperable systems illustrates the

dedication of EU institutions in tackling this crucial problem. However, in practice, the success

of such endeavours is largely dependent on the willingness and dedication of Member States,

which have proven to be unequal. Thus, instead of allowing funds to create incentives at

national level, it is perhaps time to move forward in developing a proper communication

system that allows European civil procedures to be undertaken electronically should the

17

Member State choose to opt for such a system.

Legal training. Legal training is perceived as the natural corollary of the principle of mutual

trust, which is at the heart of an effective AFSJ.

Thus, European institutions have engaged in the creation of a true European judicial culture

since it is clearly assumed that “a good understanding of the different national legal systems is

necessary to ensure recognition of judicial decisions, cooperation between judicial authorities

and swift execution of decisions. This is also central to building mutual confidence and

trust”53.

As such, recent CJEU and ECtHR case law, which sets out the new principle of exhaustion of

remedies in the Member States of origin, clearly illustrates the issues at stake. In practice, this

implies certain knowledge of both EU and national laws on the part of European Union

lawyers who will be advising their clients but also by national judges as to the applicability of

articles 34 §1 and 34 §2 of the Brussels I Regulation. All legal practitioners will have to be

able to access and understand EU law as well as national laws.

In order to be able to do so, the European Commission, in light of the Stockholm Programme,

has funded a certain number of projects aiming at legally training half of the legal practitioners

in the EU by 2020. Nevertheless, while priority has been given to judges and prosecutors, since

they are responsible for the enforcement and respect of European Union law, all legal

practitioners would benefit from better understanding of EU law and other legal systems. Thus,

various methodologies have already been experimented with, going from short-term

exchanges, to practical and theoretical approaches without neglecting the use new technologies

through e-learning platforms and informative e-portals.

Indeed, European judicial learning is instrumental in the achievement of an effective AFSJ.

And the progress made since 2011 is obvious (so far, approximately 500 000 legal practitioners

have been trained in EU law or in the law of another Member State since 2011).

However, the figures can be misleading since participation is very unequal regarding the legal

professionals trained and the Member States to which they belong. For instance, 58% of the

legal practitioners trained in 2015 through continuous education were judges and prosecutors,

37% were notaries, while the rest is divided between court staff, lawyers and bailiffs.

Thus, the challenge for the years, if not decades, to come is to unify the level of training in

European law as well as in the laws of other Member States among legal professionals and

Member States. One key aspect of such evolution may be to enhance this training at the initial

professional education stage in order to create a proper long-lasting European judicial culture.

53 COM (2011) 551 final, p. 2.

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Besides the upcoming challenges, the constraints are numerous, starting with the 22 languages

that the EU has, the absence of a central place where EU-funded projects may be gathered, as

well as, for instance, the relatively low rate of cases involving EU issues, which implies a

necessary loss in acquired knowledge.

Therefore, while much has already been done, the methodology that has been adopted so far

perhaps needs to be reassessed.

Towards geographical unity. As mentioned previously, Denmark is not part of the AFSJ,

creating a chopped-up area. The EU has no competence to force Denmark to modify its

legislation. Nevertheless, in order to harmonise procedural rules among all Member States, the

EU has the power to force Member States participating in the AFSJ to sign international

conventions in order to ascertain minimum interoperability in judicial cooperation with

Denmark. This possibility is granted to the EU thanks to the parallelism theory (art. 216 §1

TFEU), which has, for instance, been used for Austria and Malta in Decision 2016/414/EU. In

the latter decision, the EU obliged those Member States to sign and ratify the Hague

Convention of 1965 on Services Abroad. Thus, the EU could force Member States to adopt the

same international convention of which Denmark is a part– especially in the field of legal aid.

This should enable harmonisation of judicial cooperation rules through international

conventions spurred on by the EU.

b. Proposing an amending regulation

The recent interpretation of the mutual trust principle by the CJEU has real practical

consequences for litigants, who must adopt active procedural behaviour. Indeed, regarding

recent rulings, the ability to challenge a decision at the enforcement stage by invoking the

public order clause is fairly doubtful. Therefore, modification of the Brussels I Regulation and

its recast version, like Regulation 2015/2421 amending the regulation establishing a European

Small Claims Procedure and the regulation creating a European Order for Payment Procedure,

would be necessary to ease the transition to a more integrated system promoted by the CJEU.

A regulation could be the ideal type of secondary legislation since it would allow fast and

uniform application among Member States. Furthermore, having recent case law legitimised in

a legal instrument, and debated and adopted by Member States, would only enhance the path

taken by the CJEU.

As for its content, the amendment to Brussels I Regulation should, on the one hand, endorse

the recent CJEU case law on mutual trust and, on the other, aim at resolving some of the

difficulties previously discussed. Indeed, the solution adopted by the CJEU, though imposing

19

new burdens on the parties, seems to be the most pragmatic according to the EU’s objective.

As a matter of fact, overly broad admission of the possibility of challenging a judgement at the

enforcement stage would be a setback for cooperation in civil matters and the principle of

mutual trust.

Specifying the exceptions to the exhaustion of remedies mechanism. While it imposed the

mechanism of exhaustion of remedies, the CJEU accepted one exception: “specific

circumstances [which] make it too difficult or impossible to use the legal remedies in the

Member State of origin”. The new instrument should aim at defining what those specific

circumstances are. Indeed, given the factual context of recent case law, material circumstances

that could justify challenging a judgement before the Member State of enforcement are quite

difficult to picture. Should any ever arise, it would be close to a case of force majeure. The

proposed instrument amending the Brussels I Regulation should ratify such an interpretation in

order to secure the rules and prompt litigants to act accordingly.

A procedural status for third parties. One of the main improvements this instrument could

bring is the creation of a procedural status for third parties who, being impacted by

enforcement measures, but not being part of the first trial, must challenge the ruling in the

Member State of origin. They are, indeed, denied the right to invoke the public order clause in

the Member State of enforcement because all remedies have not been exhausted.

As already highlighted in Meroni-like cases, the third party obliged to challenge a judgement is

not part of the initial procedure and has no certitude of being so (see supra, pt. II, B). On what

grounds would this be possible?

This is the reason why, in cross-border disputes, a new procedural status should be created for

this very particular circumstance: third parties having to bear some of the consequences of the

enforcement of the judgement and who are not aware of the case before the enforcement stage.

Such a status would enable them to challenge the judgement in the Member State of origin

through a procedure close to the French one, which is available to the defendant of a judgement

rendered by default when he is not aware of the trial going on. The court which issued the

judgement must re-open the debate and the party absent at the first trial can present its

arguments.

Furthermore, with a specific official status, the third party would be eligible for legal aid if it

met the conditions. This would also modify art. 19 §4 of Regulation 1393/2007 which would

allow them to benefit from this possibility.

The issue of fundamental rights. This new regulation should also deal with the issue of the

preservation of fundamental rights. Could a Member State refuse to recognise and enforce a

20

judgement issued in another state in order to apply its national standards of protection when

they are higher than EU law? The ECHR Avotins ruling does not exclude this hypothesis and

the question has already arisen in criminal matters. The Melloni54 ruling refused to set aside

EU law. The scope of this decision is discussed: was it rendered in consideration of a specific

case where the defendant was close to dilatory action or did the CJEU want to set a general

principle?

Allowing Member States to apply their national standards regarding the protection of

fundamental rights, even if stricter than EU law, is a real risk for mutual recognition. However,

this may be seen as a “race to the bottom” concerning the protection of fundamental rights.

This new regulation could, however, be an opportunity to discuss the issue regarding

articulation between the principle of mutual recognition and sufficient protection of human

rights by the EU; bearing in mind that civil and commercial matters are “generally less

stringent than those applicable in administrative or criminal matters”55.

Conclusion. Recent CJEU case law, renewing the interpretation of the consequences of mutual

trust, seeks to deepen Member State integration in the AFSJ. Thus, it triggers reflexion about

the future of cooperation in civil and commercial matters and about the next steps to be taken.

The solution adopted by the CJEU, that is to say the exhaustion of all remedies in the Member

State of origin with only theoretical exceptions, raises concerns over practical consequences for

the parties and their fundamental right of access to justice.

Nevertheless, solutions can be thought of to alleviate the burden on the parties which would

contribute to an even more integrated AFSJ. This implies that the EU must fully exploit the

possibilities provided for by the treaties regarding legal training, dematerialisation, and

amendments of legal instruments, as well as having Member States adopt international

conventions to unify procedural rules in cross-border cases.

Pushing European integration further through a stricter approach of the mutual trust principle

necessarily affects the fundamental right of access to justice. For the time being, the system

developed is said to be balanced. Nevertheless, it is now up to the European institutions to

further the development of measures aimed at counterbalancing these necessary drawbacks for

the balance to last in the long term.

54 CJEU 26 Feb. 2013, Stefano Melloni v. Ministerio Fiscal, Case, C-399/11. 55 CJEU 2 March 2017, Andrew Marcus Henderson v. Novo Banco SA, Case C-354/15, n°45.