Austrian court denies enforcement of Italian payment order
Author: Klaus Oblin
Introduction
An Italian court recently issued a payment order against a company registered in Austria to an Italian plaintiff, in which the Austrian company was ordered to pay around €2.7 million. However, according to the Austrian High Court,(1) an Italian payment order issued after an ex parte proceeding (ie, a proceeding in which the defendant does not appear) is not enforceable under Article 23 of the Brussels I Regulation.
The Brussels I Regulation applied to the Italian court decision whose enforcement was the subject matter of the case.
Payment orders
A court decision can be enforced by a domestic court only if it is classified as a ‘decision’ in the sense of Article 23 of the regulation. This was questionable in the present case for a number of reasons.
The type of court order issued in this case is governed by Articles 633 and following of the Italian Rules of Civil Procedure. It is issued through a summary proceeding allowing the creditor to obtain an enforceable court order on its petition, where such petition is initially not served on the debtor.
The proceeding is initiated by a petition with which the creditor asks the court to issue a payment order against the debtor based on certain evidence. This payment order obliges the debtor to pay a certain amount or supply certain goods within a specified time (Article 641 of the rules). If all formal requirements are met and, having evaluated its conclusiveness, the judge is convinced that the claim is justified, he or she will issue the payment order. The order informs the debtor that it will be enforced after the deadline unless the debtor files an objection.
The payment order itself is generally not enforceable. Judicial permission is required for its enforcement and will be granted at the petitioner’s request after the deadline. If the debtor does not file an objection by the given deadline, and if no preliminary enforcement has been granted, the payment order will be declared enforceable after the deadline, at the creditor’s request.
If the debtor files an objection, the proceeding will continue according to the rules governing normal civil proceedings.
If the creditor so requests, the payment order can be made enforceable at the same time as it is issued – for example, if a delay could lead to severe damages (Article 642(2) of the rules). However, the court may, on the debtor’s objection, suspend this enforceability for serious reasons. Such a decision cannot be contested.
An Italian payment order which is declared enforceable in a separate proceeding in Italy following an objection by the debtor can be recognised in accordance with Article 32 of the Brussels I Regulation.
However, in the case at hand, the payment order was issued as immediately enforceable without giving the opposing party a chance to be heard.
ECJ precedent
The European Court of Justice (ECJ) has ruled(2) that preliminary court orders or those intended to secure a claim which were issued without summoning the defendant and whose enforcement is sought without prior service (ie, ex parte decisions) do not qualify for recognition and enforcement according to Title III of the 1968 Brussels Convention (now Title III of the Brussels I Regulation).
The ECJ explained this limitation by arguing that the 1968 Brussels Convention aims to ensure that proceedings leading up to court decisions are conducted in accordance with due process, as prescribed by the goals of the convention. In light of the guarantees granted to defendants in regular proceedings, Title III of the convention is rather generous as to recognition and enforcement. Hence, the 1968 Brussels Convention (now Article 32 of the Brussels I Regulation) is intended for such court decisions that are or could be based on a trial.
Court decisions that have been reached in the adjudicating state without granting the opposing party the opportunity to be heard cannot be recognised. Most legal scholars therefore agree that a court order which was declared immediately enforceable cannot be recognised under Article 32 of the Brussels I Regulation.
Comment
Generally, decisions issued by the courts of one EU member state can be enforced in any other member state. However, in this case, the Italian payment order was issued without giving the Austrian company a chance to respond, as well as being declared immediately enforceable in Italy. In this case, the decision could not be enforced in Austria because the Austrian defendant was not granted due process and had no opportunity to voice its objections against the claim.
For further information on this topic please contact Klaus Oblin at Oblin Melichar by telephone (+43 1 505 37 05), fax (+43 1 505 37 05 10) or email ([email protected]). The Oblin Melichar website can be accessed at www.oblin.at.