Courts can order payment of security when seeking enforceability
The Supreme Court recently ruled(1) that if the judgment for which a declaration of enforceability is sought is not yet final, the court deciding on a second or third appeal may, in its final decision on the appeal, order the party seeking the declaration of enforceability to pay security in accordance with the Brussels I Regulation.(2)
The purpose of the security is to counter the risk to the debtor presented by the enforcement of a foreign judgment which is not final.
Specifically, the security is intended to protect the debtor in the event that:
- the opponent becomes insolvent;
- nothing can be enforced against the opponent; or
- the trial in the state of origin is protracted and the debtor is unable to dispose of frozen assets during that time.
The type and the amount of security are governed by the law of the state carrying out the enforcement; the amount is up to the judge’s discretion.
If the court in the state of origin does not order payment to the creditor, but instead orders payment of a deposit to the court, the danger to the debtor is lower and a lower security amount may suffice.
The security is a liability fund for potential losses to the debtor. It is intended to prevent unjustified losses to the debtor if the court order is later rescinded or amended in the state of origin and the claims for damages or unjust enrichment cannot be enforced.