Under what conditions is it possible to enforce an American court decision (California)? Is international procedural public order respected when the debtor has been validly affected at the start of the proceedings and has chosen not to defend himself? Can the French company seek, before the French judge, counterclaims against its American adversary in the exequatur procedure?
It is appropriate to take an interest in a case law which was rendered on September 16, 2020 by the Court of Cassation and which comes to address the office of the Judge in the context of the control of procedural public order in the context of a procedure of exequatur.
What are the facts ?
In this case, an American company, company P, whose activity is the distribution of computer software, had concluded in April 1996 with a French company, company XT, a computer consulting company, a license agreement relating to the marketing and distribution of computer products.
Following a dispute over the amount of the royalties, company P had, pursuant to the jurisdiction clause stipulated in the contract, sued company XT before the District Court of California in the United States of America in liability and in payment of the various sums by a first order then a judgment was rendered on September 22, 2014,
The American court had condemned the XT company to pay a sum of 502,391 US dollars.
Precautionary seizure in France on the basis of an American court decision
It was in these circumstances that, after proceeding on March 16, 2016 to a precautionary seizure of the bank account of the debtor company in France, company P brought proceedings against company XT before the Tribunal de Grande Instance of Pontoise for enforcement of the decisions Americans.
In the meantime, the company XT was placed in compulsory liquidation, the liquidator acting in the name and on behalf of the said company and naturally opposing the request for exequatur made by the American company.
The exequatur against a company in compulsory liquidation
It should be recalled that the exequatur is a specific procedure which is intended to allow the transposition into French law and to obtain the executor nature of a court decision which has been obtained in a foreign country in order to allow its perfect execution on French territory.
How does the exequatur procedure work?
Several questions arose before the Court of Cassation and revolved around two axes.
The first was to know whether the defendant in France could reproach the failure to notify the defendant of the foreign decision which had been rendered against him while he was a defendant.
The second was whether the defendant could formalize counterclaims?
Indeed, the French company considered that it had been the victim of an abusive procedure which had resulted in its placement in compulsory liquidation.
In such a way that it considered that it was entitled to seek damages by way of counterclaim on the grounds of a liability characterized by the obvious fault of the plaintiff in exequatur who had been careful not to proceed with the notification and who had precipitated finally the company towards compulsory liquidation.
An action for exequatur initiated in bad faith?
In exequatur law, it should be remembered that the French Judge is not the Judge of the proceedings which have been rendered in a foreign country but the French Judge must verify, apart from the jurisdiction of the foreign Court which issued the decision and the absence of fraud against the law, the compliance of the foreign decision with international public order.
Which could rightly lead to wondering about the validity of the notification of the service of the decision rendered in the United States and its opposability the possibility that there was therefore, for lack of notification to execute and to consider an exequatur in France.
The problem of the rights of effective recourse of the defendant of the unfavorable decision abroad.
It should be recalled that international public order requires that the law of the FOR seized abroad allows appeal against the judgment rendered, therefore, the control of the compliance of the foreign decision with public order whether it be, including international procedural public order and the control of the Exequatur Judge who must, at that time, verify whether or not the defendant was able to defend himself first, secondly consider a remedy if necessary.
Company P, an American company, recalling, in the context of its cassation appeal, that the right of access to a Court as being one of the fundamental principles of the procedure is not an absolute principle and lends itself to restrictions concerning in particular the conditions of admissibility of appeals.
In such a way that the limitation of the right to appeal is therefore not in itself contrary to international public order.
Strictly regulated remedies
Indeed, the American company considered that the defendant had duly received the summons which had been served on him under the conditions as recalled by the Hague Convention of November 15, 1965, relating to the service of judicial documents on the foreign,
Thus, the French company had not shown any interest in the proceedings initiated by the company P before the Californian Judge until then, when it had indeed been affected and the proceedings had been validly notified to it.
The French company had therefore consciously chosen to default in this procedure and not to be present or represented.
Like what, once again, it is clear that the policy of the ostrich cannot pay….
A service of proceedings launched opposable to the defendant
As the French company is not unaware of the American procedure, the latter could fully learn of the decision concerning it within the one-year period granted to it by Californian law to appeal.
And thereby defend themselves…
Consequently, the company P, American, maintained that the application of the rules of the Californian rights fixing at one year the deadline to appeal from the judgment did not carry a disproportionate attack on the rights of access to the Judge of the French company, so that there had been no breach of international procedural public order.
The Court of Cassation agrees with the reasoning of the American company and recalls, as necessary, that to grant exequatur the French Judge must, in the absence of an international convention, ensure that three conditions are met, namely , the indirect jurisdiction of the foreign judge based on the attachment of the dispute to the judge seized, the compliance with international public policy of funds and procedure as well as the absence of fraud.
Exequatur and international procedural public order
Therefore, to reject the application for exequatur, the Court of Appeal had first noted that French international public order requires that the law of the FOR open the necessary remedies against the judgment of the First Instance, especially when it has been rendered by default.
The Court then notes that Californian law opens a one-year appeal period which runs to pronounce judgment without providing for the existence of an act of service, it then finally holds that this remedy cannot be exercised by a defaulting defendant. only if the latter has knowledge of the decision by the notification that it has been made.
Thus, the absence of legal diligence, a notification in good and due form, combined with the fact that the time limit for appeal runs from the moment the decision is pronounced and is such as to deprive the defendant of any effective remedy and that this absence of guarantee procedural could contravene the right to a fair trial and an effective remedy guaranteed by Articles 6 and 13 of the Convention for the Protection of Human Rights and Fundamental Freedoms, seems unfounded.
Above all, it was up to the court seised to find out, as was moreover requested by company P, an American company, whether the knowledge by company XT of the summons and the proceeding of the Californian court did not demonstrate that these rights to a fair trial and to effective recourse to articles 6 and 13 of the convention for the protection of human rights and fundamental freedoms had been respected notwithstanding the absence of notification of the decision rendered.
This is all the more so since the French company then had a period of one year from the date of the decision to lodge an appeal.
Thus, in view of the circumstances of the case, the American decisions could not reveal any breach of international procedural public order, the Court of Appeal deprived its decision of legal basis and the Court of Cassation quashed the decision.
In exequatur, is the counterclaim possible?
Thus, the Court of Cassation finally ends on the issue of the counterclaim for damages that had been formulated by the French company since the company P had considered that the Judge of the exequatur, whose powers are limited in principle to the verification of the conditions of international regularity of the foreign decisions required for their exequatur, cannot rule on an accessory claim, or counterclaim unrelated to the exequatur proceedings and thus add to the sentence pronounced by the foreign Judge,
It was therefore wrong that the Court of Appeal granted the claim for damages presented by the company XT, a French company, in support of which was alleged an alleged fault of the company P relating to a seizure conservatory devoid of any link with the exequatur procedure.
The Court of Cassation recalls the power of the Exequatur Judge.
It recalls that the Judge of the exequatur whose powers are limited to the verification of the conditions of the exequatur cannot hear a counterclaim for liability based on a fault which was not committed during the proceedings of which he is seized,
The Court of Appeal could therefore not hold company P liable by noting that the service of the American conviction decisions after expiry of the appeal period resulted from faulty procedural disloyalty, this maneuver having allowed the precautionary seizure of the bank account. of the French company which presented a credit balance on the date of the seizure.
Thus, the judgment of the Court of Appeal is quashed since the Court of Cassation considers that the Judge is limited to the sole verification of the conditions of exequatur and therefore cannot hear a counterclaim for liability.
In conclusion, how to oppose an exequatur in France?
This case law is interesting.
It also recalls the conditions under which the exequatur can be made in France of a foreign decision and provides additional details as to compliance with procedural international public order, recalling that insofar as the defendant has been informed of the existence of a procedure, it is up to him, in order to fully justify his right to an effective remedy, to follow the procedure and this policy of the ostrich is therefore not profitable as rightly pointed out by the Court of Cassation,
Finally, in the event that the defendant considers, as was the case, that the latter was the victim of a dilatory and wrongful attack on the part of the foreign creditor by initiating protective measures, the Court of Cassation recalls that the Judge of the exequatur has no power and cannot hear a counterclaim for liability for fault.
However, it should be recalled, by way of conclusion, that the means of defense in the context of an exequatur procedure remain numerous.
Article written by Maître Laurent LATAPIE,
Lawyer in Fréjus, lawyer in Saint-Raphaël, Doctor of Laws,