In an order delivered in Case 37/2023, X v Ekerby Sparbank, the Supreme Court of Denmark (Højesteret) ruled that a judgment by default of Helsingborg District Court (Helsingborg tingsrätt) is unenforceable in Denmark under the Brussels I bis Regulation, given the existence of procedural flaws in the Swedish proceedings.
In denying the enforcability of the Swedish judgment by default in Denmark; the Supreme Court also set aside two underlying judgments of two Danish courts – the Enforcement Court of Hillerød (Fogedretten i Hillerød) and the Eastern High Court (Østre Landsrets), who had ruled incorrectly.
Background and facts in Sweden
The case has its origins in a loan agreement signed in May 2007 between X and Ekeby Sparbank (the bank). X subsequently defaulted on, leading to the bank to demand full repayment by August 2012. When X failed to comply, the bank initiated legal proceedings in Sweden, resulting in a judgment by default from Helsingborg District Court (Helsingborg tingsrätt) in Sweden in April 2014, ordering X to pay 129,000 SEK, plus interest and costs.
Before the courts in Denmark, by decision of the the Enforcement Court of Hillerød (Fogedretten i Hillerød), Denmark in September 2022, and on appeal at the Eastern High Court (Østre Landsrets) in Denmark in November 2022, both Danish courts affirming the enforceability of the judgment by defaultt of the Swedsh court in Denmark.
The arguments of the parties
X challenged these decisions, arguing that the service of the initial lawsuit in Sweden was not properly conducted, thus violating their right to a fair trial.
The service of the lawsuit was executed through public announcement in the Post and Domestic Times (Post- och Inrikes Tidningar), Sweden’s official gazette, and a newspaper Helsingborgs Dagblad in February 2014, as X’s whereabouts were unknown at the time.
X argued that this method of service did not meet the requirements set forth in the Brussels I bis Regulation (Regulation 1215/2012), which governs the recognition and enforcement of judgments across EU Member States. Specifically, X claimed that he had not been given adequate notice to defend himself, as required by Article 34(2) of that Regulation.
The bank countered that the service was conducted in accordance with Swedish law, which allows for public notification when the defendant’s location is unknown. They maintained that all procedural requirements were met, and the judgment should therefore be enforceable in Denmark. They also argued that the statute of limitations had not expired, as the default judgment constituted a valid interruption of the limitation period under both Swedish and Danish law.
Judgment of the Supreme Court of Denmark
The Supreme Court of Denmark ’s analysis focused on whether the service of the lawsuit in Sweden complied with the standards of the Brussels I bis Regulation. It noted that while public notification is permissible under certain circumstances, it must be demonstrated that all reasonable efforts were made to locate the person in question.
The Supreme Court found that Helsingborg District Court did not sufficiently investigate X’s whereabouts before resorting to public notification. Notably, X had been residing in Denmark since January 2011, and this information was accessible through the Danish Civil Registration System (CPR).
In its order, the Supreme Court emphasised the importance of ensuring that defendants, like X, are given a fair opportunity to present their case, a fundamental principle underpinning the Brussels I Regulation. For it, the Swedish authorities’ failure to adequately notify X meant that he was deprived of this opportunity, rendering the Swedish judgment unenforceable in Denmark.
The final instance national court also referenced relevant case-law of the Court of Justice of the European Union (CJEU), which underscores the necessity of diligent efforts to locate defendants before resorting to alternative methods of service.
In conclusion therefore, the Supreme Court ruled in favour of X, denying the bank’s request to enforce the judgment by default in Denmark as the lawsuit did not meet the procedural safeguards required by the Brussels I Regulation, specifically the need for timely and proper notification to the defendant. Thus, the enforcement proceedings initiated by Ekeby Sparbank were dismissed.
Analysis
This ruling of the Supreme Court of Denmark highlights the stringent requirements for cross-border enforcement of judgments within the EU, particularly the necessity of ensuring that defendants are properly notified and given a fair chance to defend themselves.
The applicable case-law of the CJEU was very relevant here in assisting the Supreme Court in deciding the case. For example, in Hypoteční banka (Case C-327/10), the issue of serving legal documents to a defendant, whose whereabouts were unknown, the CJEU emphasised the need for thorough efforts to locate the defendant before resorting to public notification. Also, this time in Cornelius de Visser (C-292/10) concerning the public notification of legal documents when the defendant’s location could not be determined, the CJEU highlighted the importance of ensuring that all reasonable measures are taken to find the defendant and that public notification is a last resort.
The ruling of the Supreme Court here, in light of the applicable case-law of the CJEU, underscores the balance that must be maintained between the efficient enforcement of judgments by default, and the protection of defendants’ rights. It further illustrates the interplay between national procedural laws and EU regulations, emphasising the need for compliance with both to achieve enforceability in cross-border disputes.
Read the Order
The Supreme Court of Denmark’s judgment in Case 37/2023, X v Ekerby Sparbank can be read here.