Are Dutch courts entitled to lift a prejudgment attachment levied against an international organisation on its assets in another state? On 22 February 2019, the Dutch Supreme Court submitted preliminary questions to the Court of Justice of the European Union concerning this issue (ECLI:NL:HR:2019:292).
In essence, the preliminary questions ask whether courts in one state are entitled to rule on another state’s obligations under international law to grant immunity of execution to an international organisation. The scope of the questions reaches further than just immunity of execution cases; the Supreme Court is also seeking clarity on jurisdiction under the Brussels I bis regulation for proceedings concerning prejudgment attachments in general.
Facts and previous proceedings
The dispute arises out of Basic Ordering Agreements (BOAs) concluded between SHAPE, the military headquarters of NATO in Belgium, and Supreme, a fuel supply provider. Supreme provided fuels to SHAPE for NATO’s mission in Afghanistan on the basis of the BOAs. In 2013, Supreme and Allied Joint Force Command Brunssum (JFCB), the Netherlands-based regional headquarters of NATO, set up an escrow bank account in Belgium with the goal of offsetting any contingent liabilities on both sides at the end of the BOAs.
In 2015, Supreme initiated proceedings against SHAPE and JFCB in the Netherlands arguing that the latter parties had not fulfilled their payment obligations towards Supreme. Furthermore, Supreme levied a prejudgment garnishment on the escrow account in Belgium. SHAPE initiated proceedings for interim relief before the Dutch courts and sought (i) to lift the garnishment, and (ii) to prohibit Supreme from attaching the escrow account in the future.
SHAPE argued that it can rely on immunity of execution as laid down in Article XI paragraph 2 of the Paris Protocols, the treaty establishing the status of the NATO headquarters. Courts in both first and second instance ruled that SHAPE enjoys immunity of execution as the exceptions to immunity as recognised under customary international law do not apply in this case.
Questions referred to Court of Justice
The current proceedings before the Supreme Court concern Supreme’s appeal against the decision granting SHAPE immunity of execution. The Supreme Court has not ruled on this appeal yet, as according to Article 27 of the Brussels I bis regulation, a court is obliged to declare of its own motion that it has no jurisdiction if the courts of another Member State have exclusive jurisdiction. The Supreme Court doubted whether it has jurisdiction of its own motion, and in this context referred three questions to the Court of Justice.
First question: civil or commercial matter?
The first question is whether this case is a civil or commercial matter, as the Dutch courts can only base their jurisdiction on the Brussels I bis regulation if this question is answered affirmatively. Disputes between public authorities and legal entities under private law can fall under the regulation, unless the public authority is acting in the exercise of its public powers (see e.g. CJEU 12 September 2013, C-49/12, par. 33-35 and CJEU 9 March 2017, C-551/15, par. 33-35). The Supreme Court has asked whether SHAPE’s reliance on immunity of execution means that it should be regarded as acting in the exercise of its public powers. Furthermore, the Supreme Court has asked the Court of Justice whether it is relevant that the Dutch court granted permission to levy the attachment in relation to substantive proceedings that are initiated in the Netherlands and concern a contractual dispute about the supply of fuels for a military operation.
Second question: lifting a prejudgment attachment = enforcing a judgment?
If the Brussels I bis regulation is applicable, the second question is whether Article 24 paragraph 5 applies. According to this provision, the courts of the Member State in which a judgment has been or is to be enforced will have exclusive jurisdiction in proceedings concerned with the enforcement of the judgment. Disputes which have a close link with the enforcement procedure fall under this provision (CJEU 4 July 1985, Case 220/84, par 12). It is not entirely clear, however, whether lifting prejudgment attachments falls under “enforcement of a judgment” and would therefore be the exclusive competence of the Belgian courts. Furthermore, the Supreme Court asks whether a party’s reliance on immunity of execution should be taken into account when answering the question of whether Article 24 paragraph 5 applies in this case.
Third question: does the seized court decide if appeal to immunity is justified?
The third question is relevant if the Court of Justice rules that reliance on immunity of execution by one of the parties is a relevant factor in determining whether the Brussels I bis regulation applies in general (see question 1), and whether Article 24 paragraph 5 of the Brussels I bis regulation applies (see question 2). Is the sole reliance on immunity by the international organisation in that case reason for the court to declare itself lacking jurisdiction, or should the seized court decide whether the appeal to immunity of execution is justified? What information can the court take into account if the latter is correct, and does this include the defence of the other party?
Relevance of the questions
These questions to the Court of Justice will hopefully clarify two important issues.
The first issue is whether one state is entitled to rule on the obligations another state bears under international law to grant immunity of execution to an international organisation. As the Dutch Supreme Court notes, it might be argued that the courts of the member state where the garnishee order is levied (in this case Belgium) are best placed to judge whether the order is incompatible with the immunity of execution that the international organisation enjoys based on Belgium’s obligations under treaty law or customary international law. It is also noted by the Advocate General to the Dutch Supreme Court (see his opinion of 21 September 2018 ECLI:PHR:2018:1038) that it is quite strange that, in this case, the Dutch courts are asked to rule about Belgium’s obligations under international law. The answer to these questions may also be relevant for proceedings concerning attachments on assets of foreign states abroad, as they also enjoy immunity of execution under international law. Proceedings against international organisations and states concerning both immunity of jurisdiction and immunity of execution have been debated before Dutch courts in recent years.
The second issue is not limited to proceedings about immunity of execution, and relates to the scope of Article 24 paragraph 5. The preliminary ruling may shed light on the question of whether this provision also applies to disputes regarding prejudgment attachments. Although it is clear that disputes on executory attachments fall under this exclusionary provision, the Advocate General of the Dutch Supreme Court notes that, with regard to prejudgment attachments, a range of ideas are presented by literature and case law. The idea that prejudgment attachments would not fall under the scope of this article would be in line with the general strict interpretation that the Court of Justice gives to the exclusionary provisions of Article 24. According to the Court, this Article should not be given a wider interpretation than is required by its objective as this “results in depriving the parties of the choice of forum which would otherwise be theirs and, in certain cases, in their being brought before a court which is not that of the domicile of any of them” (see e.g. CJEU 26 March 1992, C-261/90, par. 25). Furthermore, it is useful that parties can litigate on the issue of lifting the attachments in the court where leave was granted to levy the attachments.
This point is not yet entirely clarified in case law, however, and so hopefully the answers of the Court of Justice will shed light on the scope of Article 24 paragraph 5 regarding prejudgment attachments in general, and more specifically, involving procedures where a party invokes immunity of execution.