DHL GBS (UK) Ltd v Fallimento Finmatica SPA [2009] EWHC 291 (COMM)

7 March 2010



Judgments Regulation – registration of foreign judgment – appeal against registration – arbitration and public policy exceptions – whether to stay appeal

In a judgment handed down on 20 February 2009, Tomlinson J held that an appeal against the registration in the English courts of a foreign (Italian) judgment under what is commonly known as the Judgments Regulation (Regulation EC 44/2001, “the Regulation”) should not await the outcome of an appeal against that judgment to the foreign court.

DHL and Finmatica had entered into a global framework software licence, maintenance and support agreement (“the Agreement”) containing an English law clause and a London arbitration clause. Following its winding-up, Finmatica, through its liquidator, commenced proceedings in Italy against DHL for outstanding payments under the Agreement. DHL did not participate in the Italian proceedings.

Finmatica obtained judgment against DHL, in the course of which the Italian Court, applying Italian insolvency law to the question (having held it should do so as a matter of the Insolvency Regulation), found that the arbitration clause did not bind Finmatica in liquidation. Finmatica successfully applied to register the Italian judgment in England, following which DHL launched an appeal in Italy.

However, DHL also appealed substantively against the English registration order, submitting that the Italian judgment fell outside the Regulation. Firstly, DHL said the infamous “arbitration” exception (in Art. 1(2)(d) of the Regulation) applied, because the Italian judgment was obtained in breach of a binding arbitration agreement. Secondly, and in any event, DHL said the “public policy” exception (in Art. 34(1) of the Regulation) applied because it is manifestly contrary to the public policy of the United Kingdom to register a judgment apparently obtained in breach of a binding arbitration clause.

DHL then applied to stay the English appeal pending the decision of the Italian Court of Appeal. It argued that the English appeal might be rendered nugatory if the Italian Court of Appeal found in its favour. It also said that, on the appeal, the English court would need to decide whether, as a matter of Italian law, the arbitration clause was binding – and that the decision of the Italian Court of Appeal would assist in that endeavour.

Finmatica opposed the stay application. Its primary case was that on a proper construction of the Regulation, such a stay of a substantive appeal against registration (as opposed to e.g. a stay of enforcement) was not permitted – not least because Article 45.1 requires the court on such an appeal to “give its decision without delay”.

Unfortunately, the Court held it did not need to decide this point in light of its conclusion that even if it did have jurisdiction to stay the appeal it would not exercise it. The Court accepted Finmatica’s secondary case, holding that, given that the vast majority of DHL’s assets were in the UK, Finmatica had a very real interest in knowing as soon as possible whether the English court would give effect to its judgment: otherwise, for example, it would need to reconsider whether the expense of defending DHL’s Italian appeal was justified. Moreover, in light of the ECJ’s observations in West Tankers, and the express exhortations in Articles 36 and 45(2) of the Regulation against considering the substance of foreign judgments, the Judge saw “little scope… for examination of the question whether the Italian court has correctly applied its own law”.

Following the ECJ’s decision in West Tankers, handed down in the course of the present stay application, DHL withdrew its appeal on the basis of the arbitration exception. The substantive appeal (due to take place around April) will therefore address only the scope of the ‘public policy’ exception in the Regulation and will decide whether that exception can be used to refuse recongnition of judgments obtained in apparent breach – in the recognising court’s view – of an arbitration agreement – a possibililty tentatively suggested, but not decided, by Waller J in Phillip Alexander Securities and Futures v Bamberger [1997] ILPr 73.

Adam Cloherty acted for Finmatica and will appear for it on the substantive appeal, on the instructions of Campbell Hooper LLP.