Windhorst v Levy

Factual and Procedural Background

This appeal arises from an order dismissing both an appeal against the registration of a foreign judgment and an application for a stay of enforcement. The foreign judgment, dated 2003 from a German Regional Court, was in favour of the Appellee against the Appellant, a German businessman whose insolvency proceedings commenced in 2005. The Appellee had invested $2 million in the Appellant's companies but later claimed unjust enrichment when the Appellant allegedly failed to honour their agreement. The German insolvency court approved an insolvency plan in 2005 under which creditors waived claims in exchange for a small quota payment. Under German law, this insolvency plan did not automatically render the 2003 judgment unenforceable unless a specific application was made. The Appellant sought such a declaration in German courts, which dismissed the application on jurisdictional grounds, with appeals pending. Meanwhile, the Appellee registered the 2003 judgment for enforcement in England and Wales. The English court dismissed the Appellant’s appeal against registration and refused a stay of enforcement, leading to the current appeal.

Legal Issues Presented

1. Whether the English court is obliged to recognise and enforce the 2003 Judgment notwithstanding the German insolvency plan and pending German proceedings concerning its enforceability.
2. Whether the grounds for refusing or revoking a declaration of enforceability under the Brussels I Regulation are exhaustive and limited to those specified in Articles 34 and 35.
3. Whether the Insolvency Regulation requires the English court to give the German insolvency plan the same effect as under German law, potentially affecting the enforceability of the 2003 Judgment.
4. Whether a stay of enforcement should have been granted pending the resolution of the German declaratory proceedings and subject to provision of security.

Arguments of the Parties

Appellant's Arguments

• The Insolvency Plan approved by the German court should be recognised and enforced by the English court, rendering the 2003 Judgment unenforceable until determined otherwise by the German courts.
• The English court should consider grounds beyond those enumerated in Articles 34 and 35 of the Brussels I Regulation when deciding on enforceability.
• The refusal to grant a stay was legally flawed because it placed the Appellee in a better position in England than in Germany, where enforcement depends on the outcome of pending proceedings.

Appellee's Arguments

• The list of grounds for refusing or revoking enforceability under Articles 34 and 35 of the Brussels I Regulation is exhaustive, precluding other grounds.
• The 2003 Judgment remains formally enforceable under German law unless and until declared inadmissible by German courts.
• The Appellant’s failure to provide security in German proceedings justifies refusal of a stay in England.

Table of Precedents Cited

Court's Reasoning and Analysis

The court analysed the interplay between the Brussels I Regulation and the Insolvency Regulation, focusing on the enforceability of the 2003 Judgment in England and Wales. It accepted that the Insolvency Regulation requires recognition of the German insolvency plan but only to the extent that it has effect under German law. Since under German law the insolvency plan does not automatically render the judgment unenforceable without a declaration under section 767 ZPO, the 2003 Judgment remains formally enforceable.

The court examined whether the grounds for refusing enforcement under Articles 34 and 35 of the Brussels I Regulation are exhaustive and concluded that it was unnecessary to decide definitively, as the Appellant’s primary argument on enforceability failed on the merits.

Relying on established CJEU jurisprudence, particularly Coursier v Fortis, the court held that "enforceable" refers to formal enforceability and that substantive challenges to enforcement must be addressed by the courts of the Member State of origin. The English courts must give effect to this formal enforceability and cannot review the substance of the foreign judgment.

Regarding the stay application, the court noted that although pending German proceedings and the Appellee’s choice to enforce in England might constitute special circumstances under CPR rule 83.7(4), the Appellant’s failure to provide security in Germany undermined the justification for a stay. The court found that any special circumstances arose from the Appellant’s own choices and therefore refused the stay, while indicating that a stay conditioned on security would be appropriate.

Holding and Implications

The court DISMISSED the appeal against the registration of the 2003 Judgment, confirming its enforceability in England and Wales under the Brussels I Regulation and the Insolvency Regulation.

However, the court ALLOWED the appeal against the refusal of a stay of enforcement and granted a stay conditional upon the Appellant providing security in the sum of $3.44 million, with permission to apply for variation or discharge of the stay.

The decision ensures that enforcement in England reflects the formal enforceability status under German law and protects the parties' interests by requiring security pending resolution of substantive issues in Germany. No new precedent was established beyond applying existing EU regulations and case law principles to the facts.