A. Background

Mr and Mrs Orams, a British couple, had bought a holiday home in Northern Cyprus. On 26 October 2004, a person, who did not identify himself, gave legal documents written in Greek to Mrs Orams at her home. She later discovered that one document was a writ, issued out of a court in the southern part of Cyprus, that challenged the Orams's ownership of their home. Subsequently, the court ruled that Mr Apostolides was the owner. This must have come as quite a shock to the British couple as they had apparently bought the land in good faith from the person they believed to be the owner.

The Cypriot judgment was brought to England for recognition and enforcement under the Brussels I Regulation, Regulation 44/2001. The English court refused to recognize it, on grounds that will be explained below, and an appeal was taken to the Court of Appeal, which made a reference to the European Court. The judgment of the European Court is the subject of this note.

Although the European Court took pains to avoid mentioning the political background, the case cannot be understood without a knowledge of how the situation arose. For this purpose, a short excursion into the history of Cyprus is needed. For thousands of years, Cyprus has been peopled by Greeks, though it has been ruled by a succession of conquerors. In 1570, it was conquered by the Turks, and became part of the Turkish Empire. It remained under Turkish rule until 1878 when administration was ceded to Britain. In 1925, it became a British Crown Colony.

As things stood after World War II, the majority of Cypriots were Greek (and Orthodox Christian), but a significant minority were Muslims of Turkish descent. The Greeks wanted enosis (union with Greece), but the Turks rejected this. In 1959, a solution was found. Under an agreement concluded in London and Zurich between Greece, Turkey and the United Kingdom, Cyprus became an independent State under a Constitution that granted power-sharing rights to the Turkish minority. Greece, Turkey and the United Kingdom were named in the treaty as guarantors of the Constitution.

The Constitution broke down after a few years, and inter-communal violence ensued. In 1964, a UN peace-keeping force was dispatched to the island. In 1974 the Constitution was overthrown by a coup organized in Cyprus by the Greek military dictatorship (the ‘Colonels’). A Greek Cypriot, Nicos Sampson, was proclaimed president of Cyprus, and he declared union with Greece. Turkey protested at this violation of the London and Zurich Agreements. It appealed to Britain for help, but the latter was unwilling to act. So, citing its right as a guarantor power, Turkey invaded the island and occupied the northern part. Greek Cypriots from the north fled to the south. Turkish-Cypriots from the south fled to the north. The result was a partition of the island into separate Greek and Turkish areas.

The Nicos Sampson regime fell, and was replaced by a Constitution that provided for the continuing independence of Cyprus under a democratic government, but gave no power-sharing rights to the Turks. This Constitution applied in the part of the island ruled by the Greeks. In northern Cyprus, the Turks proclaimed a separate State, the Turkish Republic of Northern Cyprus (TRNC). This State has obtained international recognition only from Turkey. Other States, including all EU Member States, recognize the Republic of Cyprus, the Greek-dominated entity, as sovereign over the whole island. The TRNC authorities expropriated the land that had been abandoned by Greeks in the north. The Orams's title to their house derived from this confiscation. Needless to say, it was not recognized by the Greek-Cypriot authorities.Footnote ¹

The result was that there were two separate views as to title to the land on which Mr and Mrs Orams lived. Under Greek-Cypriot law, it belonged to the original owner, Mr Apostolides. Under Turkish-Cypriot law, it belonged to Mr and Mrs Orams. Since the land was in the part of Cyprus under the de facto control of the TRNC, it might be thought that the title of Mr and Mrs Orams was secure. However, after Cyprus joined the EU, Greek-Cypriot lawyers believed they had found a way to use EU law to their advantage.

B. The Brussels I Regulation

Under Article 22(1) of the Brussels I Regulation, proceedings having as their ‘object’Footnote ² rights in rem in immovable property are subject to the exclusive jurisdiction of the courts of the Member State in which the property is situated. Put in everyday English, this means that disputes concerning the ownership of land in a Member State can be decided only by courts of that Member State. The Greek-Cypriot argument was simple: under Greek-Cypriot law, the land where Mr and Mrs Orams lived was part of the territory of the (Greek-Cypriot) Republic of Cyprus. This was accepted by all the Member States. So the Greek-Cypriot courts had jurisdiction to decide who owned it. Any judgment they gave had to be recognized under the Brussels I Regulation in all other EU countries. In this way, they hoped, their view of the matter could be made to prevail, at least in other EU countries.

C. The Protocol

The problem with this view is that when Cyprus joined the EU, special provision was made for North Cyprus. A Protocol was attached to the Act of Accession under which Cyprus (and a number of other countries) joined the EU. This was Protocol No 10, which provided, in article 1(1):

In Community jargon, ‘acquis’ (French for ‘gains’) means ‘Community law’, while ‘those areas of the Republic of Cyprus in which the Government of the Republic of Cyprus does not exercise effective control’ is a diplomatic way of referring to the TRNC. So what Article 1(1) of the Protocol means is that Community law, including the Brussels I Regulation, does not apply in the TRNC. As Mr and Mrs Orams's land was in the TRNC, it might seem that the Brussels I Regulation could not apply to it. It was on this ground that the High Court in England refused to recognize the judgment.Footnote ³

Apostolides appealed to the Court of Appeal and it made a reference to the European Court of Justice. The Governments of Greece and of Cyprus put observations before the court, presumably in favour of the Greek-Cypriot point of view. The United Kingdom remained studiously neutral, and did not put in any observations.

Did Article 1(1) of the Protocol preclude recognition of the Greek-Cypriot judgment? The European Court held that it did not. It said:

In other words, because the court that granted the judgment was not in the TRNC, the Regulation was not being applied to that territory. But what about the land? The court tried to counter this argument in paragraph 38 of its judgment. It made two points. The first was that the fact that the land was in the TRNC did not nullify the obligation to apply the Brussels Regulation in the Greek-controlled area. This rather begs the question.

The second point was based on its judgment in the Owusu case.Footnote ⁴ In Owusu, a claimant domiciled in England had brought proceedings against a defendant also domiciled in England concerning an accident which had occurred in Jamaica. Certain Jamaican-domiciled parties were joined to the proceedings. One issue was whether the Brussels Convention, the instrument then in force, applied to the case. It was argued that it did not, since no other EC State was involved. The European Court rejected this argument. It accepted that the Convention applied only when an international element was present, but it said that this did not have to be a link with another Member State: a link with a non-Member State would be enough.

It was argued that, under international law, a treaty cannot impose obligations on a State that is not a party to it (principle of the relative effect of treaties). It was in this context that the European Court made the statement contained in paragraph 31 of its judgment in Owusu, the paragraph referred to in paragraph 38 of the Apostolides case:

By this the European Court meant that the Brussels Convention was not being applied to Jamaica simply because it required the English courts to take jurisdiction in a case which contained links with Jamaica. It is hard to see how this was applicable to the Apostolides case.

A better way of approaching the question would be to consider what Article 1(1) of the Protocol was trying to achieve. It is reasonable to conclude that, at least in part, this was to ensure that the political dispute between the two communities in Cyprus was not prejudiced by the admission of Cyprus to the EU. If this was so, the European Court's interpretation was clearly wrong, since its effect was to enable the Greek-Cypriot view of land ownership in North Cyprus to prevail in other Member States. As was pointed out by the judge in the English proceedings, the consequences of the case will extend far beyond the rights of Mr Apostolides and Mr and Mrs Orams. Land purchases by people in the United Kingdom and other Member States have constituted an important boost to the economy in the North. Further cases are likely to be brought and the purchasers will be required to vacate their property and pay substantial damages to the original owners. This will have a devastating impact on the economy in the TRNC. For these reasons, the European Court's interpretation is open to question.

D. Civil or Commercial?

It was apparently suggested by the EC Commission that the case might be outside the scope of the Brussels I Regulation because the case was not civil or commercial, as required by Article 1. The European Court rejected this by saying that the matter was a dispute between two private parties—Mr and Mrs Orams, on the one hand, and Mr Apostolides, on the other—and concerned ownership of land. The action, said the court, ‘is brought not against conduct or procedures which involve an exercise of public powers by one of the parties to the case, but against acts carried out by individuals.’ In saying this, the court was disingenuous. It is true that the parties were all private individuals and the immediate object of the proceedings was rights to land; nevertheless, the core issue was the validity of the Turkish expropriations, a quintessentially public-law question.

E. No Effective Control

Did it matter that the Greek-Cypriot courts exercised no effective control over the part of Cyprus where the land was situated? The European Court held that it did not. Community law gives jurisdiction to the courts of the Member State in which the land is situated: the land was in Cyprus; so the courts of Cyprus had jurisdiction. It was for the law of the (Greek-dominated) Republic of Cyprus to say which courts within Cyprus had jurisdiction over the area in which the land was located.

F. Public Policy

Could the English court refuse to recognize the judgment on grounds of public policy? Was the fact that the Greek-Cypriot courts could not enforce their judgment on the ground a reason for not recognizing it?

While accepting that it is for the English courts to decide what their public policy is, the European Court said that it could lay down the limits to that power. In this connection, the court said:

• • the court asked to recognize a judgment cannot refuse to do so on the ground that the law applied by the court of origin is different from the law that it would have applied;

• • findings of fact by the court of origin cannot be reviewed;

• • recourse to public policy is permitted only where recognition would infringe a fundamental principle of the law of the State in which recognition is sought; and

• • the infringement of this fundamental principle must constitute a ‘manifest breach of a rule of law regarded as essential in the legal order of the State in which enforcement is sought or of a right recognised as being fundamental within that legal order’.Footnote ⁵

No such fundamental principle had been put forward by the English courts. The European Court concluded that, in the absence of such a principle, recognition could not be refused on public policy grounds.

G. Article 38(1): Enforceability

According to the European Court, the enforceability of the judgment in the State of origin is a prerequisite under Article 38(1) for its enforceability in other Member States. However, this means enforceability in law: whether it can be enforced in practice is irrelevant. ‘The fact that claimants might encounter difficulties in having judgments enforced in the northern area’ said the ECJ in paragraph 70 of its judgment, ‘cannot deprive them of their enforceability and, therefore, does not prevent the courts of the Member State in which enforcement is sought from declaring such judgments enforceable.’

‘Might encounter difficulties’—these words, more than any others in the judgment, show how far removed from reality the European Court's picture of Cyprus is. The problem with the whole judgment is that the European Court steadfastly refuses to face up to the political situation in Cyprus, and treats the legal and diplomatic fiction that the (Greek-dominated) Republic of Cyprus exercises sovereignty over the whole island as if it were a fact. It is then possible for the court to speak of the non-application of Greek-Cypriot law in North Cyprus as if it were a temporary inconvenience unworthy of serious consideration.

H. The Right to a Hearing

The judgment against Mr and Mrs Orams was a default judgment. The practical difficulties of appearing before a court in the Greek-Cypriot area meant that they were unable to meet the 10-day deadline imposed by Greek-Cypriot law for entering an appearance. However, they subsequently brought proceedings to have the default judgment set aside and were granted a full hearing. The application was rejected in a reasoned judgment on the ground that there were no legal grounds on the basis of which they might have won the case. An appeal was unsuccessful.

Did these facts bring the case within article 34(2) of the Brussels I Regulation? This provides:

Since the claim form was not served on Mr and Mrs Orams in sufficient time and they had commenced proceedings to challenge the judgment as soon as it was possible for them to do so, it might seem that article 34(2) covered the case. However, things are not as simple as this.

Assuming that the claim form is not served in sufficient time, there are several possibilities. First, the law of the State of origin might provide no opportunity for having the default judgment set aside: in this case, the judgment will not be recognized. Secondly, the opportunity might exist, but the judgment debtor might not take advantage of it: here, the judgment will be recognized, provided the other requirements are satisfied. Thirdly, the opportunity might exist and the judgment debtor might take advantage of it. If the default judgment is set aside, there will be no judgment to recognize.Footnote ⁶ What if the judgment is not set aside? The European Court's answer was given in paragraphs 77 to 80 of the judgment:

The Brussels I Regulation says that if a possibility exists for setting aside the default judgment and the defendant does not take advantage of it, he loses his right to invoke article 34(2). The court is now saying that if he does take advantage of it, he still loses the right to invoke article 34(2). This seems to be so irrespective of the outcome of the application. So when will article 34(2) apply? Only, it seems, if there is no opportunity to apply to have the default judgment set aside.

This is a very narrow interpretation of Article 34(2). Moreover, it implies that the question whether there was sufficient time is a matter for the original court to decide. If the defendant applies to have the default judgment set aside and the court refuses to do so on the ground that it considers that there was sufficient time, the court asked to recognize the judgment cannot (it seems) gainsay this.

The rule in article 34(2) of the Brussels I Regulation that the claim form must be served in sufficient time was also found in article 27(2) of the Brussels Convention. This provides:

The requirement that the claim form must be ‘duly’ served gave rise to problems since it seemed to imply that recognition could be refused on the basis of some purely technical defect.

In the Regulation, therefore, the requirement of due service was replaced by the purely factual requirement that the claim form must be served in such a way as to enable the defendant to arrange for his defence. This was intended to ensure that, as long as it came to the defendant's notice in sufficient time, it did not matter if there were procedural failings.

The requirement of sufficient time, on the other hand, continues unaltered. In the European Court's case-law under the Convention, it was clearly established that the court asked to recognize the judgment was not bound by a finding by the court that granted it that the claim form was served in sufficient time. It could decide this for itself.Footnote ⁷ There is no reason to believe that the change in the wording of the provision was intended to affect this rule; so the court's statement in the Apostolides case is open to question.

In fact, the application by Mr and Mrs Orams was rejected, not on the ground that they had been served in sufficient time, but on the ground that they had no defence to the claim. A rejection on such a ground, if given after a fair hearing on the merits, might be regarded as a good reason for not applying article 34(2). It was on this ground that Advocate General Kokott ruled that article 34(2) was not applicable. It is hard to understand why the court did not do the same.