Alpha Bank Cyprus Ltd v Dau Si Senh and Others C-519/13

On 16 September 2015 the European Court of Justice (“ECJ”) rendered judgment on a request for a preliminary ruling concerning the interpretation of Article 8 of Regulation (EC) No 1393/2007 on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters1 (“the Regulation”) (Alpha Bank Cyprus Ltd v Dau Si Senh and Others C-519/13)2.

Dispute in the main proceedings

The request for a preliminary ruling was submitted in connection with seven sets of proceedings concerning the balance on a mortgage loan granted by Alpha Bank Cyprus Ltd (“Alpha Bank”), established in Cyprus, against several purchasers of immovable properties (“respondents in the main proceedings”), residing in the United Kingdom, and against Alpha Panareti Public Ltd (“Alpha Panareti”), vendor of the properties, established in Cyprus, which had guaranteed the loan.

Alpha Bank had lent money to Dau Si Senh and several other residents of the UK for the purchase of immovable property in Cyprus. Alpha Bank sued Dau Si Senh and the others for payment of the loans.

Since the respondents in the main proceedings were residing abroad, the Cyprus court of first instance, following an application by Alpha Bank, made an order relating to the service on the respondents of the ex parte application outside the territory of Cyprus, in accordance with the Regulation.

In this connection the following documents were served upon the respondents:

  • a true copy of the document initiating the proceedings and a notice relating thereto (in Greek and English);
  • a true copy of the court order authorizing service outside Cyprus (in Greek);
  • a true copy of the affidavit given by the translator attesting that she had made a faithful translation of the original document.

The UK authorities decided that the Greek document didn’t need to be translated, and so they didn’t include the form prescribed by the Regulation that advises respondents of their right to refuse receipt of untranslated documents.

Dau Si Senh and the others appeared under protest before the Cyprus court of first instance and sought an order declaring the service of process invalid on the grounds that the service did not comply with Article 8 of the Service Regulation or Article D.48, Rule 13 of the Cyprus Code of Civil Procedure. Among other things, they argued that the standard form mentioned in Article 8(1) had not been served on them. They argued that, in pursuance of the Regulation (and of the Cyprus Code of Civil Procedure), amongst others the following documents should also have been served:

  • an English translation of the court order relating to the service outside of Cyprus;
  • the standard form set out in Annex II to the Regulation, in accordance with Article 8(1) of that Regulation (a form through which the addressee of a document to be served is informed about his right to refuse to accept the document in certain circumstances);
  • an explanatory letter relating to the documents to be served.

The court of first instance ruled in favour of Dau Si Senh and the others and declared the service invalid by holding that the omissions complained of by respondents constituted an infringement (both of the Cyprus Code of Civil Procedure and) of the Regulation: the respondents were in fact denied the possibility to familiarize themselves with the content of all the relevant documents and they were also not informed, by means of the form set out in Annex II to that Regulation, of their right to refuse to accept the order in Greek, which was not accompanied by an English translation.3 Alpha Bank initiated appeal proceedings against the judgment.

Questions referred for a preliminary ruling

The Supreme Court of Cyprus reversed to the extent the lower court had held that the violation of Cyprus law justified invalidating the service. But it referred the question of compliance with the Service Regulation to the ECJ. The referring court raised the question to the ECJ as to the consequences of the fact that the receiving authorities of the United Kingdom did not serve on the respondents in the main proceedings the standard form referred to in Article 8(1) of the Regulation and set out in Annex II thereto. In fact, the Regulation does not state which documents must be served in all circumstances. Moreover, it is not yet decided whether service of said standard form is required in all cases and whether the omission of that service necessarily results in the procedure being declared invalid.

The proceedings were stayed and the following questions were referred to the ECJ for a preliminary ruling:

  1. “Is service of the standard form pursuant to Regulation No 1393/2007 necessary in every case or can there be exceptions?
  2. If it is considered that service is necessary in every case, does the omission in the present case constitute a reason why service is invalid?
  3. If not, can it be effected, in keeping with the spirit of Regulation No 1393/2007, by service on the lawyer acting for the respondents appearing under protest, who is under an obligation vis-à-vis his clients to accept service, or must service be effected anew under the procedure provided for in Regulation No 1393/2007?”4

First question

In view of the objectives of the Regulation, which are noted in recitals 6 to 8 of the preamble, the Regulation must be interpreted so as to “guarantee a fair balance between the interests of the applicant and those of the defendant (…) by reconciling the objectives of efficiency and speed of the service of the procedural documents with the need to ensure that the rights of the defense of the addressee of those documents are adequately protected”.5

The system established in order to attain those objectives is one in which the service of documents is, in principle, to be effected between the ‘transmitting agencies’ and the ‘receiving agencies’ designated by the Member States. It is provided that the transmitting agency shall advise the applicant that the addressee may refuse to accept the document to be served if it is not in one of the languages provided for in Article 8.6 The receiving agency in its turn:

“shall inform the addressee, using the standard form set out in Annex II, that he may refuse to accept the document to be served (…) if it is not written in, or accompanied by a translation into, either (…) a language which the addressee understands, or the official language of the Member State addressed or, if there are several official languages in that Member State, (…) one of the official languages of the place where service is to be effected.”7

It should be added in this regard that it is not for the receiving agency to assess whether the conditions set out in Article 8(1), according to which the addressee of a document may refuse to accept the document, are satisfied. It is, on the contrary, the exclusive competence of the national court before which proceedings are brought in the Member State of origin to rule on questions of such nature.8

In respect of the system established by the Regulation, it should be noted that the Regulation provides for the use of two standard forms set out in Annexes I and II to the Regulation.9 The Regulation does not contain any exceptions to the use of those forms.10 On the contrary, it appears from the wording in the preamble11 of the Regulation that the standard forms provided for “should be used”. This in order to facilitate the transmission and service of documents between Member States and contribute to the transparency thereof.12 Moreover, the standard form set out in Annex II constitutes a notification to the addressee of his right to refuse to accept the document to be served.13 That said, the fact remains that the exercise by the addressee of his right to refuse to accept the document presupposes that he has been duly informed, in advance and in writing, of the existence of his right.14

In the light of foregoing considerations the ECJ gave the following preliminary ruling on the first question referred:

“It must therefore be held that the receiving agency is required, in all circumstances and without having a margin of discretion in that regard, to inform the addressee of a document of his right to refuse to accept that document, by systematically using for that purpose the standard form set out in Annex II to Regulation No 1393/2007.”15

Second question

The second question concerns the consequences of the receiving agency’s failure to enclose the standard form set out in Annex II to the Regulation. Article 8 of the Regulation does not provide for the legal consequences of such failure. Nor does it follow from any provision of the Regulation that said failure leads to the invalidity of the procedure for service.16 However, Article 8(3) of the Regulation provides that in case the addressee has refused to accept the document to be served on the ground that that document was not accompanied by a translation in one of the languages provided for in Article 8(1):

“(…) the service of the document can be remedied through the service on the addressee  (…) of the document accompanied by a translation into a language provided for in paragraph 1 [of this Regulation]”.17

The ECJ considered that a similar solution as laid down in Article 8(3) of the Regulation must be reached in case of the receiving agency’s failure to enclose the standard form set out in Annex II to the Regulation.18 In fact, declaring the document to be served / the procedure for service invalid would be incompatible with the objectives of the Regulation.19

In view of abovementioned, the ECJ gave the following preliminary ruling on the second question referred:

“It must therefore be held that the fact that the receiving agency, when serving a document on its addressee, fails to enclose the standard form set out in Annex II to Regulation No 1393/2007, does not constitute a ground for the procedure to be declared invalid, but an omission which must be rectified in accordance with the provisions set out in that regulation.”20

Comment

The consequences of the present preliminary ruling of the ECJ – especially with respect to the ruling on the first question referred – could be quite far-reaching. As a matter of fact, the ECJ’s ruling on the second question implies that an addressee – when confronted with a document to be served upon him – could make use of his right to refuse to accept that document on the ground that it is not written in a language which he understands or is expected to understand. Whether such refusal is justified or not is to be decided by the national court in the Member State of origin, which is not much in favour of the efficiency and speed of the service.