The Supreme Court recently delivered its judgment in Scully v Coucal Limited [2025] IESC 20, finding that the public policy exception to enforcement of foreign judgments under Article 45(1)(a) of Brussels I Regulation (Recast) (Brussels Recast) should be confined to special and exceptional cases.
A Polish judgment obtained by Coucal Limited (Appellant) on foot of an assignment of a bare cause of action, valid under Polish law, was found to be enforceable under Irish law. This was despite the general rule that such an assignment is generally not allowed under Irish law. As discussed in previous William Fry articles, such assignments are regarded as savouring of maintenance and champerty and are therefore unlawful.
Case Background
In 2006, Mr Scully (Respondent) facilitated investments from 78 Irish individuals via a special purpose vehicle to invest in a land purchase and shopping centre development in Poland. The investors alleged that the Respondent improperly profited from what was ultimately a failed venture while the investors suffered total losses. The investors formed an Irish company, the Appellant, to pursue legal action against the Respondent in Poland. The investors assigned their claims against the Respondent to the Appellant. The assignments were valid under Polish law and allowed the Appellant to pursue the claim in Poland. The assignments contained a number of clauses, one of which was particularly contentious in the Irish enforcement proceedings – the right to sell a debt to a third party was not excluded.
The Polish Court of Appeal awarded c €6.33 million against the Respondent, which the Appellant sought to have recognised and enforced in the Irish Courts. It was successful at first instance before the High Court but was overturned on appeal by the Court of Appeal. The matter then came before the Supreme Court, which granted leave to appeal on one point – because assignments of a bare cause of action are unenforceable under Irish law, being contrary to public policy, was that breach of public policy "manifest" for the purposes of Article 45(1)(a), thereby meaning that the €6.33 million judgment was not entitled to recognition.
Refusal of Recognition
Article 45(1)(a) of Brussels Recast allows a Member State court to refuse recognition of a judgment where it is "manifestly contrary to public policy" in that state. The Respondent argued that recognition and enforcement of the judgment would be contrary to public policy, firstly due to the alleged champertous nature of the assignment and due to concerns about the independence of certain members of the Polish Court of Appeal, the appointment of whom was contrary to EU rule of law provisions.
The 'rule of law' argument was unsuccessful before the High Court, and the Court of Appeal did not consider it necessary to deal with it in light of its findings on recognition. It did not form part of the appeal before the Supreme Court.
Supreme Court Judgments
Judgments were delivered by the Chief Justice, Justice O'Donnell and Justice Hogan. O'Donnell CJ considered that the Court of Appeal gave insufficient weight to the fact that the Irish court was not asked to enforce an assignment under Irish law. Rather, it was asked to enforce a judgment obtained in another Member State where such an assignment is and was "perfectly lawful, and where there is a strong public policy, as a matter of both European and Irish law, in enforcing judgments obtained in the courts of other Member States of the European Union".
O'Donnell CJ further emphasised:
"[b]ecause public policy would preclude something if done In Ireland, under Irish law, it does not necessarily follow that an Irish Court must deny recognition when done elsewhere and in accordance with the law of the legal system of that Member State whose judgments we are generally bound to recognise and enforce. There is a significant space between the two propositions which it is critical to maintain."
The public policy exception "must be construed strictly" according to the Court, and the variance with public policy must be to an unacceptable degree, to the extent that effect cannot be given to it even indirectly, such as something "offensive to basic, fundamental and essential provisions of the legal order".
O'Donnell CJ briefly outlined the concerns around the commodification of litigation, which underpin the rules of maintenance and champerty. He noted the development of the law in this area and the narrowing of what is regarded as impermissible. Therefore, public policy was not of such depth and strength as to be considered essential to the Irish legal system to allow the court to refuse recognition of the Polish judgment based on an assignment which was valid in Poland. Furthermore, O'Donnell CJ found that the case did not have sufficient characteristics of commodification or trading in litigation, as, in fact, there was no assignment to a third party.
Hogan J referred to the prohibition in Brussels Recast preventing the Irish court from looking behind the Polish judgment or questioning its merits. He also concluded that whilst the Supreme Court in SPV Osus [2018] IESC 44 confirmed that assignments of bare causes of action are void under Irish law, that is because of concerns relating to how the litigation would be conducted before judgment. In this case, the Polish court had no such concerns; therefore, the Irish courts could not insist that it should. Hogan J found that the reference to the right to sell the debt to a third party not being excluded in the assignment amounted to no more than a warranty to that effect.
Addressing Article 45(1)(a) of Brussels Recast, both O'Donnell CJ and Hogan J focused on the inclusion of the word "manifestly" in the text, with Hogan J opining that the word made it more difficult (from the earlier common law and the precursor Regulation to Brussels Recast) for a litigant to resist recognition of another Member State's judgment.
The Supreme Court allowed the appeal, restoring the judgment of the High Court. However, the Supreme Court found that, in light of its findings, it was necessary for a decision to be made on the rule of law argument. It has invited submissions as to whether that issue should be remitted to the Court of Appeal for consideration or whether the Supreme Court should determine it.
Impact
The decision reinforces some key principles concerning the recognition and enforcement of judgments under Brussels Recast. Those principles include the preclusion of any review of the substance of another Member State's judgment and that the public policy considerations under Article 45 must be interpreted restrictively before recognition can be refused.
The approach of the Supreme Court shows its willingness to adopt a more nuanced approach to public policy considerations around the recognition of judgments than in some earlier cases. Overall, it supports the free circulation of judgments within the EU and the high hurdle required to be satisfied before enforcement of a Member State judgment will be refused.
We will continue to monitor developments in this area. Should you have any questions about enforcing foreign judgments in Ireland, please do not hesitate to contact Paul Convery or your usual contact in the Litigation and Investigations team at William Fry.
Contributed by Kate Ní Mhaoláin & Gail Nohilly
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
