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Vol. IX No.3 March 2004 |
Rubin Meyer Doru & Trandafir,
SOCIETATE CIVILA DE AVOCATI |
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| INSIDE: Enforcement Of Foreign Money Judgments In Romania |
| Summary |
 Millions
of dollars in judgments rendered in numerous foreign jurisdictions
against Romanian state-owned companies for damages incurred during the
Ceausescu regime are still unpaid. Plaintiffs have succeeded in
convincing some foreign courts to “pierce the corporate veil” and hold
the Romanian State accountable for those unpaid judgments. Other
plaintiffs seek in vain to find property of Romanian judgment debtors
outside Romania to attach in order to satisfy their foreign judgments.
But most foreign creditors, regardless of whether or not their foreign
judgments stem from communist era debts, seem reluctant to seek
enforcement of those judgments in Romania. This article focuses upon the
procedural aspects of enforcing a foreign judgment in Romania. |
| Fundamentals |
| In almost all circumstances, a judgment has no direct force or effect outside the jurisdiction in which it was rendered. Consequently, a judgment will have effect in a foreign jurisdiction only if the courts of that jurisdiction are willing to recognize and enforce it. |
| Legal Framework |
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The enforcement of foreign money judgments in Romania is governed by
Articles 165-178 of Law no. 105/1992 (regarding Private International
Law) which sets forth the principles controlling the recognition of
foreign judgments. Romania’s future accession to the European Union requires the harmonization of Romanian law with the legislation of the EU. A basic EU concept is the “four freedoms,” i.e., the free movement of goods, services, persons and capital. Without them, the EU’s internal market cannot operate. The recognition and enforcement of judgments issued in Member States of the EU could be added as an additional “freedom” -- the free movement of judgments. In this regard, Romania in 2003, adopted Law no. 187/2003 regarding the jurisdiction, recognition and enforcement in Romania of civil and commercial rulings rendered in EU Member States. The provisions of this law will be effective commencing May 16, 2004. The provisions of Law no. 187/2003 prevail over the provisions of Law no. 105/1992 only if one of the parties in a cross-border private international law matter is an EU national. Romania is also a signatory to a number of bilateral and international conventions in regard to civil, family and criminal law matters. To date, Romania has signed conventions in regard to such matters with the following countries: Albania (1960); Algeria (1979); Austria (1972); Belgium (1976, 1980, 1982, 1983); Bulgaria (1959); China (1992); Cuba (1981); Egypt (1977); France (1975); Great Britain and Northern Ireland (1978); Greece (1973); Hungary (1958); Italy (1973); Mongolia (1973); Morocco (1973); North Korea (1972); Poland (1962, 1973); Syria (1979); Tunisia (1971); and Turkey (1979, 1992). In addition, the Hague Convention of March 1, 1954, relating to civil procedure applies to Argentina, Denmark, Finland, Germany, Holland, Israel, Japan, Libya, Luxembourg, Norway, Portugal, Slovenia, Spain, Surinam, Sweden, Switzerland and the Vatican. The provisions of Laws no. 105/1992 and 187/2003, and the conventions to which Romania is a signatory, provide Romanian courts with the means to enforce money judgments rendered abroad. There is no reason to believe that Romanian courts would not respond favorably to a request to enforce such a judgment in Romania, provided that all of the legal requirements have been fulfilled. Romanian courts routinely enforce foreign judgments with respect to civil and family matters, e.g., divorce, as well as foreign money judgments, but the majority of these judgments remain unpublished. Judgment creditors seeking to enforce foreign money judgments in Romania are typically not frustrated by the Romanian legislation in this area, but are rather confronted with the practical difficulties associated with locating the judgment debtor’s assets in the country. Amendments to Law 637/2002, that came into force on July 1, 2003, were meant to recognize insolvency procedures commenced under a foreign law and grant to foreign representatives and creditors direct access to the Romanian law courts through the introduction of a request to start a bankruptcy procedure stipulated under Law 64/1995. The provisions of this law may be supplemented if compatible with the provisions of Law 105/1992 and Law 187/2003. |
| Enforcement Procedures |
 As stipulated by treaty |
| Requirements for Enforcement |
 As
previously noted, the specific procedures and requirements for enforcing
a foreign money judgment in Romania are contained in the international
conventions to which Romania is a signatory and are largely the same as
those that are set forth in Law no. 105/1992.According to the provisions of the Law no. 105/1992, the Romanian courts must verify that the following requirements have been met: 1. The initial judgment must have been final and enforceable in compliance with the laws of the country in which it was issued. The Romanian courts will not enforce money judgments that are subject to remedial measures or which involve only temporary enforcement. 2. The judgment must have been issued by a court that had the jurisdictional competence to do so. 3. There must be reciprocity between the Romanian government and the national government of the court that issued the judgment in the area of judicial co-operation. Such reciprocity implies that each country’s judiciary will, upon fulfillment of the various national procedures and the submission of appropriate documentation, recognize the judgments issued by the other country’s judiciary. 4. The initial judgment must not have been obtained fraudulently. 5. The decision must not violate the principles of public order contained in Romanian private international law. In this regard, the foreign judgment must not infringe upon Romanian national sovereignty in that it cannot affect the exclusive competence of Romanian courts to deal with the matter in Romania. 6. A Romanian court has not decided the matter prior to the date of the foreign court’s judgment. Likewise, the application for exequatur in Romania cannot have been submitted to a Romanian court prior to the foreign court’s judgment. The money judgment cannot be contrary to a judgment issued by a Romanian court in litigation between the same parties. 7. A foreign judgment can be enforced in Romania within the statute of limitations, which is only 3 years, unless the statute of limitations prescribed under the foreign law in the country where it was rendered is longer. If the foreign judgment had been issued without the judgment debtor present – a default judgment -- it must be clearly established by means of documentary proof that the judgment debtor had been adequately served with the summons and complaint. A judgment issued in a EU Member State, the object of which is the payment of penalties, may be enforced in Romania only if the amount to be paid was finally established by a court in the Member State of origin. |
| The Enforcers |
| The enforcement of foreign money judgments in Romania is done through marshals who are private persons licensed by the Romanian State. The regulation of these private marshals is a bit lax and this causes a not insignificant amount of distress to some judgment creditors. |
| Distrust |
| There is nothing unusual or problematic in the Romanian law regarding the enforcement of foreign money judgments. Nevertheless, foreign judgment creditors distrust the Romanian judicial process because of the perception of the prevalence of corruption and incompetence in the judiciary. Moreover, the disorganization of the Romanian judicial system, and its unrelenting bureaucracy, (see The Crisis in the Romanian Judicial System, The Romanian Digest™ Vol. VIII no. 12, December 2003), have contributed to the discrediting of Romanian justice. The adverse consequences of Romania’s persistent failure to adequately address the state of its judiciary – including the practices employed in the enforcement of foreign money judgments -- not only jeopardizes the nation’s successful adhesion to the European Union, but causes potential trade partners to wonder whether the risk of getting a fair shake in a Romanian court is worth the effort of doing business with Romania. The words of an old Romanian anthem often heard during the 1989 revolution to overthrow the Ceausescu regime come to mind: “Awaken thee, Romanian, shake off the deadly slumber . . .” |
Editors Note: It is our policy not to mention our clients by name in The Romanian Digest™ or discuss their business unless it is a matter of public record and our clients approve. The information herein is correct to the best of our knowledge and belief at press time. Specific advice should be sought from us, however, before investment or other decisions are made. Copyright 2004 Rubin Meyer Doru & Trandafir, societate civila de avocati. All rights reserved. No part of The Romanian Digest™ may be reproduced, reused or redistributed in any form without prior written permission from the publisher. |
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