The scope of interim protective measures established during a procedure for recognition and enforcement of a foreign arbitral award  

The scope of interim protective measures is to ensure the effectiveness of a foreign arbitral award and also the effectiveness of the recognition and enforcement decision issued by Romanian Courts at the end of the exequatur proceedings.

To ensure the effectiveness of a court decision means to secure the possibility of the winning party to be able to enforce a favorable decision and to effectively cash its receivables. For example, if during a court proceeding it is allowed for the party that bears, prima facie, a considerable risk of losing, to alienate all its assets so that, when the decision will be rendered, the winning party would have no chance to enforce the decision, in this situation, the effectiveness of the court decision is obstructed.

Legal conditions for granting interim measures

According to art. 953 of Romanian Civil Procedure Code (RCPC), for establishing interim measures, the following conditions must be met:

The specific of interim measures is that this protection can be established on any movable assets/securities/traceable debts/receivables owed to the debtor by a third party, as stated in Art. 970 (Object of interim garnishment) Civil Procedure Code.

As can be seen, the text of law does not impose a certain nature under which the object of the seizure is owed by the third party, but the only condition is that it must be owed, regardless of its legal nature.

As also stated in the doctrine, the purpose of the interim garnishment is to establish a temporary precautionary measure that shall remain in force until the creditor obtains an enforceable title:

"The diligent, cautious creditor, who does not yet have an enforceable title which he can enforce, has the right to resort to these interim measures, so that, at the time and in the event of obtaining the enforceable title, he will be able to exploit the seized assets or to come into their possession; therefore, they are also called protective measures, not being enforcement measures, since, only after obtaining the enforceable title, the creditor will have the possibility of actually recovering his receivable through enforcement (in nature or by equivalent)."[1]

Moreover, the request for the recognition and enforcement of the foreign award is the only type of action (writ of summons) that can be used to transform the foreign arbitral award into an enforceable title and thus make it possible to satisfy the receivable in Romania.

In this sense, Romanian case law considered that a request for the recognition and execution of a foreign arbitral award meets the requirement of art. 953 para. 1 Civil Procedure Code.[2]

Considering the second condition required by the Romanian Legislator in order for the precautionary attachment to be established, the arbitral award represents a "written document or other record containing data about a legal act or fact".

According to Article 265 of the Romanian Civil Procedure Code:

"The written document is any writing or other recording that includes data about a legal act or fact, regardless of its material support or the method of preservation and storage".

In a first opinion, it was held that "by written document must be understood any document which, regardless of the form, contains a mention of the creditor's receivable"[3].

“In other court rulings, it was decided that by written document is meant any type of document which establishes even a non-quantified, or under condition receivable"[4].

Therefore, a foreign arbitral award, at the time when the exequatur procedure has not been completed, cannot have in the Romanian system any of the effects of an arbitral award, being a simple written document, valued as written evidence, as required by art. 953 para. 1 of the Civil Procedure Code (receivable ascertained in a written document).

A third condition for the establishment of precautionary garnishment is that the creditor's receivable is due.

From the interpretation of art. 953 para. 1 Romanian Civil Procedure Code in conjunction with art. 663 para. 4 Romanian Civil Procedure Code, it turns out that the receivable is due either when the obligation reaches maturity or when the debtor is deprived of the benefit of a suspensive term.

The situations in which the debtor is deprived of the benefit of the payment term are regulated by art. 1523 of the Romanian Civil Code.

Thus, it is important to mention that losing the benefit of a suspensive payment term can also result out of a clear manifestation of the intention not to perform the obligation. In this situation, the debtor who expresses his refusal to perform the undertaken obligation is deprived of the benefit of the term and his obligation becomes de jure due in advance and can be subject to a protective interim measure.

The legal literature[5] highlighted that the reason for setting up a security by the creditor is to protect the debtor from possible damages that he could suffer due to the seizure of the sums that he would receive from the third party. At the same time, recent case law[6] has held that, in the case of precautionary garnishment, "the obligation to set up a security is established by suppletive legal norms, (...), a fact that necessarily requires the court's assessment regarding the opportunity of the security".

If there is no prejudice that could be caused by the interim precautionary garnishment requested by the creditor, then there is no need to set up a security, because the very reason for the security, that is to protect the debtor or the third party subject to the precautionary garnishment, disappears.

What happens to the interim precautionary garnishment at the end of the exequatur procedure?

At the end of the exequatur procedure, the creditor will obtain, on Romanian territory, an enforceable title against his debtor, and he will be able to request validation of the garnishment. At this point, the interim precautionary garnishment automatically converts into a measure of enforcement, meaning that the third party is obliged to pay directly to the creditor the amounts/assets seizure under the Order for interim measures (precautionary garnishment).

Eugen Sarbu, Partner, Oglinda & Partners

[1] C. Negrilă, Commentary on art. 970, in G. Boroi (coord.), The New Civil Procedure Code: commented, 2nd volume, Hamangiu Publishing House, Bucharest, 2016, pp. 800-802.

[2] Decision no. 536/2011 of 06-oct-2011, Oradea Court of Appeal.

[3] C. A. Bucharest, s.a. V civ., dec. civil no. 442 of June 3, 2014, apud. Tr. C. Briciu, Commentary on art. 953, in V.M. Ciobanu, M. Nicolae (coords.), The New Civil Procedure Code: commented and annotated, 2nd volume, Universul Juridic Publishing House, Bucharest, 2016, p. 1255.

[4] Tr. C. Briciu, Commentary on art. 953, in V.M. Ciobanu, M. Nicolae (coords.), The New Civil Procedure Code: commented and annotated, 2nd volume, Universul Juridic Publishing House, Bucharest, 2016, p. 1255.

[5] Tr. C. Briciu, op. cit., p. 1258.

[6] Order no. 190/21.03.2016, Galati Court, File x/233/2016, case submitted to the address: https://www.legal-land.ro/poprire-asiguratorie-obligatia-de-depune-cautiune/.