Preliminary note

In Spain, enforcement is not the final phase of a litigation procedure but a separate procedure, which also starts with a writ of demand accompanied with the corresponding documents, in this case the title (judgment, notarial deed, etc.) together with other relevant documents.

In the case of recognition and enforcement of foreign titles, both the dispositions of the applicable international regulation (Brussels Convention of 1968 or Regulation CE 44/2001) and the ones of the Spanish Civil Procedure Act (Law 1/2000 of January 7th) concerning enforcement procedures have to be accomplished.

Enforcements are carried out by the Court. Namely, the concrete enforcement measures (eg. seizure orders to Real Estate Registers, requests to banks and other third parties, etc.) are ordered by the Court itself and in case physical acts are necessary (eg. taking of moveable assets, etc.), these are carried out by the Court's staff. In other words, in Spain there is no equivalent figure either to the French Huissier de justice or to the German Gerichtsvollzieher.

Garnishment terminology

As agreed, we mean:

- by "judgment creditor": the holder of a judgment or other title in his favour;

- by "judgment debtor": the convicted party, subject to possible enforcement in his patrimony (goods, rights, credits, etc.);

- by garnishee: a third party which owes money to the judgment debtor.

Garnishment example case - Facts and procedure

A trial takes place in Germany and ends with a conviction judgment, issued after 01.03.2002.

The judgment debtor has not (or not enough) solvency in Germany but the judgment creditor believes that the former owns a real estate in Spain.

After the corresponding search, we find out where such real estate is located, if there are charges or encumbrances on it, in which Real Estate Register and under which reference it is recorded, etc.

We ask our German correspondents to send us the foreign convicting judgment + (if the case is) the foreign decision concerning the costs of the German Litigation Proceedings + the corresponding Certification/s of Annex V of Regulation 44/2001 + a power of attorney (everything without Apostille except for the power of attorney).

Once we have received the documents, we obtain a sworn translation thereof and file before the Courts of First Instance of the place where the real estate is located (as place of enforcement) a writ of demand for the recognition and enforcement of the foreign title.

After having checked that all requisites have been fulfilled, the Court issues a recognition and enforcement decision, against which the judgment debtor files no appeal or opposition.

As requested by us, the Court orders the Real Estate Register to record the seizure of the real estate in favour of our client.

The Register forwards the request back, stating that the judgment debtor is no longer the owner of the real estate. Namely, he sold it several months before per notarial deed to a third party and the sale was recorded in the Real Estate Register later on, so it did not appear in the previous reports.

Through the Real Estate Register we discover that in the notarial sale-purchase operation the parties agreed that the price would be paid in instalments, by means of bills of exchange.

We therefore ask the Court:

a) to seize the judgment debtor's credit against the buyer (third party, now garnishee), and for that purpose to order the judgment debtor to deposit the bills of exchange at the Court, and

b) to send a request to the buyer (garnishee), ordering it not to pay the amounts in question to the judgment debtor but to deposit them in due time in the Court's bank account, and, if the case is, to give instructions to his bank not to pay the letters of exchange if presented by the judgment debtor.

The Court issues the above requests.

The judgment debtor does not deposit the bills of exchange at the Court but the garnishee does deposit the money in due time in the Court's bank account.

Jurisdiction

According to art. 22.5 of Regulation 44/2001, for every proceedings concerned with the enforcement of judgments, the Courts of the Member State in which the judgment is to be enforced shall have exclusive jurisdiction.

Therefore, it is my understanding that, irrespective of the domicile of the affected parties (judgment debtor, judgment creditor and garnishee), for each enforcement proceedings the jurisdiction will correspond to the Member State in which territory the concrete enforcement measures are to be carried out.

Within the Member State in which the judgment is to be enforced, the local jurisdiction for filing the demand shall be determined by the debtor's domicile or by the place of enforcement (art. 39.2 of Regulation 44/2001). If both the debtor's domicile and the place of enforcement are located in the same Member State, the judgment creditor can choose between them. From the practical point of view, it is commonly preferable to do it in the place of enforcement.

In Spain, the demand must be filed before the competent Courts of First Instance.

Applicable law:

The recognition and enforcement procedure must comply with the conditions and steps set in the specific international rules (Regulation 44/2001 or the Brussels Convention of 1968) and, for all the rest (i.e. for the aspects not included in the international rules), the procedure is submitted to the lex fori, in this case the Spanish Civil Procedure Act.

Garnishment orders, as part of the enforcement procedure, are then submitted, as far as procedural aspects are concerned, to the lex fori.

Nonetheless, the contractual aspects of the credits between the judgment debtor (which are then going to pass on to the judgment creditor) and the third party (the garnishee) are governed by the existing contractual agreements and by the law which, according to the Rome Convention of 1980, is applicable to that contractual relationship. Indeed, the judgment creditor subrogates in the place of the judgment debtor.

Therefore, in the above garnishment example case, the seizure of the bills of exchange and the garnishment procedure (both within the enforcement procedure) will be performed according to the lex fori, but the garnishee will not be obliged to pay the money before the maturity date of the bills of exchange and, if there is any substantial aspect to be cleared up, this will be done using the law which is applicable to the regime of bills of exchange.

Debtor's patrimony

In the Spanish system, in civil and commercial matters the interested party (in this case the judgment creditor) has traditionally been the one who must take active steps to allow or promote the Court's activity in several fields (the new Civil Procedure Act introduces some ex officio tasks to the Court but these do not change much the essencial role of the interested party).

One of these fields relates to searching for the debtor's patrimony (real estate, bank accounts, shares in companies, etc.) which could be seized.

For such kinds of searches we can use the Companies' Register, the central Real Estate Index and the local Real Estate Registers, as well as private agencies specialised in solvency reports.

In view of the searching results, we file a writ by the Court requesting it to order concrete enforcement measures, i.e. requests to public registers ordering them to record the seizure, garnishment orders, etc.

If, however, we haven't found enough patrimony of the judgment debtor to cover the judgment creditor's credit, the Court will have to request the judgment debtor to file a statement of goods. If he does not comply with it, he can be imposed sanctions and penalties, but in practice this does not change the fact that most debtors do not comply with this request.

On the other hand, the judgment creditor can ask the Court to carry out searches and requests which are out of reach for the judgment creditor, for instance requests to banks, but he has to give grounded reasons why he thinks the judgment debtor has accounts there.

Finally, if all the above searches are not successful enough, the judgment creditor can ask the Court to send a request to the Tax Authorities so that these provide the Court with the patrimonial information they have about the judgment debtor (art. 95.1.h of the General Tax Law 58/2003, of December 17th).

Provisional protective measures

The judgment creditor can apply for provisional protective measures (eg. provisional seizure of a real estate, freezing of a bank account, etc.) to try and make sure that the judgment debtor's patrimony will not disappear.

The requisites are the following:

a) Fumus boni iuris: an appearance of right. In the case of the judgment creditor this requisite is fulfilled by the existence of the foreign judgment.

b) Periculum in mora: you have to prove or at least give enough evidence that, if no measures are taken, there will be a high risk that, after the time the procedure will take, the chances of an effective debt recovery will be much lower.

Stating that the judgment debtor might get rid of his patrimony is not enough, you have to bring evidence in support of your statements.

c) Caution: you have to offer an amount of money which would reasonably cover the damages that could be produced to the other party if you finally lost the case.

The Court then decides if the offered amount is enough and, if not, it establishes a different amount, which the judgment creditor must deposit in the Court's bank account. No step will be taken until this is done.

The Spanish legislation and jurisprudence are very restrictive as far as Provisional Protective Measures are concerned.

Insolvent debtor

If the judgment debtor is under an insolvency proceeding (liquidation, bankruptcy, etc.), the judgment creditor will become one more member of the insolvency creditors' body, in which, according to the Insolvency Law, the different classes and degrees of privilege (employees, social security, tax authorities, etc.) are specified.

In these cases the separate enforcement procedure gets blocked and the debtor's patrimony is held by its liquidators or trustees and, in due time, distributed among the creditors pursuant to the corresponding legal rules.

If you have questions or comments please do not hesitate to contact me.
In Barcelona, on the 3rd of May 2005.

Blanca Padrós Amat
Lawyer and Sworn Translator
ESPADA GERLACH, PINTOR & ASOCIADOS
Avinguda Diagonal 361, 3º 1ª, 08037 Barcelona (España)
Tel.: +34.93.301.27.41 - Fax: +34.93.301.28.08
E-mail: b.padros@espadagerlach.com