Case study: navigating the recognition of foreign judgments and public policy in Ireland and the EU

A recent Irish Supreme Court decision in favour of Coucal Limited addresses the delicate balance between Irish public policy on litigation funding and the requirements of European Union law, specifically the Brussels I (Recast) Regulation which governs the enforcement of foreign judgments.

This ruling underscores the primacy of European Union (EU) law as set out in the Brussels I (Recast) Regulation (the Regulation) in the enforcement of member state judgments. It demonstrates how Irish public policy defences are interpreted narrowly in cross-border cases falling within the scope of the Regulation. The decision provides important clarity for parties involved in international litigation, particularly in relation to the limits of public policy objections in Ireland when enforcing foreign judgments according to the Regulation.

Background

Mr Scully was a co-owner of Castle Carbery Properties, which developed a shopping centre in Poland in 2009. The project attracted substantial investment including Coucal Limited (Coucal), an Irish company consisting of 63 Irish individuals. The investment was made via a Polish special purpose vehicle, which was a separate legal entity created for the purposes of the development of the shopping centre.

Coucal took High Court proceedings against Mr Scully in Ireland with the central argument relating to allegations that Mr Scully had structured the investment in a manner that unfairly favoured himself and disadvantaged them. The Irish court declined to uphold allegations of fraud against Mr Scully at that stage.

Coucal then issued proceedings in Poland who found against Mr Scully, holding that he had acted without proper authority in agreements affecting Coucal’s shareholders and confirmed the original €6.3 million judgment. The Polish court approved Coucal’s application to seek enforcement of the judgment against Mr Scully’s Irish assets. Mr Scully challenged this in the Polish Supreme Court which referred the matter to the Court of Justice of the European Union regarding concerns over judicial independence in Poland, a situation arising under the Regulation.

Mr Scully sought to prevent enforcement in Ireland. He brought proceedings in the Irish High Court on public policy grounds claiming that the assignment of the shareholders' action to Coucal was impermissible due to the prohibition on maintenance and champerty under Irish law which does not allow for third party litigation funding.

This claim was rejected by the High Court in November 2022 but was successfully appealed to the Court of Appeal. Coucal then sought and was granted leave to appeal to the Supreme Court.

The Irish Supreme Court overturns the decision

The Supreme Court, led by Chief Justice Donal O’Donnell and Mr Justice Gerard Hogan, considered the complex interaction between the facilitation of cross-border litigation, Irish public policy and EU legal frameworks governing enforcement of foreign judgments. The key question was whether the arrangement with Coucal amounted to improper “commodification of litigation” and whether this justified refusing enforcement of a Polish judgment in Ireland.

In its decision, the Supreme Court overturned the earlier rejection of enforcement, emphasising the importance of respecting the mechanisms set out under the Regulation for the recognition and enforcement of judgments across EU Member States. The Court found that concerns over public policy, while relevant, must be weighed against Ireland’s obligations under EU law. Unless clear and significant public policy breaches are at issue, the principle of mutual trust and smooth cross-border judicial cooperation must prevail.

As a result, Coucal's appeal succeeded and the Supreme Court held that enforcement of the Polish judgment in Ireland should not be denied merely by reason of the investment structure, in the absence of proven fraud or other egregious conduct. This landmark decision clarifies the scope of Irish public policy defences in the context of cross-border enforcement actions.

Conclusion

This judgment clarifies that, except in cases involving clear breaches of public policy, Irish courts must generally uphold cross-border judgments in line with EU laws.

How Ogier can help

If you require further guidance on any aspect of cross-border litigation and the enforcement of judgments in Ireland, please contact our Dispute Resolution team via the details below.

About Ogier

Ogier is a professional services firm with the knowledge and expertise to handle the most demanding and complex transactions and provide expert, efficient and cost-effective services to all our clients. We regularly win awards for the quality of our client service, our work and our people.

Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

Regulatory information can be found under Legal Notice