The exequatur judge must check if the foreign interest rate complies with public policy.
(Note on Cass. Civ. 1st, October 17, 2018, no. 17-18995).
A Russian law bank summoned a Russian national couple before the Tribunal de Grande Instance of Paris to obtain the exequatur of a judgment from the Saint Petersburg court as well as a ruling from the Saint Petersburg Court of Appeal.
These two judicial decisions rendered in Russia order the spouses to jointly pay the balance of three real estate loans, principal and interest, contracted with the aforementioned bank for the acquisition of three apartments in a building located in Saint Petersburg, and order the sale of the mortgaged apartments at public auction.
The Tribunal de Grande Instance of Paris declares the request well-founded and grants exequatur to the Russian judicial decisions.
The couple then appeals the exequatur judgment before the Paris Court of Appeal.
The Paris Court of Appeal, in a ruling of January 31, 2017 (RG no. 15/05468), first recalled the legal framework for the exequatur of judgments from Russia:
“To grant exequatur to a Russian judgment, in the absence of judicial cooperation between the French Republic and the Russian Federation, the French judge must ensure that three conditions are met regarding the indirect competence of the foreign judge based on the connection of the dispute to the court seized, compliance with substantive and procedural international public policy, and the absence of fraud to the law“.
Regarding public policy, the couple argued that the judicial decisions rendered by the Saint Petersburg jurisdictions were contrary to the French conception of substantive international public policy in that the 15% interest rate, in addition to a 30% indemnity, provided for by the contract and consecrated by the Russian court’s decision, were usurious.
The Paris Court of Appeal rejected this argument, deciding that an interest rate fixed and regularly revised according to economic and financial parameters observed in France, being essentially variable, cannot be considered as such [as a matter of] international public policy.
The couple then filed an appeal in cassation on the same grounds.
The Court of Cassation quashed the ruling under Article 3 of the Civil Code and recalled the mission of the exequatur judge: “it was incumbent upon him, in order to fully exercise his control under the public policy exception, to research, concretely, whether the rate applied by the Russian decisions was not contrary to international public policy”.
Thus, the Paris Court of Appeal, differently composed, which will be seized of the referral after the quashing, will have to review its analysis on this ground and likely reject the exequatur request for the decisions rendered in Russia, for conflict with public policy.