Decision blocking Irish investors from pursuing developer of Polish shopping centre overturned
The Supreme Court has overturned a decision that an Irish developer of a shopping centre in Poland could not be pursued here for a €6.3 million judgment obtained against him in Poland on behalf of 57 Irish investors.
Last year, Michael Scully won an appeal over the enforcement of the Polish judgment here in the Court of Appeal (CoA).
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But a company, Coucal Ltd, to which the investors had assigned their rights, then appealed that decision to the Supreme Court.
On Monday, a five-judge Supreme Court overturned the CoA decision and said Mr Scully could be pursued for enforcement of the judgment here.
Mr Scully, a Clonalkilty farmer who also co-owned Castle Carbery Properties Ltd which built the shopping centre in Opole, Poland in 2009, had appealed a decision of the High Court that a Polish judgment over the investment scheme against him could be enforced here. Some €48m was borrowed for the purpose of funding the shopping centre.
The CoA allowed Mr Scully's appeal after finding that the use of Coucal, a Polish special purpose vehicle (SPV) company set up by the investors, which brought the case against him in Poland, represented "the commodification of litigation" which was clearly prohibited by Irish public policy.
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The 57 investors alleged they were defrauded by Mr. Scully when he induced them to divest themselves of their investments in the shopping centre, on terms which were very unfavourable to them and very favourable to Mr. Scully. Those claims were denied.
While proceedings against Mr Scully in Poland were initially unsuccessful, by 2021 the Warsaw Court of Appeal found that Mr. Scully had wrongfully and without authority purported to enter into agreements on behalf of Coucal's shareholders. It awarded judgment against him for some €6.3million.
The Warsaw appeal court also permitted Coucal to bring proceedings in Ireland to enforce the judgment against assets he owns here, including a farm in Co Cork.
Mr Scully then brought proceedings here against Coucal Ltd seeking refusal of recognition and enforcement of the Polish judgment. The application was brought under an EU regulation, called Brussels I Recast, relating to enforcement of civil and commercial judgments across the EU.
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In the meantime, Mr Scully had appealed the judgment to the Polish Supreme Court which decided to make a reference to the Court of Justice of the EU relating to issues concerning judicial independence and impartiality and in particular the claimed lack of independence of one of the Polish Court of Appeal judges.
Mr Scully's case here was rejected by the High Court in November 2022 and he appealed, winning the appeal in the CoA just over a year ago.
Coucal then sought and was granted an appeal to the Supreme Court.
In two separate concurring judgments on behalf of the Supreme Court, Chief Justice Donal O'Donnell and Mr Justice Gerard Hogan allowed the appeal.
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The Chief Justice said it was clear that enforcement of the judgment in this case did not approach the required standard for being an exceptional case in which recognition of a foreign judgment should be refused on grounds of public policy.
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If someone enters a contract in another state, they would not normally be entitled to complain of the application of the laws of that state to either their conduct or their transactions, he said.
The Brussels Recast Regulation normally requires enforcement of the judgments obtained in other member states without engagement with the underlying merits of the claim or the applicable law, he said. This is consistent with a high hurdle being required to be satisfied before enforcement of any judgment can be refused, he said.
Mr Justice Hogan said in the circumstances of this case one cannot say that the recognition of the Polish judgment should be refused on the ground that to do so would be 'manifestly contrary to public policy' in this State within the meaning of the Brussels Recast Regulation.
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He said his judgment was subject to the caveat that, while the CoA declined to adjudicate on this issue of Polish judicial independence, which had been argued by Mr Scully in the case, he now invited the parties to make further submissions on this issue.
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