A guide to the UPC and the UP - Flipbook - Page 388
the Court must hear both parties before it can provide for penalty payments in the order 48
and the decision is appealable. 49
19-34 The rule is broad enough to cover both final decisions including orders of the Court on
substantive issues and interim orders, such as an order to preserve evidence or an order to
freeze assets. Periodic penalty payments for non-compliance with procedural orders will be
unfamiliar to practitioners in some jurisdictions, where the courts tend to punish noncompliance with procedural sanctions and/or adverse costs awards. However, imposing such
penalty payments for non-compliance with substantive decisions and orders will be familiar to
others, for example, in Germany or the Benelux where it is standard practice for noncompliance with an order to be punished by periodic penalty payments defined in advance.
19-35 The value of any periodic penalty payments must be set by the Court having regard to the
importance of the order in question. No specific guidance is given as to:
– The facts that the Court will use to determine the importance of an order;
– When a penalty should be attached to it; or
– From whose perspective the assessment of the penalty should be made.
19-36 In Germany, for example, the penalty payment is calculated in relation to the economic effect
of non-compliance on the other party i.e. the party not subject to the order, and can add up
quickly in the case of repeated violations. In the Benelux, the penalty is typically set at a multiple
of the economic value of the infringing product or service, so that it has a deterrent effect.
19-37 The use of the word penalty implies that the payment would be larger than a damages-based
payment in order to deter the defendant from breaching the order, but it is not a criminal
sanction or fine. This interpretation fits with the term “penalty” contained in art.55 Brussels
I Regulation (recast). 50 It is logical and desirable that both terms have the same meaning,
since that best ensures enforceability of all Court decisions and orders containing a penalty
across the EU. As is the case for penalties issued by national courts, the exact amount due for
each violation must first be determined by the Court before the decision can be enforced.
However, that does not mean that a separate order is needed once the violations have
occurred; the order specifying the penalty per violation may be sufficient. The penalties are,
of course, without prejudice to the right of the wronged party to claim compensation
through other means, such as claims for damages.
19-38 It is important to note that periodic penalty payments under r.354(3) RoP are payable to the
Court rather than to the other party to the proceedings. This reflects the practice in Germany,
where the decision can be enforced by the successful party against the defendant
(“Vollstreckungsgläubigerin”) on behalf of the court and with its support but is different from
the practice in many other civil law Contracting Member States, such as the Benelux countries,
where the penalties are due to the prevailing party, which must collect them itself.
48
49
50
r.354(4) RoP.
r.220(2) RoP. See chapter 21 (Procedure before the Court of Appeal) paragraphs 21-33 to 21-36 and figure 21-1.
“A judgment given in a Member State which orders a payment by way of a penalty shall be enforceable in the Member State
addressed only if the amount of the payment has been finally determined by the court of origin.” The French version uses the
term “astreinte”, the Dutch version “dwangsom” and the German version “Zwangsgelds”, which are all sums to be paid, but do
not amount to criminal sanctions.
© Bird & Bird LLP | May 2023
A Guide to the UPC and the UP 378
