Can an Award of the Financial Arbiter Qualify as a “Judgment” under the Brussels I Recast Regulation and therefore Benefit from Direct Recognition and Enforcement in Another EU Member State?
The Establishment of European Union Alternative Dispute Resolution
The development of out-of-court dispute resolution mechanisms within the European Union has led to the establishment of specialised bodies tasked with resolving disputes between consumers and regulated financial entities, including banks, credit institutions, electronic money and payment institutions, investment firms and insurance undertakings. Among these mechanisms are the various Financial Ombudsman and Financial Commissioner schemes operating across Member States.
These bodies form part of the European Union’s broader policy objective of promoting accessible, independent and effective alternatives to traditional court proceedings. Whilst the European Union has established minimum standards through its Alternative Dispute Resolution framework, Member States retain considerable discretion regarding the institutional structure, powers and procedural operation of their respective financial dispute resolution bodies.
The Divergent Landscape of National Ombudsmen Decisions
Whilst Financial Ombudsman and Financial Commissioner schemes across the European Union share the common objective of providing accessible and efficient out-of-court dispute resolution, the legal nature and effect of their decisions vary considerably between Member States. In certain jurisdictions, ombudsman decisions may possess binding characteristics and significant enforcement value under domestic law. In others, they operate primarily as non-binding recommendations intended to facilitate the amicable resolution of disputes.
The contrast between the Czech Financial Arbiter and the Cyprus Financial Commissioner illustrates this divergence. Whilst both institutions operate as independent, state-backed dispute resolution bodies within the financial sector, their decisions derive their legal effect from distinct national frameworks. In Cyprus, the Financial Commissioner functions largely on an equitable basis and its decisions remain outside the traditional judicial system. Similarly, although awards of the Czech Financial Arbiter may possess binding and enforceable effect under Czech law, the institution itself remains a statutory ADR body rather than a component of the ordinary judicial hierarchy.
The administrative nature of the Czech Financial Arbiter is particularly significant in this context. Although the Financial Arbiter exercises adjudicatory functions and issues binding determinations under Czech law, it operates as an independent statutory body established outside the formal court system. Its authority derives from a specialised administrative framework designed to provide consumers with an accessible, efficient and cost-effective alternative to traditional litigation.
Whilst the Financial Arbiter performs a dispute-resolution role that shares certain characteristics with judicial proceedings, it does not form part of the ordinary Czech judiciary and cannot readily be equated with a conventional court or tribunal. This institutional distinction lies at the heart of the debate under the Brussels I Recast Regulation. The fact that an award may be binding and enforceable under national law does not necessarily mean that the issuing body qualifies as a “court or tribunal” for the purposes of Article 2(a) of the Regulation.
Accordingly, the administrative character of the Financial Arbiter represents one of the principal reasons why its awards are unlikely to be classified as “judgments” capable of benefiting from the Regulation’s automatic recognition and enforcement regime.
These distinctions become particularly significant when considering whether such decisions are capable of benefiting from the recognition and enforcement regime established under the Brussels I Recast Regulation.
The Concept of a “Judgment” under the Brussels I Recast Regulation
The differing legal status of Financial Ombudsman decisions raises an important question under European private international law: can an award issued by the Financial Arbiter qualify as a “judgment” for the purposes of the Brussels I Recast Regulation and therefore benefit from direct recognition and enforcement in another EU Member State?
The starting point is Article 2(a) of Regulation (EU) No 1215/2012, which defines a “judgment” as any judgment given by a court or tribunal of a Member State, irrespective of the designation given to that decision under national law. Consequently, the decisive issue is not whether a determination is binding or enforceable within its Member State of origin, but whether it originates from a body capable of being regarded as a “court or tribunal” for the purposes of the Regulation.
The Court of Justice of the European Union (“CJEU”) has consistently emphasised that the concepts contained in the Brussels I Recast Regulation must be interpreted autonomously and independently from national classifications. Furthermore, the Court has recognised that the Regulation’s system of automatic recognition and enforcement is founded upon mutual trust between the judicial systems of the Member States and the procedural safeguards associated with judicial proceedings.
Whilst the CJEU has adopted a broad and functional interpretation of the concept of a “court or tribunal” in other areas of EU law, particularly in the context of Article 267 of the Treaty on the Functioning of the European Union, the position under the Brussels I Recast framework appears more restrictive. This distinction lies at the heart of the debate surrounding the cross-border enforceability of Financial Ombudsman and Financial Arbiter decisions.
Arguments Supporting the Classification of Ombudsman Decisions as “Judgments”
Proponents of a broader interpretation argue that excluding these specialised decisions elevates formalism over the practical realities of modern access to justice. From a teleological perspective, they contend that where an independent statutory body conducts an adversarial (inter partes) procedure, applies rules of law and issues a legally binding determination, it performs a dispute-resolution function that closely resembles that of a traditional court or tribunal.
Furthermore, supporters of this view argue that the Brussels I Recast framework should be interpreted dynamically, in a manner consistent with the CJEU’s broader functional approach to the concept of a “court or tribunal” under Article 267 TFEU. Under this approach, denying direct cross-border enforcement to final and binding determinations issued by specialised ADR bodies may create unnecessary procedural barriers, requiring successful parties to engage in additional domestic proceedings merely to convert such awards into court judgments capable of circulation throughout the European Union.
Viewed through this lens, the exclusion of such decisions from the Brussels I Recast framework may be seen as difficult to reconcile with the broader objectives of consumer protection, access to justice and the efficient resolution of cross-border disputes within the Internal Market.
The Formalist Triumph: Why Structural Hierarchy Supersedes Functional Equivalence
Notwithstanding the force of the arguments supporting a broader interpretation, the stronger legal view under the current framework of EU private international law remains that decisions issued by Financial Ombudsman and Financial Arbiter bodies do not qualify as “judgments” for the purposes of the Brussels I Recast Regulation.
Whilst the functional equivalence argument aligns with broader considerations of consumer protection and access to justice, it encounters significant obstacles in the existing jurisprudence of the Court of Justice of the European Union. The CJEU has consistently emphasised that the system of automatic recognition and enforcement established by the Brussels I Recast Regulation is founded upon mutual trust between the judicial systems of the Member States and the procedural safeguards associated with judicial proceedings.
As a result, the fact that a determination may be binding and enforceable under national law does not, in itself, render the issuing body a “court or tribunal” within the meaning of Article 2(a) of the Regulation. Although specialised ADR bodies undoubtedly perform an important dispute-resolution function, the current legal framework continues to draw a distinction between such entities and institutions forming part of the ordinary judicial hierarchy.
Accordingly, parties seeking to enforce an award of the Czech Financial Arbiter outside the Czech Republic should consider first obtaining a judgment from the competent Czech court, which may then benefit from the recognition and enforcement regime established under the Brussels I Recast Regulation.
Until further clarification is provided by the CJEU or the EU legislature, this remains the safer and more legally certain approach.
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Disclaimer: This article is provided for informational purposes only and does not constitute legal advice. Readers are advised to consult with legal professionals for advice specific to their individual circumstances.
Author
Maria Hadjisavva Senior Advocate
M.P. KITROMILIDOU & CO LLC