EUPillar C-49/12 The Commissioners for Her Majesty’s Revenue & Customs v Sunico ApS and Others (Third Chamber)

Summary

The case on the interpretation of Art 1(1) of Brussels I was referred to the CJEU in proceedings between HMRC (the tax authority of the UK) and Sunico and others (companies established in Denmark and private persons residing there) concerning the procedure to determine the validity of an attachment order made at the request of HMRC in respect of assets belonging to the defendants in Denmark. HMRC brought court proceedings in the UK and Denmark to claim damages resulting from an alleged value added tax (VAT) carousel type fraud. The UK proceedings were against a number of persons established in Denmark, including the defendants. This gave rise to debate before the court as to whether HMRC could claim from non-residents damages corresponding to the amount of VAT not paid by a person subject to VAT in the UK, on the ground that those non-residents had taken part in a ‘tortious conspiracy to defraud’ within the meaning of English law. Since the non-residents did not incur liability under the UK VAT legislation, HMRC relied on English tort law, applicable to the unlawful means conspiracy. Before this action, the Danish tax authorities, at HMRC’s request, supplied HMRC with information about the non-residents sued in the UK, on the basis of the Regulation on administrative cooperation in the field of value added tax. In the Danish proceedings commenced by HMRC, the Bailiff’s Court, upon the request of HMRC, made attachment orders regarding assets of the defendants in Denmark in order to secure payment of HMRC’s claim for damages. The defendants’ appeal against the attachment was dismissed. By separate application in Denmark, HMRC asked the District Court to confirm the attachment orders authorised by the Bailiff’s Court and also claimed payment of the sum corresponding to the amount of VAT evaded. The defendants objected to it. The District Court transferred the case to the referring court. The referring court was uncertain whether the action commenced earlier before the UK courts falls within the scope of Brussels I, so that a judgment delivered by those courts might be recognised and enforced in Denmark, in application of Brussels I and the EC Denmark Agreement and it asked the CJEU whether Art 44 of Brussels I covers this situation. The CJEU rephrased this question and analysed whether this action whereby a public authority of one MS claims, from natural and legal persons resident in another MS, damages in respect of loss caused by a conspiracy to commit VAT fraud in the first MS is a civil and commercial matter under Art 1(1) of Brussels I. Reaffirming its interpretation in Case C 645/11 Sapir, it stated that although certain actions between a public authority and a person governed by private law may come within the scope of Brussels I, it is otherwise where the public authority is acting in the exercise of its public powers. By agreeing with AG Kokott, it asserted that, in the context of the present legal relationship, HMRC do not exercise any exceptional powers by comparison with the rules applicable to relationships between persons governed by private law and it observed that HMRC’s claim against the defendants in the UK is not based on public law involving the exercise of powers of a public authority, but on English tort law. However, it also stated that it is for the referring court to ascertain whether the request for information which HMRC addressed to the Danish authorities affects the nature of the legal relationship between HMRC and the defendants and whether HMRC was in the same position as a person governed by private law in its action against the defendants sued in the UK. It accordingly held that an action whereby a public authority of one MS claims as against persons resident in another MS damages for loss caused by a tortious conspiracy to commit value added tax fraud in the first MS is a civil and commercial matter covered by Brussels I.