by Jonathan L T Chu^† and Felix D Pollmann^‡

 

Abstract: This paper compares English and German law in the context of a creditor who has recovered money judgment for part of a contractual debt, then seeks either to sue for the balance or to enforce a pre-existing security. Under English law, a second action for the balance is precluded by the doctrine of merger in rem judicatam, but this paper shows that merger is a procedural bar rather than a substantive rule that extinguishes the underlying debt—a point demonstrated most clearly by the position of a secured creditor post judgment. On the other hand, while German law is generally tolerant of claim splitting, it nevertheless contains several mechanisms—drawn from the res judicata doctrine and beyond—which may, in certain circumstances, preclude a second action for the balance. This comparative study reveals that, not only do the two systems diverge in how they secure finality in litigation, but they may also—at a more basic level—understand that very principle differently.

(2026) Oxford U Comparative L Forum 1 at ouclf.law.ox.ac.uk | How to cite this article

1. Introduction

Preclusion law is the assemblage of legal rules underpinned by, and which pursue, the principle of finality in litigation. As Jacob van de Velden observed, ‘most if not all legal systems based on the rule of law … recognise the value’ of that principle, which may be defined to mean that ‘in the private and public interest [alike] … there should be an end to litigation’, so that ‘matters conclusively [adjudicated upon] by a court of competent jurisdiction should not, save for exceptional circumstances, be reopened’.^[1]

In his comprehensive study of English and Dutch preclusion laws, van de Velden identified two essential considerations for any meaningful attempt at comparison. First is the recognition that different legal systems implement the principle of finality differently. Similar concerns may be addressed, and comparable functions may be served, by legal rules that ‘do not always look and sound the same’.^[2] Second is the awareness that, within a given system, preclusion law often extends beyond the law of res judicata strictly so-called. This reflects the reality that finality in litigation is a wide field, aspects of which are implemented by ‘rules of law that preclude (re)litigation of matters which are not strictly res judicata’.^[3] Going past labels and system-specific categorisations is what van de Velden has called a ‘functional’ and ‘principle-oriented’ approach to comparing preclusion laws^[4]—an approach which of course has a pedigree in comparative law more generally.^[5] In this, our own Anglo-German comparative study, we adopt this approach.

Our focus is on a specific aspect of preclusion law, in the specific context of a creditor’s claim for the non-payment of a contractual debt.^[6] We are concerned with whether, and how, English and German legal systems preclude a creditor from reasserting a contractual debt, in an attempt to recover greater monetary relief, in circumstances where the creditor has already recovered money judgment from an earlier action on the strength of the same debt.

The following case scenario illustrates the nature of our inquiry:

Debtor owes Creditor €100 under a contract, and Creditor has taken security for this contractual debt of €100, either in personam or in rem.^[7] The debt has fallen in arrears, and Creditor has sued Debtor for the non-payment of it, recovering a final money judgment for €80.^[8] In this action, Creditor made no mention of the fact that the true amount of the debt was €100. On the face of it, €80 was all that Creditor was claiming. In turn, the court in its judgment made no mention of the fact that the true amount of the debt might be €100. It gave judgment for €80 simply because that was what Creditor appeared to be claiming.^[9] Despite the judgment, Debtor has not paid a single cent to Creditor.

One may be forgiven for finding this case scenario bordering on the ludicrous. As we will explain, however, it is a simplified version of some routine occurrences of partial debt claims in both the English and the German systems.^[10] The purposes of this simplification are, first of all, so that a problem may be posed in largely functional terms, devoid of systemic prepossessions, in order to facilitate comparison; and secondly, to sharpen the facts deliberately so that the operation of the relevant legal rules might be accentuated.

Two questions arise from this case scenario.

First, can Creditor sue Debtor a second time to recover a further money judgment for the €20 balance under the contract?

Secondly, can Creditor, instead of suing Debtor a second time, enforce the pre-existing security to recoup (1) the €80 judgment sum; or even, (2) the €100 contract sum in full?

The motivation for this exercise is not exactly the same from both English and German perspectives. An English lawyer will have no hesitation in answering ‘No’ to the first question. As we will see, however, they struggle with articulating the true reasons for this answer, and with discerning the proper effect of the legal rules at play. It is a widely held assumption among English lawyers that, upon recovering money judgment for the non-payment of a contractual debt, the creditor’s contractual right is extinguished and replaced by a new payment right born of the judgment, which is said to become her sole right.

On the other hand, German lawyers on the whole have no difficulty in correctly appreciating the proper effect of a judgment. The first question is a difficult one for them, however. It is often assumed that, like other civilian systems, German law has no mechanism to curb the second claim, and that ‘splitting’ the claim in the way Creditor did in our case scenario is inherently and invariably unobjectionable.

Our aim is to show both assumptions to be unfounded. The English assumption will be disproved by a thorough consideration of the second question, which is often overlooked in judicial and academic writings on the topic. The German assumption, on the other hand, will be revealed to be overly simplistic; there are at least three mechanisms—two coming from outside the law of res judicata strictly so-called—by which Creditor may be precluded from suing Debtor a second time for the balance.

2. English law

2.1. Foundations

2.1.1. English preclusion law

We shall begin with an overview of English preclusion law. This is a vast field spreading beyond the law of res judicata. Van de Velden has shown us that English preclusion law can be understood as comprising the following four aspects.^[11]

First is the rule that, once a judgment has been perfected by sealing, the judgment-rendering court is functus officio so that the parties are, save in exceptional situations, precluded from going back to that court to reopen matters that have been conclusively decided.

Second is merger in rem judicatam^[12] (hereafter ‘merger’). This doctrine precludes a claimant^[13] who has recovered a money judgment on a cause of action from reasserting the same cause of action, in a bid to recover a further money judgment. This is based on the notion that the cause of action is extinguished by being merged in the judgment recovered—hence the name of the doctrine. The proper effect of this doctrine is the central question for our study.

Third is estoppel per rem judicatam (hereafter ‘estoppel’). To ‘estop’ simply means to stop.^[14] Here, it means being stopped by res judicata from putting forward an assertion. More specifically, this doctrine precludes a party to litigation from contradicting a conclusive judicial finding about the existence or non-existence of a cause of action (known as ‘cause of action estoppel’), or the merits of an issue of law or fact that was essential to be determined in the earlier judgment (known as ‘issue estoppel’).

Fourth and final is the doctrine of abuse of process. This has a few specific strands, though speaking generally, they all aim at precluding a party to litigation from raising matters through ‘procedural conduct that, though technically consistent with procedural law’—that is, including the law of res judicata—‘is in effect manifestly unfair to [the other party], or otherwise brings the administration of justice into disrepute’.^[15]

As the names reveal, only merger and estoppel comprise the English law of res judicata. That said, all the rules and doctrines mentioned are what van de Velden would call ‘agents of finality’—legal rules that promote and implement the principle of finality in litigation.

A final point in this quick sketch of English preclusion law is that res judicata under English law has a somewhat different meaning from what civil lawyers may be accustomed to. There are several distinctions, but the most important one for our purpose is this. Under English law, a judgment has res judicata status for any matter conclusively determined by the judgment-rendering court, even if that judgment remains subject to appeal. The determination of the judgment-rendering court does not of course bind the appeal court. Save as to that, however, the matter decided is res judicata for as long as the first-instance judgment stands undisturbed.^[16]

2.1.2. Merger in rem judicatam

From the perspective of a claimant trying to reassert a cause of action, the difference between merger and estoppel may be explained in terms that the former applies to a claimant who was ‘successful’ in the first action, the latter to one who lost. Merger is concerned with the situation where a court has, not only decided that a cause of action existed, but given money judgment on the strength of that cause of action. Importantly, even if the judgment did not tally with the full extent of the claimant’s monetary entitlement arising from the cause of action, the claimant is still precluded from bringing a second action to recover the balance. On the other hand, if a court has decided that a claim was unfounded because the cause of action relied on did not in fact exist, the claimant cannot bring a second action based on the same alleged cause of action, because to do so would be to contradict the earlier judicial finding. This is estoppel.

Indeed, apart from the fact that merger renders unrecoverable any unrecovered balance, the combined effects of merger and estoppel correspond to the claim preclusive effect of res judicata under German law.^[17] The question is, why does the English law of res judicata extend its reach to the unrecovered balance? The usual explanation is that English law does not allow a claimant to ‘split’ her monetary claim;^[18] ‘for one cause of action you must recover all damages incident to it by law once and for ever’, as Lord Halsbury said.^[19] If we pause to ponder for a moment, however, it would seem that this explanation cannot get us very far, unless we are told what an indivisible unit of monetary claim comprises; in other words, what ‘all damages incident to [a cause of action]’ means.

Lord Halsbury, if pressed, would probably say that he had in mind the entirety of a claimant’s monetary entitlement as prescribed by law to arise on a given set of facts; which was different, he would hasten to add, from what the claimant herself had precisely sought by way of relief. If this is the correct view, it brings to light an important difference in legal tradition.

As we will see later,^[20] German law has a procedural principle known as ‘party disposition’, within which the Roman principle ne eat iudex ultra petita partium^[21] (hereafter ‘non ultra petita’) is observed. Non ultra petita enjoins a court from giving relief beyond what the claimant has craved in her statement of claim. This results in a more restrictive meaning of a cause of action, and, by extension, a more restrictive res judicata effect of a judgment upon it. Under German law, the object of a cause of action is partly defined by law but partly defined by the claimant herself. Therefore, causes of action are the same only if there is identity in both the underlying facts as well as the particular relief sought. In our case scenario, for instance, Creditor has pursued her cause of action for €80, but this leaves intact a distinct cause of action—or potentially multiple causes of action even—for the €20 balance.

By contrast, while English law is often said to be based on the ‘adversary system’ and does exhibit a ‘dispositive principle’ of sorts (particularly in relation to matters of evidence and issues of fact),^[22] it does not, crucially when it comes to relief, have the tradition of strictly enforcing non ultra petita. This is not to say that an English judge can, as a matter of procedural propriety, award any relief without ever consulting the parties or their legal representatives; the precise shape and form of relief is an important concern that is often fully ventilated at trial. The point is that, unlike the German system, in giving relief, an English judge is not tied down to precisely what the claimant has demanded in her claim form; this is now expressly reflected in the Civil Procedure Rules.^[23] In practice, moreover, the ‘prayer for relief’ section of the particulars of claim is almost always couched in the most general terms, complete with a catch-all request for ‘further and other relief’. All this may be a legacy of the pre-twentieth century formulary system: as far as monetary relief was concerned, the precise content of the relief was a matter for the jury, not something to be fixed in stone before trial.^[24] This is still the case, the only difference being that the jury trial has now been gotten rid of. The result is that English law does not regard the object of a cause of action as being defined by reference to the precise extent of what the claimant has formally demanded as her monetary relief. It is, instead—as Lord Halsbury would have said—the whole of the claimant’s monetary entitlement, determined solely according to law to have arisen from the facts. This is why, when someone has a cause of action for monetary relief, she has one chance to recover all that she is by law entitled to on a given set of facts.

For these reasons, a ‘successful’ claimant cannot claim any unrecovered balance, even if a second claim for greater monetary relief would involve neither claiming the ‘same’ relief (in the sense that the claimant would not be claiming the same portion of her monetary entitlement a second time) nor contradicting an earlier judicial finding (because the claimant would be relying on, not disputing, the determination that she had a cause of action). In one of many judicial statements attempting to justify this policy of English law, Mr Justice Willes said:

… the recovery in the former action was held to be a bar to the latter, on the ground that the plaintiff had had an opportunity of recovering in the first action the whole of his demand, and that, regard being had to the shortness of life, it was unreasonable to allow a defendant to be vexed a second time for the same cause.^[25]

Thus, the second claim is barred. The doctrine of merger—with its notion that the entire cause of action is merged in the judgment recovered and therefore gone—is the doctrinal vehicle through which this preclusive effect is both manifested and attained.

There are two aspects to the operation of merger which we can usefully distinguish. The first is a logically anterior enquiry as to what cause of action the claimant had. This is in truth a question of substantive law which turns on the nature of the obligation in question.^[26] In a contract case, for instance, that would depend on a proper construction of the terms of the contract.^[27] Identifying the cause of action can be a complex matter. Difficult questions abound, for instance, where different rights are allegedly violated, or multiple defendants are allegedly involved, or the wrongful conduct has allegedly continued for a period of time or has caused continuous or multiple harms.^[28] With these questions we are not concerned. Focusing on money being owed under a contract by one debtor to one creditor, we may say that, speaking generally, one debt gives the creditor one cause of action upon the debtor’s failure to pay by the time required.^[29]

Once the cause of action has been identified, the doctrine of merger can properly operate. The traditional explanation of merger’s operation is in terms that the cause of action is merged in and extinguished by the judgment. Lady Justice Arden put it this way:

Merger explains what happens to a cause of action when a court or tribunal gives judgment. If a court or tribunal gives judgment on a cause of action, it is extinguished. The claimant, if successful, is then able to enforce the judgment, but only the judgment.^[30]

And she added:

The effect of merger is that a claimant cannot bring a second set of proceedings to enforce his cause of action even if the first tribunal awarded him less than he was entitled to.^[31]

Three things stand out from this entirely orthodox explanation. First is that merger operates automatically; it does not leave room for judicial disapplication.^[32] Second is that merger operates whether the judgment is given by a court or a tribunal; provided that the award is validly made^[33] in exercise of a judicial function,^[34] it bars a second claim in the same court or tribunal, or a different one.^[35] Third is that merger operates immediately upon judgment.^[36] It does not matter that the judgment has not since been carried into effect. The claimant cannot sue the defendant again, even if the defendant has not discharged the judgment debt, or execution of the judgment has left the claimant unsatisfied. Furthermore, as we have said, it does not matter whether the judgment remains subject to the possibility of reversal. There are circumstances where a cause of action may revive upon judgment being reversed on appeal or otherwise set aside. For as long as that has not happened and a valid judgment continues to stand, however, the cause of action is gone.

2.2. Our case scenario

2.2.1. Can Creditor sue Debtor a second time for the €20 contract balance?

The short answer is ‘No’.^[37] Our case scenario is a vanilla case where a single debt gives rise to a single cause of action upon non-payment. Having recovered money judgment on that cause of action, Creditor cannot sue Debtor again, even though the judgment sum does not tally with the full extent of Creditor’s contractual entitlement.^[38] Upon judgment, Creditor’s cause of action is gone. It is merged in and extinguished by the judgment for €80.

Importantly, it does not matter what Creditor’s intentions were when she limited the claim to €80. It does not even matter whether she made a conscious decision or a slip. In a remarkable case from Australia,^[39] the Deputy Commissioner of Taxation sued a taxpayer for AU$25,557.92 in unpaid tax. The real amount was in fact AU$255,579.20. Judgment was however entered for AU$25,557.92 as claimed. It was obvious that the claim suffered from an ingenuous clerical error. Nevertheless, the Deputy Commissioner was barred from subsequently suing for the balance. There was one cause of action that had been completely exhausted in the earlier proceedings. So long as the judgment for AU$25,557.92 stood, the Deputy Commissioner could not sue the taxpayer again for the same demand.

Now we already saw how the strictness of the doctrine of merger is very much implanted in the minds of English lawyers as a matter of legal tradition. It is therefore true that rarely do people with a straightforward claim to a fixed sum of money split their claim in the way Creditor did in our case scenario, banking on the thought that they might later sue for the balance still. When splitting happens in this context it usually comes down to jejune reasons like clerical error,^[40] inadequate assessment of the evidence,^[41] or flawed legal advice.^[42] Moreover, those who consciously try to split their claim, as perhaps for strategic reasons such as costs, will not succeed; even an express reservation on the claim form of the right to sue for the balance is of no effect;^[43] there is no English equivalent of the ‘open partial action’ as there is in German law.^[44]

But there is one specific situation which our case scenario is intended to encapsulate, albeit in a much simplified form. This is the situation where the contractual debt in question comprises two components, the principal sum and interest, and where the latter is stipulated to continue to run for as long as the former (or any part of it) remains unpaid. The paradigm case is a loan, but it can occur to any debt carrying agreed interest: price for goods sold, bills for services, and so on.^[45] In England, the invariable outcome of a successful suit upon this kind of debt is that the creditor will recover judgment for the unpaid principal with interest, but the interest will be calculated up to the date of judgment only. In other words, the judgment will not reflect the contractual interest accruing between the date of judgment and the date when the principal is in fact discharged, either by voluntary payment or by execution, post judgment. It is therefore impossible, subject to what is said below,^[46] for the creditor to recover post-judgment interest at the contractual rate, whether in the same action or in a subsequent one. That the creditor cannot bring a second suit is the effect of merger; the unrecovered balance of contractual interest is equivalent to the €20 contract balance in our case scenario.^[47]

A full diagnosis of this most curious quandary cannot be undertaken here,^[48] but a quick sketch can be offered. The starting point is that, when interest is stipulated for by the parties themselves, barring provisions to the contrary the interest is considered to be accessory to the principal. This means that, while the value of the creditor’s contractual entitlement grows day by day, in legal logic the principal and the interest comprise one and the same debt; and one debt, as we have said, gives rise to one cause of action only, which must be pursued in one go.^[49] Now, although the Civil Procedure Rules contain no such requirement,^[50] it appears to be somewhat common for creditors to state on the claim form that they are claiming contractual interest ‘until judgment or sooner payment’.^[51] More damning, however, is the fact that, since Robinson v Bland (1760),^[52] the settled practice of English courts has been ‘to give judgment for the amount of principal and interest outstanding at the date of judgment, without reference to the borrower’s continuing [contractual] liability to pay interest on the outstanding balance of the principal sum after judgment’.^[53] That is so, whether or not the claim form is expressly limited in the way mentioned; indeed, it is conceivable that this court practice, settled as it was in the eighteenth century, is what gave rise to that pleading custom in the first place, although this is speculative.^[54] That court practice itself is possibly another relic of the jury trial: at a time when the assessment of monetary award was the responsibility of the jury, it was quite unimaginable to expect the jury to return any verdict otherwise than one which specified a fixed sum of money; a verdict carrying a variable component would not do.^[55] With the jury trial gone this obstacle naturally vanishes,^[56] and there have been calls for reform.^[57] But old habits die hard.^[58] The upshot for present purposes is that, because of this anomalous but unyielding form of English judgments, claimants of debts are on a daily basis barred from recovering the post-judgment component of their contractual interest—much like how Creditor in our case scenario is barred from suing for the €20 balance.^[59]

It must be mentioned that, in reality, there are two ways by which the harshness of that outcome in the continuing interest situation can be mitigated, so that in practice the problem may not be as bad as it sounds. First, by a crafty (if not artificial^[60]) piece of draftsmanship backed by judicial fiat, creditors can easily couch the contractual term for interest in a way that preserves their right to sue again.^[61] This has come to be known as an ‘independent covenant’, or a ‘no merger’ clause, since it usually comes in the form of stipulating that the debtor’s obligation to pay interest on the principal shall be ‘independent of and not to merge with any judgment’, and that the interest shall continue to accrue ‘until payment after as well as before any judgment’.^[62] Analytically, the effect of such a provision may well be explained in terms of a disaggregation of the interest—or, perhaps more accurately, the post-judgment component of the interest—from the principal, so that what would otherwise be a single composite debt is conjured into two separate debts, from which there arise two causes of action.^[63] While this does the trick in a topsy-turvy manner, it rather undermines the integrity of the English notion of finality in litigation, driving creditors to bring two suits instead of one, and leaving debtors exposed to both, all because of that anomalous form of English judgments.^[64] The second mitigation is that, since 1838, every High Court judgment debt has by statute carried simple interest at a specified rate, currently standing at 8% p.a., which must be paid along with the judgment sum, and may be levied by execution of the judgment.^[65] The interposition of this statutory interest upon judgment debts appears to have the effect of unconsciously entrenching the practice of reckoning the contractual interest only up to the date of judgment,^[66] although this is beyond the scope of our present discussion. What matters for now is that the statutory interest does go some way to alleviating the creditor’s inability to recover contractual interest in the post-judgment period. Indeed, if the contractual rate of interest is lower than the statutory rate, then the creditor will in a sense reap a windfall and have nothing to complain.^[67] By contrast, if the contractual rate is higher, then the creditor will suffer prejudice, unless she is lucky enough that the contract contains an ‘independent covenant’, in which case she must still bring a second action to recover the difference between the contractual and statutory rates.^[68] It is worth noticing also that statutory interest upon judgment debts is not uniformly available across all courts and tribunals.^[69] Where it is not available, and there is no ‘independent covenant’ to enable a second suit, the inability to recover the full contractual interest remains a real concern, reflected in our case scenario.

2.2.2. Does this mean that the contractual debt is gone?

So far we have been using the expression ‘cause of action’ to denote the subject matter that the doctrine of merger extinguishes. But what does that mean? What is being extinguished, precisely? This is a difficult question. Difficult, because English lawyers have not traditionally been entirely transparent with their expressions, and ‘cause of action’—with its rich history and multifarious usages—is no exception.^[70]

In some contexts outside of merger, ‘cause of action’ means the facts on which a court action is founded. It ‘has been held from the earliest time to mean every fact which is material to be proved to entitle the plaintiff to succeed’, said Mr Justice Brett.^[71] Or, as the same judge (now Lord Esher, Master of the Rolls) later put it, it signifies ‘every fact which it would be necessary for the plaintiff to prove … in order to support his right to the judgment of the Court’.^[72] In this sense, the cause of action in a contractual debt claim is the fact of the debtor failing to pay the creditor in strict accordance with the stipulations of the contract—for the stipulated amount, at the time and place stipulated, in the stipulated currency, so on and so forth.

But as Lord Hodge recently observed in a case concerning merger, ‘[t]he facts are the facts and cannot be extinguished by a judgment’.^[73] That must be right. Judges are not magicians; judgments cannot magically extinguish what has happened in the real world. Moreover, a favourable judgment for the claimant always implies that the court is in agreement—to some extent if not fully—with the claimant’s account of the facts. In recording those facts, judgments seek to confirm rather than to ‘destroy’ those facts.

Thus, in the context of merger, ‘cause of action’ cannot mean the facts. If the operation of this doctrine does lead to something being extinguished, that must be something that exists in the mind—a juridical construct, in other words. Put another way, it must be some legal entitlement of the successful claimant that is extinguished upon judgment.

Yet even here there is room for ambiguity. Precisely what legal entitlement of the claimant is extinguished? Consider our case scenario. Creditor has first and foremost an entitlement under the contract to be paid €100. That is her contractual right to be paid a debt. Some lawyers do, controversially, call this right alone a ‘cause of action’.^[74] Is this the kind of legal entitlement that merger extinguishes? Or is it something else?

That the doctrine of merger extinguishes the contractual debt is a widely held assumption supported by judicial statements from even the highest authorities. The origin of this assumption appears to be some fantastical words employed by Sir Edward Coke in his report of the Higgens’s Case (1605–07),^[75] that upon judgment, ‘the debt due by the bond is transformed and metamorphosed into a matter of record’.^[76] This was echoed nearly three centuries later by Mr Justice Bramwell, in a continuing interest case,^[77] who said, ‘the original debt is gone, transit in rem judicatum, a fresh debt is created with different consequences’.^[78] Similar expressions abound in the decided cases^[79] and the literature.^[80] On this view, merger is not merely a legal rule concerned to uphold and implement the principle of finality in litigation. It is a substantive rule that effects changes—drastic changes in some cases—to the legal relations between the parties.^[81]

One of us has suggested elsewhere that this assumption is mistaken.^[82] Drawing on a recent decision of the UK Supreme Court,^[83] it is argued that what is extinguished by the doctrine of merger is the claimant’s ‘right to claim a further remedy arising from [the same] factual circumstances’ as that which grounded an earlier money claim.^[84] A creditor’s right to be paid a debt is different from her right to sue for the debt upon non-payment.^[85] The second of those rights—often called a ‘right of action’^[86] or even a ‘cause of action’^[87]—is the true target of the doctrine of merger. The former is not, and it is not affected in the slightest by the pronouncement of a favourable money judgment for the creditor. The judgment merely takes away the actionability of the contractual debt, thereby changing its nature.^[88] It does not extinguish it.^[89] On this view, merger is a procedural rule concerned solely with the regulation of court actions, in furtherance of the principle of finality in litigation.^[90] It has no substantive effect on the parties’ legal relation.

This argument is not new. Van de Velden made the same point nearly a decade ago in his comparative study of preclusion laws.^[91] More recently, Stephen Smith’s study of private law remedies in the common law tradition led him to the same conclusion.^[92] Going back in time, Charles Dunlop, in his treatise on creditor-debtor law in Canada, put forth the same argument and contended that the language of merger was therefore a work of supererogation.^[93] It is a notable feature of this scholarship that all three jurists, coming as they did from different intellectual backgrounds, ended up reaching the same conclusion independently.

Moreover, this view is not entirely alien to judicial analyses, although it is true that judges seldom express the proposition as frankly as we now do. A rare exception is found in the judgment of Mr Justice FitzGerald^[94] in the Irish case Wakefield v Smythe.^[95] A landlord applied for a court order to evict the tenant for non-payment of rent. The tenant argued that the application should fail, because judgment for the unpaid rent having been recovered, the debt was gone and so was the foundation of the eviction action. In rejecting this argument, Mr Justice FitzGerald expressed his disapprobation of the debt-merging theory:

The effect of the application of the rule transit in rem judicatam, as Mr Baron Parke showed [in King v Hoare^[96]], was not to extinguish the debt, but simply to merge the remedy … The right which the recovery of a judgment gives to have an execution, merges the inferior remedy; and obviously so, because it would be absurd that a party, having got a right to an execution for a single debt, should institute another action, and proceed to judgment and execution for the same cause of action over again. That decision therefore is, not that the judgment operates as a satisfaction or extinguishment of the debt, but simply that it operates as a merger of the remedy; because the plaintiff has already got the highest remedy, and should not be permitted to look for an inferior remedy, or one merely co-extensive … that does not import that the debt is extinguished or satisfied.^[97]

Therefore:

… the mere recovery of judgment in an action for rent does not merge or extinguish the rent, or so affect its character as to prevent the landlord from maintaining … an action of ejectment, to recover possession of the lands in respect of the same rent.^[98]

It will be noticed that Mr Justice FitzGerald invoked the word ‘remedy’ several times without defining it. This recurred in some other old cases addressing merger.^[99] To an English lawyer of today, the word ‘remedy’ is more readily understood as a reference to the court order that a claimant is seeking or has obtained from a court.^[100] We must however notice that, in Mr Justice FitzGerald’s time, the word ‘remedy’ also signified the particular action that a person could bring in court for recovering a particular form of relief, according to the laws and practices of the day.^[101] The ‘inferior remedy’ in this context was the form of action for recovering a contractual debt; the ‘highest remedy’ that to execute a judgment recovered. What Mr Justice FitzGerald and the judges in those other cases were saying, then, is that when judgment has been recovered, the action to sue for the debt—or, as lawyers would now say, the entitlement to bring such action—is gone. The debt is not.^[102]

The picture across the Atlantic is worth noting as well. Founded in 1923, the American Law Institute publishes Restatements of the Law which share the aim of civilian codes of stating the law in a series of short propositions. These are not binding legal statements, but they do have foundational importance in American lawyers’ understanding of their laws.^[103] For our purpose, it appears that the American Law Institute has made a subtle but decisive shift in their understanding of the effect of a favourable judgment for a claimant. Early in the last century, Restatement First: Contracts confidently stated: ‘A contractual duty … is discharged by merger when a judgment to enforce that duty is rendered against the party subject to the duty … ’.^[104] Merger was discussed in Restatement First: Restitution^[105] and Restatement First: Torts^[106] as well, on the basis of the view expounded in Restatement First: Judgments that it was a question of substantive law, because ‘[a] valid judgment always affects the legal relations of persons’.^[107] The change in attitude became visible from the late 1970s, when Restatement Second: Torts and Restatement Second: Contracts ceased to treat merger, because it was now thought to be a ‘matter[ ] of procedure’.^[108] Restatement Third: Restitution and Unjust Enrichment^[109] contains no reference to merger at all. Crucially, Restatement Second: Judgments no longer states that judgments affect legal relations. Rather, merger is now said to result in ‘the claim [being] extinguished’,^[110] and is understood to be a part of the ‘law of res judicata’, described as ‘a subcategory of the law governing procedure in civil actions’.^[111]

The Restatements are not binding in America, still less in England. It is not suggested that this shift in thinking of the American Law Institute—if a shift indeed there has been—is probative or conclusive of the position under English law. But the considered views of this learned body of common lawyers should at least prompt their counterparts on this side of the Atlantic to revisit the ingrained assumption—however time-honoured it may appear to be—that judgment extinguishes contractual debt. The question is, how do we test it?

2.2.3. Can Creditor enforce security?

We suggest that the answers to our second question provide solid proof that Mr Justice FitzGerald and others were right to say that a debt subsists beyond judgment and that the doctrine of merger has no substantive effect whatsoever.

2.2.3.1. To recoup the €80 judgment sum?

The answer to this part of the question is ‘Yes’.^[112] To understand why, we need to recall the basic principle that ‘the holder of a security’, in Lord Reed’s words, ‘holds a right, accessory in nature, which he can exercise to secure the payment of the debt that is distinct from, and additional to, the right of action and execution which any creditor can exercise to enforce the performance of the debtor’s personal obligation’.^[113] In other words, the enforceability of a security for a debt is distinct from the actionability of the debt. Therefore, security is in no way affected or compromised by the creditor’s recovery of a money judgment.^[114]

If merger did extinguish the contractual debt, it would not be possible for Creditor to enforce the security to recoup any amount. This is because the security would cease to exist from the very instant money judgment was pronounced.^[115] It is a basic principle that security is accessory in nature and goes whenever the underlying debt is discharged or extinguished.^[116]

One may try to explain away Creditor’s ability to enforce the security by saying that, post judgment, the object of the security is transposed from an erstwhile €100 contractual debt to the new €80 judgment debt.^[117] There are two answers to this. First, it is an unusual explanation, and one would expect a proposition of such importance, if it existed, to rank among the foundational principles of the law of security—but it is not. Secondly, as we shall explain presently, Creditor’s ability to enforce the security is not limited to the judgment sum; it extends to her full contractual entitlement.

2.2.3.2. Or even, to recoup the €100 contract sum in full?

The answer to this part of the question is ‘Yes’ as well.^[118] This answer was given by the House of Lords more than a century ago in Economic Life Assurance Society v Usborne (1902),^[119] in the context of the continuing interest situation that we discussed earlier.^[120] Usborne concerned a mortgage deed dated 1858, whereby the borrowers^[121] agreed to repay the lenders^[122] the principal sum borrowed, with interest at 5% p.a. ‘until payment’ of the principal; at the same time, the lenders agreed to release the mortgaged assets upon payment by the borrowers of the principal with interest ‘in manner [so] covenanted and agreed’.^[123] In 1897, the lenders recovered judgment for a sum comprising the principal then remaining unpaid along with 5% interest computed up to the date of judgment^[124]—consistently with the court practice we saw earlier. Later, proceedings were commenced by the borrowers’ other creditors^[125] for the appointment of a receiver^[126] and for an account of how much each creditor should be paid in accordance with their priorities. For the lenders specifically, the question was therefore how much should be paid to them in discharge of the mortgage. It was clear that the mortgage deed did not contain one of those ‘independent covenants’ respecting interest.^[127] And the lower courts,^[128] swayed by the debt-merging theory, held that the lenders were not, in enforcing the mortgage, entitled to recoup interest at 5% in the post-judgment period, because this portion of the contractual debt had gone, so it was thought. The courts held that the receiver should pay the lenders the sum stated on the 1897 judgment, together with 4% interest on this judgment debt as interposed by statute.^[129]

That decision was overturned by the House of Lords. The Earl of Halsbury said that it involved ‘a confusion of thought’:^[130]

Where you are endeavouring to sue by any form which the law recognises for the realization of the security, or to free it from all claims, whether it be in the form of the redemption of a mortgage, or whatever the form be, all the rights arising from the instrument in question are to be observed; and it is idle to say, because the right as to one specific sum of money has been changed in its nature—changed from a right to sue upon the covenant into a judgment bearing interest at 4 per cent—that therefore you have got rid of the other obligations which are involved in either the realizing of the security or the freeing of the security, in whichever form it arises, from the claims attaching to it.^[131]

This profound but somewhat packed explanation was amplified by the speech of Lord Davey. He explained that the doctrine of merger only meant that ‘when a judgment is recovered in respect of a debt any other personal remedy for the same debt is extinguished or merged in the judgment’ (emphasis added).^[132] In other words, the right of action is gone;^[133] even a secured creditor—such as the lenders in Usborne, who did not have the benefit of an ‘independent covenant’—is precluded from suing the debtor a second time for a second money judgment.^[134] But the enforcement of security, including the realisation of it through foreclosure or redemption proceedings, is entirely distinct from an action to sue for a money judgment. Even if judgment has been recovered for a smaller sum, a secured creditor is entitled ‘to sit upon their deeds’, meaning, ‘to hold their security until they have been paid every penny of the [debt] measured by what is expressed in the covenant’.^[135] Of course, security may be taken on terms that only a portion of the debt is secured; just like the mortgage deed in Usborne could have required the lenders to release the mortgaged assets upon payment of the principal with interest up to the date of any judgment recovered;^[136] or, in our scenario, the €100 debt could have been secured only as to such part which had been sued to judgment. But that was not how the mortgage in Usborne or the security in our case scenario was worded. Both were straightforwardly security for the payment of the entire debt. The lenders in Usborne were entitled to recoup interest at 5% in accordance with the terms of the mortgage deed, that is, ‘until payment’ of the principal, not until judgment.

That is the important insight offered by Usborne: a secured creditor’s post-judgment ability to extract from the security her full contractual entitlement is solid proof that the doctrine of merger does not extinguish the contractual debt. In our case scenario, for instance, it is impossible to understand how, on the one hand Creditor can enforce the security to recoup the €100 contract sum in full, while on the other it is said that the €100 debt is gone and replaced by the €80 judgment debt.

One may be struck by the notion that, post judgment, Creditor has both a subsisting contractual right to be paid €100 and a new judgment right to be paid €80. How is that possible? Would that not lead to double recovery? The answer lies in Lord Justice Bankes’s explanation that a money judgment ‘merely operates as an additional security for the due payment of the debt’.^[137] Judgment is not of course security in the strictest sense. What Lord Justice Bankes meant was that a money judgment operates like a security, so that Creditor’s right to be paid €80 under the judgment—along with the ensuing entitlement to execution—is limited to a security function and is accessory to the €100 contractual debt. Once the judgment has been fully satisfied, either voluntarily or by execution, the contractual debt will be reduced to €20.^[138] Conversely, if Creditor fully recoups €100 from the security, the judgment will cease to have force even without an annulment from the court; any subsequent attempt to execute the judgment will be wrongful.^[139] However, if ever the creditor is unable to recoup €100 fully from the security, she can always fall back on the judgment and execute it to recover the balance of the contract sum, as long as that is within the limit of the judgment sum.^[140] If Creditor recoups €80 from the security, the judgment will remain executable for €20. If she recoups €50, then €50. If €20, then the €80 in full. The debt-merging theory struggles to explain why, in all these situations, the money judgment stands enforceable for the balance of the contractual debt (up to the judgment sum) rather than the balance of the judgment debt.

2.3. Summary

In summary, the proper effect of the doctrine of merger is to bar a successful claimant from reasserting her contractual entitlement to be paid a debt, in a bid to recover a further money judgment. Properly explained, the mode by which the doctrine of merger brings about this preclusive effect is to extinguish the successful claimant’s entitlement to assert her monetary entitlement by action. These two entitlements are distinct. The doctrine of merger does not extinguish the monetary entitlement itself—only the entitlement to sue upon it. Where the creditor has no security, the practical outcome of merger is that she cannot recover any deficiency between her actual monetary entitlement and the judgment sum. All she can now do is to execute the judgment; and if the judgment sum falls short of the contract sum, it cannot be helped. This may generate the impression that, post judgment, all that is left for the creditor is her entitlement under the judgment. An examination of the position of a secured creditor reveals this to be an illusion. The contractual debt is not gone; it merely becomes unactionable. The widely held assumption that the debt is merged in and extinguished by judgment is wrong.

It may seem a wonder that, despite in possession of these answers, English lawyers have so nurtured the debt-merging theory that it may persist for so long. This is probably due to the fact that the theory, fallacious though it is, largely does no harm. As we have seen, for an unsecured creditor, the impression that the contractual debt is gone certainly looks very real in the practical nature of things. Moreover, the position of a secured creditor may not always enter the picture so as to be ever present in the minds of judges and jurists writing on the topic.^[141] Even when secured creditors are indeed involved, the right result can somehow be reached by (mis)reading the principle upheld in the Usborne case as creating an exception to the doctrine of merger rather than as clarifying its true analytical import.^[142] These, along with certain confusions engendered by that anomalous form of English judgments,^[143] may be some of the reasons why the fallacy has lingered on. On the other hand, how that theory originated in the first place is an entirely different question. As the quotation from Coke’s report of the Higgens’s Case indicates,^[144] the genesis of the fallacy lies deep within the historical evolution of English law. But the unravelling of all this must await another day.^[145]

3. German law

3.1. Foundations

3.1.1. Main German preclusion doctrines

Under German law, (re-)litigation may be precluded mainly on two grounds: (1) on the claim preclusive effect of a judgment according to the German Code of Civil Procedure (Zivilprozessordnung, hereafter ‘ZPO’); or (2) on the basis that it would constitute an abuse of rights or abuse of process, violating the principle of good faith enshrined in § 242 of the German Civil Code (Bürgerliches Gesetzbuch, hereafter ‘BGB’).

Ground (1) falls under the doctrine of res judicata (materielle Rechtskraft).^[146] Provided that a judgment is final (formelle Rechtskraft)^[147]—meaning that it is no longer subject to appeal—res judicata applies (only) to such part of the claimant’s legal entitlement (Anspruch)^[148] that was pursued in the relevant action^[149] and adjudicated on by the court.^[150] In other words, the res judicata effect of a judgment is determined by the plaintiff in the statement of claim (Klageantrag). This is because, pursuant to the principle non ultra petita, which forms part of the more general procedural principle of party disposition (Dispositionsmaxime), the court may only rule on the claim declared in the statement of claim and may not award more than what was claimed, or an unclaimed relief.^[151] Claims are identical if they concern the same cause of action (Streitgegenstand or prozessualer Anspruch), and this is determined based on two requirements that must be fulfilled in conjunction:^[152] the identity of the underlying factual basis on which the claim is based, and the identity of the relief sought—both defined by the statement of claim. Claims are considered identical if they at their core ultimately seek to achieve the same.^[153] A subsequent claim is also treated as identical with a previous claim if it reasserts parts of that previous claim.^[154]

Res judicata thus bars the re-litigation of the same claim as declared by the plaintiff in the previous trial.^[155] This means that, on the one hand, the courts are prohibited from issuing a second decision on the merits, where an action is brought for the same claim (ne bis in idem) or its contradictory opposite.^[156] Such action would be inadmissible and declared by the court as such ex officio.^[157] On the other hand, if the claim that was ruled on in the first trial constitutes a prerequisite under substantive law for the claim brought in the second trial, the judgment on the first claim has prejudicial effect.^[158] This means that the second decision must be based on and be congruent with the first one.^[159]

Ground (2) is not based on any preclusive effect of a previous judgment, but is associated with the parties’ conduct.^[160] It may be derived from the general principle of good faith under German law and the court’s and parties’ duty to conduct fair proceedings.^[161] Accordingly, a party may be barred from bringing an action in the first place or putting forward certain arguments, if the relevant party’s conduct is in violation of the good faith principle and the duty of fair processing, and is abusive of the civil procedural system.

3.1.2. Claim splitting

Bringing a partial action (Teilklage), ie an action for only a portion of the claimant’s legal entitlement and thereby splitting the claim for it, is a common occurrence in German civil procedure. While partial action is not explicitly prescribed in German statutory law,^[162] it is derived from the general procedural principle of party disposition.^[163] So, if an action is brought for a portion of a legal entitlement, the court may only rule on that portion.

Pursuing only parts of an entitlement can be in the parties’ interest for several reasons.^[164] The parties may test the outcome of their dispute in a cost-effective way, especially in a case that involves difficult legal and evidentiary issues. Since the court fees are calculated based on the amount in dispute, it is cheaper for the parties to only litigate parts of an entitlement to clarify their legal positions first, especially where large sums are concerned. If the judgment is rendered in favour of the plaintiff, the defendant may be inclined to fulfil the remaining entitlement out of court, so as to avoid further court proceedings and associated costs. Conversely, even if the plaintiff failed, costs have been saved and she could then refrain from bringing another action. It may also be in the parties’ interest to keep the claim value below a certain monetary threshold. In this way, the case may be heard, not in the regional courts or even the higher regional courts in the form of the newly established ‘Commercial Courts’,^[165] but in the local courts, where the legal fees may be lower, among other things, because representation by a qualified lawyer is not mandatory.^[166] In general, there is also no appeal available against decisions below a certain value of the matter under appeal.^[167]

However, in contrast to the situation under English law,^[168] debt with continuing interest is—while theoretically possible—generally not a case where partial action or re-litigation is sought by a creditor in practice. This is because German judgments, unlike English judgments, may incorporate the full (contractual) interest accruing until the date of actual payment of the principal, beyond the date of judgment, provided that it is claimed as such.^[169] Therefore, when executing the judgment, the creditor can already recover the full (contractual) interest.^[170] So there is generally no need for a second action.

The prerequisite to bringing a partial action is that the legal entitlement must be divisible in nature. Essentially what this means is that the legal relationship asserted in the action is divisible. Monetary entitlements, eg debts or damages, are naturally divisible in this sense and they constitute the vast majority of partial actions. On the other hand, certain declaratory actions and claims for injunctive relief are indivisible.^[171]

Partial actions, for the purposes of this paper, may appear in two forms: (1) open partial actions (offene Teilklage), where the plaintiff expressly declares that she is pursuing a portion of her entitlement only, reserving the right to claim the rest in another action;^[172] (2) disguised partial actions (verdeckte Teilklage), where the plaintiff does not disclose (and perhaps does not even know at the time) that she is only claiming a portion of her entitlement.^[173]

3.2. Our case scenario

3.2.1. Can Creditor sue Debtor a second time for the €20 contract balance?

Given German law’s openness to claim splitting, it is true that Creditor can generally sue Debtor again for the balance, unless Ground (1) or Ground (2) bars her from doing so. Let us explore the various ways in which this preclusive outcome may be achieved.

3.2.1.1. Not if res judicata effect of the judgment extends to €20

Starting with Ground (1): Creditor would be barred from claiming €20 if the previous judgment for €80 creates res judicata effect to that result. Since the judgment is final, it fulfils the conditio sine qua non for res judicata effect. Accordingly, Creditor would be barred from claiming €20, if either (1) this second claim was considered identical to the first claim for €80; or (2) the judgment for €80 was considered to have resolved all of Creditor’s entitlements.

The first option can be disregarded straight away, because it is obvious that even though both claims have the same underlying factual bases—the contractual relationship between Creditor and Debtor—an order for payment of €80 is a different relief claimed than an order for payment of the remaining €20.^[174]

The second option, ie that the judgment for €80 has resolved all of Creditor’s entitlements, must be examined more closely. As explained before, the court in the first trial is restricted to ruling on what was claimed, based on the statement of claim, and a judgment only has res judicata effect within the confines of that claim. Therefore, the judgment for €80 may only have resolved all of Creditor’s entitlements, if (1) the first action for €80 was actually an action for the entire entitlement under the contractual debt; or (2) Creditor’s conduct in bringing the first action for €80 was interpreted by the court in the second trial as an action for the entire entitlement.

It would have actually been an action for the entire entitlement if what was claimed was indivisible in nature. But since Creditor has an entitlement to a debt, and therefore seeks monetary relief, that entitlement may be split with regard to the amount and generally pursued in parts via partial actions.

So, only the interpretation of Creditor’s conduct in the first trial remains as a possible basis for extending the res judicata effect of the judgment to the remaining €20, thereby barring a subsequent action for that amount. This can happen if it is possible to interpret the action for €80 as an action for the entire entitlement. If Creditor brought an open partial action, there would not be any room for such interpretation of conduct, and this is undisputed.^[175] By pursuing only €80 and explicitly reserving the right to pursue €20 in a subsequent trial, the court in the first trial is restricted to ruling on €80 as a portion of the wider entitlement. Since the €20 portion of the entitlement was not part of the first trial, the court in the second trial has no basis to interpret the judgment for €80 as fully resolving Creditor’s entitlement. Therefore, the res judicata effect only extends to €80.

However, in our case scenario, because Creditor did not disclose that €80 was only a portion of the €100 debt, it must follow that she did not expressly reserve the right to bring another partial action for €20. We are therefore in the territory of disguised partial action.

The majority view held by scholars^[176] and reaffirmed in jurisprudence^[177] is that open and disguised partial actions are generally to be treated the same, meaning that, under our case scenario, the court in the first trial is understood to have only ruled on €80 and so any res judicata effect merely extends to that. While it is accepted that Creditor’s statement of claim and conduct in the first trial must be interpreted and the court in the second trial could conclude that Creditor had brought her entire entitlement in the first trial and so the court had ruled on that entire entitlement, they argue that there is rarely any room for this interpretative result, where the legal entitlement is divisible, quantified, and limited to a certain amount. This is because from such an entitlement, the scope of what the court may rule on is clearly restricted to that partial amount declared in the statement of claim. Consequently, the judgment only has res judicata effect with regard to that partial amount and not the rest of the entitlement.^{[178], [179]}

Some scholars argue for a different interpretative approach. According to them, Creditor’s partial claim for €80 that was not declared as such must always be understood as an action for all of Creditor’s entitlements, so that the res judicata effect of the judgment for €80 would extend to the full €100, thereby preventing Creditor from litigating the rest of her entitlement in a second trial.^[180] Their proposition effectively stems from considerations of procedural fairness which might be endangered by a disguised partial action. These considerations also underpin the doctrine of good faith, which we will discuss below. For now, we observe that relying on considerations of procedural fairness to extend the effect of res judicata is neither a mainstream opinion nor a favourable understanding of German law. Following this path would essentially abolish disguised partial action and contradict established res judicata doctrine.

In summary, it is unlikely that Creditor’s claim for €20 will be barred under the doctrine of res judicata. Creditor could have definitely sued Debtor a second time for €20, if she had disclosed in the first action that she was only bringing a partial action. In that case, res judicata would clearly cover €80 only and not the remaining €20 then pursued in the second action. On the other hand, where Creditor did not disclose in the first action that she was only bringing a partial action, as in our case scenario, she may be barred from suing Debtor a second time for €20. This outcome can be achieved if Creditor’s initial claim for €80 is interpreted as intended to be a final resolution of all of her entitlements. In that case, the first judgment for €80 would have res judicata effect over the entire entitlement and the second action for €20 would be inadmissible. Under the prevailing view, however, such interpretation of conduct would be highly unlikely.

3.2.1.2. Not if subsequent claim for €20 is considered abusive

Moving over to Ground (2): Creditor could be barred from suing Debtor a second time, if such suit would violate the general principle of good faith under German law and the court’s and party’s duty to conduct proceedings fairly, thereby constituting an abuse of rights or process. There are several situations in which a subsequent claim may be considered abusive.

First, it could be considered abusive if Creditor deliberately split the claim for her legal entitlement only to remain under a court’s monetary thresholds. However, splitting a claim for this purpose is generally permitted if Creditor brought the claims for €80 and €20 one after the other, and not at the same time.^[181] If the claims were brought at the same time, then it is apparent that the Creditor was not making use of most of the advantages associated with partial actions. A cheaper and more convenient way of resolving the entire entitlement would have been available to Creditor in the form of extending the action, in order to combine both sums in one action.^[182] Therefore, Creditor would lack the need for legal protection and either the action for €80 or the one for €20 would be dismissed.^[183] In our case scenario, however, where the Creditor only brought the action for €20 after having obtained favourable judgment for €80, there is not such procedural instrument available to Creditor and so the action for €20 will not be dismissed on this ground.

Second, it may be considered abusive in extreme cases if Creditor brought the claim for €100 literally ‘drop by drop’ only to visit the Debtor with disproportionate court fees.^[184] This would be considered harassment and the corresponding action would be dismissed. This is not the case in our scenario, however. Note, also, that the statute of limitations is only suspended for the part of the legal entitlement that is claimed.^[185] So, indefinitely stretching out partial actions drop by drop is not always possible and therefore only a subordinate concern in practice.

Third, some argue that bringing a disguised partial action is per se abusive.^[186] This proposition is another manifestation of the minority view under Ground (1) but leads to different legal consequences (ie the subsequent action being admissible but unfounded, instead of inadmissible outright). To approach this proposition, we must appreciate the differences between open and disguised partial actions from the perspective of Debtor.

If Debtor was confronted with an open partial action, he may put the entire €100 to resolution by counterclaiming a declaration that beyond €80 nothing more was owed.^[187] In this way, Debtor may evade the split resolution of Creditor’s legal entitlement via partial action brought by Creditor. Provided that Creditor was ultimately successful in pursuing the entire €100, it would be less costly if the claim was not split into the partial claim for €80 and another for €20 but resolved in one trial, because of the degressive increase of court fees. If Creditor brought a disguised partial action, however, Debtor might not be alerted to the availability of this option, since he might have no knowledge of the fact that Creditor was merely bringing a partial action for €80, intending to claim the rest in a subsequent trial. The partial action is generally a cost-saving instrument for both parties, in the sense that the court fees for a partial claim are lower, and Debtor, if unsuccessful, could choose to pay the remaining €20 outside of court proceedings. But if Debtor was surprised by Creditor bringing the remaining claim for €20, because he did not recognize the first action for €80 as a partial action, Debtor might not be prepared to pay voluntarily.^[188] Further, it is possible that, confronted with a low-value claim for €80 that is not expressed to be a partial action, Debtor might have defended himself with less intensity and care, compared to the situation where Creditor and Debtor understood that the claim for €80 was only a stand-in for a total entitlement of higher value €100.^[189] We must not underestimate the effect a judgment rendered in a partial action has on a subsequent trial for the remaining entitlement. Even though it is not strictly speaking res judicata for the remaining entitlement, a later court will be inclined to decide in line with the previous decision, particularly if the same court and the same judges are concerned.^[190]

So, we can see that the disguised partial action can potentially lead to an imparity between Creditor and Debtor that does not exist under the open partial action. Imparity alone, however, does not suffice to raise the accusation of abuse of process against Creditor. Assuming Creditor did not know her bringing of an action for €80 was only a partial action (because eg she did not know her entitlement amounted to €100), she could neither have extended the claim in the first trial to €100 nor disclosed the partial nature of the action for €80 so that Debtor could have responded properly. An abuse of process may therefore only come into question where Creditor knew or was negligently unaware that the claim for €80 in the first action was actually only part of the bigger entitlement to €100.^[191]

The next question, however, is how we might deal with such an abuse. As stated under Ground (1), even if there was an abuse of process by Creditor, we must not disregard the rules of res judicata. But even then, there are several potential consequences for the second action for €20 to consider.

Some scholars argue for mandatory consequences: Peter Marburger advocates that Creditor in the second trial for €20 had to be precluded from arguing such claim, if, during the first trial for €80, she was aware that she was bringing a disguised partial action, or was negligently unaware of this.^[192] On this view, the second action for €20 would be admissible but unfounded. This proposition is based on an analogy with several preclusion provisions. Ultimately, however, this approach is not convincing.^[193] It is foreign to German procedural law to preclude a claimant from raising a certain legal entitlement for the first time (which is the case with respect to the remaining part of the entitlement, ie €20), or to lose a legal entitlement based on negligently not raising it. In addition, the provisions used by analogy are special provisions that cannot be generalized in this form.

Other scholars qualify the abuse as a breach of duty under the legal relationship that exists between Creditor and Debtor as plaintiff and defendant to a civil trial (which is different from the contractual relationship that is the basis of the dispute in the first place).^[194] So, if Creditor knew or was negligently unaware that the claim for €80 was actually only part of a bigger entitlement to €100, bringing the second action for the remaining €20 would make Debtor eligible for damages under the legal relationship between them as plaintiff and defendant. The damages would be in the amount of the difference in legal fees between what would have to be borne if the entitlement to €100 was resolved in one trial and what is now borne for the resolution via partial actions for €80 and €20. On this view, however, Creditor would not be precluded from bringing the second action for €20 and the action would potentially be successful on the merits. The Debtor could only offset his damages claim against the second partial claim for €20.^[195]

In summary, there is more—albeit still little—likelihood that Creditor’s claim for €20 might be barred for being abusive under the doctrine of good faith. Arguably, Creditor would cause procedural prejudice to Debtor, if she knowingly brought a disguised partial claim for €80. According to some scholars, this conduct would constitute an abuse of process in itself and in consequence, Creditor’s second action for €20 would be admissible but unfounded, either wholly (according to Peter Marburger) or partially (due to set-off with damages). The same is argued to be the result where Creditor was negligently unaware of the total entitlement to €100. These are not mainstream opinions, however. Finally—and only this we argue to be a commonly held view—it would be abusive for Creditor to bring several partial claims at the same time, or to split her claims excessively in order to cause disproportionate court fees. Such claims would probably from the outset (ie before any trial, not just in a subsequent trial) be thrown out as inadmissible, and Creditor would then have the opportunity to restructure her approach. But our case scenario is not such a case.

3.2.1.3. Outside the main preclusion doctrines: interpreting the claim for €80 as forgiving the rest

Under the prevailing opinion, Grounds (1) and (2) are unlikely to lead to the preclusive effect under discussion, but there might be a Ground (3) that prevents Creditor from suing Debtor a second time for €20. This is not part of the main preclusion doctrines under German law, although it may—on van de Velden’s framework—be understood as an ‘agent for finality’ as well. It is drawn from substantive instead of procedural law.^[196] Here once more the interpretation of conduct comes into play (conduct that happens to have occurred in the course of a trial, but which could have also taken place out of court): Creditor’s conduct in bringing the first claim for €80 is correctly understood as only bringing a partial claim (contrast the minority view under Ground (1)), but further than that, the conduct during trial is interpreted as forgiving any potentially remaining parts of the debt. It is interpreted, for example, as an offer to conclude a contract of forgiveness under § 397 BGB. Such conclusion, however, must not be drawn too easily. First, there is really only room for such interpretation where Creditor brought a disguised partial action, as in our case scenario.^[197] Second, Creditor must generally have knowledge of her entire entitlement to €100.^[198] And third, there must be positive indications suggesting Creditor’s intent to forgive the remaining debt—an interpretative conclusion only rarely reached by courts, as such forgiveness must never be assumed.^[199] Still, under the assumption that Creditor did have the necessary knowledge and there was sufficient indication of intent, her conduct could be interpreted as forgiving Debtor the remaining €20. The second action for €20 would then be admissible but unfounded, not based on any of the main preclusion doctrines, but because the debt to the extent of €20 was gone, since the parties had concluded a contract of forgiveness.

3.2.2. Can Creditor enforce security?

We now turn to consider the analytical question of whether a judgment has ‘substantive’ effect of extinguishing the debt on which the claim is brought, against the backdrop of the second question of our case scenario.

3.2.2.1. To recoup the €80 judgment sum?

Under German law, no matter whether Creditor is precluded from suing Debtor a second time, it is undisputed that Creditor can enforce the security to recoup €80. Post judgment, Creditor can still choose to fall back on the original security.^[200] Once Creditor has got satisfaction from realising the security, she will be precluded from executing the judgment against Debtor.

3.2.2.2. Or even, to recoup the €100 contract sum in full?

The answer to this question is more complex, as it depends on whether Creditor is precluded from suing Debtor a second time and, if so, the basis on which she is so precluded.

To start with, if Creditor is not precluded from suing Debtor a second time, then she must be able to enforce the security to recoup €100 in full, for the reasons explained.

Even if Creditor is precluded from suing a second time under Ground (2), because her second claim against Debtor is barred by the doctrine of good faith for abuse of process, she should still be able to enforce security, unless her doing so is considered abusive in itself.

From the above, we may now determine that the first judgment for €80 only has procedural effect; it does not extinguish the underlying debt.^[201]

On the other hand, Creditor cannot enforce security to recoup €100 in full, if she is precluded from suing a second time under Ground (1) on the basis that her conduct in bringing a disguised partial action for €80 is interpreted as resolving her entire entitlement to €100. This is not because the contractual debt is gone. Rather, it is because the judgment for €80 will have res judicata effect as to the remaining €20, and under German law, this res judicata effect will apply in favour of Debtor as well as a third-party security provider, even if the latter was not a party to the proceedings in which judgment was given.^[202] In terms of the res judicata effect, German law sees no difference between (a) Creditor initially claiming €100 but the court determines that Debtor only owes €80, not €100 as claimed; and (b) Creditor initially claiming €80, omitting to claim the balance, and the court interprets this conduct as intending to bring the entire entitlement to €100 to resolution. In both situations, Creditor cannot contradict the judicial resolution that her entitlement is limited to €80. Therefore, Creditor cannot sue or enforce security against Debtor for the remaining €20, and this extends to suing or enforcing security against a third-party security provider.

Finally, Creditor also cannot enforce security to recoup €100 in full, if she is precluded from suing a second time under Ground (3) on the basis that her conduct in bringing a disguised partial action for €80 is interpreted as forgiving €20. The debt, to the extent of €20, is gone, but only because of Creditor’s conduct and not because the judgment for €80 itself extinguishes any part of the debt. Because the debt to the extent of €20 is gone, Creditor cannot enforce security to recoup €20.

3.3. Summary

In summary, under German law, in theory, a creditor may be precluded from reasserting the contractual debt for a greater money relief based on one of the main preclusion doctrines (Grounds (1) and (2)) or another agent of finality (Ground (3)). In reality, the application of Grounds (1) and (2) to achieve this preclusive effect is not looked favourably upon by the prevailing opinion, although Ground (3) is treated in a different light. Regardless, this preclusive effect is always—under all Grounds—subject to the possibility of the creditor expressly reserving in her statement of claim the right to bring another partial action in the future. This flows from the general procedural principle of party disposition and German law’s resultant openness to claim splitting. Moreover, as regards disguised partial action, the prevailing view supported by jurisprudence is that this preclusive effect is not automatic, but is always—again under all Grounds—subject to the court’s evaluation of the creditor’s conduct, knowledge, and intention in bringing the first action. In all cases, post judgment, a secured creditor can fall back on the security and recoup at least the judgment sum. Where the creditor is not precluded from suing again, or is precluded under Ground (2), she can even enforce the security to recoup the full contract sum. All this is testament to the fact that judgment does not extinguish the underlying debt. Under Grounds (1) and (3), a creditor cannot recoup the debt in full from the security, but this is not because the judgment extinguishes the debt; it is because the court interprets the conduct of the creditor as either intending to bring all of her entitlements to a full resolution, or as forgiving the unclaimed part of the debt.

4. Conclusion

Drawing the threads together, we hope that this paper has substantiated two important points of comparative interest.

First is that under both English and German law, a money judgment ordering a debtor to pay his debt does not have the substantive effect of extinguishing the debt. This is confirmed by the fact that, under both systems, a secured creditor is able, post judgment, to enforce the pre-existing security for the debt to recoup the judgment sum, at the least; under English law and in some situations under German law, she may even recoup the contract sum in full, where that is greater than the judgment sum. It is a common mistake to assume that English law approaches the effect of money judgment differently from civil law systems. Properly analysed, the English doctrine of merger in rem judicatam is a procedural rule that regulates actions for monetary relief in the courts. While its rigid operation may lead to harsh consequences, these consequences flow from procedural law and are procedural in nature only.

Second is that we have been able to identify several mechanisms in German law by which a creditor may be precluded from suing for the balance, potentially achieving an outcome that is somewhat similar to that obtained under English law. This confirms van de Velden’s argument—speaking as he did from Dutch law—that just because a legal system does not bar ‘claim splitting’ by default, it does not necessarily follow that there is nothing in that system that can be invoked to curb reassertion.^[203]

The ‘functional’, ‘principle-oriented’ approach to comparing preclusion laws does not entail overlooking systemic differences and overreaching conclusions. In comparing different laws, the differences are just as important as the similarities. It is useful to recap the three major differences we have identified.

First, because of the distinct meaning of res judicata under English law, the preclusive effect arising from the doctrine of merger fastens immediately, even if the judgment remains subject to appeal. In contrast, a matter is not res judicata under German law until appeal is exhausted or no longer available. At least if we take the res judicata approach, ie Ground (1) in our German law analysis, there is this difference in timing to consider.

Secondly, all three mechanisms under German law operate upon the court’s evaluative adjudication. In contrast, there is no room for such inquiry under English law and, in this sense, the doctrine of merger operates automatically.

Thirdly, although it is our conclusion that under both systems a money judgment does not have any substantive impact on extra-curial legal relations, under German law, there are situations—ie under Grounds (1) and (3)—where, post judgment, a secured creditor may nonetheless lose the benefit of the security for the balance between a higher contract sum and a lower judgment sum. This is—we stress—not because the judgment itself extinguishes the contractual debt to that extent. Rather, it is either because the res judicata effect of the judgment extends to the enforcement of security (whether as against the debtor or a third-party security provider), or because the creditor’s bringing of the first action is interpreted as generating a contract of forgiveness for the unclaimed portion of the debt. On this front, therefore, ie the question of post-judgment enforcement of security, there is this significant divergence between English and German law, even if all three mechanisms have the potential of achieving, under German law, a similar preclusive outcome to that which would follow from the English doctrine of merger, with respect to a second money claim.

These are analytical differences, but there is, we suggest, a difference of a different kind. In comparing different legal systems, we must not forget the reality and fixate solely upon theoretical possibilities. To a German lawyer, this whole exercise of trying to look for ways to preclude a second money claim may look baffling, and English lawyers must not too readily dismiss this gut reaction as no more than a civilian peculiarity. The reaction of a German lawyer bred in the traditions and usages of their own legal system must be carefully unpacked and understood. This is not the place to put forward any comprehensive argument, but we will venture a thought, which is this. In the context of a legal system that gives central importance to the principle non ultra petita,^[204] the whole question about ‘claim splitting’ is really, generally speaking, a non-starter. At a fundamental level, most German lawyers do not see any problem with ‘splitting’ a monetary claim. This is because under the German system, a money claim is defined, not solely by reference to abstract rules of law like how English law does it, but by the claimants themselves, acting against those rules. For an English lawyer, reflection will reveal that a ‘cause of action’ in this context is really the right to sue for a particular kind of relief to which a person is by law entitled on a legally significant set of facts—so we speak of whether there is a cause of action for monetary relief, a cause of action for declaratory relief, a cause of action for injunctive relief, so on and so forth.^[205] To German lawyers, however, ‘cause of action’ is defined additionally by reference to the particular extent of the kind of relief that the claimant has specified in her statement of claim. At an analytical level, as long as the claimant wills it, she can have as many causes of action for monetary relief arising from the same set of facts as possible. It is for this reason that all three mechanisms we have identified cannot apply where there is an open partial action.^[206] Even in the context of a disguised partial action, a candid German lawyer will tell you that the application of one of those mechanisms to achieve a similar preclusive outcome as that reached under English law, while theoretically possible, does not sit easily with their lawyerly instincts. Provided that their system works well in practice though, who are we to say that they have got it wrong (and vice versa)?

The ultimate lesson is that there is no single right way of doing things. This comparative exercise has helped us see more clearly that the English doctrine of merger in rem judicatam does not exist for its own end. It is there to buttress, and is therefore explicable intelligibly only by reference to, the long-standing judicial policy that claiming a further money judgment where you have had the opportunity to recover your whole monetary entitlement is a bad thing—is vexatious, as it were. This is not the stance of German law—not at least as the position from which legal analysis begins.

To van de Velden’s trailblazing guidance on comparing preclusion laws, perhaps one more point should be added in consequence: that the principle of finality in litigation, while no doubt recognised by all functioning legal systems in the world, may itself be understood differently. To each their own.^[207]

Endnotes

* An earlier version of this paper was published under the title, ‘Debt, Judgment, and Security: English and German Approaches to Preclusion’, in Bettina Heiderhoff and Ilaria Queirolo (eds), Private International Law and the European Union: Developments in Contemporary Private Law (Editoriale Scientifica 2026), which is a volume of contributions from the participants of the Programme in European Private Law for Postgraduates 2024–25. For fond memories and fruitful exchange we are indebted to the organisers of the Programme, especially its founder and lead coordinator, Professor Bettina Heiderhoff. We further thank the editors of the volume for permission to republish the paper here, albeit with rather significant updating and revisions in various parts. For their incisive comments on the occasion of this republication we thank the anonymous reviewers, as well as Professor Gerhard Dannemann and Professor Stefano Dominelli for facilitation. A still earlier version was presented to the Oxford Comparative Law Discussion Group and (with respect to the English law analysis) the Cambridge Private Law Centre, on separate occasions in March 2026. We are deeply grateful to participants at both events for their interest and feedback. Jonathan also thanks Eden Smith for helpful discussion on the historical aspect. Felix thanks his colleagues at the Institute for International and Comparative Public Law of the University of Münster for their helpful comments on Part 3.↑

† Doctoral Candidate, Faculty of Law and Downing College, University of Cambridge (email: ltc30@cantab.ac.uk). Writing Parts 1, 2 and 4.↑

‡ Doctoral Candidate and Research Assistant, Institute for Corporate and Capital Markets Law, University of Münster (email: felix.pollmann@uni-muenster.de). Writing Part 3.↑

1. Jacob B van de Velden, Finality in Litigation: The Law and Practice of Preclusion—Res Judicata (Merger and Estoppel), Abuse of Process and Recognition of Foreign Judgments (Wolters Kluwer 2017) 1. ↑
2. Van de Velden (n 1) 9. ↑
3. Van de Velden (n 1) 14–15. ↑
4. Van de Velden (n 1) 8–9. ↑
5. Konrad Zweigert and Hein Kötz, An Introduction to Comparative Law (Tony Weir tr, 3rd edn, OUP 1998) 34–36, 43–44. ↑
6. Our use of the word ‘claim’ in this paper requires a word of clarification. Under German substantive law, a person’s legal entitlement (eg a contractual debt) is denoted by the word Anspruch, which is usually translated into English as ‘claim’. To an English lawyer, however, the English word ‘claim’ is more naturally associated with either (1) the court proceedings in which a person’s legal entitlement is asserted (and, by extension, the right to bring such proceedings); or (2) the subject matter of such proceedings, ie the facts relied on and/or the particular relief demanded by the claimant. The second of those meanings roughly corresponds to Streitgegenstand or prozessualer Anspruch under German procedural law, which may also be rendered into English as ‘claim’. On the other hand, what is meant by Anspruch is, to an English lawyer, a ‘right’ or an ‘entitlement’, not a ‘claim’. Given this disjunction, and in order to facilitate comparative analysis as well as to avoid confusion, we will, in this paper, render Anspruch as ‘legal entitlement’, while the word ‘claim’ will be used throughout to mean a court action or its subject matter. ↑
7. Under German law, a creditor must normally sue the debtor before enforcing certain third-party personal security, unless the contract expressly abrogates this requirement. English law has no such rule. For our analysis of German law, we proceed on the basis that this requirement has been contractually abrogated. ↑
8. In other words, we assume that this judgment has acquired res judicata status in the respective legal systems. ↑
9. In other words, this is a different scenario from one where Creditor did claim €100, but the court has positively decided that the true value of the debt was €80 instead. Different considerations apply in that event: see n 118 (English law) and text following n 202 (German law). ↑
10. See text following n 44 (English law) and text following n 164 (German law). ↑
11. Van de Velden (n 1) 30–31; and see the rest of chapter 1 for details. ↑
12. Also known as the doctrine of former recovery, or by the full Latin tag transit in rem judicatam. ↑
13. Including a counterclaimant. ↑
14. Oxford English Dictionary, under this word. ↑
15. Van de Velden (n 1) 100. ↑
16. Van de Velden (n 1) 58, 71–72, 219. ↑
17. See text between n 155 and n 157. ↑
18. We use the expression ‘monetary claim’ advisedly. In Zavarco plc v Nasir [2025] UKSC 5, [2025] AC 738, the Supreme Court has held that a claimant may first seek a declaration before bringing a consequential claim for monetary relief. The Court further left open the question whether the grant of a final injunction would preclude a later monetary claim based on the same facts, despite the affirmative answer given in Serrao v Noel (1885) 15 QBD 549 (CA). ↑
19. Darley Main Colliery Co v Mitchell (1886) 11 App Cas 127 (HL) 132. See also King v Hoare (1844) 13 M & W 495, 504; 153 ER 206, 210; Nelson v Couch (1863) 15 CB NS 100, 108; 143 ER 721, 724–25; Brunsden v Humphrey (1884) 14 QBD 141 (CA) 147; Conquer v Boot [1928] 2 KB 336 (DC) 343; Clark v Urquhart [1930] AC 28 (HL N Ire) 54; Rothwell v Chemical & Insulating Co Ltd [2007] UKHL 39, [2008] 1 AC 281 [13]–[14]; Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2013] UKSC 46, [2014] AC 160 [17]; Zavarco (n 18) [29]. There is a similar rule in Scotland: Aitchison v Glasgow City Council [2010] CSIH 9, 2010 SC 411. In England, section 35 of the County Courts Act 1984 expressly prohibits the ‘division of causes of action’ ‘for the purpose of bringing two or more actions [in] the county court’. ↑
20. Section 3.1.1. ↑
21. ‘Let the judge not go beyond what has been requested by the parties.’ ↑
22. J A Jolowicz, On Civil Procedure (CUP 2000) 87, 176–77, 219–21, 252, 389–90, citing Air Canada v Secretary of State for Trade [1983] 2 AC 394 (HL). At 219 Jolowicz perspicaciously observed that English law’s subscription to the ‘dispositive principle’ was implicit rather than explicit, although the conception of an ‘adversary system’ might be explained as an ‘exaggerated’ asseveration of that principle. ↑
23. CPR 16.2(5): ‘The court may grant any remedy to which the claimant is entitled, even if that remedy is not specified in the claim form.’ ↑
24. It sufficed that the plaintiff had, in the originating writ and pleading (equivalent to today’s claim form and particulars of claim), plucked a figure that was large enough to encompass all the amounts she could possibly ‘prove’ to the jury: see eg Edward Lawes, A Practical Treatise on Pleading in Assumpsit (W Reed 1810) 429, 505, 513; Edward Bullen and Stephen Martin Leake, Precedents of Pleadings in Actions in the Superior Courts of Common Law, With Notes (1st edn, V & R Stevens & Sons 1860) 4–5 n (f); A W B Simpson, A History of the Common Law of Contract: The Rise of the Action of Assumpsit (OUP 1975) 63, 65, 580–81, 585–87; David J Ibbetson, A Historical Introduction to the Law of Obligations (OUP 1999) 31–32, 149; Jolowicz (n 22) 375; David Ibbetson, ‘The Assessment of Contractual Damages at Common Law in the Late Sixteenth Century’ in Matthew Dyson and David Ibbetson (eds), Law and Legal Process: Substantive Law and Procedure in English Legal History (CUP 2013) 126–27. ↑
25. Nelson (n 19) 109. See also Hoare (n 19) 504; Kendall v Hamilton (1879) 4 App Cas 504 (HL) 542. Discussed van de Velden (n 1) 44. In some old cases the justification was laid upon the historical practice of jury assessment of monetary award, the point being that it would be ‘inconvenient’ to allow a second trial, whereby a second jury might assess the award differently: Buckland v Johnson (1854) 15 CB 145, 166; 139 ER 375, 383–84; Brinsmead v Harrison (1872) LR 7 CP 547 (Ex Ch) 551–52. But this was specious reasoning, the second claim being barred even if there was no jury trial in the first: Lord Bagot v Williams (1824) 3 B & C 235, 240–41; 107 ER 721, 723. ↑
26. National Coal Board v Galley [1958] 1 WLR 16 (CA) 26. ↑
27. As illustrated by Overstone Ltd v Shipway [1962] 1 WLR 117 (CA), for instance. ↑
28. See eg van de Velden (n 1) 46–54; Jonathan L T Chu, ‘“Continuing Cause of Action” Revisited’ (2024) 140 LQR 192. ↑
29. Patterson v Patterson (1875) 59 NY 574 (NY Ct App) 578; Young v Queensland Trustees Ltd (1956) 99 CLR 560 (HCA) 566–69; Big Island Construction (HK) Ltd v Wu Yi Development Co Ltd (2015) 18 HKCFAR 364 [80]. ↑
30. Clark v In Focus Asset Management & Tax Solutions Ltd [2014] EWCA Civ 118, [2014] 1 WLR 2502 [5]. ↑
31. Clark (n 30) [5]. ↑
32. It has been said that merger must be pleaded by the defendant and that a court cannot apply it of its own motion: van de Velden (n 1) 45; but see Jolowicz (n 22) 190. In the earlier version of this paper, there was a cursory suggestion in this footnote that exceptional circumstances might justify the disapplication of merger, Buckland v Palmer [1984] 1 WLR 1109 (CA) cited. This is inaccurate. It is true that at 1115 Sir John Donaldson MR did say, obiter, that the principle of finality in litigation underlying the doctrine of merger must be set against the competing ‘public interest in seeing that justice is done’. But the solution he offered was ‘to re-appraise the circumstances in which a judgment could be set aside, if justice so required’, not to allow a second action while the judgment continues to stand. ↑
33. On the different consequences flowing from an invalid judgment of an inferior court or tribunal as opposed to that of a superior court, see Patrick Keane, Spencer Bower and Handley: Res Judicata (6th edn, LexisNexis 2024) paras 4.03, 4.08, 20.07. ↑
34. Clark (n 30) [82]–[89]. ↑
35. Bagot (n 25) (judgment of local court barred action in the Court of King’s Bench); Wright v The London General Omnibus Company (1877) 2 QBD 271 (DC) (award of magistrate barred action in county court); Clarke v Yorke (1882) 52 LJ Ch 32 (Ch D) (judgment of county court barred action in High Court); Birmingham Corporation v Samuel Allsopp and Sons Ltd (1918) 119 LT 775 (DC) (award of court of summary jurisdiction barred action in county court); Lloyds Bank plc v Hawkins [1998] 3 EGLR 109 (CA) (judgment of county court barred action in High Court); Fraser v HLMAD Ltd [2006] EWCA Civ 738, [2006] ICR 1395 (judgment of employment tribunal barred action in High Court); Clark (n 30) (award of financial ombudsman barred action in county court). ↑
36. Higgens’s Case (1605–07) 6 Co Rep 44b, 77 ER 320, sub nom Randall v Higgins 142 Selden Soc 1560; Hoare (n 19); Johnson (n 25); Kendall (n 25); United Australia Ltd v Barclays Bank Ltd [1941] AC 1 (HL) 16–17, 30, 34, 48–49. ↑
37. Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 (HCA); followed Lloyds Bank (n 35). Accord Robinson v Bland (1760) 2 Burr 1077, 1087; 97 ER 717, 723; Nelson (n 19) 109; Hollis v Palmer (1836) 2 Bing NC 713, 716–17, 718; 132 ER 275, 276–77; Clark v Alexander (1845) 8 Scott NR 147, 165. ↑
38. Although we do not address this in the text, in principle, Creditor cannot even sue Debtor a second time to recover unclaimed damages over and above the value of the debt, as compensation for loss caused by late payment: Sempra Metals Ltd v IRC [2007] UKHL 34, [2008] 1 AC 561. This flows from the earlier discussion in Section 2.1.2 that the object of a cause of action for monetary relief is the whole of a claimant’s monetary entitlement arising by law, which, in our scenario, includes Creditor’s entitlement to compensation. ↑
39. Chamberlain (n 37). ↑
40. As in Chamberlain (n 37) and Lloyds Bank (n 35), as well as Tebbs v Barron (1842) 4 Man & G 844 (though the plaintiff in the last case was saved by a piece of formulary procedure, just before the formal entry of the judgment). ↑
41. See eg Johnson (n 25); Sanders v Hamilton (1907) 96 LT 679 (DC). ↑
42. See eg Bagot (n 25). ↑
43. Fraser (n 35); Clark (n 30). See also County Courts Act 1984 s 17, providing that if a claimant ‘abandons’ part of her claim in order to bring it within the county court limit, ‘the judgment of the court in the action shall be in full discharge of all demands in respect of the cause of action, and entry of the judgment shall be made accordingly’. ↑
44. Section 3.1.2 below. ↑
45. Absent express agreement, interest is not lightly implied into the contract, whether for the pre-default or post-default period: Calton v Bragg (1812) 15 East 223, 104 ER 828; Cook v Fowler (1874) LR 7 HL 27; Al Jaber v Al Ibrahim [2018] EWCA Civ 1690, [2019] 1 WLR 885; but see the Late Payment of Commercial Debts (Interest) Act 1998. Where there is no interest as a matter of contract, the creditor might still be able to recover interest on different bases: eg Sempra Metals (n 38) (interest as damages for late payment of debt, subject to proof of loss in the ordinary way); Senior Courts Act 1981 s 35A (simple interest between the accrual of the cause of action and judgment or earlier payment, awarded in the discretion of the court); Judgments Act 1838 s 17 (simple interest at 8% p.a. on judgment debts). But in all these instances the interest is not a part of the contract and hence is not a contractual debt. ↑
46. Text between n 60 and n 64. ↑
47. Ex p Fewings, Re Sneyd (1883) 25 Ch D 338 (CA); Director General of Fair Trading v First National Bank plc [2001] UKHL 52, [2002] 1 AC 481 [3]. ↑
48. Jonathan L T Chu, ‘Merger Fallacy Diagnosed: Debt, Judgment, and Security’, forthcoming. ↑
49. Robinson (n 37) 1087; Hollis (n 37) 716–17, 718; Norton v Ellam (1837) 2 M & W 461, 464; 150 ER 839, 840; Alexander (n 37) 165; Director General of Fair Trading (n 47) [3]; Al Jaber (n 45) [18]–[19]. ↑
50. CPR 16.4(2) lays down the pleading requirements for claimants seeking interest. They have to state: the basis of the interest claim (subpara (a)); the interest rate (subpara (b)(i)); the date from which interest is claimed (subpara (b)(ii)); the total amount of interest claimed to the date of calculation, which must not be later than the date of the claim form (subparas (b)(iii)–(iv)); and the daily rate at which interest accrues after that date (subpara (b)(v)). ↑
51. There are many examples of precedent claim forms and pleadings to that effect: see eg Forms 1, 7, 11, 40, 43 in Atkin’s Court Forms: Contract, vol 12(2) (LexisNexis 2016); Form 22 in Atkin’s Court Forms: Money, vol 27(1) (LexisNexis 2024); William Blair and others (eds), Bullen & Leake & Jacob’s Precedents of Pleadings (19th edn, Sweet & Maxwell 2020) paras 11-E1, 14-E2. ↑
52. Robinson (n 37). This case was also reported in 1 Wm Bl 234, 256; 96 ER 129, 141. ↑
53. So said Lord Millett in Director General of Fair Trading (n 47) [59]. In that case, the Law Lords were not referred to Robinson (n 37) as the case where this practice was settled. For precedent forms of judgment in use today, see ‘Form No 45: Judgment after trial before Judge without jury (Practice Direction 40B para 14.1(1))’ (GOV.UK, 1 April 2016) <https://www.gov.uk/government/publications/form-no45-judgment-after-trial-before-judge-without-jury-practice-direction-40b-para-1411> accessed 31 May 2026; Form 53 in Atkin’s Court Forms: Judgments and Orders, vol 23(2) (LexisNexis 2021). ↑
54. Another speculation is that pleaders have been influenced by the terms of those statutes under which the court has discretionary power to award interest between the accrual of the cause of action and the date of judgment: Law Reform (Miscellaneous Provision Act) 1934 s 3; Senior Courts Act 1981 s 35A. But it all seems to go back to the same point, elaborated further in text following this footnote, if we consider the fact that those provisions are the successors to section 28 of the Civil Procedure Act 1833, which was revealingly headed ‘Jury empowered to allow Interest upon Debts’. ↑
55. This explains why Lord Mansfield said this in Robinson (n 37) 1086: ‘Nothing can be more agreeable to justice, than that the interest should be carried down quite to the actual payment of the money. But as that cannot be, it should be carried on as far as to the time when the demand is completely liquidated’ (emphasis added); and, in Blackstone’s report of the case (n 52) 264: ‘Now in Chancery, they always compute down to the time of the last act done by the Court, to liquidate the demand. And I don’t see, why the jury should not in their discretion (according to the circumstances of the case) compute down to the verdict; or rather, to the first four days of the ensuing term’. On jury verdict, see Simpson (n 24) 580. ↑
56. Ealing LBC v El Isaac [1980] 1 WLR 932 (CA) 938. ↑
57. In Director General of Fair Trading (n 47) [47]–[52], [58]–[61], for instance, Lord Hope and Lord Millett, while leaving the question open, noted this practice with dismay and compared it to the practice over in Scotland, where judgments do incorporate contractual interest carried down to the eventual discharge of the principal: Bank of Scotland v Davis 1982 SLT 20 (IH). The same is true in Germany: text following n 168. ↑
58. See eg Standard Chartered Bank v Ceylon Petroleum Corp [2011] EWHC 2094 (Comm) [9], [12], [15]; Chubb v Dean [2013] EWHC 1283 (Ch) [10]–[11]. ↑
59. Though Creditor in our case scenario was not of course prevented from recovering that amount in the first action, which marks a distinction from the continuing interest situation. However, in the continuing interest situation, the creditor’s inability to recover that amount in the first action has nothing to do with merger, because merger only comes into play after a judgment has been recovered. Sometimes this point is not sufficiently grasped, as revealed by eg counsel’s argument in Ealing (n 56) 936. ↑
60. Usborne v Limerick Market Trustees (No 2) [1900] 1 IR 85 (CA Ire) 112; Director General of Fair Trading (n 47) [55]. ↑
61. Popple v Sylvester (1882) 22 Ch D 98; Fewings (n 47) 355–56; Economic Life Assurance Society v Usborne [1902] AC 147 (HL Ire) 149–50, 152–53; Director General of Fair Trading (n 47) [3]–[4]. ↑
62. Director General of Fair Trading (n 47) [2]. ↑
63. Union Investment Co v Wells (1908) 39 SCR 625 (SCC) 645. ↑
64. Bemoaned in Director General of Fair Trading (n 47) [47]–[52], [58]–[61], [65]. ↑
65. Judgments Act 1838 s 17; CPR PD 70A para 6; Ex p Lewis, Re Clagett (1888) 36 WR 653 (CA). At first, the statutory rate was fixed by Parliament at 4% p.a., and this continued to be the case until the 1970s, when the Lord Chancellor was given power, in consultation with the Treasury, to amend the rate by statutory instrument: Administration of Justice Act 1970 s 44. The current rate of 8% p.a. was laid down by such process in 1993: Judgment Debts (Rate of Interest) Order 1993, SI 1993/564. If however a judgment is given for a sum expressed in a currency other than sterling, the court may fix any rate as it thinks fit: Administration of Justice Act 1970 s 44A, inserted in 1996. ↑
66. See Re European Central Railway Co, Ex p Oriental Financial Corp (1876) 4 Ch D 33 (CA) 38; Lowry v Williams [1895] 1 IR 274 (CA Ire) 283; Standard Chartered (n 58) [9], [12], [15]; Chubb (n 58) [10]–[11]. It is worth noticing that, in 1999, section 17 of the Judgments Act 1838 was amended to allow rules of court to provide that all or part of the statutory post-judgment interest may be disallowed by the court. CPR 40.8(1)(b), for instance, provides that the statutory interest ‘shall begin to run from the date that judgment is given unless … the court orders otherwise’. ↑
67. Director General of Fair Trading (n 47) [4]; Standard Chartered (n 58). ↑
68. As in Popple (n 61). ↑
69. For instance, county court judgment debts did not carry interest until 1991, and even then, there remain significant exceptions: see County Courts (Interest on Judgment Debts) Order 1991, SI 1991/1184 (as amended), issued under County Courts Act 1984 s 74. ↑
70. For an important endeavour to dissect the different meanings and usages attached to that expression, see Lionel Smith, ‘Defences and the Disunity of Unjust Enrichment’ in Andrew Dyson, James Goudkamp and Frederick Wilmot-Smith (eds), Defences in Unjust Enrichment (Hart Publishing 2016) 36–37; Lionel Smith, ‘Sources of Private Rights’ in Simone Degeling, Michael Crawford and Nicholas Tiverios (eds), Justifying Private Rights (Hart Publishing 2020) 142–45. ↑
71. Cooke v Gill (1873) LR 8 CP 107, 116. ↑
72. Read v Brown (1888) 22 QBD 128 (CA) 131. See also Letang v Cooper [1965] 1 QB 232 (CA) 242–43. ↑
73. Zavarco (n 18) [37]. For the same point: van de Velden (n 1) 41. ↑
74. Peter Birks, ‘Rights, Wrongs, and Remedies’ (2000) 20 OJLS 1, 25, 27–28; Hardy Exploration & Production (India) Inc v Government of India [2018] EWHC 1916 (Comm), [2019] QB 544 [120]. Contrast the citations in n 29. ↑
75. Higgens’s Case (n 36). Although the year of this case is usually given as 1605, we now know from the Selden Society edition that the decision of the judges was in fact deferred to the Trinity Term of 1607. ↑
76. Higgens’s Case (n 36) 45b. Compare Preston v Perton (1601) Cro Eliz 817, 78 ER 1043; Attorney General v Bagg (1658) Hard 125, 128; 145 ER 413, 415; Anon (1406) Jenk 69, 70; 145 ER 49, 50 (being Judge David Jenkins’s notes to YB Pas 7 Hen IV, fo 39, pl 3, first published in 1661). In Zavarco (n 18) [19], the Supreme Court attributed the quoted words to the Court of Common Pleas, where the Higgens’s Case was indeed heard. There is danger in this attribution, however, because, as has been well observed, Coke had the habit of ‘not always distinguishing … his own views from those he was reporting’: John Baker, An Introduction to English Legal History (5th edn, OUP 2019) 194. ↑
77. Recall Section 2.2.1. ↑
78. European Central Railway (n 66) 38. ↑
79. Ex p Higgins, Re Tyler (1858) 3 De G & J 33, 38; 44 ER 1181, 1183; Kendall (n 25) 519, 539–40; Fewings (n 47) 349–50, 353–54; Re Hodgson, Beckett v Ramsdale (1885) 31 Ch D 177 (CA) 188–89; Lewis (n 65) 654; Re King & Beesley, Ex p King & Beesley [1895] 1 QB 189 (DC) 193; Usborne (n 61) 149, 151; Riches v Westminster Bank Ltd [1947] AC 390 (HL) 411; President of India v La Pintada Compania Navigacion SA [1985] 1 AC 104 (HL) 122; Director General of Fair Trading (n 47) [3], [50]; Virgin Atlantic (n 19) [17]. Sometimes, instead of the ‘debt’, it is said that it is the ‘contract’ or the ‘covenant’ that is gone, which may or may not amount to the same notion: Higgens’s Case (n 36) 45a; Biddleson v Whitel (1764) 1 Wm Bl 506, 507; 96 ER 293, 293; Drake v Mitchell (1803) 3 East 251, 259; 102 ER 594, 596; Fewings (n 47) 355–56; Director General of Fair Trading (n 47) [55]. ↑
80. Halsbury’s Laws of England (5th edn, LexisNexis 2025) vol 22, para 417; Hugh Beale (ed), Chitty on Contracts (36th edn, Sweet & Maxwell 2026) paras 29-008, 29-010; Birks (n 74) 15–16, 30–31; Andrew Dickinson, The Effect in the European Community of Judgments in Civil and Commercial Matters: Recognition, Res Judicata and Abuse of Process: Report for England and Wales (British Institute of International and Comparative Law 2008) 6, 18–19; Keane (n 33) para 19.02; Hodge M Malek (ed), Phipson on Evidence (21st edn, Sweet & Maxwell 2026) para 43-17; Sandy Steel and Robert Stevens, ‘The Secondary Legal Duty to Pay Damages’ (2020) 136 LQR 283, 287–90; Rafal Zakrzewski, Remedies Reclassified (OUP 2005) 108–09; Andrew Zuckerman, Zuckerman on Civil Procedure: Principles of Practice (5th edn, Sweet & Maxwell 2026) paras 23.101, 26.91. ↑
81. Virgin Atlantic (n 19) [17]; Clayton v Bant [2020] HCA 44, (2020) 272 CLR 1 [66]. ↑
82. Jonathan L T Chu, ‘Degrees of Right’ (2025) 84 CLJ 514. ↑
83. Zavarco (n 18). ↑
84. Zavarco (n 18) [37]. ↑
85. John Salmond, Jurisprudence (7th edn, Sweet & Maxwell 1924) 248; Jolowicz (n 22) 62. For a similar point in the civil law tradition, see Niall R Whitty, ‘From Rules to Discretion: Changes in the Fabric of Scots Private Law’ (2003) 7 Edin LR 281, 288, 305–07; Smith, ‘Defences’ (n 70) 33–36. ↑
86. Johnson (n 25) 165; Kendall (n 25) 515, 526; Wegg Prosser v Evans [1895] 1 QB 108 (CA) 111–13; Usborne (n 61) 149, 153, 154. ↑
87. Patterson (n 29) 578; Board of Trade v Cayzer, Irvine & Co Ltd [1927] AC 610 (HL) 617 and passim. ↑
88. (1470) YB Hil 9 Edw IV, fos 50–51, pl 10; Higgens’s Case (n 36) 45b; Smith v Nicholls (1839) 5 Bing NC 208, 220; 132 ER 1084, 1089; Usborne (n 61) 149. Sometimes, instead of the debt, it is said that it is the nature of the ‘remedy’ that has changed, discussed text following n 98. ↑
89. Scotland takes the same view: Bank of Scotland (n 57) 21. ↑
90. Brinsmead v Harrison (1871) LR 6 CP 584, 586, decision affd Brinsmead (n 25); Republic of India v India Steamship Co Ltd (The Indian Grace) [1993] AC 410 (HL) 415; Zavarco (n 18) [17], [31]. ↑
91. Van de Velden (n 1) 40–43. ↑
92. Stephen A Smith, Rights, Wrongs, and Injustices: The Structure of Remedial Law (OUP 2019) 59–65. ↑
93. C R B Dunlop, Creditor-Debtor Law in Canada (2nd edn, Carswell 1995) 200–04. ↑
94. Later Lord FitzGerald, the first Irish Lord of Appeal in Ordinary (1882–89). ↑
95. Wakefield v Smythe (1864) 16 Ir CLR 173 (QB Ire). Followed Irish Land Commission v Junkin [1888] 24 LR Ir 40 (QBD Ire) 43. ↑
96. Hoare (n 19) 504. ↑
97. Wakefield (n 95) 178–79. ↑
98. Wakefield (n 95) 179. ↑
99. Drake (n 79) 258; Smith (n 88) 220–21; Hoare (n 19) 504, 506; Johnson (n 25) 166; Tyler (n 79) 38; Kendall (n 25) 544; Usborne (n 61) 152. ↑
100. Zakrzewski (n 80) ch 4; Smith (n 92) 6–7. ↑
101. Zakrzewski (n 80) 11–12; Van de Velden (n 1) 36–37. ↑
102. To same effect: Energy Investments Global Ltd v Albion Energy Ltd 2020 (2) JLR 421 (CA Jersey) [30]. ↑
103. Stephen Smith, ‘The Restatement of Liabilities in Restitution’ in Charles Mitchell and William Swadling (eds), The Restatement Third: Restitution and Unjust Enrichment—Critical and Comparative Essays (Hart Publishing 2013) 227; Zweigert and Kötz (n 5) 251–52. ↑
104. American Law Institute, Restatement of the Law of Contracts (American Law Institute Publishers 1932) §444. ↑
105. American Law Institute, Restatement of the Law of Restitution, Quasi Contracts, and Constructive Trusts (American Law Institute Publishers 1937) §145. ↑
106. American Law Institute, Restatement of the Law of Torts, vol 4 (American Law Institute Publishers 1939) §897. ↑
107. American Law Institute, Restatement of the Law of Judgments (American Law Institute Publishers 1942) 5; and see discussion of merger at §47. ↑
108. American Law Institute, Restatement of the Law Second: Contracts 2d (American Law Institute Publishers 1981) §378; American Law Institute, Restatement of the Law Second: Torts 2d, vol 4 (American Law Institute Publishers 1979) §897. ↑
109. American Law Institute, Restatement of the Law Third: Restitution and Unjust Enrichment (American Law Institute Publishers 2011). ↑
110. American Law Institute, Restatement of the Law Second: Judgments 2d (American Law Institute Publishers 1982) §§17–18. ↑
111. American Law Institute (n 110) 5. ↑
112. Usborne (n 61) (real security); Vestry of Bermondsey v Ramsey (1871) LR 6 CP 247, 252 (personal security). ↑
113. National Crime Agency v Szepietowski [2013] UKSC 65, [2014] AC 338 [83]. ↑
114. The converse is also true; if enforcement of security leaves the creditor unsatisfied, she can sue for the balance: Seddon v Tutop (1796) 6 TR 608; 101 ER 729; Nelson (n 19) 110, 112; Drake (n 79); Bell v Banks (1841) 3 Man & G 258, 133 ER 1140; Wegg (n 86). ↑
115. This was the precise argument mounted by the debtor—in a bid to avoid post-judgment enforcement of security—and rejected by the Court of Appeal of Jersey in Energy Investments (n 102) [33]–[34] (the debtor ultimately succeeded on different grounds: [60]–[73]). ↑
116. Roy Goode and Louise Gullifer, Goode and Gullifer on Legal Problems of Credit and Security (7th edn, Sweet & Maxwell 2023) para 1-35; Aman v Southern Railway Co [1926] 1 KB 59 (CA) 73–74. ↑
117. As was attempted, not perhaps entirely consciously, in Popple (n 61); Limerick (n 60) 111; A C Freeman, A Treatise of the Law of Judgments (5th edn, Bancroft-Whitney 1925) vol 2, §550; American Law Institute (n 107) §47 (see especially comment d). ↑
118. Usborne (n 61); Parr v Tiuta International Ltd [2016] EWHC 2 (QB). While these cases concerned real security, the same principle should likewise apply to the realisation of personal security, through an action for money judgment against the relevant third party. It is true that Creditor might be precluded by the doctrine of abuse of process from recovering the full €100 from a third-party provider of personal security, if the earlier judgment against Debtor had positively decided that the value of primary debt was €80 instead of €100: van de Velden (n 1) 93–94, citing Reichel v Magrath (1889) LR 14 App Cas 665 (HL); compare German law, discussed n 202. In our case scenario, however, this concern is not engaged: recall n 9. ↑
119. Usborne (n 61). ↑
120. Recall Section 2.2.1. ↑
121. The Limerick Market Trustees in Ireland, which remains operational to this day: ‘History’ (Milk Market Limerick) <https://www.milkmarketlimerick.ie/history/> accessed 1 June 2026. ↑
122. The Economic Life Assurance Society. ↑
123. These terms are recited in extenso in Limerick (n 60) 90–92. ↑
124. Limerick (n 60) 95, 116. ↑
125. Usborne and others. ↑
126. This would become ‘the longest receivership in Irish commercial history’, spanning 90 years from 1898 to 1988: ‘History’ (n 121). ↑
127. Recall text between n 60 and n 64. ↑
128. The Master of the Rolls and the Court of Appeal in Ireland: Limerick (n 60). ↑
129. Recall n 65. Since Usborne was an Irish case, the applicable provision was section 26 of the Debtors (Ireland) Act 1840, which was, for present purposes, identical to section 17 of the Judgments Act 1838. ↑
130. Usborne (n 61) 149. ↑
131. Usborne (n 61) 149. ↑
132. Usborne (n 61) 152. ↑
133. Usborne (n 61) 153, 154. Recall text between n 98 and n 102. ↑
134. Sometimes it is said—inaccurately, as the above discussion reveals—that the doctrine of merger does not apply to secured debts: Ealing (n 57) 937; Parr (n 118) [20]. ↑
135. Usborne (n 61) 155. ↑
136. This was in essence Lord Davey’s attempt to rationalise Arbuthnot v Bunsilall (1890) 62 LT 234 (Ch D), which had similar facts to Usborne and so on the face of it supported the decision of the lower courts: Usborne (n 61) 153–54, 155. Mr Justice Stirling, in deciding Arbuthnot, did not of course have the benefit of the speeches of Lord Halsbury and Lord Davey, which make clear, consistently with our earlier analysis (text between n 60 and n 64), that the presence or absence of an ‘independent covenant’ respecting contractual interest only goes to the question whether the creditor has a right to sue for a second time; it is wholly irrelevant in the context of the enforcement of security. Therefore, in purporting to decide that case on the basis of the absence of such a term, Mr Justice Stirling was strictly in error. However, the terms of the instrument in question was somewhat unhappily worded, at least according to the report of the case, which must have led Lord Davey to conclude that the outcome in Arbuthnot might still be saved on the basis of a proper (if strict) construction of the security. ↑
137. Aman (n 116) 71. See also Drake (n 79) 258; Kendall (n 25) 526; Potteries, Shrewsbury, and North Wales Railway Co v Minor (1871) LR 6 Ch App 621, 625. ↑
138. Bell (n 114) 266. ↑
139. Clissold v Cratchley [1910] 2 KB 244 (CA); Moore v Lambeth County Court Registrar (No 2) [1970] 1 QB 560 (CA). ↑
140. As illustrated by Parr (n 118). Compare n 114. ↑
141. As observed in Limerick (n 117) 127. ↑
142. N 134. ↑
143. Recall Section 2.2.1. ↑
144. Text at n 76. ↑
145. Chu (n 48). ↑
146. § 322 ZPO. Since the res judicata effect only extends to the operative part (Tenor) of the judgment and to those findings necessary to support it (tragende Gründe), see Gregor Vollkommer, ‘Vorbemerkungen zu § 322’ in Christoph Althammer and others (eds), Zöller Zivilprozessordnung: Kommentar (Dr Otto Schmidt 2026) para 31; Reinmar Wolff, ‘§ 322’ in Hans-Joachim Musielak and Wolfgang Voit (eds), Zivilprozessordnung: Kommentar (Franz Vahlen 2026) para 16; there is no dedicated issue preclusion associated with it under German law, but rather, certain situations may be solved via the res judicata effect, more specifically, the prejudicial effect of a judgment, or as an abuse of rights or abuse of process, see Peter Gottwald, ‘§ 322’ in Thomas Rauscher and Wolfgang Krüger (eds), MüKoZPO (C H Beck 2025) para 56; Christoph Althammer, ‘§ 322’ in Reinhard Bork and Herbert Roth (eds), Stein/Jonas: ZPO (Mohr Siebeck 2018) paras 194, 206. More in favour of an issue preclusion even under German civil procedure, Albrecht Zeuner, Die objektiven Grenzen der Rechtskraft im Rahmen rechtlicher Sinnzusammenhänge: Zur Lehre über das Verhältnis von Rechtskraft und Entscheidungsgründen im Zivilprozeß (Mohr Siebeck 1959). ↑
147. § 705 ZPO. See Gottwald (n 146) para 17; Wolff (n 146) para 5. ↑
148. For an explanation as to why we render Anspruch as ‘legal entitlement’ instead of ‘claim’, see n 6. ↑
149. Including a counterclaim. ↑
150. § 322(1) ZPO. ↑
151. § 308 ZPO, based on the principle non ultra petita in Roman law: Oliver Elzer, ‘§ 308’ in Volkert Vorwerk and Christian Wolf (eds), BeckOK-ZPO (C H Beck 2026) para 2; Hans-Joachim Musielak and Ansgar Hüntemann, ‘§ 308’ in Rauscher and Krüger (eds) (n 146) para 1. ↑
152. See only Ekkehard Becker-Eberhard, ‘Vorbemerkung zu § 253’ in Rauscher and Krüger (eds) (n 146) para 32; BGH, Judgment of 16.02.2009 – II ZR 185/07, NJW 2009, 2210, 2211. ↑
153. Gottwald (n 146) para 41; Urs Peter Gruber, ‘§ 322’ in Vorwerk and Wolf (eds) (n 151) para 20. ↑
154. Gottwald (n 146) para 41; Althammer (n 146) para 185. ↑
155. Gruber (n 153) para 12; Wolff (n 146) para 9. ↑
156. Gottwald (n 146) paras 40, 43; Althammer (n 146) paras 185 et seq. ↑
157. BGH, Judgment of 24.06.1993 – III ZR 43/92, NJW 1993, 3204, 3205; BGH, Judgment of 14.02.1962 – IV ZR 156/61, NJW 1962, 1109. See also Gottwald (n 146) para 59. ↑
158. BGH, Judgment of 10.04.2019 – VIII ZR 39/18, NJW 2019, 1745, 1746; BGH, Order of 07.03.2012 – XII ZB 391/10, NJW 2012, 1964, 1965. See also Vollkommer (n 146) para 24. ↑
159. For example, the decision on a claim for performance seeking payment has prejudicial effect on a subsequent action based on unjust enrichment to reclaim what was paid, see Vollkommer (n 146) para 25; Gottwald (n 146) para 53. ↑
160. See Jacob van de Velden and Justine Stefanelli, Comparative Report: The Effect in the European Community of Judgments in Civil and Commercial Matters: Recognition, Res Judicata and Abuse of Process (British Institute of International and Comparative Law 2008) 34. ↑
161. § 242 BGB. See Lorenz Kähler, ‘§ 242’ in Beate Gsell and others (eds), BeckOGK-BGB (C H Beck 2025) para 1184. ↑
162. Unlike Switzerland, for example, where the partial action is listed as a type of action, see Art 86 Swiss Code of Civil Procedure. ↑
163. Hannah Fries, Dogmatische Einordnung und prozessuale Konsequenzen einer quantitativen Klageermäßigung (Springer Fachmedien 2022) 117; Haimo Schack, ‘Rechtskraft und Bindungswirkungen bei offenen und verdeckten Teilklagen’ in Christian Berger and others (eds), Prozessrecht, Zwangsvollstreckungsrecht, Insolvenzrecht: Festschrift für Ekkehard Becker-Eberhard (C H Beck 2022) 492; Doris Friedrich, Probleme der Teilklage (PhD thesis, Universität zu Köln 1995) 1–2. ↑
164. Gruber (n 153) para 24; Friedrich (n 163) 3 et seq. ↑
165. On the jurisdiction and procedural rules of the newly introduced German Commercial Courts, see Felix D Pollmann, European Commercial Court: Towards an International Commercial Court of the European Union—Comparative Analysis and Feasibility under EU Law (PhD thesis, University of Münster 2026) 105 et seq, 189 et seq. ↑
166. § 78(1) ZPO. ↑
167. A judgment with a value of the matter under appeal not exceeding €1000 may not be appealed (unless the case is of fundamental importance or imperative for developing or safeguarding the uniformity of jurisprudence): § 511(2) no 2, (4) ZPO. ↑
168. Section 2.2.1. ↑
169. BGH, Judgment of 26.04.2023 – VIII ZR 125/21, NJW 2023, 2716, 2717. ↑
170. There is, however, a distinction between the interest accruing until the judgment becomes final and the interest accruing thereafter until actual payment of the principal. For the former, there is a limitation period of 30 years, which applies to claims that have been finally and bindingly established, § 197(1) no 3 BGB. The latter is subject to the standard limitation period of three years, since, from the temporal perspective of the final judgment, it constitutes periodically recurring performance, which has been finally and bindingly been established, but falling due only in the future, §§ 197(2), 195 BGB; see also Helmut Grothe, ‘§ 197’ in Franz Jürgen Säcker and others (eds), MüKoBGB (C H Beck 2025) para 31. ↑
171. BGH, Judgment of 15.06.1994 – XII ZR 128/93, NJW 1994, 3165. See also Herbert Roth, ‘§ 253’ in Reinhard Bork and Herbert Roth (eds), Stein: ZPO (Mohr Siebeck 2024) para 29; Stefan Trommler, Die Teilklage im Zivilprozess (Mohr Siebeck 2018) 26–31; Friedrich (n 163) 2. ↑
172. BGH, Judgment of 15.07.1997 – VI ZR 142/95, NJW 1997, 3019, 3020. See also Trommler (n 171) 24; Helmuth Kuschmann, ‘Die materielle Rechtskraft bei verdeckten Teilklagen in der Rechtsprechung des Bundesgerichtshofs’ in Gerhard Lüke and Othmar Jauernig (eds), Festschrift für Gerhard Schiedermair zum 70. Geburtstag (C H Beck 1976) 354. ↑
173. Gottwald (n 146) para 130; Kuschmann (n 172) 356. ↑
174. Trommler (n 171) 35; Friedrich (n 163) 12; Walther J Habscheid, Der Streitgegenstand im Zivilprozess und im Streitverfahren der Freiwilligen Gerichtsbarkeit (Deutscher Heimat-Verlag 1956) 274. ↑
175. BGH, Judgment of 30.01.1985 – IV b ZR 67/83, NJW 1985, 1340, 1342. See also Schack (n 163) 494; Johann Braun, Lehrbuch des Zivilprozeßrechts: Erkenntnisverfahren (Mohr Siebeck 2014) 476; Kuschmann (n 172) 354. ↑
176. Vollkommer (n 146) para 48; Gottwald (n 146) para 131; Trommler (n 171) 151 et seq. ↑
177. BGH, Judgment of 15.04.2015 – VIII ZR 59/14, NJW 2015, 2566, 2567; BGH, Judgment of 09.04.1997 – IV ZR 113/96, NJW 1997, 1990. ↑
178. BGH, Judgment of 09.04.1997 – IV ZR 113/96, NJW 1997, 1990. ↑
179. There are some exceptions to this rule, Martin Schwab, Zivilprozessrecht (C F Müller 2016) paras 432 et seq; Kuschmann (n 172) 359 et seq; but these do not apply to the case scenario at hand. For instance, in a disguised partial action for compensation for financial loss arising from expropriation, the court in the second trial would interpret the claimant’s conduct in the first trial as having resolved his entire entitlement. This is because such compensation is generally pieced together based on the various detrimental effects and costs associated with the expropriation, and partial action is generally not expected, Kuschmann (n 172) 361; BGH, Judgment of 27.02.1961 – III ZR 16/60, NJW 1961, 917. Another example is a disguised partial action for damages for pain and suffering, where the claimant is not required to quantify his entitlement in the statement of claim, since the nominal value of compensation is for the court to determine. In this situation, the court is not confined by the claimant’s statement of claim. Any amount indicated by the claimant would not be binding on the court. Unless the claimant expressly reserves the right to bring further partial actions, the conduct in the first trial would be interpreted as covering the entire entitlement, BGH, Judgment of 20.01.2004 – VI ZR 70/03, NJW 2004, 1243. ↑
180. Haimo Schack, ‘Waffengleichheit im Zivilprozess’ (2016) 129 Zeitschrift für Zivilprozess 393, 412; Braun (n 175) 485; Max Pagenstecher, Die Einrede der Rechtskraft im Aufwertungsprozess im Lichte der Judikatur des Reichsgerichts (J Bensheimer 1925) 72–77. ↑
181. Friedrich (n 163) 113 et seq. ↑
182. § 264 no 2 ZPO. Extending the claim would be more convenient, compared to parallel litigation, since then, among other things, only one court would resolve the entire dispute, gather evidence, and hear the parties. It would also be cheaper, because court fees, while they depend on the amount in dispute, do not increase in a linear way but degressively. So, one trial for €100 generates lower fees than several trials for the same total amount. ↑
183. Trommler (n 171) 57–58; Friedrich (n 163) 118–20; Habscheid (n 174) 274–75. Braun (n 175) 475–76, however, argues that these inconveniences were to be accepted by the defendant. ↑
184. Braun (n 175) 475. ↑
185. § 204(1) no 1 BGB; BGH, Judgment of 02.05.2002 – III ZR 135/01, NJW 2002, 2167. See also Vollkommer (n 146) para 48; Trommler (n 171) 133–34. ↑
186. Schack (n 180) 412; Braun (n 175) 485; Peter Marburger, ‘Rechtskraft und Präklusion bei der Teilklage im Zivilprozeß’ in Wolfgang Schön (ed), Gedächtnisschrift für Brigitte Knobbe-Keuk (Dr Otto Schmidt 1997) 194 et seq. ↑
187. §§ 33, 256(1) ZPO. See also Schack (n 163) 498; Friedrich (n 163) 47. ↑
188. Marburger (n 186) 196. ↑
189. Marburger (n 186) 196; Friedrich (n 163) 59. ↑
190. Marburger (n 186) 196. ↑
191. Schack (n 163) 498; Braun (n 175) 485; Marburger (n 186) 198–99. ↑
192. Marburger (n 186) 199. ↑
193. See only Gottwald (n 146) para 135; Schwab (n 179) para 428. ↑
194. Schack (n 163) 498; Schwab (n 179) para 429. ↑
195. Schwab (n 179) para 430. ↑
196. Gottwald (n 146) para 133; Althammer (n 146) para 153. ↑
197. BGH, Judgment of 15.07.1997 – VI ZR 142/95, NJW 1997, 3019, 3021. See also Vollkommer (n 146) para 48. ↑
198. Fries (n 163) 114; Schack (n 163) 497. ↑
199. BGH, Judgment of 13.12.1989 – IV b ZR 22/89, NJW-RR 1990, 390, 391; BGH, Judgment of 20.12.1983 – VI ZR 19/82, NJW 1984, 1346, 1347. ↑
200. Stephan Madaus, ‘§ 773’ in Gsell and others (eds) (n 161) para 18. Note the initial stipulation under n 7. ↑
201. This conclusion confirms the prevailing understanding in German law, that a civil judgment has procedural instead of material effect. See on the distinction, Herbert Roth, ‘Materielle und prozessuale Rechtskrafttheorien’ (2016) 33 Ritsumeikan Law Review 83. ↑
202. Res judicata effect normally only applies to the original parties to the proceedings and certain third parties as prescribed by law: §§ 325–327 ZPO. These are, for example, persons that have assumed legal succession after the dispute has become pending. It is further accepted by the courts and the majority of legal scholars, that beyond the parties to the proceedings, a third-party security provider may rely on a judgment beneficial to the debtor with regard to the secured debt when subsequently litigating with the creditor, see Arndt Kiehnle, ‘§ 1137’ in Gsell and others (eds) (n 161) para 13; Christoph Althammer, ‘§ 325’ in Bork and Roth (eds) (n 146) para 99; Braun (n 175) 950. See also Matthias Fervers, Die Bindung Dritter an Prozessergebnisse (Mohr Siebeck 2022) 288, 301 et seq with further references. The creditor, however, may not rely on a previous favourable judgment, achieved (only) against the debtor, in subsequent litigation with the third-party security provider, see Fervers (n 202) 290. ↑
203. Van de Velden (n 1) 105, 124–33, 210, 213–14, 219–20. ↑
204. Recall Section 2.1.2 (English law) and Section 3.1.1 (German law). ↑
205. This explains the Supreme Court’s view set out in n 18, addressed in Chu (n 82). ↑
206. For the meaning of open and disguised partial action, recall Section 3.1.2. ↑
207. Consider H Patrick Glenn, ‘The Aims of Comparative Law’ in Jan M Smits (ed), Elgar Encyclopedia of Comparative Law (2nd edn, Edward Elgar 2012) ch 4; Lionel Smith, ‘Peter Birks and Comparative Law’ (2013) 43 Revue de droit de l’Université de Sherbrooke 193. ↑