Flux européens

On 23 June 2015, the European Parliament and the Council of the European Union reached a compromise concerning the amendment of Regulation N0 861/2007, establishing the European Small Claims Procedure.

The text of the amending Regulation, as contemplated by the compromise, may be found here. The actual legislative measure will be formally adopted in the coming months.

Under the reformed Regulation, the European Small Claims Procedure will apply to “civil and commercial matters in cross-border cases … where the value of a claim does not exceed EUR 5000 at the time when the claim form is received by the court or tribunal with jurisdiction, excluding all interest, expenses and disbursements”. The current ceiling is 2000.

In five years’ time the Commission shall present a report on the operation of the Regulation, including an evaluation as to whether a further increase of the threshold above. On the same occasion, the Commission will look into the possibility of extending the scope of the European Small Claims Procedure so as to “facilitate access to justice for employees in cross-border employment disputes with their employer, in particular to claims for remuneration”.

The amended Regulation, though less innovative than the Commission had originally proposed, will have an impact on a number of practical issues raised by the application of the existing rules, including issues relating to the court fees charged to claimants (fees will have to be proportional to the value of the claim, but there will be no fixed cap) and the payment of such fees (Member States will be under an obligation to accept electronic payments).

Videoconferencing and, more generally, the use of remote communications technology, will be encouraged, although the Member States will not be under a legal duty to make the relevant equipment available to courts and litigants.

In Goldman Sachs v Novao Banco SA, the High Court first of all had to consider the scope of the Brussels I Regulation on the issue of ‘civil and commercial’.  This issue came up following the restructuring of a Portuguese Bank and the role of the Portuguese Central Bank, under its statutory powers, in the transfer of liabilities to a Bridge Bank, ‘Novo Banco’. [For the facts of the case see the judgment itself and see also Christopher Bates’ review, which first alerted me to the case. Mr Bates also reviews the issue of mutual recognition under the Bank Recovery Directive].

Hamblen J (soon to move to the Court of Appeal) in my view justifiably rejected Novo Banco’s arguments that the claim was not civil and commercial, given the statutory intervention of the Central Bank. With reference to the traditional line-up of CJEU precedent (see most recently Fahnenbrock, absent from the High court’s judgment; and Sapir, which does feature heavily) he held that the nature of the claim, in spite of the factual intervention of the Central Bank, is one in debt, which is a claim based on private law rights conferred by the relevant Facility Agreement and a civil and commercial matter. A novation of the Facility Agreement would not change the nature of that claim; nor does a statutory transfer.

Having decided that the claim falls under the Regulation, the High Court subsequently had to decide whether Novo Banco was subject to the choice of court, in favour of the English court, part of the Facilities Agreement. As this is a transfer of claims and not a contractual chain, Refcomp does not apply (Hamblen J did not refer to it). The matter needs to be decided by the lex causae, here the lex contractus: English law. Upon consideration of the various arguments, the High Court held that the choice of court clause had so been transferred together with the original claims.

Finally, the Court rejected a stay on ‘case management’ grounds (see Jong and Plaza for earlier applications).

The case shows how some of the core considerations of Brussels I can create a lot of argument, indeed.

Geert.

 

The Court of Pécs, in Hungary, has recently submitted several questions to the ECJ concerning the interpretation of Regulation No 593/2008 on the law applicable to contractual obligations and Regulation No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, respectively the Rome I and Brussels I Regulations (case C-222/15, Hőszig Kft. v Alstom Power Thermal Services).

The requests concerning the Rome I Regulation relate to the fact that the contract that forms the basis of the main proceedings features a choice of law clause to which one of the parties did not consent.

The relevant provision, here, as indicated in Article 3(5) of the Rome I Regulation, is Article 10.

Article 10(1) provides that “the existence and validity of a contract, or of any term of a contract, shall be determined by the law which would govern it under this regulation if the contract or term were valid”. However, under Article 10(2), “a party, in order to establish that he did not consent, may rely upon the law of the country in which he has his habitual residence if it appears from the circumstances that it would not be reasonable to determine the effect of his conduct in accordance with the law specified in paragraph 1”.

The first question raised by the referring court concerns the meaning of the expression “if it appears from the circumstances”. In particular, the court seeks to determine whether the assessment contemplated by Article 10(2) “must cover the circumstances of the conclusion of the contract, the subject-matter of the contract and the performance of the contract”. Furthermore, referring to the case where the relevant circumstances actually demonstrate that consent to the law applicable pursuant to paragraph 1 would not be a reasonable effect of the behavior of the party, the request seeks to determine whether the validity of the contractual clause at hand must then be determined “pursuant to the law of the country of habitual residence of the party who made the reference”.

Secondly, the Hungarian court wonders whether the court has discretion in evaluating if, under the circumstances that must be taken into account, consent to the law applicable pursuant to Article 10(1) was not a reasonable effect of the party’s behaviour.

The third question posed by the court is whether, once a party makes reference to the law of the country in which he has his habitual residence in order to establish that he did not consent, the court must consider this law in the sense that, by virtue of it, and because of the circumstances mentioned, “the consent of that party to the law chosen in the contract was not reasonable conduct”. If this is the case, the court also asks whether the examination of the circumstances carried out in order to determine if there are reasonable grounds to believe that consent was not given “covers the circumstances of the conclusion of the contract, the subject-matter of the contract and the performance of the contract”.

Finally, the court raises a question concerning Article 23(1) of the Brussels I Regulation, now corresponding to Article 25(1) of Regulation No 1215/2012 (Brussels Ia). Under this provision, the parties may agree to confer jurisdiction on a court of a Member State to settle any disputes between them, as long as these concern a particular legal relationship. Jurisdiction shall lie with the chosen court unless the agreement is null and void as to its substantive validity under the law of the Member State of the designated court. The choice of court agreement must meet the formal requirements set forth in the same provision.

In this connection, the request is meant to clarify whether the designation of the court must be specific or, if it is sufficient that the wish or intention of the parties can be deduced unequivocally from the wording, since Recital 14 of the Brussels I Regulation (now Recital 19 of the Brussels Ia Regulation) provides that party autonomy should be respected, subject to the exclusive grounds of jurisdiction, and to the limits stated in the field of protected contracts, where only limited autonomy is allowed.

In particular, having regard to this recital, the court asks whether “a clause conferring jurisdiction, included in the standard contract terms of one of the parties”, under which they stipulate that their disputes concerning validity, performance or termination of the order “are to be subject to the exclusive and final jurisdiction of the courts of a specific Member State”, namely, the court of Paris, could be considered “sufficiently precise, given that the wish or intention of the parties in relation to the designated Member State can be deduced unequivocally from its wording”.

On 16 July 2015, the European Court of Justice (ECJ) rendered its judgment in the case of A v. B (C-184/14), clarifying the interpretation of Regulation No 4/2009 on jurisdiction, applicable law, recognition and enforcement of decisions and cooperation in matters relating to maintenance obligations (the Maintenance Regulation).

More specifically, the ruling regarded the interpretation of Article 3 of the Regulation. This provides, inter alia, that jurisdiction in matters of maintenance lies with “(c) the court which, according to its own law, has jurisdiction to entertain proceedings concerning the status of a person if the matter relating to maintenance is ancillary to those proceedings, unless that jurisdiction is based solely on the nationality of one of the parties”, or with “(d) the court which, according to its own law, has jurisdiction to entertain proceedings concerning parental responsibility if the matter relating to maintenance is ancillary to those proceedings, unless that jurisdiction is based solely on the nationality of one of the parties”.

The dispute in the main proceedings concerned the legal separation of two Italians and the custody of their children. These proceedings had been brought by A (the husband) against B (the wife) before the District Court of Milan.

The Court of Milan asserted its jurisdiction in respect of legal separation relying on Article 3(1)(b) of Regulation No 2201/2003 (Brussels IIa), but held that, pursuant to Article 8(1) of that Regulation, it lacked jurisdiction over parental responsibility, as the children were, at the material time, habitually resident in the UK. The Court of Milan further held that, according to Article 3(c) and (d) of the Maintenance Regulation, it had jurisdiction to decide on the issue of maintenance for the benefit of the wife, but not to decide on maintenance for the benefit of the children, since the latter request was not ancillary to proceedings over personal status, but to proceedings concerning parental responsibility.

The case eventually reached the Italian Supreme Court, which decided to request the ECJ for a preliminary ruling. The Supreme Court asked whether, in circumstances such as those described above, a maintenance request pertaining to the child may be ruled on both by the court that has jurisdiction over legal separation or divorce, as a matter ancillary to the proceedings concerning the status of a person, within the meaning of Article 3(c) of that Regulation, and by the court that has jurisdiction to entertain the proceedings concerning parental responsibility, as a matter ancillary to those proceedings, within the meaning of Article 3(d) of that Regulation; or whether a decision on a similar matter can only be taken by the latter court.

Put otherwise, the issue was whether the heads of jurisdiction set out in Article 3(c) and (d) of the Maintenance Regulation must be understood to be mutually exclusive, or whether the conjunction “or” in the provision implies that the courts that have jurisdiction over legal separation and parental responsibility may be both validly seised of an application relating to maintenance in respect of children.

In its judgment, the ECJ begins by observing that the scope of the concept of “ancillary matter” cannot be left to the discretion of the courts of each Member State according to their national law. The meaning of this expression should rather be determined by reference to the wording of the relevant provisions, their context and goals.

The wording of Article 3(c) and (d) indicates that a distinction should be made between proceedings concerning the status of a person and proceedings concerning parental responsibility. In the face of this wording, it cannot be unequivocally established “whether the alternative nature of those criteria means that the applications relating to child maintenance are ancillary only to one set of proceedings concerning parental responsibility, or whether those applications may be deemed ancillary also to proceedings concerning the status of a person”.

As regards the context of the pertinent provisions, the ECJ notes that the above distinction echoes the distinction made by the Brussels IIa Regulation between disputes concerning divorce, legal separation and marriage annulment, on the one hand, and disputes regarding the attribution, exercise, delegation, and restriction or termination of parental responsibility, on the other. The ECJ further notes in this connection, based on Recital 12 of the preamble of the latter Regulation, that the rules on jurisdiction relating to parental responsibility underlie a concern for the best interests of the child, and adds that “an application relating to maintenance in respect of minor children is … intrinsically linked to proceedings concerning matters of parental responsibility”.

The ECJ concludes that “it is vital to take into account, in interpreting the rules on jurisdiction laid down by Article 3(c) and (d) of Regulation No 4/2009, the best interest of the child”, and that the implementation of such Regulation “must occur in accordance to Article 24(2) of the Charter of Fundamental Rights of the European Union”, according to which, in all actions relating to children, whether taken by public authorities or private institutions, the child’s best interests must be a primary consideration.

Finally, as regards the goals of the provisions at stake, the Court considers that the main objective of the Maintenance Regulation is to ensure, in this field, the proper administration of justice within the EU. This implies that the court to which jurisdiction is conferred to decide on parental responsibility should be the court that finds itself “in the best position to evaluate in concreto the issues involved in the application relating to child maintenance, to set the amount of that maintenance intended to contribute to the child’s maintenance and education costs, by adapting it, according to (i) the type of custody (either jointly or sole) ordered, (ii) access rights and the duration of those rights and (iii) other factual elements relating to the exercise of parental responsibility brought before it”.

In light of the above, the ECJ concludes that, when the court of a Member State is seised of proceedings concerning legal separation or divorce between the parents of a minor child, and the court of another Member State is seised of proceedings involving matters of parental responsibility over the same child, Article 3(c) and (d) of Regulation No 4/2009 must be interpreted as meaning that “an application relating to maintenance concerning that child is ancillary only to the proceedings concerning parental responsibility, with the meaning of Article 3(d) of that Regulation”.

As the holiday season now is in full swing, here’s a choice of court and choice of law clause I received. For us all to ponder on the beaches /in the mountains /whatever retreat we’ll find ourselves on:

‘LAW AND JURISDICTION
This agreement is between the holiday-maker (the renter) and the agency or property owner. Booking ltd is acting only as a representative of the agency or owner listed on the voucher and as such can not be held directly responsible for any problems concerned with the booking. The owners of Booking LTd its employees or agents shall not be liable for any damage, loss or personal injury which may be sustained by persons or property at any time during the reserved stay. In the event of controversies arising from the booking of the rental, the Irish Court only can deal with the matter and Irish law only applies. Signing the booking form and making the booking implies that the General Letting Conditions have been understood and have thereby been accepted without reserve and without exception. If any of the conditions of this contract have become invalid or were invalid or if in this contract there should be a gap, the other conditions cannot be contested.

Any and all issues regarding the property, such as damages, injury, etc, shall be a dispute between the owner or agency and the renter of the property. In such cases, with no exceptions, Irish law will apply and the jurisdiction will be the local courts in Ireland.’

Happy holidays. Geert.

Massimo V. Benedettelli, Profili di diritto internazionale privato ed europeo delle società, in Rivista di diritto societario, 1/2015, pp. 35 ss.

1. La dimensione internazionalprivatistica ed europea del diritto delle società. – 2. Criteri guida per il coordinamento tra diritto interno, diritto straniero e diritto europeo in materia societaria. – 3. Il coordinamento internazionalprivatistico secondo il diritto italiano: rinvio tendenzialmente integrale alle valutazioni dell’ordinamento di costituzione della società. – 4. L’influenza del diritto europeo sul coordinamento tra gli ordinamenti degli Stati membri in materia societaria. – 5. L’ambito della giurisdizione italiana in materia societaria. 6. – Il riconoscimento di sentenze, altri provvedimenti e lodi arbitrali stranieri in materia societaria. – 7. Il diritto applicabile in materia societaria. – 8. Le fusioni e le scissioni internazionali. – 9. Il trasferimento della sede sociale all’estero.

In una ordinanza del 21 luglio 2015, il Tribunale di Milano si è pronunciato sull’individuazione del “luogo di esecuzione” di una decisione agli effetti dell’art. 22 n. 5 della Convenzione di Lugano del 30 ottobre 2007 sulla competenza giurisdizionale e il riconoscimento e l’esecuzione delle decisioni in materia civile commerciale. Tale norma, pressoché identica a quella che si leggeva nell’art. 22 n. 5 del regolamento n. 44/2001 (Bruxelles I) e che ora si ritrova all’art. 24 n. 5 del regolamento n. 1215/2012 (Bruxelles I bis), attribuisce una competenza esclusiva, in materia di esecuzione delle decisioni, ai giudici dello Stato, vincolato dalla Convenzione, “nel cui territorio ha luogo l’esecuzione”.

Nella specie, si trattava di localizzare un’attività esecutiva consistente nell’espropriazione forzata di crediti presso terzi.

La domanda, avanzata da una società svizzera, riguardava un lodo arbitrale emesso in Ticino e dichiarato esecutivo in Italia, recante la condanna di un cittadino italiano residente in Tailandia. Il creditore procedente aveva allora provveduto alla notificazione di un atto di pignoramento al debitore pignorato e ad altri due soggetti debitori di costui, aventi entrambi sede in Italia. Su queste premesse, debitore e terzi sono stati citati a comparire davanti al Tribunale di Milano.

Il giudice adito, rilevata la necessità di verificare la sussistenza della giurisdizione italiana, ha ritenuto di dover fare riferimento alla Convenzione di Lugano del 2007, avendo cura di rilevare che la stessa deve interpretarsi “tenendo debitamente conto” dei principi elaborati dalla Corte di giustizia con riguardo a disposizioni analoghe contenute sia nella Convenzione di Lugano del 1988 (che la Convenzione del 2007 ha provveduto a sostituire), sia nella Convenzione di Bruxelles del 1968 e nel regolamento Bruxelles I.

Riferendosi, dunque, all’art. 22 n. 5 della Convenzione, il Tribunale di Milano ha osservato, innanzitutto, che nel determinare il significato di espressioni dal tenore letterale incerto — quale può essere, appunto, “il luogo di esecuzione di una decisione” — occorre preferire, come emerge del resto dalla giurisprudenza della Corte di giustizia, un approccio autonomo, cioè sganciato dalle categorie dei singoli ordinamenti nazionali, e valorizzare la finalità perseguita dalla norma in questione, presa individualmente e nel contesto in cui è calata.

Tradizionalmente fondata sull’esistenza di un legame particolarmente stretto tra fatti e foro, la giurisdizione esclusiva dovrebbe allora ritenersi sussistente ogniqualvolta tale prossimità riesca, effettivamente, ad attribuire a questo foro una posizione privilegiata per valutare i fatti in causa, poiché, per usare le parole della Corte di Giustizia nella sentenza Sanders, “è chiaro che i giudici cui è riconosciuta competenza esclusiva [ai sensi dell’allora articolo 16 della Convenzione di Bruxelles del 1968] sono quelli meglio situati per dirimere le controversie di cui trattasi”.

La “buona amministrazione della giustizia”, procede il giudice milanese, è poi, innegabilmente, un valore immanente all’intero sistema di Bruxelles e Lugano, oltre che una finalità espressamente attribuita nella giurisprudenza della Corte di giustizia ai titoli di giurisdizione esclusiva.

Su queste basi, il Tribunale ha concluso che, ai fini dell’art. art. 22 n. 5, il luogo dell’esecuzione, in caso di espropriazione forzata di crediti presso terzi, coincida con il “luogo della sede del terzo”.

Nella specie, come detto, i debitori del debitore erano due persone giuridiche aventi sede in Italia, circostanza atta a rendere il foro italiano, stando al Tribunale, la sede maggiormente idonea a garantire un efficiente svolgimento del procedimento, specie sotto il profilo istruttorio.

Nel diritto processuale italiano, infatti, l’espropriazione del credito presso terzi presuppone una verifica incidentale dei rapporti intercorrenti tra il debitore pignorato ed il terzo, la quale, di regola, dovrebbe svolgersi in forma semplificata e meramente documentale (art. 547 del codice di procedure civile, come modificato).

Potrebbe tuttavia rendersi necessario, localmente, il compimento di altre attività istruttorie – nonché la comparizione in udienza – nel caso, non infrequente, di mancanza o contestazione della dichiarazione del terzo, sulla quale il suddetto accertamento è “fisiologicamente” basato.

L’argomento determinante nel ragionamento del giudice è dunque costituito dalla necessità di garantire quella specifica declinazione dell’economia procedurale data dalla “efficacia della prova”. Il rilievo che, nella giurisprudenza europea, tale profilo sia emerso principalmente nella diversa sede dell’interpretazione del foro dell’illecito (come nella sentenza Mines de Potasse d’Alsace o nella sentenza Marinari) nulla toglie alla valenza generale di questa indicazione, derivante dal carattere integrato delle norme giurisdizionali uniformi.

La soluzione adottata per concretizzare il criterio dettato dall’art. 22 n. 5 avrebbe inoltre, secondo l’ordinanza, il merito aggiunto di soddisfare le esigenze di prevedibilità del foro, altro obiettivo dichiarato del regime di Bruxelles e Lugano. La sede del terzo è un dato della realtà oggettiva, per di più dipendente dalla scelta di un soggetto posto in posizione di tendenziale equidistanza rispetto ad entrambe le parti del procedimento esecutivo. Il riferimento a tale circostanza sembra dunque realizzare un duplice vantaggio: in primo luogo, garantisce la disponibilità di un foro prevedibile e certo, ancorato ad un elemento fattuale sottratto a eventuali condizionamenti del debitore pignorato; in secondo luogo, l’individuazione di un tale foro sarebbe resa immediata ed obiettiva, basandosi su una circostanza neutra, indifferente rispetto alla natura del rapporto intercorrente tra debitore pignorato e terzo, spesso ignota al creditore procedente.

Giesela Rühl, The Role of Economic Efficiency in European Private International Law, di prossima pubblicazione in S. Leible (a cura di), General Principles of European Private International Law, 2015, disponibile su SSRN a questo indirizzo.

[Abstact] – In recent years, a growing number of contributions have devoted attention to the “general part” of European private international law: in a number of articles academics have either examined how legal concepts traditionally categorized as “general” (e.g. characterization, choice of law, preliminary questions, ordre public, renvoi) are designed in the Regulations thus far enacted by the European legislature. Or they have asked whether and how these concepts could be codified in a Rome 0 Regulation or, more generally, in a Code of European Private International Law. The following article adds to this debate by looking at European private international law from an economic perspective. It analyses whether and to what extent economic efficiency has been considered by the European legislature when enacting the pertaining Regulations and whether and to what extent it should be considered when revising the Regulations currently in place or when adopting a Rome 0 Regulation. The article finds that the TEU and TFEU permit – and in fact demand – that economic efficiency be taken into account in formulating European choice-of-law rules. However, it also finds that European law-makers have not oriented their efforts on economic efficiency in the past. This, in turn, means that efficiency is unlikely to be given any methodological or systematic regard when the relevant provisions are interpreted and applied, for it is only those objectives which the European legislature actually had in mind which may be taken into account when interpreting the pertaining rules and regulations. In the face of the informative value of the economic efficiency criterion this is, of course, to be regretted. The article, therefore concludes, that European law-makers should pay greater attention to economic efficiency in the future than they have done in the past, particularly when enacting a Rome 0 Regulation.

Thank you Eiríkur Thorláksson (whose expert report fed substantially into the Court’s findings) for flagging and for additional insight: In Tchenguiz v Kaupthing, the High Court had to review the insolvency exception to the Lugano Convention, combined with Directive 2001/24 on the reorganisation and winding-up of credit institutions. Directive 2001/24 applies to UK /Iceland relations following the EFTA Agreement. See my earlier post on Sabena, for Lugano context. Mr Tchenguiz is a London-based property developer. He claims against Kaupthing; Johannes Johannsson, a member of Kaupthing’s winding-up committee; accountants Grant Thornton; and two of its partners.

While Directive 2001/24 evidently is lex specialis vis-a-vis the Insolvency Regulation, much of the ECJ’s case-law under the Regulation is of relevance to the Directive, too. That is because, as Carr J notes, much of the substantial content of the Regulation has been carried over into the Directive. Carr J does emphasise (at 76) that the dovetailing between the Lugano Convention /the Judgments Regulation, and the Insolvency Regulation, carried over into the 2001 Directive does not extend to matters of choice of law. [A bit of explanation: insolvency was excluded from the Judgments Regulation (and from the Convention before it) because it was envisaged to be included in what eventually became the Insolvency Regulation. Consequently the Judgments Regulation and the Insolvency Regulation clearly dovetail when it comes to their respective scope of application]. That is because neither Lugano nor the Judgments Regulation consider choice of law: they are limited to jurisdiction.

On the substance of jurisdiction, the High Court found, applying relevant precedent (German Graphics, Gourdain, etc.), that the claims against both Kaupthing and Mr Johansson are within the Lugano Convention and not excluded by Article 1(2)(b) of that Convention. That meant that Icelandic law became applicable law by virtue of Directive 2001/24, and under Icelandic law proceedings against credit institutions being wound up come not be brought before the courts in ordinary (rather, a specific procedure before the winding-up committee of the bank applies). No jurisdiction in the UK therefore for the claim aganst the bank. The claim against Mr Johansson can go ahead.

[For the purpose of this blog, the jurisdictional issues are of most relevance. For Kaupthing it was even more important that the Bankruptcy Act in Iceland was found to have extra-territorial effect. The Act on Financial Undertakings implemented the winding-up directive and the Icelandic legislator intented it to have extra-territorial effect].

A complex set of arguments was raised and the judgment consequentially is not an easy or quick read. However the above should be the gist of it. I would suggest the findings are especially crucial with respect to the relation between Lugano /Brussels I, Directive 2001/24, and the Insolvency Regulation.

Geert.

The Permanent Bureau of the Hague Conference on Private International Law has recently launched a questionnaire regarding the legal effects of agreements in the area of international family law involving children, e.g., agreements in disputes regarding child custody, child support, relocation with a child, rights to visit and to have contact with a child.

[From the introduction to the questionnaire] – Agreements between parents or other family members in family disputes involving children have gained more importance and have become more frequent. This development is, in part, attributable to the enhanced promotion of alternative dispute resolution mechanisms (such as mediation, conciliation, and negotiation) to achieve agreed solutions in these cases. In addition, party autonomy in the area of family law has gained more importance and States increasingly enable parents and other family members to conclude agreements that regulate child-related matters, in particular custody and contact issues. Due to today’s increasing “internationalisation” of the family, agreements are negotiated more and more in cross-border situations (e.g., one of the parents plans to relocate to his / her country of origin with the child and contact between the child and the other parent will be carried out abroad or would require the child to travel) which may require the recognition and enforcement of the agreement in a State (hereinafter referred to as “requested State”) other than the State in which it was concluded (hereinafter referred to as “State of origin”). 

The questionnaire has been sent to government officials and to the members of the International Hague Network of Judges, but Permanent Bureau is equally seeking the views of practitioners, such as lawyers and mediators, and other experts of international family law.

The questionnaire may be completed online here before 18 September 2015.

This post has been some time in the making, notwithstanding my promise to have it up soon. Let’s just say I got distracted. The wide interest in Lutz, Case C-557/13, illustrates the increasing relevance of the actio pauliana in protecting creditors from their debtor’s insolvency. The core underlying issue for Lutz is that, in the absence of considerable capital in companies (arguably a direct result indeed of the regulatory competition in Member States’ corporate law following the ECJ’s case-law on freedom of establishment), civil law mechanisms have become more relevant than classic recourse to companies’ liability. If one relies on more classic modes of securitisation, one may want to have more predictability in what law will apply to those securitised agreements. That is where the Insolvency Regulation comes in, in providing for a mechanism which allows parties to indeed give parties the freedom to choose applicable law for the relevant agreements. Article 4(2)m of the Insolvency Regulation (in the new Regulation this is Article 7(m) – unchanged) makes the lex concursus applicable in principle: lex concursus applies to ‘(m) the rules relating to the voidness, voidability or unenforceability of legal acts detrimental to all the creditors.’ However Article 13 (16 new – unchanged) insulates a set of agreements from the pauliana: ‘Article 4(2)(m) shall not apply where the person who benefited from an act detrimental to all the creditors provides proof that: – the said act is subject to the law of a Member State other than that of the State of the opening of proceedings, and – that law does not allow any means of challenging that act in the relevant case.’  The crucial consideration in Lutz was whether the absence of means of challenge in the lex causae, relates to substantive law only, or also to procedural law. Randi summarise the time-line and relevant distinction in German and Austrian law as follows:

• “17 Mar 2008-Austrian court issues an enforceable payment order in favour of Mr Lutz against the debtor company
• 18 April 2008-debtor files application for German insolvency proceedings
• 20 May 2008-attachment of three Austrian bank accounts of the company
• 4 August 2008-German insolvency proceedings opened (as main proceedings) in respect of the company
• 17 Mar 2009-Austrian bank pays monies to Mr Lutz

Under German law, any enforcement of security over the debtor’s assets during the month preceding the lodging of the application to open proceedings is legally invalid once proceedings are opened. Under Austrian law, an action to set aside a transaction must be brought within one year after the opening of proceedings, failing which it becomes time-barred. By contrast, the limitation period under German law is three years. Although the attachment order was granted before the application to open main proceedings was filed, the actual attachment itself took place after that filing and the subsequent payment of monies by the bank took place after main proceedings were opened in Germany. Mr Lutz argued that art 13 applied and that the payment could no longer be challenged by the German liquidator under Austrian law as the one-year limitation period had expired.” (Randi also have good review of the questions in Lutz relating to rights in rem and Article 5, triggered in the case at issue by the attachments of bank accounts). Essentially, the Court expresses sympathy for the cover of procedural limits to fighting detrimental acts to be determined by the lex causae. (It dismissed any relevance of Article 12(1)d of Rome I Regulation, which provides that prescription and limitation of actions are governed by ‘the law applicable to a contract’: for the Insolvency Regulation is most definitely lex specialis). However leaving the matter up to the lex causae would cause differentiated application of the Insolvency Regulation across the Member States. Consequently the ECJ opts for autonomous interpretation, ruling (at 49) that Article 13 of Regulation No 1346/2000 must be interpreted as meaning that the defence which it establishes also applies to limitation periods or other time-bars relating to actions to set aside transactions under the lex causae.’ The ECJ’s judgment essentially confirms the EFTA Court’s views on the similar proviso in Directive 2001/24 on the winding-up of credit institutions (Lbi hf v Merrill Lynch). A pity the ECJ did not refer to that finding. Geert.

I need to give a bit of a factual background before I can get to the implications of the ECJ’s (or CJEU, I still haven’t decided) finding in C-469/13 Nortel.

Nortel Networks SA is established in Yvelines (France). The Nortel group was a provider of technical solutions for telecommunications networks. Nortel Networks Limited (‘NNL’), established in Mississauga (Canada), held the majority of the Nortel group’s worldwide subsidiaries, including NNSA.  In 2008 insolvency proceedings were initiated simultaneously in Canada, the US and the EU. In January 2009, the High Court opened main insolvency proceedings under English law in respect of all the companies in the Nortel group established in the EU, including NNSA, pursuant to Article 3(1) of the Insolvency Regulation.

Following a joint application lodged by NNSA and the joint administrators, by judgment of May 2009 the court at Versailles opened secondary proceedings in respect of NNSA. In July 2009, industrial action at NNSA was brought to an end by a memorandum of agreement settling the action. It provided for the making of a severance payment, of which one part was payable immediately and another part, known as the ‘deferred severance payment’, was to be paid, once operations had ceased, out of the available funds arising from the sale of assets. That memorandum was approved by the court at Versailles. NNSA’s positive balance was subsequently however caught up in the global settlement for Nortel, including transfers of funds to escrow accounts in the US, to be distributed following global settlement, and new debt following the continuation of Nortel’s activities as well as costs related to the global winding-up of the company. The deferred severance payment therefore could no longer be paid.

The works council of NNSA and former NNSA employees brought an action before the court at Versailles seeking, first, a declaration that the secondary proceedings give them an exclusive and direct right over the share of the overall proceeds from the sale of the Nortel group’s assets that falls to NNSA and, second, an order requiring the liquidator to make immediate disbursement, in particular, of the deferred severance payment, to the extent of the funds available to NNSA. the French liquidator then summoned the joint administrators as third parties before the referring court. However, these then suggested the court at Versailles decline international jurisdiction, in favour of the High Court at London, and in the alternative, to decline jurisdiction to rule on the assets and rights which were not situated in France for the purposes of Article 2(g) of the Insolvency Regulation when the judgment opening the secondary proceedings was delivered. That Article reads

(g) “the Member State in which assets are situated” shall mean, in the case of: – tangible property, the Member State within the territory of which the property is situated, – property and rights ownership of or entitlement to which must be entered in a public register, the Member State under the authority of which the register is kept, – claims, the Member State within the territory of which the third party required to meet them has the centre of his main interests, as determined in Article 3(1);

There are essentially two parts to the referring court’s questions: (i) the allocation of international jurisdiction between the court hearing the main proceedings and the court hearing the secondary proceedings; and (ii) identification of the law applicable to determine the debtor’s assets that fall within the scope of the effects of the secondary proceedings.

On the (i) first question, the Court first reviewed whether the Insolvency Regulation applied at all – an issue seemingly which did not feature in the national proceedings nor in the written procedure before the CJEU, however which came up at the hearing. The issue being that what the Works Council was after was that an agreement to pay a debt be honoured: one that looks just like a fairly standard agreement were it not to arise out of insolvency. Per Nickel and Goeldner the Court reviewed whether the right or the obligation which respects the basis of the action finds its source in the common rules of civil and commercial law or in the derogating rules specific to insolvency proceedings. Here, the basis of the action, as was pointed out by Mengozzi AG, was relevant French insolvency law (for the determination of the order of creditors’ rights) and the Insolvency Regulation (for the determination of the hierarchy between main and secondary insolvency proceedings). The Insolvency Regulation therefore applies. The AG’s review in fact was clearer than the Court’s summary. More generally, the ECJ does seem to go out of its way to re-emphasise the Nickel and Goeldner formula, even if the separation of the Brussels I and the Insolvency Regulation was not particularly controversial in the case at issue.

Next, the Court essentially extended its Seagon/Deko Marty case-law to secondary proceedings. In Seagon, the Court held that Article 3(1) must be interpreted as meaning that it also confers international jurisdiction on the courts of the Member State within the territory of which insolvency proceedings were opened to hear an action which derives directly from the initial insolvency proceedings and which is ‘closely connected’ with them, within the meaning of recital 6 in the preamble to the Regulation. In Nortel the Court holds that Article 3(2) of that regulation must be interpreted analogously. Here, the related action seeks a declaration that specified assets fall within secondary insolvency proceedings. It is designed specifically to protect the local interests which justify the very establishment of jurisdiction for the secondary proceedings.

However, such action quite obviously has a direct effect on the interests administered in the main insolvency proceedings. The jurisdiction for the court of the secondary proceedings therefore cannot be exclusive. It is jurisdiction concurrently with the Member State of COMI. This is an altogether sec appreciation of the Court which, as Bob Wessels notes, in reality will create serious co-ordination headaches (one for which I do not think even the provisions for co-ordination in the new insolvency Regulation provide sufficient answer).

Finally, in reply to question (ii), the ECJ is fairly brief: Article 2(g) ought to suffice to give the referring court the guidance it seeks. Granted, the ECJ says, it will not be easy. But it ought to suffice. The one extra guidance the CJEU gives is that that provision is also applicable if the property, right or claim in question must be regarded as situated in a third State (such as here: in the escrow accounts).

All in all, quite an important judgment, indeed. Unlike Nortel’s sad demise, this judgment has quite a life ahead of it.

Geert.

 

As reported when Szpunar AG issued his Opinion, key question in Diageo, Case C-681/13 is whether the fact that a judgment given in the State of origin is contrary to EU law (in the case at issue; trademark law) justifies that judgment’s not being recognised in the State in which recognition is sought, on the grounds that it infringes public policy (‘ordre public’) in that Member State. Precedent for Diageo did not look good and indeed the ECJ on Thursday confirmed the views of its AG.

Where the breach concerns infringement of EU law, the ECJ formulates the test as follows: ‘the public-policy clause would apply only where that error of law means that the recognition of the judgment concerned in the State in which recognition is sought would result in the manifest breach of an essential rule of law in the EU legal order and therefore in the legal order of that Member State’ (at 50). The relevant breach of EU trademark law is simply not in that league (at 51).

The Court does (at 54) seem to suggest – although one has to infer that a contrario – that if one were to show that Member State courts deliberately infringe EU law, even if that EU law is not in the ‘essential’ category, such pattern of national precedent (imposed by the higher courts), could lead to refusal of recognition. However this was not the suggestion made in the case at issue.

Geert.

È uscito il terzo numero di GenIUS, Rivista di studi giuridici sull’orientamento sessuale e l’identità di genere.

Il fascicolo include alcuni articoli dedicati a temi di diritto internazionale privato, tra cui i contributi di Marcella Distefano, Maternità surrogata ed interesse superiore del minore: una lettura internazionalprivatistica su un difficile puzzle da ricomporre (p. 160 ss.), Matteo M. Winkler, Senza identità: il caso Paradiso e Campanelli c. Italia (p. 243 ss.) ed Ester di Napoli. La Corte d’appello di Torino di fronte alla fecondazione assistita eterologa all’estero (p. 258  ss.).

Il fascicolo è reperibile a questo indirizzo.

Huawei Technologies
Concurrence
L’introduction d’une action en cessation par le titulaire d’un brevet essentiel à une norme en position dominante contre un contrefacteur allégué peut constituer un abus de position dominante sous certaines conditions

A
Espace de liberté, sécurité et justice
Le juge appelé à décider sur la responsabilité parentale est également compétent pour statuer sur la pension alimentaire due par l’un des parents envers ses enfants mineurs

Commission / Italie
Environnement et consommateurs
À cause de la mauvaise application de la directive déchets dans la région de Campanie, l'Italie est condamnée à payer une somme forfaitaire de 20 millions d'euros et une astreinte de 120 000 euros par jour de retard

CHEZ Razpredelenie Bulgaria
Principes du droit communautaire
L’installation de compteurs électriques à une hauteur inaccessible dans un quartier densément peuplé de Roms est de nature à constituer une discrimination fondée sur l’origine ethnique lorsque les mêmes compteurs sont installés dans d’autres quartiers à une hauteur normale

Singh e.a.
Citoyenneté européenne
Un ressortissant d’un pays tiers, conjoint d’un citoyen de l’Union résidant dans un autre État membre que le sien, ne peut plus bénéficier de droit de séjour dans cet État lorsque le citoyen de l’Union quitte l’État en question avant le début de la procédure judiciaire de divorce.

Lanigan
Justice et Affaires intérieures
L’expiration des délais pour statuer sur l’exécution d’un mandat d’arrêt européen ne dispense pas la juridiction compétente d’adopter une décision à ce sujet et n’exclut pas, en soi, le maintien de la personne recherchée en détention