Update 22 November 2019 the CJEU yesterday confirmed the AG’s Opinion.
Bobek AG opined end of May in C-198/18 CeDe Group v KAN. I am posting a touch late for well, readers will know I have not been fiddling my thumbs. The Opinion concerns the lex causae for set-off in accordance with the (2000) Insolvency Regulation – provisions for which have not materially changed in the current version of the EIR (Regulation 2015/848). At stake are Articles 4 cq 6 and 7 cq 9 in the two versions of the Insolvency Regulation.
The liquidator of PPUB Janson sp.j. (‘PPUB’), a Polish company the subject of insolvency proceedings in Poland, lodged before the Swedish courts an application against CeDe Group AB (‘CeDe’), a Swedish company, claiming payment for goods delivered under a pre-existing contract between PPUB and CeDe, which is governed by Swedish law. In the course of those proceedings, CeDe claimed a set-off in respect of a larger debt owed to it by PPUB. The liquidator had previously refused that set-off within the framework of the Polish insolvency proceedings. During the course of the procedure before the Swedish courts, PPUB’s liquidator assigned the claim against CeDe to another company, KAN sp. z o.o. (‘KAN’), which subsequently became insolvent. However, KAN’s liquidator refused to take over the claim at issue, with the result that KAN (in insolvency) is now party to the litigation
The Supreme Court, Sweden doubts the law applicable to such a set-off claim. Before the referring court, KAN claimed that the set-off claim should be heard under Polish law, whereas CeDe submitted that that issue should be examined under Swedish law. Both of course reverse-engineered their arguments to support opposing views.
The Advocate General in trademark lucid style navigates the facts and issues (not helped by the little detail seemingly given by the referring court). Complication is of course that the general Gleichlauf rule of the EIR is repeatedly tempered by ad hoc regimes for specific claims or claimants.
The AG advises on the main question (should the CJEU follow then his reply to the other questions becomes redundant), at 36, that ‘that Article 4(2) of the Insolvency Regulation makes reference to the conditions for invoking set-offs and to the effects of insolvency on current contracts cannot entail, in my view, that any claim relating to a contract where a party to that contract is subject to insolvency proceedings (and/or where a set‑off is invoked against that claimant) falls automatically within the concept of ‘insolvency proceedings and their effects’ for the purposes of determining which provision governs the applicable law. The mere fact that it is the liquidator who has lodged such an action does not, in my view, change that conclusion.. At 37 he adds powerful argument for same: ‘A case like the present one neatly demonstrates why any other conclusion would lead to unpredictable, or even bizarre, results. The law governing the contractual claim would not only differ from the one that the parties agreed on, but it would also change repeatedly, due to subsequent assignments and/or the assignees themselves eventually becoming subject to insolvency proceedings. All such changes to the applicable law would be based on events not only post-dating the conclusion of the contract and the choice of applicable law, but also largely unconnected to the contract. In addition, all this could be happening while proceedings are pending before the same court.’
Like the Commission, for the final, very interesting question [that question from the referring court boils down to the issue of whether the ‘non-permissibility’ of set-offs in the lex concursus under Article 4 EIR is to be addressed in concrete or abstract terms in order to trigger the exception laid down in Article 6(1)] Bobek AK focuses on the Regulation’s stated aim (recital 26 of the 2000 EIR; recital 70 in the 2015 EIR) of having the set-off regime fulfill its role as a guarantee for international commercial transactions: at 74: ‘adopting an approach focused on the concrete outcomes produced by the respective applicable laws in conflict in a given case, the test to be applied must zero in on the specific solution that would be arrived at by the law applicable to the main claim’.
An Opinion very much soaked in commercial reality.
(Handbook of) EU private international law, 2nd ed. 2016, Chapter 5, Heading 5.7.