Posts Tagged C‑649/16

Wiemer & Trachte v Tadzher: vis attractiva concursus leads to exclusive jurisdiction for the pauliana.

The pauliana rings extensively at Kirchberg these days and months.

Two days ago the Court held in C‑296/17 Wiemer & Trachte. Following Wahl AG’s Opinion (which is not available in English), the Court has confirmed exclusive jurisdiction for set aside (pauliana) actions, of the courts of the Member State within the territory of which insolvency proceedings have been opened (COMI or secondary proceedings). Not therefore jurisdiction under the Brussels I Recast for the State of domicile of the defendant.

The need to avoid forum shopping (a strong leading principle in the insolvency Regulation) in particular, led Wahl AG and now the Court to insist on exclusive jurisdiction. The alternative reading (defended, I understand, inter alia by the Commission; this is odd for it ordinarily is a staunch defender of the forum shopping-averse nature of the Regulation) relied on the altogether limiting wording of the relevant articles in the Regulation (both the previous and current versions), and also on an efficiency argument: particularly the insolvency practitioner ought to be able to forum shop so as to ensure the best outcome for the collective creditors (particularly by pursuing parties who have benefited from avoidance actions, in their domicile). Wahl AG confessed sympathy for that practical reason (not unlike some of the arguments in the common law against say Owusu or West Tankers), yet emphasised the CJEU’s direction on vis attractiva concursus: rather a magnetic direction.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 5 Heading 5.4.1. Chapter 2 Heading 2.2.2.10.1

 

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Valach: Clarifying vis attractiva concursus.

This one long overdue – I am adding it to the blog for completeness’ sake. C‑649/16 Valach was held end of December 2017. The CJEU relies heavily on Tunkers and recital 6 of the (old) Insolvency Regulation: the regulation should be confined to provisions governing jurisdiction for opening insolvency proceedings and judgments which are ‘delivered directly on the basis of the insolvency proceedings and are closely connected with such proceedings’: the latter two criteria guide the CJEU.

In the case at issue, the action for liability at issue in the main proceedings is the direct and inseparable consequence of the performance by the committee of creditors, a statutory body established by Slovak law when insolvency proceedings are opened, of the task specifically assigned to them by the provisions of national law governing such procedures. Consequently, it is clear that the obligations which form the basis of bringing an action for liability in tort against a committee of creditors, such as that at issue in the main proceedings, originate in rules that are specific to insolvency proceedings (at 35-36).

As for the second criterion, it is the closeness of the link between a court action and the insolvency proceedings that is decisive for the purposes of deciding whether the Brussels I Recast’s insolvency exception is triggered. That is the case here: at 38: in order to ascertain whether the liability of the members of the committee of creditors may be engaged because of the rejection of the restructuring plan, it will be necessary to analyse in particular the extent of that committee’s obligations in the insolvency proceedings and the compatibility of the rejection with those obligations. Such an analysis clearly presents a direct and close link with the insolvency proceedings, and is therefore closely connected with the course of those proceedings.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 5 Heading 5.4.1. Chapter 2 Heading 2.2.2.10.1

 

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