Tag: Forum rei sitae

Posted on

UB v VA (Tiger SCI): The CJEU dots the i’s on forum rei sitae in insolvency.

In C-493/18 UB v VA, proceedings took place between UB, on the one hand, and VA, Tiger SCI, WZ, as UB’s trustee in bankruptcy, and Banque patrimoine et immobilier SA, on the other, concerning the sale of immovable property originally owned by UB and mortgages granted over that property by UB and the action taken by WZ to have those transactions declared ineffective as against the bankruptcy estate.

A little bit of factual background may be useful – for that reference is best made to the judgment. Essentially, an avoidance (insolvency pauliana) action was launched given suspicious transactions between UB and his sister. On 10 May 2011, UB was, on his own petition, declared bankrupt by Croydon County Court. On 1 July 2011, WZ was appointed UB’s trustee in bankruptcy, with effect from 6 July 2011.  At WZ’s request, Croydon County Court authorised WZ on 26 October 2011 to bring an action before the French courts in order, first, to have the bankruptcy order registered and, second, to obtain a ruling that the sale of the properties referred to in paragraph 12 above and the mortgages granted over those properties to VA (‘the sales and mortgages at issue’) were transactions at an undervalue or for no consideration under the relevant United Kingdom bankruptcy law provisions. WZ thus sought a decision authorising the restitution of those properties to UB’s bankruptcy estate, for the purposes of their disposal. The French courts granted the declaration.

The legal issue under consideration is the reach of the Insolvency Regulation’s establishment of jurisdiction for the courts of the Member State of COMI. Does it extend to an action by a trustee in bankruptcy appointed by a court of the Member State in which the insolvency proceedings were opened (here: the UK) the purpose of which is to obtain a declaration that mortgages registered over immovable property situated in another Member State (here: France) and the sale of that property are ineffective as against the bankruptcy estate.

The CJEU correctly emphasises that the Insolvency Regulation old or new does not impose any rule conferring on the courts of the place where immovable property is located international jurisdiction to hear an action for the restitution of those assets to the bankruptcy estate in insolvency proceedings. Furthermore, concentrating all the actions directly related to the insolvency proceedings before the courts of the Member State within the territory of which with those proceedings were opened is consistent with the objective of improving the efficiency and speed of insolvency proceedings having cross-border effects. Support for this ex multi: Wiemer & Trachte.

The English courts therefore should have exercised jurisdiction per vis attractiva concursus – the file before the CJEU does not reveal its hesitation to do so. It does reveal that UB claims among others that the insolvency proceedings in England had already been concluded and presumably therefore the pauliana time-barred.

Geert.

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

 

Posted on

Schmidt v Schmidt: CJEU confirms Kokott AG’s views on forum rei sitae & forum connexitatis in Brussels I Recast.

Much as expected, the Court has this week confirmed Kokott AG’s views on Article 24(1) and Article 8(4) Brussels I Recast, in C-417/15 Schmidt v Schmidt. Please refer to my review of the Advocate General’s Opinion for detail of the case.

A request for voidance of a contract of gift of immovable property, on grounds of incapacity, is not covered by Article 24(1). The fact that the contract for which a declaration of invalidity is sought concerns immovable property is irrelevant to the issue of its validity, the immovable nature of the subject matter of the contract being only of marginal significance in that context (at 36). This does not endanger the ratio legis of Article 24(1): by ruling on the request for the avoidance of a contract of gift on the ground of the donor’s incapacity to contract, the court before which the dispute is brought is not required to carry out investigations strictly related to the immovable property concerned so as to justify an application of the rule of exclusive jurisdiction provided for in that article (at 37). In the present case, the action in the main proceedings is based on the alleged invalidity of the contractual obligation consisting of the conveyance of ownership of the immovable property, which, provided that the contract is valid, must be, and which was initially, performed in Austria. This therefore establishes jurisdiction for that court on the basis of Article 7(1) a of the Brussels I Recast.

The separate request for removal from the land register of the donee’s right of ownership, in turn is based on the invalidity of the conveyance of ownership and, therefore, on the right in rem relied on by the applicant in the main proceedings in the immovable property concerned:this action is covered by Article 24(1). This latter court may also rule on the request for voidance: there is a connection between the claims pursuant to Article 8(4) of Regulation 1215/2012. Unlike the AG, the CJEU does not add that this possibility for joinder must not be abused, however there is no reason why the prohibition of abuse must not apply to Article 8(4). Given the possibility of joinder, a race to court of course is triggered between, in this case, father and daughter.

Schmidt v Schmidt is once again a useful reminder for courts and notaries alike, not to shy away from contracts, gifts, matrimonial property etc. simply because it involves real estate located elsewhere. Plenty of the legal issues surrounding such constructions can be perfectly dealt with outside the locus rei sitae.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.6

Posted on

Schmidt v Schmidt: Family feud again leads to discussion of forum rei sitae & forum connexitatis in Brussels I Recast.

An unusually high proportion of cases under Article 22 (old) or 24 (Recast) Brussels I relate to family disputes on property. Webb v Webb, Weber v Weber, Komu v Komu, and now, C-417/15 Schmidt v Schmidt. It’s all about keeping up with the Joneses.

Kokott AG opined in Schmidt last week. Mr Schmidt had gifted a (otherwise unspecified) piece of Vienna real estate to his daughter, who lives in Germany. Ms Schmidt is included in the land register as the owner. Mr Schmidt subsequently sues in Austria for the annulment of the gift due to alleged incapacity at the time of the gift, and for removal of the registration. Is the action caught by Article 24? (in which case Ms Schmidt’s claim of lack of jurisdiction fails).

The Advocate General first of all suggests that the referring court’s request should not be turned down simply because it did not specify the time of seizure: in other words it is not clear whether the case is covered by the old or the Recast Brussels I Regulation. Ms Kokott however suggests the Court should not be pedantic about this and answer the question regardless, seeing as the rule has not changed.

Next up and potentially trickier, is the exclusion of capacity from the scope of application of the Regulation. However the Advocate General is right when she suggest that the exclusions should only be relevant where they concern the main object of the litigation. Not, as here, when they are raised incidentally. (She discusses in some detail the linguistic implications given different wording in the different language versions of the Regulation).

Then to the real question. With respect to the annulment of the (gift) agreement, the object and purpose of plaintiff’s action is not the establishment or confirmation of an erga omnes right in rem. Rather, the confirmation of voidness of an agreement transferring such right, due to incapacity. That this will have erga omnes consequences if successful, is not to the point given the long-established need to apply Article 24 restrictively. In this respect this case is akin to C-294/92 Webb and Webb.

The analysis is different however, the AG suggests, for the request to delete the entry in the land register. This does aim directly at erga omnes consequences under Austrian law.

Ms Kokott subsequently rejects the notion that as a result of part of the suit being subject to Article 24, this should drag the remainder into the exclusive bath with it: at 48: if only because if one were to accept this, forum shopping would be facilitated. Including in its suit a procedure covered by Article 24 would enable plaintiff to draw in a whole range of other issues between the parties.

Finally, the AG suggests joinder of the contractual claim (the nullity of the gift) to the right in rem claim, is possible under Article 8(4) and rejects that national rules of civil procedure should or even can play a role in this respect. This part of the Opinion may be optimistically short. For if the joinder route of Article 8(4) may lead to the same result as the one the AG had just rejected, one assumes there ought to be discretion for the national courts to reject it. Not, as the AG rightly suggests, by reference to national civil procedure rules (that would lead to unequal application) but rather by reference to the (probably) EU inspired rule that abuse of Article 8 be avoided.

The Court will probably not answer all the questions the case raises, particularly on Article 8. Expect this to return.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.6

%d bloggers like this: