Posts Tagged Regulation 2015/848

Videology: Snowden J’s textbook consideration of COMI under UNCITRAL Model Law and EU Insolency Regulations.

Looking at my back queue for blog postings, [2018] EWHC 2186 (Ch) Videology is one I do wish to bring to the attention of my readers. Snowden J refused to recognise proceedings under Chapter 11 of the US Bankruptcy Code (“Chapter 11”) in relation to Videology Ltd as a foreign main proceeding under Article 17 of the UNCITRAL Model Law on Cross-Border Insolvency (“the Model Law”) as incorporated into English law in Schedule 1 to the Cross-Border Insolvency Regulations 2006 (the “CBIR”). He did so because he was not satisfied that the centre of main interests (“COMI”) of the Company was in the US where the Chapter 11 proceedings are taking place. He did, however, grant recognition of the Chapter 11 proceedings as a foreign non-main proceeding.

The Judgment is a master class on COMI determination.  Of note are

  • at 28 the rejection of, for so long as the UK remains a party to the Recast EIR,  any different approach in relation to the concept of COMI under the CBIR/Model Law and the Recast EIR;
  • the emphasis on a basket of criteria required to displace the presumption of COMI in place of the registered office;
  • at 42 ff the rejection of a narrow focus on, or attachment of overriding importance to, the location in which the directors and senior management act;
  • Snowden J’s rejection at 46 ff of the Head Office approach as being determinant under EU law (see also Handbook heading 5.6.1.2.4); and
  • the factors referred to eventually to uphold the presumption: at 72: ‘In addition to being the place of its registered office, the UK is where the Company’s trading premises and staff are located, where its customer and creditor relationships are established, where it administers its relations with its trade creditors on a day-to-day basis using those premises and local staff, and where its main assets (the receivables and cash at bank) are located. All of those factors will be visible and immediately ascertainable by the customers, and in particular by the trade creditors, of the Company. The UK is also, importantly, where representations were made to the Company’s main finance creditor that its COMI was situated.’

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 5, Heading 5.6.1 (specifically also 5.6.1.2.4 for the Head Office discussion).

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Espírito Santo (in liquidation): CJEU on vis attractive concursus in the event of pending lawsuits (lex fori processus).

The title of this piece almost reads like an encyclical. C-250/17 Espirito Santo (in full: Virgílio Tarragó da Silveira Massa v Insolvente da Espírito Santo Financial GroupSA – readers will appreciate my suggestion of shortening), held last week, concerns the scope of Article 15 juncto 4(2)(f) of the EU’s Insolvency Regulation 1346/2000 (materially unchanged in Regulation 2015/848).

In many jurisdictions lawsuits pending are subject to vis attractiva concursus: all suits pending or not, relevant to the estate of the insolvent company are centralised within one and the same court. In the context of cross-border insolvency however this would deprive the courts and the law of the Member State other than the State of opening of proceedings, of hearing cq applying to, pending suits.

The Court has now held along the lines what is suggested in the Virgos-Schmit report: only enforcement actions are subject to Article 15. Lawsuits pending which merely aim to establish the merits of a claim without actually exercising it (in the judgment: ‘Substantive proceedings for the recognition of the existence of a debt’), remain subject to the ongoing proceedings in the other Member State.

The judgment evidently has more detail but this is the gist of it. Of note is that yet again, linguistic analysis assists the court in its reasoning.

Geert.

(Handbook of) EU Private International, 2nd ed. 2016, Chapter 5.

 

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Colin King: On the application ratione temporis of the Recast Insolvency Regulation.

I thought I had but seemingly had not, flagged Bob Wessels’ timely alert to [2016] COMP 039 Colin King (Supreme Court of Gibraltar). The judgment first of all looks at the temporal scope of application of the Regulation, holding correctly that it is not the filing for bankruptcy which is relevant but rather the time of actual openings of those proceedings. Further, it makes correct application of the various presumptions and definitions vis-a-vis natural persons.

Not a shocking judgment but one which is a good read for a gentle introduction to COMI. And as Bob notes, it was not quite the first to apply the new EIR.

Geert.

(Handbook of) EU Private International Law, 2nd edition 2016, Chapter 5.

 

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COMI in NIKI.

Thank you Bob Wessels for again alerting us (with follow-up here [update 15 January 2018 and here ; looks like regular revisits of prof Wessels’ blog are in order) and also reporting by Lukas Schmidt here) timely to a decision this time by the German courts in Niki, applying the Insolvency Regulation 2015, on the determination of COMI – Centre of Main Interests. Bob’s review is excellent per usual hence I am happy to refer for complete background.

Of particular note is the discussion on the extent of a court’s duty to review jurisdiction ex officio; the court’s correct assumption that in the event of foggy circumstances, the EIR’s presumption of COMI at the place of incorporation must have priority; and finally in my view the insufficient weight the court places on ascertainability by third parties.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 5, Heading 5.6.1.

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COMI in Powerstorm and in Bezuijen Holding v X: Dutch Courts warming up to the new Insolvency Regulation.

Thank you Bob Wessels for again alerting us timely to two recent decisions by the Dutch courts, applying the Insolvency Regulation 2015, on the determination of COMI – Centre of Main Interests. Bob’s review is excellent per usual hence I am happy to refer for complete background. In short, the decisions are

  • in Powerstorm: textbook applications on the public expression (hence ascertainability by third parties, to use the CJEU’s phrase of words) of COMI, which third parties have to rely on. Here: to displace the presumption of COMI in the United States (place of incorporation; in re Powerstorm) in favour of Amsterdam.
  • in Bezuijen BV against X, a natural person: with extensive reference to the recitals of the EIR 2015, that the Dutch courts have to consider jurisdiction proprio motu, evidently, and that they need serious evidence to uphold jurisdiction against a natural person who, both parties agree, no longer has his residence in The Netherlands (where it is, is in dispute but it is probably somewhere in the vicinity of Paris).

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 5, Heading 5.6.1.

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Bank Leumi. No calling for the EU’s Insolvency Regulation in intra-UK scenarios.

Thank you Ben Zielinski for flagging Bank Leumi (UK) Plc v Screw Conveyor Ltd [2017] CSOH 129. I believe Ben is right in writing that this is the first formal acknowledgement that Scottish judicial authorities have no insolvency business in respect of an English registered company, and the same applies to English courts and Scottish companies,  in spite of the EU’s Insolvency Regulation.

Even if a company carries out its main activities in Scotland, internal UK jurisdictional rules will assign insolvency jurisdiction to the English judicial authorities. That is a result of, as Lord Doherty writes, the Insolvency Regulations designating the ‘Member State the courts of which may open insolvency proceedings’ however ‘territorial jurisdiction within that Member State is established by the Member State’s national law’ (at 9).

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 5, Heading 5.6.1.

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Vinyls Italia: Szpunar AG on the chemistry between the Insolvency Regulation and Rome I. And again, on the pauliana.

In C-54/16 Vinyls Italia (in full: Vinyls Italia SpA, in liquidation v Mediterranea di Navigazione SpA) Szpunar AG opined last week (the Opinion is not available in English). At the core of the case is the application of Article 13 of the Insolvency Regulation 2000 (Article 16 in the 2015 version; see my general review here), however the case opens an interesting discussion on the meaning of ‘international’ in ‘private international law’.

For the general context of Article 13 (16 new) I should like to refer to my review of Lutz and Nike. At issue in the case at hand are payments made by Vinyls to Mediterranea for the transport of chemicals of the former by the latter. Both are Italian registered companies. Shipment was presumably carried out in Italy (an extra-Italian element in the actual transport does not feature in the factual analysis re ‘international’, which I refer to below). However the contract made choice of law in favour of English law. Mediterranea makes recourse to Article 13 juncto English law as the lex contractus to ward off an attempt by Vinyls to have the payments return to its books.

First up is the question whether courts should apply Article 13 ex officio: for Mediterranea’s claim was made after the procedural deadline foreseen by Italian law. Szpunar AG in my view justifiably suggest it does not: he refers to the Virgos Schmit report [„Article 13 represents a defence against the application of the law of the State of the opening, which must be pursued by the interested party, who must claim it” – § 136 of that report, para 43 of the AG’s Opinion) and to the CJEU’s finding in C-310/14 Nike at 26. The AG does point to the particulars of the case: Mediterranea seemingly had provided proof supporting its view that the substantial conditions of Article 13 had been met (in particular an expert opinion by an English lawyer) but had not expressis verbis requested its application. Szpunar refers the final say to the Italian court, which needs to judge on the basis of Italian civil procedure however does suggest that it seems fairly inconceivable to have provided proof for the fulfillment of a legal proviso, without meaning to request its application.

The question on the applicability of Rome I at all (which is required if Mediterranea want to make recourse to the provisions of English law as lex contractus per Rome I or the Rome convention) may not make it to the CJEU. As Szpunar AG notes, the underlying contract dates prior to 17 December 2009, which is the cut-off date of the Rome I Regulation. The referring court being a court of first instance, it is not in a position to request preliminary review of Rome I’s predecessor, the 1980 Rome Convention. The AG completes the analysis anyway (the Court itself will not, should it find Rome I not to be applicable) and takes in my view the right, expansionist approach (one which I also defend in my handbook): especially given the presence of Article 3(3)’s proviso for ‘purely domestic’ contracts, it is clear that it suffices for Rome I to be applicable that parties make choice of court in favour of a foreign law. Further in the opinion (137 ff) he also suggests that such application is not tantamount to fraude a la loi (fraus legis) and again I agree: the relevance of fraus has been seriously diminished by the provisions on party autonomy in both Rome I and the Rome Convention.

The use of choice of law per Rome I (or the Convention) in turn serves as a jack to trigger the application of the insolvency Regulation. That too is correct in my view, and with undramatic consequences. Choice of law for the underlying contract only identifies its lex causae (where relevant, with an impact on Article 13 of the Insolvency Regulation). It does does not of course in and of itself determine the lex concursus: the latter is determined by the Insolvency Regulation once /if insolvency occurs. Parties have no means to manipulate this at the time of the formation of the contract.

Exciting, conceptual stuff. Most probably the Court itself will not be in a position to assess it all.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 3, Heading 3.2.1; Heading 3.2.8.1; chapter 5; Heading 5.7.1.

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