Posts Tagged Switserland
FC Black Stars Basel: international arbitration cannot circumvent non-arbitrability of employment disputes.
I post this item mostly as a point of reference for discussions on mandatory law, employment disputes, and the use of arbitral tribunals to circumvent limitations in domestic litigation.
In FC Black Stars Basel 4A_7/2018, the Swiss Supreme Court held in April that mandatory Swiss law on limited arbitrability of domestic employment disputes, cannot be circumvented by submitting dispute to international arbitration. Schellenberg Witmer have succinct analysis here.
Note in particular 2.3.3:
Vor diesem Hintergrund erscheint es zur Vermeidung von Wertungswidersprüchen folgerichtig, den in Art. 341 OR angeordneten Schutz der sozial schwächeren Partei im Rahmen der Beurteilung der freien Verfügbarkeit nach Art. 354 ZPOinsoweit in das Prozessrecht hinein zu verlängern, als Schiedsvereinbarungen nicht uneingeschränkt zugelassen werden
Swiss ‘Sabena’ judgment interprets Lugano insolvency exception. Eventual recognition not impossible.
Update 22 January 2016 An amendment to the relevant parts of the Swiss PIL code is being suggested, which would make recognition of foreign insolvency proceedings less cumbersome.
In SAirLines AG v Masse en faillite ancillaire de Sabena SA, the Swiss Bundesgericht (Federal High Court) held that the request by the liquidators of Sabena (the former Belgian national carrier) to have a Brussels Court of appeal judgment recognised and enforced in Switserland, falls within the ‘insolvency’ exception of the Lugano Convention (2007). It cannot therefore enjoy the swift recognition procedure included in that Convention. Instead, a claim under standard Swiss private international law in my view is still possbible (although, going by the Court’s obiter, see below, not promising).
The Brussels Court of Appeal in 2011 held SAirLines AG ( the holding company of the former Swiss Air Group) responsible for the insolvency of Sabena, by the misapplication of a number of crucial investment agreements (I summarise; that however is the gist of the dispute). SAirlines AG is itself being liquidated in Switserland. The Bundesgericht relied heavily on precedent in C-111/08 Alpenblumme where the insolvency exception of the Brussels I-Regulation was held as as applying to a judgment of a court of Member State A regarding registration of ownership of shares in a company having its registered office in Member State A, according to which the transfer of those shares was to be regarded as invalid on the ground that the court of Member State A did not recognise the powers of a liquidator from a Member State B in the context of insolvency proceedings conducted and closed in Member State B.
It also referred to Gourdain. Per Gourdain, an action is related to bankruptcy only if it derives directly from the bankruptcy and is closely linked to proceedings for realising the assets or judicial supervision. It is the closeness of the link, in the sense of the case-law resulting from Gourdain, between a court action and the insolvency proceedings that is decisive for the purposes of deciding whether the exclusion in Article 1(2)(b) of the JR is applicable.
The mere fact that the liquidator is a party to the proceedings is not sufficient to classify the proceedings as deriving directly from the insolvency and being closely linked to proceedings for realising assets.
(Incidentally, for a Lugano-bound court to rely on the ECJ’s case-law on the insolvency exception may in my view in future be less obvious, at least as far as the ECJ’s case-law post the entry into force of the insolvency Regulation is concerned: the ECJ’s judgment on the respective scope of both Regulations is now obviously subject to there being the other, closely related Regulation. The Insolvency Regulation however does not apply to Switserland whence arguably the scope of the stand-alone Lugano insolvency exception need not necessarily evolve alongside that of the Brussels I-Insolvency exception).
In the case at hand, it might indeed be difficult to argue that the Belgian liquidators’ action while having an impact on the insolvency and the division of the assets, does not directly derive from the bankruptcy and would have existed even without such insolvency occurring.
The judgment does not mean that recognition and enforcement of the judgment is now totally out of the question (even the official court’s press release suggests as much in its title). Rather the Bundesgericht has simply held on the applicability of the Lugano Convention. As far as my legal German reaches (that may be an important caveat hence I would like to hear from Swiss, German or Austrian lawyers) the judgment does not prejudice enforceability under general Swiss private international law. (Although, with the same caveat, the language at para 10 of the judgment does not sound promising:
‘ Das belgische Urteil fällt aus den dargelegten Gründen nicht in den sachlichen Anwendungsbereich des Lugano-Übereinkommens. Dass das Urteil unter diesen Umständen nach den Regeln des IPRG anzuerkennen wäre, wird nicht geltend gemacht und ist aufgrund der insolvenzrechtlichen Natur der Streitsache auch nicht ersichtlich (vgl. BGE 139 III 236 E. 5.3). Bei dieser Sachlage kommt eine Anerkennung und Vollstreckbarerklärung von vornherein nicht in Frage, und es erübrigt sich, darüber zu befinden, ob die Anerkennungsvoraussetzungen gemäss dem LugÜ gegeben wären und ob die Beschwerdegegnerin überhaupt ein genügendes Rechtsschutzinteresse an einer selbstständigen Anerkennungsfeststellung und Vollstreckbarerklärung gemäss Art. 33 Abs. 2 und Art. 38 Abs. 1 LugÜ hätte, wie die Vorinstanz annahm, die Beschwerdeführerinnen hingegen bestreiten.).
To be continued, therefore?
Schmid v Hertel: ECJ confirms ‘extraterritorial’ reach of insolvency Regulation’s Seagon extension – Actio Pauliana
(Postscript April 2015: The ECJ confirmed these principles in C-295/13, H v HK).
Less is more, I know – Apologies for the long title and thank you to Matthias Storme for highlighting the case. In Case C-328/12 Ralph Schmid v Lilly Hertel, Schmid was the German liquidator of the debtor’s assets, appointed in the insolvency proceedings opened in her regard in Germany on 4 May 2007. The defendant, Ms Hertel, resides in Switzerland. Mr Schmid brought an action against Ms Hertel before the German courts to have a transaction set aside, seeking to recover EUR 8 015.08 plus interest as part of the debtor’s estate.
In Case C-339/07 Seagon the ECJ had ruled that the courts of the Member State within the territory of which insolvency proceedings have been opened have jurisdiction to decide an action to set a transaction aside (actio pauliana) that is brought against a person whose registered office is in another Member State. However does Seagon also apply where insolvency proceedings have been opened in a Member State, but the place of residence or registered office of the person against whom the action to have a transaction set aside is brought is not in a Member State, but in a third country?
The ECJ held that it does. Bob Wessels has a very good analysis here and I am happy to refer. Let me just add one or two things. The Brussels I Regulation, the overall Regulation on jurisdiction on civil and commercial matters, displays bias in favour of the defendant: actor sequitur forum rei. The overall jurisdictional angle of the Insolvency Regulation is different: avoiding forum shopping to the detriment of creditors is its main aim, and its insistence on verifiable and predictable criteria to determine COMI (which in turns determines jurisdiction) needs to be seen in that light. That non-EU domiciled defendants get caught up in EU proceedings on the basis of COMI is not generally seen as problematic within the context of the Regulation.
The ECJ is rather realistic with respect to the potential recognition and enforcement problems associated with judgments under the Regulation held against non-domicileds. In the absence of assets in the EU held by the non-dom (if there were, enforcement would be straightforward), classic bilateral treaties may come to the rescue and if there is no such treaty, so be it: the Regulation’s jurisdictional rules should not be held up by potential problems end of pipe.
An important judgment for the reach of the Insolvency Regulation.