Posts Tagged Yukos
Vulture funds (and Yukos) fail in Round 1 against Belgian enforcement regime viz sovereign immunity. No reference to Luxemburg on compatibility of Brussels I with international law.
Thank you Quentin Declève for alerting me to the Constitutional Court’s judgment on a related action (where MNL were joined by Yukos) namely against the act of 23 August 2015 which introduced Article 1412quinquies in the Belgian Judicial Code. It is noteworthy that the action against the Act of July has not yet been decided by the Court (that case number, for the aficionados, is 6371), at the least I have not been able to locate any judgment).
As Quentin summarises, as a general rule, Article 1412 quinquies of the Belgian Judicial Code provides that assets located in Belgium that belong to a foreign State are immune from execution and cannot be subject to enforcement proceedings by creditors. Exceptions to that rule are possible if very strict conditions are met: a party wishing to seize the assets belonging to a State needs to obtain a prior authorisation from a judge. This judge will only authorise the seizure if (i) the foreign State has “expressively” and “specifically” consented to the seizure of the assets; (ii) the foreign State has specifically allocated those assets to the enforcement of the claim which gives rise to the seizure; and (iii) the assets are located in Belgium and are allocated to an economic or commercial activity.
The Court has now annulled the word ‘specifically’ but has otherwise left the Act intact. Quentin summarises how the Court found that this proviso is not part of international law on State immunity.
Now, picking up where Quentin left: part of applicants’ arguments relate to Brussels I Recast. The argument is made that Belgium with its Act re-introduces exequatur, now that is has been abolished by the Recast. Belgium’s Government seems to argue that the law relating to seizure has public order character and hence is covered by the ordre public exception of the Brussels I Recast Regulation, and that seizure in Belgium which would go against public international customary law on State immunity, along the same lines would be covered by the ordre public exception of the Recast (para A.5.2, p.6).
The Court (at B.29.1 ff, .34 ff) deals with the Brussels I arguments very very succinctly: it refers to Article 41(1) which other than the substantive requirements of title III, makes recognition and enforcement subject to the law of the State of enforcement. The Court also says enforcement is not entirely obstructed: some of the foreign entities’ assets remain subject to seizure; and there are other ways of enforcement other than seizure. Finally the Court suggests that the Brussels I Recast surely must not be applied in a way which would be incompatible with international customary law. By rejecting the suggestion for a prelimary reference to Luxembourg (suggestion made by the Belgian State, unusually), the Court clearly believes that call is not one that has to be made by Luxembourg. Pitty: that would have been an interesting reference.
Again, NML Capital’s action against the Vulture Fund Act is still ongoing, lest I have missed withdrawal. As I noted in my paper, this Act I believe is wanting on various grounds, including some related to the New York Convention and the Brussels I Recast.
(Handbook of) EU Private International Law, Chapter 2, Heading 2.2.16, Heading 220.127.116.11.4.
Not quite HoHoHo (yet): OOO PROMNEFTSTROY v Yukos: Insolvency and conflict of laws in the Dutch Supreme Court.
Granted, the (bad) pun in the title would have worked better around the end of year, which is when I had originally planned this posting, before I got sidetracked. Bob Wessels has excellent overview here (including admirably swift and exact translation of core parts of the judgment). OOO PROMNEFTSTROY v Yukos at the Dutch Supreme Court is but one instalment in running litigation literally taking place across the globe.
Of particular interest to the blog is the court’s finding (at 3.4.2) that the existence of a corporation is subject to the lex incorporationis not, as the Court of Appeal had held, the lex concursus in the event of insolvency. The EU’s Insolvency Regulation does not apply for COMI is not within the EU. The Insolvency Regulation does not in so many words say the same as the Dutch Supreme Court however it is likely that under the EIR, too, this issue falls under lex societatis /lex incorporationis (see e.g. Miguel Virgos & Francisco Garcimartin, The European Insolvency Regulation: Law and Practice, Kluwer, 2004, p.82 (par 123, f: dissolution of the company).
One can imagine of course the one or two complications arising out of the seizure of assets of a company which no longer exists.
European private international law, second ed. 2016, Chapter 5, Heading 5.7