INSOLVENCY REGULATION AND REGULATION 44/2001 (BRUSSELS I) AND 2007 LUGANO CONVENTION Judgment of 4 September 2014, C-157/13, Nickel & Goeldner Spedition GmbH v Kintra UAB Judgment of 4 December 2014, C-295/13, H v HK MIGUEL TORRES JOAQUIM-J. FORNER 1. Continued dialogue between Insolvency Regulation and Brussels I Regulation The Regulation 44/2001 ( Brussels I Regulation ) excludes insolvency matters from its material scope in Art. 1(2)(b). The ECJ has referred several times to the scope of the exclusion, thus elaboration on the borders between Brussels I Regulation and Insolvencu Regulation. 1 In its Judgment of 4 September 2014, C-157/13, Nickel & Goeldner Spedition GmbH v Kintra UAB, the ECJ has pronounced a decision which reaffirms the doctrine. The facts were as follows: On 28 May 2009, the Vilniaus apygardos teismas (Regional Court, Vilnius) opened insolvency proceedings against Kintra, which has its registered office in Lithuania. The insolvency administrator of Kintra applied to the Vilniaus apygardos teismas for an order that Nickel & Goeldner Spedition, which has its registered office in Germany, pay, by way of principal sum, LTL 194 077.76 in respect of services comprising the international carriage of goods provided by Kintra for Nickel & Goeldner Spedition, inter alia in France and in Germany. According to the insolvency administrator of Kintra, the jurisdiction of the Vilniaus apygardos teismas was based on Article 14(3) of the Lithuanian Law on the insolvency of undertakings. Nickel & Goeldner Spedition disputed that jurisdiction claiming that the dispute fell within the scope of Article 31 of the CMR and of Regulation No 44/2001. By judgment of 29 August 2011, the Vilniaus apygardos teismas granted the application of the insolvency administrator of Kintra, holding that its jurisdiction resulted from the provisions of the Lithuanian Law on the insolvency of undertakings and from Regulation No 1346/2000. By decision of 6 June 2012, the Lietuvos apeliacinis teismas (Court of Appeal of Lithuania) upheld the judgment at first instance. It held that the dispute related to the exception concerning bankruptcy, laid down in Article 1(2)(b) of Regulation No 44/2001, and that the court with jurisdiction in the dispute must be decided in 1 See in this webpage section: Insolvency regulation and Regulation 44/2001 (Brussels I), examining Judgment of 12 February 2009, C-339/07, Christopher Seagon, in his capacity as liquidator in respect of the assets of Frick Teppichboden Supermärkte GmbH v Deko Marty Belgium NV; Judgment of 10 September 2009, C-292/08, German Graphics Graphische Maschinen GmbH v Alice van der Schee, acting as liquidator of Holland Binding BV; Judgment of 19 April 2012, C-213/10, F-Tex SIA v Lietuvos-Anglijos UAB Jadecloud-Vilma.
accordance with Article 3(1) of Regulation No 1346/2000 and with the provisions of the Lithuanian Law on the insolvency of undertakings. 2 The ECJ summarized first its doctrine: It is apparent from that case-law that it is true that, in its assessment, the Court has taken into account the fact that the various types of actions which it heard were brought in connection with insolvency proceedings. However, it has mainly concerned itself with determining on each occasion whether the action at issue derived from insolvency law or from other rules. It follows that the decisive criterion adopted by the Court to identify the area within which an action falls is not the procedural context of which that action is part, but the legal basis thereof. According to that approach, it must be determined whether the right or the obligation which respects the basis of the action finds its source in the common rules of civil and commercial law or in the derogating rules specific to insolvency proceedings. 3 The court found that it is not disputed that the action at issue is an action for the payment of a debt arising out of the provision of services in implementation of a contract for carriage. That action could have been brought by the creditor itself before its divestment by the opening of insolvency proceedings relating to it and, in that situation, the action would have been governed by the rules concerning jurisdiction applicable in civil and commercial matters. The fact that, after the opening of insolvency proceedings against a service provider, the action for payment is taken by the insolvency administrator appointed in the course of those proceedings and that the latter acts in the interest of the creditors does not substantially amend the nature of the debt relied on which continues to be subject, in terms of the substance of the matter, to the rules of law which remain unchanged. It is therefore necessary to hold that the action at issue in the main proceedings does not have a direct link with the insolvency proceedings opened in relation to the applicant. 4 The ECJ concludes: Consequently, the answer to the first question is that Article 1(1) of Regulation No 44/2001 must be interpreted as meaning that an action for the payment of a debt based on the provision of carriage services taken by the insolvency administrator of an insolvent undertaking in the course of insolvency proceedings opened in one Member State and taken against a service recipient established in another Member State comes under the concept of civil and commercial matters within the meaning of that provision. 5 We shall see infra Section 3 that the ECJ had to clarify its language soon after. 2. What rule of jurisdiction applies? The inclusion in the scope of Brussels I Regulation and exclusion of the Insolvency does not necessarily comport the application of Brussels I Regulation rules of jurisdiction. Art. 71 thereof gives precedence to certain international conventions, in 2 Paras 14-18. 3 Paras 26-27. 4 Paras 28-30. 5 Para 32.
particular to the Convention on the Contract for the International Carriage of Goods by Road, signed in Geneva on 19 May 1956, as amended by the Protocol signed in Geneva on 5 July 1978 ( the CMR ), to which Lithuania acceded in 1993. The ECJ summarized its doctrine concerning the relationship between CMR and Brussels I Regulation 6 : [T]he application, in relation to matters governed by specialised conventions, of the rules provided for by those conventions cannot compromise the principles which underlie judicial cooperation in civil and commercial matters in the EU such as the principles, recalled in recitals 6, 11, 12 and 15 to 17 in the preamble to Regulation No 44/2001, of the free movement of judgments in civil and commercial matters, predictability as to the courts having jurisdiction and therefore legal certainty for litigants, the sound administration of justice, minimisation of the risk of concurrent proceedings, and mutual trust in the administration of justice in the EU... 7 In the present case, the ECJ has found that Art. 31 of the CMR 8 was consistent with the doctrine and has also underlined that the interpretation given by the ECJ to art. 5(1) of the Brussels I Regulation has reached a solution similar in the matter of passengers transport by air 9 : It is true that the second indent of Article 5(1)(b) of Regulation No 44/2001, the wording of which refers to only one place of performance, offers the claimant less choice than Article 31(1) of the CMR, which allows him to choose between the place where the goods were taken over by the carrier and the place designated for delivery of the goods. However, that fact is not such as to affect the compatibility of Article 31(1) of the CMR with principles which underlie judicial cooperation in civil and commercial matters in the EU. The Court has accepted in relation to contracts for carriage that, in certain circumstances, the applicant may have the choice between the courts of the place of departure and those of the place of arrival. In that respect, it has stated that such a choice granted to the applicant, apart from respecting the criterion of proximity, also satisfies the requirement of predictability, in so far as it allows the applicant, as well as the defendant, easily to identify the courts before which proceedings may be brought. What is more, it is consistent with the objective of legal certainty, since the applicant s choice is limited to two possible judicial fora within the framework of the second indent of Article 5(1)(b) of Regulation No 44/2001 (judgment in Rehder, para 45). Therefore, a dispute falls within the scope of both the regulation and the CMR, a Member State may, in accordance with Article 71(1) of that regulation, apply the rules concerning jurisdiction laid down in Article 31(1) of the CMR. 10 6 Judgment of 4 May 2010 C-533/08 TNT Express Nederland BV v. AXA Versicherung AG and Judgment of 19 December 2013 C-452/12 Nipponkoa Insurance Co. (Europe) Ltd v. Inter-Zuid Transport BV. 7 Para 38. 8 In legal proceedings arising out of carriage under this Convention, the plaintiff may bring an action in any court or tribunal of a contracting country designated by agreement between the parties and, in addition, in the courts or tribunals of a country within whose territory: (a) The defendant is ordinarily resident, or has his principal place of business, or the branch or agency through which the contract of carriage was made, or (b) The place where the goods were taken over by the carrier or the place designated for delivery is situated. 9 Judgment of 9 July 2008, C-204/08, Peter Rehder v. Air Baltic Corporation. 10 Para 42.
3. What if applicability of Lugano Convention of 2007 is at stake? a) Exclusion from Regulation 44/2001 In Judgment of 4 December 2014, C-295/13, H v HK the ECJ has faced the relationship between Brussels I Regulation and the Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, signed in Lugano on 30 October 2007, which enacts a system of judicial jurisdiction copied from the Brussels I Regulation. It therefore has a rule in Art. 1(2)(b) excluding bankruptcy, proceedings relating to the winding-up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings from its scope of application. The 2007 Lugano Convention is in force among member States of the EU (except Denmark), on one side, and Iceland, Norway and Switzerland, on the other side 11. The facts of the case involved a defendant domiciled in Switzerland, which makes 2007 Lugano Convention applicable instead of the Brussels I Regulation before a German court: The applicant in the main proceedings is the liquidator in insolvency proceedings opened on 1 November 2009 and concerning the assets of G.T., a German company with its registered office at Offenbach am Main (Germany). The defendant in the main proceedings is the managing director of G.T. He is domiciled in Switzerland. On 1 July 2009, G.T. transferred EUR 115 000 to one of its subsidiaries and, on 8 July 2009, to the same subsidiary, EUR 100 000, EUR 50 000 of which it recovered. The applicant in the main proceedings is seeking from the defendant in those proceedings, in his capacity as managing director of G.T., reimbursement of the remaining EUR 165 000. He has based his claim on the first and second sentences of Paragraph 64 of the GmbHG and submits that the transfers made by the defendant in the main proceedings on 1 and 8 July 2009 to the subsidiary in question were made after G.T. became insolvent and after it had been established that the company s liabilities exceeded its assets. The referring court raises the question whether the proceedings fall within the substantive scope of Article 3(1) of Regulation No 1346/2000. [...] According to the referring court, if the action at issue falls within the substantive scope of Article 3(1) of Regulation No 1346/2000, it is necessary to answer the question whether that provision also applies if the insolvency proceedings have been opened in a Member State while the defendant s domicile or registered office is situated in a non-member State as, in the present case, the Swiss Confederation. The Swiss Confederation, while a contracting party to the Lugano II Convention, is not bound by that regulation. Should the Court conclude that Article 3(1) of Regulation No 1346/2000 is not applicable in a case such as that in the main proceedings, the referring court raises the issue whether the dispute in the main proceedings falls within the substantive scope of Article 1(2)(b) of the Lugano II Convention. Pursuant to that provision, that convention does not apply to bankruptcy, proceedings relating to the 11 See Pocar, F. Explanatory Report. Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, signed in Lugano on 30 October 2007 OJ C 319, 23.12.2009, p. 1.
winding-up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings. 12 Regarding the applicability of the Insolvency Regulation the question is whether Article 3(1) of Regulation No 1346/2000 must be interpreted as meaning that the courts of the Member State in the territory of which insolvency proceedings regarding a company s assets have been opened have jurisdiction, on the basis of that provision, to hear and determine an action, such as that at issue in the main proceedings, brought by the liquidator in the insolvency proceedings against the managing director of that company for reimbursement of payments made after the company became insolvent or after it had been established that the company s liabilities exceeded its assets. 13 The answer is positive, but it requires an extended reasoning due to the particular status of Paragraph 64 of the GmbHG which is the relevant rule in German law allowing the institution of the action regardless of an insolvency procedure. The reasoning includes further insights on Judgment of 4 September 2014, C-157/13, Nickel & Goeldner Spedition GmbH v Kintra UAB (Supra Section 1): It must be observed in this connection that, having regard, inter alia, to the effectiveness of Regulation No 1346/2000, Article 3(1) thereof must be interpreted as meaning that it confers international jurisdiction on the Member State within the territory of which insolvency proceedings were opened in order to hear and determine actions which derive directly from those proceedings and which are closely connected to them (judgment in Seagon, para 21). Furthermore, it must be stated that the Court, in its case-law concerning the assessment of the question whether proceedings derive directly from insolvency proceedings or are closely connected with them, has taken into account, first, the fact that the various types of actions which it heard were brought in connection with insolvency proceedings. Secondly, the Court concerned itself above all with determining on each occasion whether the action at issue derived from insolvency law or from other rules (see, to that effect, judgment in Nickel & Goeldner Spedition, C 157/13, para 26). Thus, so far as concerns the action at issue in the main proceedings, based on Paragraph 64 of the GmbHG, it must be found, first, that it has been brought in connection with insolvency proceedings. Secondly, so far as concerns the fact that the wording of Paragraph 64 of the GmbHG theoretically allows an action to be brought even where no insolvency proceedings concerning the assets of the debtor company have been opened, it must be stated that this fact per se does not preclude such an action being characterised as an action which derives directly from insolvency proceedings and is closely connected with them, providing that that action was actually brought in the context of insolvency proceedings, as is the case in the main proceedings. Admittedly, the Court has already held that, in order to identify the area within which an action falls, it is necessary to determine whether the right or the obligation which forms the basis of the action finds its source in the common rules of civil and commercial law or in the derogating rules specific to insolvency proceedings (judgment in Nickel & Goeldner Spedition, para 27). However, those considerations cannot be interpreted to the effect that an action based on a provision whose application does not require insolvency proceedings to have formally been opened but 12 Paras 8-9, 11-12. 13 Para 14.
does require the actual insolvency of the debtor, and thus on a provision which, in contrast to the provisions at issue in the case which gave rise to the judgment in Nickel & Goeldner Spedition (EU:C:2014:2145), derogates from the common rules of civil and commercial law, does not derive directly from insolvency proceedings or is not closely connected with them. Under Paragraph 64 of the GmbHG, the managing director of a debtor company must reimburse the payments which he made on behalf of that company after it became insolvent or after it was established that the company s liabilities exceeded its assets. That provision therefore clearly derogates from the common rules of civil and commercial law, specifically because of the insolvency of the debtor company. An interpretation of Article 3(1) of Regulation No 1346/2000 to the effect that an action based on Paragraph 64 of the GmbHG, brought in insolvency proceedings, is not an action deriving directly from insolvency proceedings and closely connected with them, would therefore create an artificial distinction between that action and comparable actions, such as the actions to set transactions aside at issue in the cases which gave rise to the judgments in Seagon and F-Tex, on the sole ground that the action based on Paragraph 64 of the GmbHG could theoretically be brought even if there were no insolvency proceedings. Such an interpretation, which has no basis in the relevant provisions of Regulation No 1346/2000, cannot be accepted. It must be stated, on the other hand, that an action based on Paragraph 64 of the GmbHG and brought outside the context of insolvency proceedings may fall within the scope of the Lugano II Convention or, as the case may be, that of Regulation No 44/2001. However, that is not the situation in the case in the main proceedings. 14 b) Exclusion from 2007 Lugano Convention Including the action into the material scope of the Insolvency Regulation corresponds to its exclusion of Brussels I Regulation, which is the same under the 2007 Lugano Convention. In the language of the ECJ the question is whether Article 3(1) of Regulation No 1346/2000 must be interpreted as meaning that the courts of the Member State in the territory of which insolvency proceedings regarding a company s assets have been opened have jurisdiction to hear and determine an action, such as that at issue in the main proceedings, brought by the liquidator in the insolvency proceedings against the managing director of that company for reimbursement of payments made after the company became insolvent or after it had been established that the company s liabilities exceeded its assets, where the managing director is domiciled, not in another Member State but, as is the situation in the main proceedings, in a contracting party to the Lugano II Convention. 15 The ECJ had already admitted that Art. 3(1) of the Insolvency Regulation is applicable regardless of the domicile of the defendant in a third country 16 and the same finding is made in the present case: [T]he Court, in a case concerning, inter alia, the exclusion of bankruptcy, proceedings relating to the winding up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings from 14 Paras 17-25. 15 Para 27. 16 Judgment of 16 January 2014 C-328/12 Ralph Schmid, acting as liquidator of the assets of Aletta Zimmermann v. Lilly Hertel.
the scope of Regulation No 44/2001, provided for, in identical terms to those of Article 1(2)(b) of the Lugano II Convention, in Article 1(2)(b) of that regulation, has previously held that that exclusion, on the one hand, and the scope of Regulation No 1346/2000, on the other, must be interpreted in such a way as to avoid any overlapping of the rules of law laid down by those texts. Consequently, in so far as an action falls under Article 3(1) of Regulation No 1346/2000, it does not fall within the scope of Regulation No 44/2001 (see, to that effect, Nickel & Goeldner Spedition, EU:C:2014:2145, paragraph 21 and the case-law cited).in the light, in particular, of the identical wording of the provisions concerned, the considerations set out in the preceding paragraph may be transposed to the interpretation of Article 1(2)(b) of the Lugano II Convention. Therefore, since the action in the main proceedings falls under Article 3(1) of Regulation No 1346/2000, it is excluded from the scope of that convention. Accordingly, the fact that the Swiss Confederation is a contracting party to the Lugano II Convention is irrelevant for the purposes of the outcome of the dispute in the main proceedings, the convention not being applicable to that dispute. Thirdly, the Court has already ruled that Article 3(1) of Regulation No 1346/2000 must be interpreted as meaning that the courts of the Member State within the territory of which the insolvency proceedings were opened have jurisdiction to hear and determine an action which derives directly from those proceedings and which is closely connected with them that is brought against a defendant whose place of residence is not within the territory of a Member State (see the judgment in Schmid, EU:C:2014:6, paragraphs 30 and 39 and the case-law cited).