| INSOLVENCY — Jurisdiction — Parent company and subsidiary in different member states — Conflicting decisions purporting to open insolvency proceedings — Criteria for regulation — Council Regulation (EC) No 1346/2000, arts 3(1), 16(1), 26
In re Eurofood IFSC Ltd (Case C-341/04)
ECJ: President Skouris, Judges Jann, Timmermans, Rosas, Malenovský, Puissochet, Schintgen, Colneric, Klučka, Lõhmus and Levits: 2 May 2006 }
The presumption, for the purposes of the rule that the courts of the EC member state where a debtor’s main interests were situated had jurisdiction to open insolvency proceedings, that, in the case of a company, that was where its registered office was situated, could only be rebutted by objective factors that were ascertainable by third parties; the fact that the company was a “letterbox” company that did not carry out any business in the state where it had its registered office would suffice, but the mere fact that it was a subsidiary whose economic choices were controlled by a parent company in another state would not.
The Grand Chamber of the Court of Justice of the European Communities so held inter alia on a reference for a preliminary ruling by the Supreme Court, Ireland.
E Ltd, with its registered office in Ireland, was a wholly owned subsidiary of Parmalat SpA, an Italian company which was admitted to extraordinary administration proceedings in December 2003. On an application to the Irish High Court in January 2004, that court appointed a provisional liquidator of E Ltd with inter alia powers to take possession of all the company’s assets. In February, an Italian court determined that it had jurisdiction in the matter of E Ltd’s insolvency, after a hearing of which the Irish liquidator had four days’ notice and in respect of which he received no documents despite repeated requests. In March, the Irish court determined that E Ltd was insolvent. On appeal, a number of issues of jurisdiction were referred to the European Court.
Art 3(1) of Regulation 1346/2000 on insolvency proceedings provides: “'The courts of the member state within the territory of which the centre of a debtor’s main interests is situated shall have jurisdiction to open insolvency proceedings. In the case of a company or legal person, the place of the registered office shall be presumed to be the centre of its main interests in the absence of proof to the contrary.” Art 16(1) provides: “Any judgment opening insolvency proceedings … pursuant to article 3 shall be recognised in all the other member states …” Art 26 provides: “Any member state may refuse to recognise insolvency proceedings opened in another member state … where the effects of such recognition … would be manifestly contrary to that state’s … fundamental principles …”
THE COURT, for reasons stated by it, ruled: (1) where a debtor was a subsidiary company whose registered office and that of its parent company were situated in two different member states, the presumption laid down in art 3(1) of Regulation 1346/2000 could be rebutted only if factors which were both objective and ascertainable by third parties enabled it to be established that an actual situation existed which was different from that which location at that registered office was deemed to reflect. That could be so in particular in the case of a company not carrying out any business in the territory of the member state in which its registered office was situated. By contrast, where a company carried on its business in the territory of the member state where its registered office was situated, the mere fact that its economic choices were or could be controlled by a parent company in another member state was not enough to rebut the presumption laid down by that Regulation. (2) On a proper interpretation of article 16(1) of the Regulation, (i) the main insolvency proceedings opened by a court of a member state had to be recognised by the courts of the other member states without their being able to review the jurisdiction of the court of the opening state, and (ii) a “judgment opening insolvency proceedings” included a decision to appoint a liquidator and to divest the debtor so that the debtor lost the powers of management over his assets. (3) On a proper interpretation of art 26, a member state could refuse to recognise insolvency proceedings opened in another member state where the decision to open the proceedings was taken in flagrant breach of the fundamental right to be heard which a person concerned by such proceedings enjoyed.
|
