International procedure

1. International procedure • Overview of issues: • Jurisdiction of courts (incl. issue of lis pendens) • Service abroad • Specific rules for cross-border disputes (incl. possible use of harmonised rules of procedure) • Application of foreign law • Taking evidence abroad • Recognition and enforcement of foreign judgments or other instruments • Insolvency procedures

2. International procedure - sources • Sources in general • National law on jurisdiction, service, procedure incl. evidence of facts and law, insolvency proceedings, recognition and enforcement • In part replaced by EU legislation (esp. Regulations) • Multilateral and bilateral conventions • NB. For immunities of jurisdiction, see Ch. 1

3. Reasons for choice • Why does it matter ? What do you pay attention to when choosing a forum ? • Proximity-familiarity • Procedural reasons: • different rules of procedure, incl. rules on taking evidence, on confidentiality • use of language, • costs and distribution of costs (« american rule » (each party its own costs) or fee-shifting), • trust in the judges, • proximity of evidence (incl. presence of witnesses) • trust in law firms • Substantive reasons: - applicable rules, esp. those overruling choice of law • « national » interpretation of foreign or uniform law • remedies courts in hat country (can) grant • Chances of recognition and enforcement abroad

4. International jurisdiction • Domestic rules on international jurisdiction of national courts (in Belgium in Code of P.I.L.): • often rather wide jurisdiction, e.g. based also on *nationality of claimant * foreign defendant found in the country, *foreign defendant doing business in the country, etc.; • sometimes limited by « FNC » (forum non conveniens) • sometimes protected by anti-suit injunctions against proceedings abroad (eg Gallo Winery t. Andina, case in US against exorbitant jurisdiction rule in Ecuador) • Lis alibi pendens not always an exception or ground for suspension

5. International jurisdiction • Domestic rules on international jurisdiction limited by: • International conventions (bilateral or multilateral) (no uniform interpretation authority) • Hague Convention on Choice of Court Agreements 2005 (expected to enter into force for EU (without Denmark), Mexico and US) • Hague Conference preliminary negotiations (2012) for a Judgments Convention • CMR art. 31 • EU-Regulations: originally Brussels Convention 1968, now EU-Regulations (except overseas territories of art. 355 TFEU: still Brussels Convention) (+ uniform interpretation by ECJ) • Lugano Convention 1988, revised 2007: EU-EFTA Convention (CH, N, Iceland) parallel to EU-Regulation 44/2001 (incl. an endeavour to interpret in conformity with identical rules in EU Regulation)

6. International jurisdiction - EU • EU-Regulations: • Civil and commercial matters in general: Reg. 44/2001 (« Brussels-I ») and « Recast » 1215/2012. Excl.: family & succession, social security, jurisdiction over arbitration (incl. judging validity of arbitration agreements: jurisdiction rules left to national law; no recognition on the basis of Brussels-I) (proceedings ancillary to arbitration also outside Brussels-I Recast) • Separate Regulations on matrimonial matters and parental responsibility Brussels-II), maintenance obligations (alimony), on transnational successions (650/2012) • Regulation on insolvency proceedings 1346/2000 (s. further) • Purpose of these rules: • « Free movement of judgments », i.e. recognition and enforcement of judgments from other member states (in the USA: full faith and credit) • To reach this, harmonisation of international jurisdiction is required

7. EU – Brussels I Reg - Scope • Brussels-I-Regulation 44/2001 – and Recast 1215/2012 • Scope of application ratione personae • Regulates only procedures where a defendant is domiciled in a MS; otherwise: national procedural law applies (art. 4.2, Recast art. 6) (s. infra Hague Convention on Choice of Court Agreements) • Definition of domicile: - of natural persons: art. 59 (Recast 62) > national law (not autonomous) (><in other regulations, habitual residence is used, an autonomous concept) - of legal persons: autonomous definition; alternative grounds (art. 60, Recast 63) • If residence unknown, last known residence may be used (C-327/10, Hypotecni banka / Lindner)

8. EU – Brussels I Reg - Scope • Brussels-I-Regulation 44/2001 – and Recast 1215/2012 (in force Jan 10, 2015) - Scope of application ratione personae • Only « international » cases. See however C-478/12 Maletic: when consumer can sue travel organisator before court of its domicile, he can also sue the travel intermediary with a seat elsewhere in his country before the first court (akhough the latter reletaionship viewed in isolation is not international) • Extensions in Recast 1215/2012: also when defendant not domiciled in a MS: • Jurisdiction over consumer contracts (Recast 18 I) • Jurisdiction over individual employment contracts (Recast 21) • Matters of exclusive jurisdiction (in art. 24 Recast) • (valid) Choice of forum of a court in a member state (art. 25 Recast)

9. EU – Brussels I - General • Brussels-I-Regulation 44/2001 – and Recast 1215/2012 • General characteristics: • Hard & strict rules • Restrictive interpretation of any deviation from the basic rule «court of the defendant» (against a forum actoris = home play) • No doctrine of «forum non conveniens» (FNC) - ECJ in C-281/02 Owusu (British tourist in Jamaica tort case, sues also travel agent) • Court examines jurisdiction ex officio (art. 25 ff.; Recast 27). • No «anti-suit injunction» allowed: ECJ in C-159/02 Turner (not even by court seised first) and in C-185/2007 West tankers (not even in relation to arbitration) (disputed whether the latter remains under the new 1215/2012 Regulation); Lituanian Gazprom case pending (on recognition of an anti-suit order by arbitrators). • Pending question whether damage claim is possible meanwhile (UKSC in Alexandros)

10. Brussels-I Excl. jurisdiction • Brussels-I-Regulation – Grounds for jurisdiction: • Some cases of exclusive jurisdiction (no choice of court possible): • Real estate: proprietary rights in immovable property + tenancy in immovable property (art. 22.1, Recast 24.1) • Matters of the law of companies and other legal persons (22.2, Recast 24.2) • Entries in public registers (22.3, Recast 24.3) • Intellectual property rights (22.4, Recast 24.4) • Enforcement (22.5, Recast 24.5)

11. Brussels I Choice of court • Effect of choice of court agreements: Art. 23 (Recast 25). It must be recognised if: 1° at least one party domiciled in a member state (no longer required in Recast 25); 2° consent of the parties is clear*. Also in case of conferral in a trust instrument (Recast 25.3 with exceptions in 25.4). See next slide on validity; 3° in writing (incl. e-communication) or in another form customary in international trade or according to practices between the parties; 4° indicating a court or the courts of a member state. * Disputed whether third party deriving rights from a contract is also bound by choice of court. Cass.(F) 4 Jan 2005: addressee in transport contract is not bound.

12. Brussels I Choice of court • Problem under old Reg: no priority for designated court. If however, a court declines juridiction because of forum clause, courts in other MS are bound (C-456/11 Gothaer allgemeine) • Recast: The designated judge will judge (the effectiveness of) the choice of court agreement • Validity of choice of court agreements • Validity to be judged by the law of the designated forum (Recast 25.1) , including its conflict of law rules (Recast consideration 20), thus by the law applicable by virtue of the conflict of law rules of the designated forum • Fomal validity: uniform rule for all member states in Brussels-I itself; see supra • Validity of choice of court agreements to be assessed separately from the rest of the contract (Recast art. 25.6)

13. Brussels-I Choice of court • Exceptions to choice of court agreements • Excluded in cases of exclusive jurisdiction (art. 22, Recast 24) • Limited in insurance, consumer and labour disputes (see art. 13 c.q. 17 c.q. 21, Recast 15, 19, 23) • Overrules national restrictions (eg. Belgian Act on Distributorship) (but Reg. does not apply if designated Court is outside EU > case law in B, Germany, etc. rejects choice if the foreign court is not bound to apply overriding mandatory provisions as in agency or distributorship contracts) • Some restrictions in other treaties remain (eg CMR Convention) • Validity of unilateral optional forum clauses ? Rejected i.a. in France Cass.(Fr.) 26 Sep 2012; accepted in the UK.

14. Brussels-I Choice of court • Voluntary appearance of defendant without protest (art. 24, Recast 26) (except cases of exclusive jurisdiction under art. 22, recast 24)

15. Choice of court – Hague C • Choice of Court Agreements – Hague Convention 2005 (not in force yet, ratified by Mexico, signed by US* and EU (w/o Denmark)): • Art. 1: defines « international cases » • Art. 2: outside scope of application: consumer cases, labour cases, family law, successions, insolvency, competition, most tort cases, property in land, legal persons, most intellectual property cases, etc. • Art. 3 requirements: a) where the agreement indicates a Court of a contracting state b) formal requirements (in writing or by any other means of communication that renders information accessible so as to be usable for subsequent reference) * The ULC (uniform law commission) has already approved the Uniform Implementation Act

16. Choice of court – Hague C • Choice of Court Agreements Hague Convention 2005 - effects • Art. 5: Chosen court* must hear the case, unless it finds the agreement invalid; Art. 5: validity under the law of the chosen court * More precisely: chosen court system (state basis) (transfer to other court of same state system remains possible) • Any not-named court must decline jurisdiction (unless named court has declined) • Convention does not govern interim measures (art. 7) • Recognition and enforcement may only be refused on the grounds of art. 9 (i.a. art. 11 punitive damages, cfr. existing case law in Germany, France, Italy)

17. Brussels-I general rules • Grounds for jurisdiction (cont.) • Basic rule: domicile of the defendant (rule against forum actoris) (Art. 2, Recast 4) • Art. 6.1 (Recast 8.1.) Plurality of defendants if closely linked (requirement of reasonable foreseeability in ECJ C-145/10 Painer, (violation of privacy by media), taken over in Recast 1215/2012) (but for defendants outside EU, national law determines this) • Art. 6.3 (Recast 8.3): Counterclaims: same court • Art. 6.2 (Recast 8.2): Third party intervention: possible in same court

18. Brussels-I provisional measures • Provisional measures: art. 31 (Recast 35) • may be demanded in the country where they can/must be performed/enforced • condition is that they are provisional - restrictive interpretation of « provisional measure »: only « conservatory measures » (ECJ in C-104/2003), incl. obtaining information or preserving evidence • Does not include eg ordering the hearing of a witness (but a court has jurisdiction for such measures if asked by the court having jurisdiction over substance, see further Reg. 1206/2011 on evidence)

19. Alternative jurisdiction: contracts • Brussels-I-Regulation – grounds for jurisdiction (contracts) • Alternative grounds on which claimant can base jurisdiction: • art. 5.1.a. (Recast 7.1.a) claim based on a contractual obligation: • place of performance of the obligation (as determined by the substantive law applicable to the obligation) (secondary obligations follow the principal obligation) • art. 5.1.b (Recast 7.1.b) in sales and service contracts • > a more specific and autonomous rule: place of delivery c.q. provision of service or place where should have been delivered/provided. To be determined by interpreting the contract, taking into account also « including terms and clauses which are generally recognised and applied through the usages of international trade or commerce, such as the Incoterms » (C-87/10 Electrosteel). If that does not help, place of factual delivery (C-381/08 Car Trim)

20. Alternative jurisdiction: torts • Brussels-I-Regulation –Alternative grounds on which claimant can base jurisdiction – tort: • Art. 5.3. (Recast 7.2.) Claim based on a non-contractual obligation from tort: place where the harmful event occurred. • In general, this can be the place where the event was caused (locus acti) or where the damage occurs (locus damni) (C-21/76 Bier /Mines de Potasse) • Also possible for negative declarations on liability in tort (C-133/11 Folien Fischer) > incentive for defendant to go to court first • For damage to personality rights worldwide: full jurisdiction for country where act is committed and country of centre of main interest of damaged person; partial jurisdiction for other countries where damage is caused (C-509/09 eDate advertising) • Damage to personality rights by press (C-68/93, Shevill) or damage to IP rights (including on internet) (C-523/10 Wintersteiger): full jurisdiction for country where act is committed; partial jurisdiction for other countries where damage is caused

21. Alternative jurisdiction other • Brussels-I-Regulation – grounds for jurisdiction • Alternative grounds on which claimant can base jurisdiction: • 5.5. (Recast 7.5) Disputes arising out of the operations of a branch, agency or other establishment: its location • 8-14 (Recast 10-16) Insurance contracts litigation • 15-17 (Recast 17-19) Consumer contracts litigation in 3 cases • (a) a contract for the sale of goods on instalment credit terms; • (b) a contract for a loan repayable by instalments, or for any other form of credit, made to finance the sale of goods; or • (c) the contract has been concluded with a person who pursues commercial or professional activities in the MS of the consumer's domicile or, by any means, directs such activities to that MS or to several States including that MS (NB. no requirement that contract is concluded as distance contrract: C-190/11 Mühlleitner / Autohaus Yusufi) • 18-21 (Recast 20-23) Labour contracts litigation

22. Alternative jurisdiction: general • Restrictive interpretation of alternative grounds • eg succeeding party such as assignee*, subrogated party** cannot use the alternative jurisdiction (except when it personally meets the requirements) • * C-89/91 Shearson Lehman Hutton • ** C-347/08 Vorarlberger Gebietskrankenkasse

23. Lis alibi pendens in EU • Brussels-I-Regulation – further rules on jurisdiction • Lis alibi pendens in other MS (art. 27, Recast 29) – Scope of application: • same claim (same cause of action) between same parties** already* before another court • * Date of seizure autonomously defined (art. 30, Recast 32): claim filed at court or claim received by the servicing authority (see further the rules on servicing abroad) • ** C-452/12 Nipponkoa: where there a claim for a declaration of non-liability is already pending, a recourse by the insurer of the defendant who has paid a third party falls within the scope of lis pendens.

24. Lis alibi pendens in EU • Brussels-I-Regulation – further rules on jurisdiction • Lis alibi pendens in other MS (art. 27, Recast 29) - Effects: • later court must suspend/stay proceedings until court first seised has decided (and must decline jurisdiction if first court decides it has jurisdiction). First court has Kompetenzkompetenz (even on the question whether there is a choice for court agreement naming another court) (ECJ C-116/02, Gasser). • This is not the case when the court seised later has exclusive jurisdiction on the basis of Ch. II. S. 3 (insurance), 4 (consumer) or art. 22 (ECJ C-438/12 Weber/Weber) • New rule in recast art. 31.2: where another court is seised on the basis of a choice of court agreement, that court has to decide first: named court has Kompetenzkompetenz

25. Lis alibi pendens in EU • Brussels-I-Regulation – further rules on jurisdiction • Lis alibi pendens and arbitration • No suspension if there is arbitration agreement, even if arbitration proceedings already pending • the wide exclusion of arbitration from the scope in the Recast (s. supra) also means that the fact that the validity of an arbitration agreement is already pending before one court not deprive other courts of jurisdiction !

26. Lis alibi pendens extra EU • Brussels-I-Regulation – further rules on jurisdiction • new in Recast 1215/2012 art. 33: • Lis alibi pendens in non-EU court : later EU court may suspend proceedings • Decision of non-EU Court with res iudicata: EU court will dismiss the proceedings if the non-EU judgment is capable of recognition (Recast art. 33.3)

27. Connex case pending • Brussels-I-Regulation – further rules on jurisdiction • Connexity (connected or related cases): later court MAY suspend or refer the case (no obligation) (art. 28, Recast 30) • Connexity with case in non-EU court (new in Recast 1215/2012 art. 34)

28. US jurisdiction • International jurisdiction of US Courts: mostly wide rules of jurisdiction but with many or wide exceptions • Grounds for jurisdiction: it is sufficient that there is a contact in personam or in rem with the state concerned - Jurisdiction in personam: very broadly formulated – mere presence of the defendant (domicile, citizenship, temporary presence, doing business) or consent of the defendant (choice of court agreement). Restricted by SCotUS in Daimler v Bauman (Jan 14, 2014): general jurisdiction only in home state of defendant; otherwise only specific jurisdiction for claims linked to the place • Jurisdiction in rem: dispute over property in an asset situated in that state. • Exceptions / Limitations to jurisdiction: • Choice of Court Agreement (widely accepted – SC 3 Dec 2013 in Atlantic Marine Construction) • Defendant fraudulently lured into the jurisdiction (invited for dinner) • Forum non conveniens (rarely accepted !, Gilbert case 1947) • Lis alibi pendens: «first filed rule»

29. UK jurisdiction • International jurisdiction of English Courts against defendants not domiclied in the EU is not governed by Brussels-I but by the English law. • Common law tradition: mostly wide rules of jurisdiction but with many or wide exceptions • Incl. wide jurisdiction in personam

30. Servicing docs. abroad • Service abroad of judicial documents • Hague Convention 1965 on the service abroad of judicial and extrajudicial documents in civil and commercial matters: cross-border service to a known address: • can take place via the «central authorities» of the contracting states; • a direct service abroad is possible in certain cases. • EU Regulation 1393/2007 (formerly 1348/2000) on service between member states: next slide • Matters outside these Conventions/Regulations: regulated by domestic law (usually via bailiff + postal service)

31. Servicing docs. abroad • EU Regulation 1393/2007 (formerly 1348/2000) on service between member states: • transmission via central authorities (art. 4 ff.) (standard forms); alternative forms in art. 12 ff; direct service by officials in the MS addressed if this is permitted by the law of that State (art. 15 • C-473/04 Plumex: no hierarchy between these alternatives • adressee may refuse to accept if neither in the official language of the place of destination nor in a language easily understood by defendant (art. 8) • Additional rules in specific regulations (eg Small Claims Regulation)

32. Cross-border procedures • National law may have specific rules of procedure for cross-border litigation (rare, except EU-Regulations mentioned infra) • If such rules are restrictive, they may be set aside by EU law, e.g. the requirement of a Cautio iudicatum solvi for foreign claimants • EU: proposals of the Storme-Commission 1994 • Some largely uniform procedures for cross-border litigation introduced in the law of all EU member states: • Small claims Regulation (Reg. 861/2007) • Payment order Regulation (Reg. 1896/2006) • Proposal for a Regulation on attachment of bank accounts («  European Account Preservation Order”), etc. • Model law by ALI/Unidroit Principles of transnational civil procedure (Principles + Annex with “Rules”)

33. Applying foreign law What is the task of the judge when according to the conflict of law rule, foreign law must be applied ? • Continental rule: curia novit ius, applies also to the foreign law indicated by the domestic conflict rule. Judge may obtain information according to the European Convention on Information on Foreign Law (London 1968) (not frequently used). More frequent: expert opinion on foreign law • Anglo-American rule: foreign law is a matter of fact that must be proven (usually by expert opinion, esp. affidavit by qualified foreign lawyer)

34. Evidence - problems • Applicable law: • rules on means of proof accepted for certain facts, eg contracts: the applicable substantive law • rules on obtaining evidence: domestic procedural law (lex fori). • Procedural law of evidence differs a lot, e.g. concerning discovery (actio ad exhibendum): • continental rule: restricted to specific documents • >< in USA: much broader («fishing expeditions») • Means of proof especially relevant in international trade: expert examinations; certificates or reports of control/surveillance organisations, etc.

35. Evidence • Taking evidence abroad • Unilaterally: • supposes voluntary compliance • in some cases compliance is even forbidden (by « blocking statutes » or by a specific court order) (eg French Law 80-538 of 16 July 1980); sometimes set aside by foreign court (eg E&WC.A. 22 Oct 2013: recourse to the Evidence Regulation not necessary) • Rogatory Commissions sent abroad (for examination of witnesses, visit of a location abroad, etc.): • Hague Convention on Taking Evidence Abroad 1970 (most states made a reservation for pre-trial discovery): via a central authority • EU-Regulation 1206/2001 on co-operation in taking of evidence: next slide

36. Evidence – EU Reg. • EU-Regulation 1206/2001 on co-operation in taking of evidence • demand directly adressed by «requesting court»  to «requested court» in other member state; use of standard forms; subsidiary role of a central body in each member state. • Directive only facilitates takeing evidence, thus does not forbid any measure which can be taken without the cooperation of the other member state: - C-170/11, Lippens e.a.: Court has the option, to summon a personresiding in another Member State before it and hear him as a witness in accordance with the law of its Member State. - C-332/11 Prorail: entrusting  to an expert a task of taking of evidence to be carried out in another Member State, can be done without this procedure, unless it affect the powers of the Member State in which it takes place, in particular where it is an investigation carried out in places connected to the exercise of such powers or in places to which access or other action is, under the law of the Member State in which the investigation is carried out, prohibited or restricted to certain persons.

37. Recognition & enforcement • Deals with so-called « Title import » • Within federal states: « Full faith and credit » • Otherwise traditionally re-examination of the case in country where recognition / enforcement is asked, unless simplified by treaties • In Belgium simplified since 2004 (Code of PIL art. 25 § 1 abolishes re-examination and lists grounds for refusal) • No global convention until now (only for Choice of Court Agreements (supra), including rules on recognition and enforcement) • CMR art. 31 • In the EU: • certain judgmentsfrom courts of other EU states enjoy full faith and credit (automatically enforceable), • for others under Reg. 44/2001 a simplified procedure of « exequatur », abolished by Brussels-I Recast 1215/2012

38. Recognition & enforcement • General framework: Brussels-I-Regulation (+ separate regulations in family, maintenance obligations, successions, insolvency, etc.) • Old rules: automatic recognition of judgments* / enforcement after obtaining an exequatur** on unilateral request with certain formalities (art. 41) (« title inspection ») * limited grounds for refusal in case of opposition/appeal (art. 34-35) - contrary to public policy (34.1) (interpreted restrictively by ECJ) - judgment in default and defendant not served in sufficient time (34.2) - incompatible with a judgment issued in the country of enforcement (34.3 & 4) - from a court having no jurisdiction in case of conflict with section 3,4 or 6 of Ch. II or in case of art. 72 (special convenions) (art. 35) - see also art. 61 (Recast 64 )(civil decision in criminal proceedings, defendant had no opportunity to arrange defence) * Q: is an English Scheme of Arrangement a judgment in the sense of art. 32 ? ** without re-examination or review of the merits (art. 53) NY Convention on arbitration takes precedence over the Regulation

39. Recognition & enforcement • General framework: Brussels-I-Regulation • Old rules (44/2001): • Automatic enforceability without exequatur in case of: • European Enforcement order for uncontested claims (Reg. 805/2004) awarded in a procedure according to domestic law of a member state • European Payment Orders (supra) • Decisions in European Small Claims Procedures (supra)

40. Recognition & enforcement • General framework: Brussels-I-Regulation • New rules (Recast 1215/2012): • automatic recognition and enforcement without obtaining an exequatur, on presentation of judgment + certificate with summary (and possibly translations). Enforcement requires prior serving of certificate to that person. • Same limited grounds for refusal in case of opposition/appeal : - contrary to public policy (45.1a) (interpreted restrictively by ECJ) - judgment in default and defendant not served in sufficient time (45.1b) - incompatible with a judgment issued in the country of enforcement (45.1c & d) - from a court having no jurisdiction (45.1e) - see also art. 64: civil decision in criminal proceedings, defendant had no opportunity to arrange defence NY Convention on arbitration takes precedence over the Regulation

41. Recognition & enforcement • Automatic recognition and enforcement applies under the Recast 1215/2012 also to: • Authentic instruments (as notarial deeds) (58.1) • Court settlements (58.2) • Extraterritorial effect of provisional measures: • by court having jurisdiction over substance: measure enforceable in the EU (if unilateral procedure, then only after service of decision to the defendant) • by court not having jurisdiction over substance: jurisdiction for protective measures (supra), but effect confined to territory of that MS

42. Insolvency proceedings • Types of insolvency proceedings usually found abroad: • Liquidation proceedings, such as bankruptcy • Reorganisation and composition proceedings, such as: • * judiciary reorganisation, • * collective agreement with creditors (suspension of the execution by creditors in order to reorganise the business) • In all these proceedings the control over the assets of the debtor is granted to an administrator and the claims of the creditors are dealt with collectively (instead of individually) • Not an « insolvency proceeding »: English ‘Scheme of Arrangement’ under part 26 Companies Act

43. Insolvency proceedings • International insolvency: two conflicting solutions / principles: • universalism (single bankruptcy extended to all countries where debtor has assets) (eg Belgian law) • Moderate territorialism: insolvency proceedings in each country relate only to assets in that country. • radical territorialism: insolvency proceedings in each country relating to assets in that country that are « ring-fenced »: the product is used first for debts incurred in that country • Universalism only works insofar as the proceedings are recognised in other countries where assets lie. • EU-Regulation 1346/2000 on insolvency proceedings has chosen a compromise solution

44. EU Insolvency regulation • EU-Regulation 1346/2000 (Recast proposed in 2013) • Scope of application: only where debtor has its « centre of main interest » (COMI) in a Member State; no limited to cases where at least 2 member states are involved (C-328/12, Schmid / Hertel) • Presumption that the seat of a legal person is its COMI (art. 3). • Definition of insolvency proceedings to which it applies (art. 1.1): • collective proceedings, • based on insolvency, • which entail the partial or total divestment of a debtor, • and the appointment of a liquidator (a list is found in the Annex A to the Regulation) Thus not applicable where « debtor in possession ». Proposed Recast would make it possible to include them • Separate Regulations for financial institutions (banks) and insurance companies (not covered by the Insolvency Regulation) • No uniform rules regarding investment companies

45. EU Insolvency regulation - jurisdiction • EU-Regulation 1346/2000 - Basic solution – possible procedures • Art. 3.1.: main proceedings: possible (only) in country of « centre of main interest » of the debtor (« COMI »). In principle universal jurisdiction, unless limited by a territorial procedure. Proposed recast would 1° define COMI and 2° also cover jurisdiction over avoidance actions (art. 3a) • Result: forum shopping (insolvency tourism) by moving the COMI. • Art. 3.2.: a territorial insolvency can be opened in other MS where the debtor has an establishment. When there is a main proceeding, the territorial one is called « secondary »: • it is territorial with respect to assets • but universal with respect to creditors (all creditors may file, not only for debts incurred in that country – no ring-fencing). • It is in principle always a liquidation procedure, subject to duty to cooperate in case main proceedings are not liquidating (C-116/11 Bank Handlowy)

46. EU Insolvency regulation - jurisdiction • EU-Regulation 1346/2000 - Basic solution – possible procedures • Proposed Recast would limit possibility of such secondary procedures a bit more. • Where no secondary procedure is opened: no enforcement proceedings possible except those permitted by the law of the state of the main proceedings (ECJ in C-444/07) • EU-Regulation 1346/2000, art. 3 Scope of jurisdiction – • jurisdiction includes actions derived directly from the insolvency proceedings and closely connected with them, e.g. actions to se a detrimental transaction aside (pauliana), even where the defendant resides outside the EU: C-328/12, Schmid / Hertel.

47. EU Insolvency Regulation • EU-Regulation 1346/2000 – Effects abroad of procedures: • opening of proceedings can be published in other MS (art. 21-22) • main insolvency must be recognised in other MS (art. 16); has in principle the same effects as if it were opened in that state (art. 17) – except where manifestly contrary to public order (art. 26) (e.g. fundamental rights) or insofar as it is a matter for a secondary procedure effectively opened • further rules on coordination • effect on pending lawsuits depends on lex fori of that lawsuit (art. 15) • Proposed Recast : • * internet register for insolvency proceedings (art. 20a ff.) • * duty to cooperate incl. exploring possibility of restructuring.

48. EU Insolvency Regulation – applicable law • The lex concursus (i.e. the lex fori of the place of opening of the insolvency) determines according to Art. 4 i.a.: • the procedural aspects of the insolvency: which assets are in principle administered; how they are administered (powers of the administrator, the court, the debtor); formalities to be fulfilled by creditors; how sale and distribution proceedings are organised; distribution of the product in the absence of property rights • effect on later disposition of assets, other than assets subject to registration • effect of insolvency on current contracts (art. 4.2.e) • Except: individual execution right of creditor with proprietary right (lex rei sitae) (eg in many countries creditor with mortgage) – to be decided by the lex rei sitae

49. EU Insolvency Regulation – applicable law • As to existing property rights on assets which fall under the insolvent estate: • it is in principle the lex rei sitae (place of the asset) which determines the property rights on the asset (art. 5, for reservation of title art. 7), incl. execution rights • surplus must go in the insolvent estate (lex concursus) • Proposed Recast art. 2 (f) would clarify the lex rei sitae in respect to certain assets, such as • registered shares: located in the registered office of the company • book entry securities (‘dematerialised’): where the account is maintained • account money (cash in accounts): member state indicated by the IBAN

50. EU Insolvency Regulation – applicable law • (Cont.) • Whether detrimental acts are voidable/defeasable*: lex concursus, unless undefeasable according to lex causae (art. 4.2.m + art. 13) *in the US « preference action » (payee was unduly preferred) • Set-off: important differences between national laws on effect after insolvency. Art. 6 Reg.: set-off is effective if either effective under the lex concursus or under the lex causae of the passive claim (claim of the insolvent debtor used by the creditor to get paid). Proposed Recast would add in art. 6a that netting agreements (contractual set-off) are governed by the lex contractus. • Effect on labour contracts: governed by lex contractus (art. 10)