From ‘Prisoner's Dilemma’ to Reluctance to Use Judicial Discretion: The Enemies of Cooperation in European Cross‐Border Cases

• Published date: 01 December 2017
• Date: 01 December 2017
• Author: Renato Mangano
• DOI: http://doi.org/10.1002/iir.1285

From ‘Prisoner’s Dilemma’to Reluctance to

Use Judicial Discretion: The Enemies of

Cooperation in European Cross-Border

Cases

Renato Mangano*

University of Palermo, Palermo, Italy

Abstract

This article will focus on Articles 41–44 of the Recast European Insolvency Regu-

lation (Regulation 2015/848) and the dynamic of cooperation and communication

between courts and insolvency practitioners. Two main ideas will be maintained.

The first is that cooperation requires a legal framework which is certain—

otherwise, prescriptions imposing duties of cooperation and communication might

produce ‘prisoner’s dilemmas’and, paradoxically, unwillingness to cooperate. The

second idea is that prescriptions imposing duties of cooperation and communica-

tion have an intrinsic open texture—this characteristic ontologically requires

courts and insolvency practitioners to make choices between different rulings and

activities. These findings imply that while interventions, both at European level

and at national level, aiming at making the legal framework more certain are

always welcome, interventions aiming at better specifying contents and extension

of duties of cooperation and communication could be to a certain extent useless

and even counterproductive. Copyright © 2017 INSOL International and John

Wiley & Sons, Ltd.

I. Introduction

1

The people that drew up Regulation 2015/848 (the ‘Recast European Insolvency

Regulation, EIR’) increased the duties of cooperation and communication

*E-mail: renato.mangano@unipa.it

1. This article reproduces with many changes the text

of a lecture given at a conference titled ‘The Imple-

mentation of the New Insolvency Regulation—Im-

proving Cooperation and Mutual Trust’, held at the

Max-Planck Institute Luxembourg for Procedural

Law on 7 October 2016. The author is grateful to Pro-

fessor Burkhard Hess, a director of Max-Planck Insti-

tute Luxembourg, for consenting to the publication of

this article in this journal.

Copyright © 2017 INSOL International and John Wiley & Sons, Ltd. Int. Insolv. Rev., Vol. 26: 314–331 (2017)

Published online 8 September 2017 in Wiley Online Library

(wileyonlinelibrary.com). DOI: 10.1002/iir.1285

imposed on courts and insolvency practitioners appointed in main and secondary

proceedings. While Regulation 1346/2000 (the ‘EIR’) provided a single article im-

posing a duty of cooperation and communication on liquidators only (Article 31 of

the EIR), the Recast EIR contains many articles imposing duties of cooperation

and communication on both courts and insolvency practitioners (Articles 41–44

of the Recast EIR). These duties refer both to those cases where insolvency pro-

ceedings are already opened and to those where a request to open insolvency pro-

ceedings is still pending. These duties are cross-directional ones in the sense that a

court of a member state Adealing with a cross-border case Xnot only is obliged to

cooperate and communicate with the court of member state Bdealing with the

same case Xbut it has also to cooperate and communicate with that insolvency

practitioner who is appointed there, just as that insolvency practitioner who is

appointed in member state Afor the case Xis obliged to cooperate and communi-

cate with that of member state Bdealing with the same case X. Further, Recast

EIR employs duties of cooperation and communication as a regulatory device to

regulate insolvencies within groups of companies (Articles 56–77 of the Recast

EIR).

2

However, these duties fall outside of the scope of this article.

The choice of policy consisting in increasing the duties of cooperation and com-

munication between main and secondary proceedings complies with an established

tradition of common law courts and practitioners dealing with cross-border cases

—these courts have always cooperated with each other to a great extent

3

; this

choice also corresponds to a commonly shared idea that private international

law is based on cooperation.

4

Moreover, the idea of thoroughly regulating the

duties of cooperation and communication by means of an EU Regulation is ex-

pected to remove some cultural and legal (national) constraints that prevent civil

law courts from cooperating to the same extent as those of common law jurisdic-

tions and, especially, to make cooperation in cross-border insolvency cases

smoother. However, cooperation –which hereinafter includes communication, un-

less otherwise provided –is an open issue. This explains why, in some EU member

states, courts and insolvency practitioners needed time to start to smoothly cooper-

ate, and this explains why, outside the scope of European law, the UNIDROIT

Convention on International Interests in Mobile Equipment 2001 (‘Cape Town

Convention’) does not establish a duty to cooperate in insolvency issues and why

the protocols attached to the Cape Town Convention consign the only prescrip-

tion devoted to this subject to the class of opt-in prescriptions, with the result that

a state signing the Cape Town Convention and which also intends to be the subject

2. Actually, concerning group insolvencies, the Recast

EIR distinguishes between two distinct regulatory de-

vices, which are called ‘cooperation and communica-

tion’(Articles 56–60) and ‘coordination’(Articles 61–

77). Nevertheless, coordination is a form of coopera-

tion too, where ‘contract’is supplemented by ‘hierar-

chy’, to use Oliver Williamson’s terminology.

3. Bob Wessels, Bruce Markell and Jason Kilborn, In-

ternational Cooperation in Bankruptcy and Insolvency Matters

(OUP, 2009), 174 and passim.

4. See, inter alia, Anne-Marie Slaughter, ‘A Global

Community of Courts’(2003) 44 Harvard International

Law Journal 191 ff.; European Parliament—DG for In-

ternal Policies, Study on A European Framework for Private

International Law: Current Gaps and Future Perspectives

(2012), available at: <http://www.europarl.europa.

eu/document/activities/cont/201212/20121219ATT

58300/20121219ATT58300EN.pdf.>

The Enemies of Cooperation in European Cross-Border Cases 315

Copyright © 2017 INSOL International and John Wiley & Sons, Ltd. Int. Insolv. Rev., Vol. 26: 314–331 (2017)

DOI: 10.1002/iir