Grounds for Refusal of Recognition of (Quasi‐) Annex Judgements in the Recast European Insolvency Regulation

• Date: 01 December 2017
• Published date: 01 December 2017
• Author: Zoltan Fabok
• DOI: http://doi.org/10.1002/iir.1284

Grounds for Refusal of Recognition of

(Quasi-) Annex Judgements in the Recast

European Insolvency Regulation

Zoltan Fabok*

,†

Nottingham Trent University, Nottingham, UK

Abstract

Insolvency-related (annex) actions and judgements fall within the scope of the

Recast European Insolvency Regulation (‘Recast EIR’). That instrument both

determines international jurisdiction regarding annex actions and sets up a

simplified recognition system for annex judgements. However, tension between

the Recast EIR’s provisions on jurisdiction and recognition arises when a court

of a state different from the state of insolvency erroneously assumes jurisdiction

for annex actions. Such ‘quasi-annex’judgements rendered by foreign courts erro-

neously assuming jurisdiction threaten the integrity of the insolvency proceedings.

Besides, the quasi-annex judgements may violate the effectiveness and efficiency of

the insolvency proceedings as well as the principle of legal certainty. In this article,

it is argued that even the current legal framework may offer some ways to avoid the

recognition of such quasi-annex judgements. First, the scope of the public policy

exception may be extended in order to protect the integrity of the insolvency pro-

ceedings from the quasi-annex judgements rendered by foreign courts erroneously

assuming jurisdiction. Second, it may be argued that quasi-annex judgements do

not equal real annex judgements and therefore do not enjoy the automatic recog-

nition system provided by the Recast EIR. At the same time, their close connection

to the insolvency proceedings –disregarded by the forum erroneously assuming

jurisdiction –may exclude quasi-annex judgements from the scope of the Brussels

Ibis Regulation, as well. As a consequence, those quasi-annex judgements may fall

within the gap between the two regulations, meaning that no European instrument

instructs the courts of the member state addressed to recognise quasi-annex judge-

ments. Copyright © 2017 INSOL International and John Wiley & Sons, Ltd.

*E-mail: fabok1975@gmail.com

†

Fellow of INSOL International, Counsel at DLA

Piper (Hungary) and PhD candidate at Nottingham

Trent University (UK). The author is grateful to the

two anonymous referees and Professor Michael Veder

for their helpful comments. The usual disclaimer

applies.

Copyright © 2017 INSOL International and John Wiley & Sons, Ltd Int. Insolv. Rev., Vol. 26: 295–313 (2017)

Published online 25 August 2017 in Wiley Online Library

(wileyonlinelibrary.com). DOI: 10.1002/iir.1284

I. Introduction

There are situations where the automatic recognition system set up by the Recast

European Insolvency Regulation (EIR)

1

concerning the insolvency-related (annex)

judgements may lead to inadequate result. Apparently, the catalogue of those

explicit legal grounds upon which the recognition of annex judgements may be

refused is limited to the only public policy exception pursuant to Article 33 of

the Recast EIR. As a consequence, there is a possibility that the opening (or other)

member state is required to recognise foreign annex judgements delivered by a

foreign noninsolvency forum without the latter having international jurisdiction

in the context of the European private international law. Such a recognition

may inappropriately interfere in the sphere insolvency proceedings and appears

to be inconsistent with the principle of efficiency and that of legal certainty. In this

article, it is argued that refusing the recognition of such judgement may be

compatible with the current legal framework provided by the Recast EIR.

II. Some Features of the Jurisdiction, Recognition and Enforcement

System of the Recast EIR

A. The ‘insolvency exception’to the Br ussels Ibis Regulation

The Brussels Ibis Regulation

2

deals with the jurisdiction and recognition of

judgements in civil and commercial matters. According to Article 1(2)(b) of the

Brussels Ibis Regulation, that instrument shall not apply, among others, to bank-

ruptcy, proceedings relating to the winding up of insolvent companies or other

legal persons, judicial arrangements, compositions and analogous proceedings.

As a general rule, those proceedings falling within the scope of this ‘insolvency

exception’in the Brussels Ibis Regulation fall within the scope of the Recast

EIR.

3

In that sense, both regulations are intended to be mutually exclusive. In

order to avoid unjustifiable loopholes between the two instruments, those actions

excluded from the Brussels Ibis Regulation by virtue of the insolvency exception

are subject to the Recast EIR.

4

In the last decades, the courts of the European Union have dealt extensively

with the issue of delineation between, on the one hand, the terrain of the

Brussels regime and, on the other hand, that of the EIR 2000 and now Recast

1. Regulation (EU) 2015/848 on insolvency proceed-

ings (recast) [2015] OJ L141/19 (‘Recast EIR’).

2. Regulation (EU) 1215/2012 on jurisdiction and the

recognition and enforcement of judgements in civil and

commercial matters (recast) [2015] OJ 2012 L351/1

(‘Brussels Ibis Regulation’).

3. cf Recital (7), Recast EIR.

4. cf Miguel Virgós and Etienne Schmit, Report on the

Convention of Insolvency Proceedings Council Document

6500/1/96 (‘Virgós-Schmit Report’), paragraph 77;

Miguel Virgós and Francisco Garcimartín, The Euro-

pean Insolvency Regulation: Law and Practice (Kluwer Law

International, 2004), paragraph 78; Case C-157/13

Nickel & Goeldner Spedition GmbH v ‘Kintra’UAB [2015]

QB 96, paragraph 21 ff.

International Insolvency Review296

Copyright © 2017 INSOL International and John Wiley & Sons, Ltd Int. Insolv. Rev., Vol. 26: 295–313 (2017)

DOI: 10.1002/iir