# C_2018455EN.01002501.xml

| 17.12.2018 | EN | Official Journal of the European Union | C 455/25 |
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17.12.2018

EN

Official Journal of the European Union

C 455/25

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Request for a preliminary ruling from the Okrazhen sad Vidin (Bulgaria) lodged on 17 October 2018 — Korporativna targovska banka AD in insolvency v Elit Petrol AD

(Case C-647/18)

(2018/C 455/35)

Language of the case: Bulgarian

Referring court

Okrazhen sad Vidin

Parties to the main proceedings

Applicant in the main proceedings: Korporativna targovska banka AD

Defendant in the main proceedings: Elit Petrol AD

Questions referred

| 1. | i) | Should the value of ‘the rule of law’ protected under Article 2 TEU be interpreted to mean that, when legal provisions are adopted in a Member State, the national legislature is obliged to comply with the legal principles and criteria that characterise ‘the rule of law’, as developed and cited in the case-law of the Court of Justice of the European Union and in the Communication from the Commission to the European Parliament and the Council of 11 March 2014 entitled ‘A new EU Framework to strengthen the Rule of Law’? |
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1.

i)

Should the value of ‘the rule of law’ protected under Article 2 TEU be interpreted to mean that, when legal provisions are adopted in a Member State, the national legislature is obliged to comply with the legal principles and criteria that characterise ‘the rule of law’, as developed and cited in the case-law of the Court of Justice of the European Union and in the Communication from the Commission to the European Parliament and the Council of 11 March 2014 entitled ‘A new EU Framework to strengthen the Rule of Law’?

| ii) | Should the value of ‘the rule of law’ enshrined in Article 2 TEU and its basic principles — legality, legal certainty, and independent and effective judicial review including respect for fundamental rights and equality before the law — be interpreted to mean that they prevent the adoption of a provision of national law, such as that enacted in Paragraph 5 of the transitional and final provisions of the Zakon za izmenenie i dopalnenie na Zakona za bankovata nesastoyatelnost (Bulgarian Law Amending and Supplementing the Law on the Insolvency of Banks, ‘ZIDZBN’), which reregulates the social relations associated with the registration of security interests in public registers exceptionally for the benefit of a particular individual? In this particular case, the national provision retroactively annuls the deletions in the registers of security interests established for the benefit of the insolvent KTB AD and gives rise to legal uncertainty, as it stipulates that the insolvent KTB AD can cite the security interests deemed to have been deleted towards third parties ex lege, even though the liabilities for which the security interests were registered have been discharged. |
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ii)

Should the value of ‘the rule of law’ enshrined in Article 2 TEU and its basic principles — legality, legal certainty, and independent and effective judicial review including respect for fundamental rights and equality before the law — be interpreted to mean that they prevent the adoption of a provision of national law, such as that enacted in Paragraph 5 of the transitional and final provisions of the Zakon za izmenenie i dopalnenie na Zakona za bankovata nesastoyatelnost (Bulgarian Law Amending and Supplementing the Law on the Insolvency of Banks, ‘ZIDZBN’), which reregulates the social relations associated with the registration of security interests in public registers exceptionally for the benefit of a particular individual? In this particular case, the national provision retroactively annuls the deletions in the registers of security interests established for the benefit of the insolvent KTB AD and gives rise to legal uncertainty, as it stipulates that the insolvent KTB AD can cite the security interests deemed to have been deleted towards third parties ex lege, even though the liabilities for which the security interests were registered have been discharged.

| iii) | Can the court directly invoke and directly apply Article 2 TEU if it finds that the way in which the provision of national law in Paragraph 5 of the transitional and final provisions of the ZIDZBN retroactively reregulates the legal effects of the security interests recorded in public registers for the benefit of the insolvent KTB AD infringes the value of ‘the rule of law’ and its aforementioned basic principles? |
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iii)

Can the court directly invoke and directly apply Article 2 TEU if it finds that the way in which the provision of national law in Paragraph 5 of the transitional and final provisions of the ZIDZBN retroactively reregulates the legal effects of the security interests recorded in public registers for the benefit of the insolvent KTB AD infringes the value of ‘the rule of law’ and its aforementioned basic principles?

| iv) | What criteria and conditions must the national court apply when considering if the value of ‘the rule of law’ within the meaning of Article 2 TEU permits the adoption of a provision of national law such as that in Paragraph 5 of the transitional and final provisions of the ZIDZBN? |
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iv)

What criteria and conditions must the national court apply when considering if the value of ‘the rule of law’ within the meaning of Article 2 TEU permits the adoption of a provision of national law such as that in Paragraph 5 of the transitional and final provisions of the ZIDZBN?

| v) | Should Article 67(1) TFEU, which states that the Union constitutes an area of freedom, security and justice with respect for fundamental rights and the different legal systems and traditions of the Member States, be interpreted to mean that it prevents provisions of national law which give rise to uncertainty in civil and commercial transactions or anticipate the outcome of pending litigation? |
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v)

Should Article 67(1) TFEU, which states that the Union constitutes an area of freedom, security and justice with respect for fundamental rights and the different legal systems and traditions of the Member States, be interpreted to mean that it prevents provisions of national law which give rise to uncertainty in civil and commercial transactions or anticipate the outcome of pending litigation?

| 2. | i) | Can the applicable provisions of Article 7(2)(h) and Article 8 of Regulation (EU) 2015/848 (1) of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings, read in combination with Article 2 TEU, systematically be interpreted in conjunction with the fundamental rights enshrined in Article 17(1), Article 20 and the second paragraph of Article 47 of the Charter? |
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2.

i)

Can the applicable provisions of Article 7(2)(h) and Article 8 of Regulation (EU) 2015/848 (1) of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings, read in combination with Article 2 TEU, systematically be interpreted in conjunction with the fundamental rights enshrined in Article 17(1), Article 20 and the second paragraph of Article 47 of the Charter?

| ii) | If the said provisions of EU law should be interpreted in conjunction with the rights enshrined in the Charter, is it admissible to apply those rights in insolvency proceedings in a Member State and should the protection afforded by those rights be interpreted to mean that it prevents a national legal rule which retroactively reregulates social relations exceptionally in favour of an creditor in insolvency specifically named by the legislature? |
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ii)

If the said provisions of EU law should be interpreted in conjunction with the rights enshrined in the Charter, is it admissible to apply those rights in insolvency proceedings in a Member State and should the protection afforded by those rights be interpreted to mean that it prevents a national legal rule which retroactively reregulates social relations exceptionally in favour of an creditor in insolvency specifically named by the legislature?

| iii) | Do Article 7(2)(h) and Article 8 of Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings, interpreted in conjunction with the rights enshrined in Article 17(1), Article 20 and the second paragraph of Article 47 of the Charter, prevent the application of a national legal rule which retroactively annuls deletions in the registers of the security interests held by KTB AD and states that the ‘resurrected’ security interests for the benefit of the insolvent KTB AD can be cited against third parties ex lege, thereby infringing the rights of other creditors and changing the order of satisfaction of claims in insolvency proceedings? |
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iii)

Do Article 7(2)(h) and Article 8 of Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings, interpreted in conjunction with the rights enshrined in Article 17(1), Article 20 and the second paragraph of Article 47 of the Charter, prevent the application of a national legal rule which retroactively annuls deletions in the registers of the security interests held by KTB AD and states that the ‘resurrected’ security interests for the benefit of the insolvent KTB AD can be cited against third parties ex lege, thereby infringing the rights of other creditors and changing the order of satisfaction of claims in insolvency proceedings?

| iv) | Can Article 7(2)(h) of Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings, in conjunction with the rights enshrined in Article 17(1), Article 20 and the second paragraph of Article 47 of the Charter, be interpreted to mean that it prevents the conditional admission in insolvency proceedings of the claims of a creditor specifically named by the legislature (KTB AD), where that creditor’s claims had been extinguished in full by set-off when the claims were lodged and litigation seeking annulment of the set-off is pending and has not yet been completed? If the claims of the creditor in insolvency are lodged under the condition that the national court finds the set-offs by which the claims were extinguished to be unenforceable, does the right to a fair hearing in accordance with the second paragraph of Article 47 of the Charter permit a national provision of law which retroactively amends the conditions under which set-off may be invoked and thus anticipates the outcome of the pending litigation seeking annulment of the set-off or admission of the claim in insolvency proceedings? |
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iv)

Can Article 7(2)(h) of Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings, in conjunction with the rights enshrined in Article 17(1), Article 20 and the second paragraph of Article 47 of the Charter, be interpreted to mean that it prevents the conditional admission in insolvency proceedings of the claims of a creditor specifically named by the legislature (KTB AD), where that creditor’s claims had been extinguished in full by set-off when the claims were lodged and litigation seeking annulment of the set-off is pending and has not yet been completed? If the claims of the creditor in insolvency are lodged under the condition that the national court finds the set-offs by which the claims were extinguished to be unenforceable, does the right to a fair hearing in accordance with the second paragraph of Article 47 of the Charter permit a national provision of law which retroactively amends the conditions under which set-off may be invoked and thus anticipates the outcome of the pending litigation seeking annulment of the set-off or admission of the claim in insolvency proceedings?

| v) | Can the court rely upon and directly apply the provisions of Article 7(2)(h) and Article 8 of Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings, read in combination with Article 17(1), Article 20 and the second paragraph of Article 47 of the Charter, if it finds that the national provisions of law on which the conditional admission of the claim of KTB AD is based and/or which bring about the condition on which the claim is lodged conflict with EU law? |
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v)

Can the court rely upon and directly apply the provisions of Article 7(2)(h) and Article 8 of Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings, read in combination with Article 17(1), Article 20 and the second paragraph of Article 47 of the Charter, if it finds that the national provisions of law on which the conditional admission of the claim of KTB AD is based and/or which bring about the condition on which the claim is lodged conflict with EU law?

| 3. | Should Article 77 of Directive 2014/59/EU (2) be interpreted to mean that it prevents the application of a national law which retroactively amends the conditions of set-off of reciprocal claims and liabilities with a credit institution in recovery or resolution, thereby anticipating the outcome of pending litigation seeking annulment of the set-off declared to the credit institution? |
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3.

Should Article 77 of Directive 2014/59/EU (2) be interpreted to mean that it prevents the application of a national law which retroactively amends the conditions of set-off of reciprocal claims and liabilities with a credit institution in recovery or resolution, thereby anticipating the outcome of pending litigation seeking annulment of the set-off declared to the credit institution?

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(1)  OJ 2015 L 141, p. 19.

(2)  Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council (OJ 2014 L 173, p. 190).

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