Judgment — ECLI:EU:C:2006:281
Date: 2006-05-02
Language of the case: English
Court formation: Grand Chamber
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Area of freedom, security and justice;Judicial cooperation in civil matters
Concepts: Rights of the defence and procedural guarantees;Insolvency procedures
Procedure: Reference for a preliminary ruling
Origin: Ireland

Summary of the Judgment 1. Judicial cooperation in civil matters – Insolvency proceedings – Regulation No 1346/2000 (Council Regulation No 1346/2000, Art. 3(1)) 2. Judicial cooperation in civil matters – Insolvency proceedings – Regulation No 1346/2000 (Council Regulation No 1346/2000, Art. 16(1)) 3. Judicial cooperation in civil matters – Insolvency proceedings – Regulation No 1346/2000 (Council Regulation No 1346/2000, Art. 26) 4. Judicial cooperation in civil matters – Insolvency proceedings – Regulation No 1346/2000 (Council Regulation No 1346/2000, Art. 26) 1. Where a debtor is a subsidiary company whose registered office and that of its parent company are situated in two different Member States, the presumption laid down in the second sentence of Article 3(1) of Regulation No 1346/2000, whereby the centre of main interests of that subsidiary is situated in the Member State where its registered office is situated, can be rebutted only if factors which are both objective and ascertainable by third parties enable it to be established that an actual situation exists which is different from that which location at that registered office is 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 is situated. By contrast, where a company carries on its business in the territory of the Member State where its registered office is situated, the mere fact that its economic choices are or can be controlled by a parent company in another Member State is not enough to rebut the presumption laid down by the regulation. (see para. 37, operative part 1) 2. On a proper interpretation of the first subparagraph of Article 16(1) of Regulation No 1346/2000, the main insolvency proceedings opened by a court of a Member State must be recognised by the courts of the other Member States, without the latter being able to review the jurisdiction of the court of the opening State. The rule of priority laid down in that provision, which provides that insolvency proceedings opened in one Member State are to be recognised in all the Member States from the time that they produce their effects in the State of the opening of proceedings, is based on the principle of mutual trust, which has enabled a compulsory system of jurisdiction to be established, and, as a corollary, has enabled the Member States to waive the right to apply their internal rules on recognition and enforcement of foreign judgments in favour of a simplified mechanism for the recognition and enforcement of decisions handed down in the context of insolvency proceedings. If an interested party, taking the view that the centre of the debtor’s main interests is situated in a Member State other than that in which the main insolvency proceedings were opened, wishes to challenge the jurisdiction assumed by the court which opened those proceedings, it may use, before the courts of the Member State in which they were opened, the remedies prescribed by the national law of that Member State against the opening decision. (see paras 39-40, 43, operative part 2) 3. On a proper interpretation of the first subparagraph of Article 16(1) of Regulation No 1346/2000, a decision to open insolvency proceedings is a decision handed down by a court of a Member State to which application for such a decision has been made, based on the debtor’s insolvency and seeking the opening of proceedings referred to in Annex A to that regulation, where that decision involves the divestment of the debtor and the appointment of a liquidator referred to in Annex C to that regulation. Such divestment implies that the debtor loses the powers of management that he has over his assets. The mechanism providing that only one main set of proceedings may be opened, producing its effects in all the Member States in which the regulation applies, could be seriously disrupted if the courts of those States, hearing applications based on a debtor’s insolvency at the same time, could claim concurrent jurisdiction over an extended period. It is therefore necessary, in order to ensure the effectiveness of the system established by the regulation, that the recognition principle laid down in that provision be capable of being applied as soon as possible in the course of the proceedings. (see paras 52, 54, operative part 3) 4. On a proper interpretation of Article 26 of Regulation No 1346/2000, a Member State may 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 enjoys. Though the specific detailed rules concerning the right to be heard may vary according to the urgency for a ruling to be given, any restriction on the exercise of that right must be duly justified and surrounded by procedural guarantees ensuring that persons concerned by such proceedings actually have the opportunity to challenge the measures adopted in urgency. Whilst it is for the court of the State to which application has been made to establish whether a clear breach of the right to be heard has actually taken place in the conduct of the proceedings before the court of the other Member State, that court cannot confine itself to transposing its own conception of the requirement for an oral hearing and of how fundamental that requirement is in its legal order, but must assess, having regard to the whole of the circumstances, whether or not the persons concerned by that procedure were given sufficient opportunity to be heard. (see paras 66-68, operative part 4)