Tribunal Supremo. Sala de lo Civil ; 2019-05-07; ROJ STS 1447/2019
Decision by national courts in the field of European Union law — ECLI:ES:TS:2019:1447
Date: 2019-05-07
Subject matter: Judicial cooperation in civil matters;Lugano Convention
Origin: Spain

82019ES0507(51)_ENG_SUMJURE
JURE summary
JURE summary
This case regards a question of admissibility of a cassation appeal brought before the Tribunal Supremo (hereinafter ‘the Supreme Court’).
There was a relationship between a company domiciled in Spain (hereinafter ‘the plaintiff’) and a company domiciled in the United Kingdom (hereinafter ‘the defendant’), where the defendant was a creditor of the plaintiff. The plaintiff went bankrupt and reached a debt reduction agreement with its other creditors. As a consequence of this, the financial entitlement of the defendant should have been reduced to 80%. There were also other proceedings already running in Norway initiated by the defendant against the plaintiff, so the defendant refused to be obliged by the agreement reached in the  bankruptcy proceedings in Spain.
The plaintiff applied before the Juzgado de Primera Instancia núm. 13 de Vigo (hereinafter ‘the Court of First Instance’) requesting a declaration that the defendant is obliged by the creditor’s new agreement, that its financial entitlement is reduced according to that agreement and that the defendant shall halt the proceedings running in Norway. The Court of First Instance declared the defendant to be bound by the creditor’s agreement and ordered it staying the procedure in Norway, or, if the defendant receives any amount in the Norwegian proceedings, to reimburse the plaintiff to the bankruptcy estate.
The defendant appealed to the Audiencia Provincial de Pontevedra (Sección 6.ª) (hereinafter ‘the Court of Appeal’), but the appeal was dismissed and the first instance conclusions were confirmed in their entirety.
The defendant subsequently lodged a request for extraordinary and cassation appeals with the Supreme Court based on several grounds.
The defendant argued a lack of international jurisdiction of the Spanish courts citing Article 5(1)(a) of the Brussels I Regulation (1) (special jurisdiction in matters relating to a contract) and alleged that the current case cannot be regarded as a matter relating to a contract since the creditor’s new agreement cannot be understood as a contractual relationship between the plaintiff and the defendant. The Supreme Court stated that the jurisdiction of the Spanish courts does not result from the Brussels I Regulation, but from Council Regulation (EC) No 1346/2000 (2), according to which the jurisdiction in issues related to the insolvency proceedings shall lie with the courts of the Member State where the insolvency proceedings have been initiated, which was Spain in this case.
The defendant further argued a violation of Article 222 of the LEC (3) and Article 33 of the new Lugano Convention (4) and by a violation of the principle of res iudicata, since the defendant alleged that the proceedings in Norway already finally declared that the defendant is entitled to payment from the plaintiff. The Supreme Court rejected this ground of appeal pointing to the fact that the proceedings in Norway were just similar, not identical to the current proceedings, so the principle of res iudicata cannot influence the current cassation appeal due to a different basis. The subject of proceedings in Spain is broader and it intends to give effect to the novated agreement between the plaintiff and its creditors.
The defendant also alleged an infringement of the LC (5) since the effect of bankruptcy on the plaintiff’s assets in Norway must be determined by Norwegian legislation and not by Spanish. The Supreme Court stated that, in the previous bankruptcy proceedings, the defendant omitted any reference to its claims to the plaintiff’s assets in Norway, even though at time of the bankruptcy proceedings it had already obtained an enforcement approval in Norway. Therefore, the known claims that the defendant had against the plaintiff during the bankruptcy proceedings should be subject to the novative effect of the new creditor’s agreement.
The defendant further alleged that pursuant to the Spanish law, the new agreement reducing the financial entitlements must be respected by all creditors, otherwise it ceases to exist directly ipso iure. The Supreme Court confirmed this position, however, it stated that the mere fact that the new agreement shall cease to exist if its effects would not be applied does not prevent a plaintiff to enforce the agreement in courts, so this argument cannot serve as the basis for cassation appeal either.
The Supreme Court dismissed all grounds for the cassation appeal presented by the defendant and the request for a cassation appeal was denied.
(1) Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.
(2) Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings.
(3) Ley de Enjuiciamiento Civil (LEC) (Code of Civil Procedure).
(4)  Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.
(5) Ley Concursal (Bankruptcy Law).