Common Position (EC) No 43/2000

adopted by the Council on 17 July 2000

with a view to adopting Directive 2000/.../EC of the European Parliament and of the Council of ... on the reorganisation and winding up of credit institutions

(2000/C 300/02)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 47(2) thereof,

Having regard to the proposal from the Commission(1),

Having regard to the opinion of the Economic and Social Committee(2),

Having regard to the opinion of the European Monetary Institute(3),

Acting in accordance with the procedure laid down in Article 251 of the Treaty(4),

Whereas:

(1) In accordance with the objectives of the Treaty, the harmonious and balanced development of economic activities throughout the Community should be promoted through the elimination of any obstacles to the freedom of establishment and the freedom to provide services within the Community.

(2) At the same time as those obstacles are eliminated, consideration should be given to the situation which might arise if a credit institution runs into difficulties, particularly where that institution has branches in other Member States.

(3) This Directive forms part of the Community legislative framework set up by Directive 2000/12/EC of the European Parliament and of the Council of 20 March 2000 relating to the taking up and pursuit of the business of credit institutions(5). It follows therefrom that, while they are in operation, a credit institution and its branches form a single entity subject to the supervision of the competent authorities of the State where authorisation valid throughout the Community was granted.

(4) It would be particularly undesirable to relinquish such unity between an institution and its branches where it is necessary to adopt reorganisation measures or open winding-up proceedings.

(5) The adoption of Directive 94/19/EC of the European Parliament and of the Council of 30 May 1994 on deposit-guarantee schemes(6), which introduced the principle of compulsory membership by credit institutions of a guarantee scheme in their home Member State, brings out even more clearly the need for mutual recognition of reorganisation measures and winding-up proceedings.

(6) The administrative or judicial authorities of the home Member State must have sole power to decide on and to implement the reorganisation measures provided for in the law and practices in force in that Member State. Owing to the difficulty of harmonising Member States' laws and practices, it is necessary to establish mutual recognition by the Member States of the measures taken by each of them to restore to viability the credit institutions which it has authorised.

(7) It is essential to guarantee that the reorganisation measures adopted by the administrative or judicial authorities of the home Member State and the measures adopted by persons or bodies appointed by those authorities to administer those reorganisation measures, including measures involving the possibility of a suspension of payments, suspension of enforcement measures or reduction of claims and any other measure which could affect third parties' existing rights, are effective in all Member States.

(8) Certain measures, in particular those affecting the functioning of the internal structure of credit institutions or managers' or shareholders' rights, need not be covered by this Directive to be effective in Member States in so far as, pursuant to the rules of private international law, the applicable law is that of the home State.

(9) Certain measures, in particular those connected with the continued fulfilment of conditions of authorisation, are already the subject of mutual recognition pursuant to Directive 2000/12/EC in so far as they do not affect the rights of third parties existing before their adoption.

(10) Persons participating in the operation of the internal structures of credit institutions as well as managers and shareholders of such institutions, considered in those capacities, are not to be regarded as third parties for the purposes of this Directive.

(11) It is necessary to notify third parties of the implementation of reorganisation measures in Member States where branches are situated when such measures could hinder the exercise of some of their rights.

(12) The principle of equal treatment between creditors, as regards the opportunities open to them to take action, requires the administrative or judicial authorities of the home Member State to adopt such measures as are necessary for the creditors in the host Member State to be able to exercise their rights to take action within the time limit laid down.

(13) There must be some coordination of the role of the administrative or judicial authorities in reorganisation measures and winding-up proceedings for branches of credit institutions having head offices outside the Community and situated in different Member States.

(14) In the absence of reorganisation measures, or in the event of such measures failing, the credit institutions in difficulty must be wound up. Provision should be made in such cases for mutual recognition of winding-up proceedings and of their effects in the Community.

(15) The important role played by the competent authorities of the home Member State before winding-up proceedings are opened may continue during the process of winding up so that these proceedings can be properly carried out.

(16) Equal treatment of creditors requires that the credit institution is wound up according to the principles of unity and universality, which require the administrative or judicial authorities of the home Member State to have sole jurisdiction and their decisions to be recognised and to be capable of producing in all the other Member States, without any formality, the effects ascribed to them by the law of the home Member State, except where this Directive provides otherwise.

(17) The exemption concerning the effects of reorganisation measures and winding-up proceedings on certain contracts and rights is limited to those effects and does not cover other questions concerning reorganisation measures and winding-up proceedings such as the lodging, verification, admission and ranking of claims concerning those contracts and rights and the rules governing the distribution of the proceeds of the realisation of the assets, which are governed by the law of the home Member State.

(18) Voluntary winding up is possible when a credit institution is solvent. The administrative or judicial authorities of the home Member State may nevertheless, where appropriate, decide on a reorganisation measure or winding-up proceedings, even after voluntary winding up has commenced.

(19) Withdrawal of authorisation to pursue the business of banking is one of the consequences which winding up a credit institution necessarily entails. Withdrawal should not, however, prevent certain activities of the institution from continuing in so far as is necessary or appropriate for the purposes of winding up. Such a continuation of activity may none the less be made subject by the home Member State to the consent of, and supervision by, its competent authorities.

(20) Provision of information to known creditors on an individual basis is as essential as publication to enable them, where necessary, to lodge their claims or submit observations relating to their claims within the prescribed time limits. This should take place without discrimination against creditors domiciled in a Member State other than the home Member State, based on their place of residence or the nature of their claims. Creditors must be kept regularly informed in an appropriate manner throughout winding-up proceedings.

(21) For the sole purpose of applying the provisions of this Directive to reorganisation measures and winding-up proceedings involving branches located in the Community of a credit institution of which the head office is situated in a third country, the definitions of "home Member State", "competent authorities" and "administrative or judicial authorities" should be those of the Member State in which the branch is located.

(22) Where a credit institution which has its head office outside the Community possesses branches in more than one Member State, each branch should receive individual treatment in regard to the application of this Directive. In such a case, the administrative or judicial authorities and the competent authorities as well as the administrators and liquidators should endeavour to coordinate their activities.

(23) Although it is important to follow the principle that the law of the home Member State determines all the effects of reorganisation measures or winding-up proceedings, both procedural and substantive, it is also necessary to bear in mind that those effects may conflict with the rules normally applicable in the context of the economic and financial activity of the credit institution in question and its branches in other Member States. In some cases reference to the law of another Member State represents an unavoidable qualification of the principle that the law of the home Member State is to apply.

(24) That qualification is especially necessary to protect employees having a contract of employment with a credit institution, ensure the security of transactions in respect of certain types of property and protect the integrity of regulated markets functioning in accordance with the law of a Member State on which financial instruments are traded.

(25) Transactions carried out in the framework of a payment and settlement system are covered by Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and securities settlement systems(7).

(26) The adoption of this Directive does not call into question the provisions of Directive 98/26/EC according to which insolvency proceedings must not have any effect on the enforceability of orders validly entered into a system, or on collateral provided for a system.

(27) Some reorganisation measures or winding-up proceedings involve the appointment of a person to administer them. The recognition of his appointment and his powers in all other Member States is therefore an essential factor in the implementation of decisions taken in the home Member State. However, the limits within which he may exercise his powers when he acts outside the home Member State should be specified.

(28) Creditors who have entered into contracts with a credit institution before a reorganisation measure is adopted or winding-up proceedings are opened should be protected against provisions relating to voidness, voidability or unenforceability laid down in the law of the home Member State, where the beneficiary of the transaction produces evidence that in the law applicable to that transaction there is no available means of contesting the act concerned in the case in point.

(29) The confidence of third-party purchasers in the content of the registers or accounts regarding certain assets entered in those registers or accounts and by extension of the purchasers of immovable property should be safeguarded, even after winding-up proceedings have been opened or a reorganisation measure adopted. The only means of safeguarding that confidence is to make the validity of the purchase subject to the law of the place where the immovable asset is situated or of the State under whose authority the register or account is kept.

(30) The effects of reorganisation measures or winding-up proceedings on a lawsuit pending are governed by the law of the Member State in which the lawsuit is pending, by way of exception to the application of the lex concursus. The effects of those measures and procedures on individual enforcement actions arising from such lawsuits are governed by the legislation of the home Member State, in accordance with the general rule established by this Directive.

(31) Provision should be made for the administrative or judicial authorities in the home Member State to notify immediately the competent authorities in the host Member State of the adoption of any reorganisation measure or the opening of any winding-up proceedings, if possible before the adoption of the measure or the opening of the proceedings, or, if not, immediately afterwards.

(32) Professional secrecy as defined in Article 30 of Directive 2000/12/EC is an essential factor in all information or consultation procedures. For that reason it should be respected by all the administrative authorities taking part in such procedures, whereas the judicial authorities remain, in this respect, subject to the national provisions relating to them,

HAVE ADOPTED THIS DIRECTIVE:

TITLE I

SCOPE AND DEFINITIONS

Article 1

Scope

1. This Directive shall apply to credit institutions and their branches set up in Member States other than those in which they have their head offices, as defined in Article 1(1) and (3) of Directive 2000/12/EC, subject to the conditions and exemptions laid down in Article 2(3) of that Directive.

2. The provisions of this Directive concerning the branches of a credit institution having a head office outside the Community shall apply only where that institution has branches in at least two Member States of the Community.

Article 2

Definitions

For the purposes of this Directive:

- "home Member State" shall mean the Member State of origin within the meaning of Article 1(6) of Directive 2000/12/EC,

- "host Member State" shall mean the host Member State within the meaning of Article 1(7) of Directive 2000/12/EC,

- "branch" shall mean a branch within the meaning of Article 1(3) of Directive 2000/12/EC,

- "competent authorities" shall mean the competent authorities within the meaning of Article 1(4) of Directive 2000/12/EC,

- "administrator" shall mean any person or body appointed by the administrative or judicial authorities whose task is to administer reorganisation measures,

- "administrative or judicial authorities" shall mean such administrative or judicial authorities of the Member States as are competent for the purposes of reorganisation measures or winding-up proceedings,

- "reorganisation measures" shall mean measures which are intended to preserve or restore the financial situation of a credit institution and which could affect third parties' pre-existing rights, including measures involving the possibility of a suspension of payments, suspension of enforcement measures or reduction of claims,

- "liquidator" shall mean any person or body appointed by the administrative or judicial authorities whose task is to administer winding-up proceedings,

- "winding-up proceedings" shall mean collective proceedings opened and monitored by the administrative or judicial authorities of a Member State with the aim of realising assets under the supervision of those authorities, including where the proceedings are terminated by a composition or other, similar measure,

- "regulated market" shall mean a regulated market within the meaning of Article 1(13) of Directive 93/22/EEC,

- "instruments" shall mean all the instruments referred to in Section B of the Annex to Directive 93/22/EEC.

TITLE II

REORGANISATION MEASURES

A. Credit institutions having their head offices within the Community

Article 3

Adoption of reorganisation measures - applicable law

1. The administrative or judicial authorities of the home Member State shall alone be empowered to decide on the implementation of one or more reorganisation measures in a credit institution, including branches established in other Member States.

2. The reorganisation measures shall be applied in accordance with the laws, regulations and procedures applicable in the home Member State, unless otherwise provided in this Directive.

They shall be fully effective in accordance with the legislation of that Member State throughout the Community without any further formalities, including as against third parties in other Member States, even where the rules of the host Member State applicable to them do not provide for such measures or make their implementation subject to conditions which are not fulfilled.

The reorganisation measures shall be effective throughout the Community once they become effective in the Member State where they have been taken.

Article 4

Information for the competent authorities of the host Member State

The administrative or judicial authorities of the home Member State shall without delay inform, by any available means, the competent authorities of the host Member State of their decision to adopt any reorganisation measure, including the practical effects which such a measure may have, if possible before it is adopted or otherwise immediately thereafter. Information shall be communicated by the competent authorities of the home Member State.

Article 5

Information for the supervisory authorities of the home Member State

Where the administrative or judicial authorities of the host Member State deem it necessary to implement within their territory one or more reorganisation measures, they shall inform the competent authorities of the home Member State accordingly. Information shall be communicated by the host Member State's competent authorities.

Article 6

Publication

1. Where implementation of the reorganisation measures decided on pursuant to Article 3(1) and (2) is likely to affect the rights of third parties in a host Member State and where an appeal may be brought in the home Member State against the decision ordering the measure, the administrative or judicial authorities of the home Member State, the administrator or any person empowered to do so in the home Member State shall publish an extract from the decision in the Official Journal of the European Communities and in two national newspapers in each host Member State, in order, in particular, to facilitate the exercise of the right of appeal in good time.

2. The extract from the decision provided for in paragraph 1 shall be forwarded at the earliest opportunity, by the most appropriate route, to the Office for Official Publications of the European Communities and to the two national newspapers in each host Member State.

3. The Office for Official Publications of the European Communities shall publish the extract at the latest within 12 days of its dispatch.

4. The extract from the decision to be published shall specify, in the official language or languages of the Member States concerned, in particular the purpose and legal basis of the decision taken, the time limits for lodging appeals, specifically a clearly understandable indication of the date of expiry of the time limits, and the full address of the authorities or court competent to hear an appeal.

5. The reorganisation measures shall apply irrespective of the measures prescribed in paragraphs 1 to 3 and shall be fully effective as against creditors, unless the administrative or judicial authorities of the home Member State or the law of that State governing such measures provide otherwise.

Article 7

Duty to inform known creditors and right to lodge claims

1. Where the legislation of the home Member State requires lodgement of a claim with a view to its recognition or provides for compulsory notification of the measure to creditors who have their domiciles, normal places of residence or head offices in that State, the administrative or judicial authorities of the home Member State or the administrator shall also inform known creditors who have their domiciles, normal places of residence or head offices in other Member States, in accordance with the procedures laid down in Articles 14 and 17(1).

2. Where the legislation of the home Member State provides for the right of creditors who have their domiciles, normal places of residence or head offices in that State to lodge claims or to submit observations concerning their claims, creditors who have their domiciles, normal places of residence or head offices in other Member States shall also have that right in accordance with the procedures laid down in Articles 16 and 17(2).

B. Credit institutions having their head offices outside the Community

Article 8

Branches of third country credit institutions

1. The administrative or judicial authorities of the host Member State of a branch of a credit institution having its head office outside the Community shall without delay inform, by any available means, the competent authorities of the other host Member States in which the institution has set up branches which are included on the list referred to in Article 11 of Directive 2000/12/EC and published each year in the Official Journal of the European Communities, of their decision to adopt any reorganisation measure, including the practical effects which that measure may have, if possible before it is adopted or otherwise immediately thereafter. Information shall be communicated by the competent authorities of the host Member State whose administrative or judicial authorities decide to apply the measure.

2. The administrative or judicial authorities referred to in paragraph 1 shall endeavour to coordinate their actions.

TITLE III

WINDING-UP PROCEEDINGS

A. Credit institutions having their head offices within the Community

Article 9

Opening of winding-up proceedings - Information to be communicated to other competent authorities

1. The administrative or judicial authorities of the home Member State which are responsible for winding up shall alone be empowered to decide on the opening of winding-up proceedings concerning a credit institution, including branches established in other Member States.

A decision to open winding-up proceedings taken by the administrative or judicial authority of the home Member State shall be recognised, without further formality, within the territory of all other Member States and shall be effective there when the decision is effective in the Member State in which the proceedings are opened.

2. The administrative or judicial authorities of the home Member State shall without delay inform, by any available means, the competent authorities of the host Member State of their decision to open winding-up proceedings, including the practical effects which such proceedings may have, if possible before they open or otherwise immediately thereafter. Information shall be communicated by the competent authorities of the home Member State.

Article 10

Law applicable

1. A credit institution shall be wound up in accordance with the laws, regulations and procedures applicable in its home Member State in so far as this Directive does not provide otherwise.

2. The law of the home Member State shall determine in particular:

(a) the goods subject to administration and the treatment of goods acquired by the credit institution after the opening of winding-up proceedings;

(b) the respective powers of the credit institution and the liquidator;

(c) the conditions under which set-offs may be invoked;

(d) the effects of winding-up proceedings on current contracts to which the credit institution is party;

(e) the effects of winding-up proceedings on proceedings brought by individual creditors, with the exception of lawsuits pending, as provided for in Article 25;

(f) the claims which are to be lodged against the credit institution and the treatment of claims arising after the opening of winding-up proceedings;

(g) the rules governing the lodging, verification and admission of claims;

(h) the rules governing the distribution of the proceeds of the realisation of assets, the ranking of claims and the rights of creditors who have obtained partial satisfaction after the opening of insolvency proceedings by virtue of a right in rem or through a set-off;

(i) the conditions for, and the effects of, the closure of insolvency proceedings, in particular by composition;

(j) creditors' rights after the closure of winding-up proceedings;

(k) who is to bear the costs and expenses incurred in the winding-up proceedings;

(l) the rules relating to the voidness, voidability or unenforceability of legal acts detrimental to all the creditors.

Article 11

Consultation of competent authorities before voluntary winding up

1. The competent authorities of the home Member State shall be consulted in the most appropriate form before any voluntary winding-up decision is taken by the governing bodies of a credit institution.

2. The voluntary winding up of a credit institution shall not preclude the adoption of a reorganisation measure or the opening of winding-up proceedings.

Article 12

Withdrawal of a credit institution's authorisation

1. Where the opening of winding-up proceedings is decided on in respect of a credit institution in the absence, or following the failure, of reorganisation measures, the authorisation of the institution shall be withdrawn in accordance with, in particular, the procedure laid down in Article 22(9) of Directive 2000/12/EC.

2. The withdrawal of authorisation provided for in paragraph 1 shall not prevent the person or persons entrusted with the winding up from carrying on some of the credit institution's activities in so far as that is necessary or appropriate for the purposes of winding up.

The home Member State may provide that such activities shall be carried on with the consent, and under the supervision, of the competent authorities of that Member State.

Article 13

Publication

The liquidators or any administrative or judicial authority shall announce the decision to open winding-up proceedings through publication of an extract from the winding-up decision in the Official Journal of the European Communities and at least two national newspapers in each of the host Member States.

Article 14

Provision of information to known creditors

1. When winding-up proceedings are opened, the administrative or judicial authority of the home Member State or the liquidator shall without delay individually inform known creditors who have their domiciles, normal places of residence or head offices in other Member States, except in cases where the legislation of the home State does not require lodgement of the claim with a view to its recognition.

2. That information, provided by the dispatch of a notice, shall in particular deal with time limits, the penalties laid down in regard to those time limits, the body or authority empowered to accept the lodgement of claims or observations relating to claims and the other measures laid down. Such a notice shall also indicate whether creditors whose claims are preferential or secured in rem need lodge their claims.

Article 15

Honouring of obligations

Where an obligation has been honoured for the benefit of a credit institution which is not a legal person and which is the subject of winding-up proceedings opened in another Member State, when it should have been honoured for the benefit of the liquidator in those proceedings, the person honouring the obligation shall be deemed to have discharged it if he was unaware of the opening of proceedings. Where such an obligation is honoured before the publication provided for in Article 13 has been effected, the person honouring the obligation shall be presumed, in the absence of proof to the contrary, to have been unaware of the opening of winding-up proceedings; where the obligation is honoured after the publication provided for in Article 13 has been effected, the person honouring the obligation shall be presumed, in the absence of proof to the contrary, to have been aware of the opening of proceedings.

Article 16

Right to lodge claims

1. Any creditor who has his domicile, normal place of residence or head office in a Member State other than the home Member State, including Member States' public authorities, shall have the right to lodge claims or to submit written observations relating to claims.

2. The claims of all creditors whose domiciles, normal places of residence or head offices are in Member States other than the home Member State shall be treated in the same way and accorded the same ranking as claims of an equivalent nature which may be lodged by creditors having their domiciles, normal places of residence, or head offices in the home Member State.

3. Except in cases where the law of the home Member State provides for the submission of observations relating to claims, a creditor shall send copies of supporting documents, if any, and shall indicate the nature of the claim, the date on which it arose and its amount, as well as whether he alleges preference, security in rem or reservation of title in respect of the claim and what assets are covered by his security.

Article 17

Languages

1. The information provided for in Articles 13 and 14 shall be provided in the official language or one of the official languages of the home Member State. For that purpose a form shall be used bearing, in all the official languages of the European Union, the heading "Invitation to lodge a claim. Time limits to be observed" or, where the law of the home Member State provides for the submission of observations relating to claims, the heading "Invitation to submit observations relating to a claim. Time limits to be observed".

2. Any creditor who has his domicile, normal place of residence or head office in a Member State other than the home Member State may lodge his claim or submit observations relating to his claim in the official language or one of the official languages of that other Member State. In that event, however, the lodgement of his claim (or the submission of observations on his claim) shall bear the heading "Lodgement of claim" (or "Submission of observations relating to claims") in the official language or one of the official languages of the home Member State. In addition, he may be required to provide a translation into that language of the lodgement of claim or submission of observations relating to claims.

Article 18

Regular provision of information to creditors

Liquidators shall keep creditors regularly informed, in an appropriate manner, particularly with regard to progress in the winding up.

B. Credit institutions the head offices of which are outside the Community

Article 19

Branches of third country credit institutions

1. The administrative or judicial authorities of the host Member State of the branch of a credit institution the head office of which is outside the Community shall without delay inform, by any available means, the competent authorities of the other host Member States in which the credit institution has set up branches on the list referred to in Article 11 of Directive 2000/12/EC and published each year in the Official Journal of the European Communities, of their decision to open winding-up proceedings, including the practical effects which these proceedings may have, if possible before they open or otherwise immediately thereafter. Information shall be communicated by the competent authorities of the first abovementioned host Member State.

2. Administrative or judicial authorities which decide to open proceedings to wind up a branch of a credit institution the head office of which is outside the Community shall inform the competent authorities of the other host Member States that winding-up proceedings have been opened and authorisation withdrawn.

Information shall be communicated by the competent authorities in the host Member State which has decided to open the proceedings.

3. The administrative or judicial authorities referred to in paragraph 1 shall endeavour to coordinate their actions.

Any liquidators shall likewise endeavour to coordinate their actions.

TITLE IV

PROVISIONS COMMON TO REORGANISATION MEASURES AND WINDING-UP PROCEEDINGS

Article 20

Effects on certain contracts and rights

1. The effects of a reorganisation measure or the opening of winding-up proceedings on:

(a) employment contracts and relationships shall be governed solely by the law of the Member State applicable to the employment contract;

(b) a contract conferring the right to make use of or acquire immovable property shall be governed solely by the law of the Member State within the territory of which the immovable property is situated. That law shall determine whether property is movable or immovable;

(c) contractual netting agreements between the credit institution and its counterparty shall be governed solely by the law of the Member State applicable to such agreements;

(d) repurchase agreements between the credit institution and its counterparty shall be governed solely by the law of the Member States applicable to such agreements subject to point (f);

(e) rights in respect of immovable property, a ship or an aircraft subject to registration in a public register shall be governed solely by the law of the Member State under the authority of which the register is kept;

(f) the enforcement of property rights in instruments or other rights in such instruments the existence or transfer of which presupposes their being recorded in a register, an account or a centralised deposit system held or located in a Member State shall be governed by the law of the Member State where the register, account, or centralised deposit system in which those rights are recorded, is held or located;

(g) without prejudice to point (f), the transactions carried out and procedures applicable in the context of a regulated market shall be governed solely by the law of the Member State applicable to that market;

(h) subject to the provisions laid down in points (a) to (g), the right in rem or reservation of title of a third party in respect of tangible or intangible, movable or immovable assets belonging to, or in the possession of, the credit institution and all types of valuable security shall be governed solely by the law applicable to that right, reservation of title or valuable security.

2. Without prejudice to points (c), (d) and (g) of paragraph 1, the opening of winding-up proceedings or the adoption of a reorganisation measure shall not affect the right of a creditor, by operation of law, to set his claims off against the claims of the credit institution where such a set-off is permitted by the law of the Member State applicable to the credit institution's claim.

Article 21

Proof of liquidators' appointment

1. The administrator or liquidator's appointment shall be evidenced by a certified copy of the original decision appointing him or by any other certificate issued by the administrative or judicial authority of the home Member State.

A translation into the official language or one of the official languages of the Member State within the territory of which the administrator or liquidator wishes to act may be required. No legalisation or other similar formality shall be required.

2. Administrators and liquidators shall be entitled to exercise within the territory of all the Member States all the powers which they are entitled to exercise within the territory of the home Member State. They may also appoint persons to assist or, where appropriate, represent them in the course of the reorganisation measure or winding-up proceedings, in particular in host Member States and, specifically, in order to help overcome any difficulties encountered by creditors in the host Member State.

3. In exercising his powers, an administrator or liquidator shall comply with the law of the Member States within the territory of which he wishes to take action, in particular with regard to procedures for the realisation of assets and the provision of information to employees. Those powers may not include the use of force or the right to rule on legal proceedings or disputes.

Article 22

Registration in a public register

1. The administrator, liquidator or any administrative or judicial authority of the home Member State may request that a reorganisation measure or the decision to open winding-up proceedings be registered in the land register, the trade register and any other public register kept in the other Member States.

A Member State may, however, prescribe mandatory registration. In that event, the person or authority referred to in the preceding subparagraph shall take all the measures necessary to ensure such registration.

2. The costs of registration shall be regarded as costs and expenses incurred in the proceedings.

Article 23

Detrimental acts

1. Article 10 shall not apply as regards the rules relating to the voidness, voidability or unenforceability of legal acts detrimental to the creditors as a whole, where the beneficiary of these acts provides proof that:

- the act detrimental to the creditors as a whole is subject to the law of a Member State other than the home Member State, and

- that law does not allow any means of challenging that act in the case in point.

2. Where a reorganisation measure decided on by a judicial authority provides for rules relating to the voidness, voidability or unenforceability of legal acts detrimental to the creditors as a whole performed before adoption of the measure, Article 3(2) shall not apply in the cases provided for in paragraph 1 of this Article.

Article 24

Protection of third parties

Where, by an act concluded after the adoption of a reorganisation measure or the opening of winding-up proceedings, a credit institution disposes, for consideration, of:

- an immovable asset,

- a ship or an aircraft subject to registration in a public register, or

- instruments or rights in such instruments the existence or transfer of which presupposes their being recorded in a register, an account or a centralised deposit system held or located in a Member State,

the validity of that act shall be governed by the law of the Member State within the territory of which the immovable asset is situated or under the authority of which that register, account or deposit system is kept.

Article 25

Lawsuits pending

The effects of reorganisation measures or winding-up proceedings on a pending lawsuit concerning an asset or a right of which the credit institution has been divested shall be governed solely by the law of the Member State in which the lawsuit is pending.

Article 26

Professional secrecy

All persons required to receive or divulge information in connection with the information or consultation procedures laid down in Articles 4, 5, 8, 9, 11 and 19 shall be bound by professional secrecy, in accordance with the rules and conditions laid down in Article 30 of Directive 2000/12/EC, with the exception of any judicial authorities to which existing national provisions apply.

TITLE V

FINAL PROVISIONS

Article 27

Implementation

1. Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive on ...(8). They shall forthwith inform the Commission thereof.

National provisions adopted in application of this Directive shall apply only to reorganisation measures or winding-up proceedings adopted or opened after the date referred to in the first subparagraph. Measures adopted or proceedings opened before that date shall continue to be governed by the law that was applicable to them at the time of adoption or opening.

2. When Member States adopt these measures, they shall contain a reference to this Directive or shall be accompanied by such reference on the occasion of their official publication. The methods of making such reference shall be laid down by Member States.

3. Member States shall communicate to the Commission the texts of the main provisions of national law which they adopt in the field governed by this Directive.

Article 28

Entry into force

This Directive shall enter into force on the day of its publication.

Article 29

Addressees

This Directive is addressed to the Member States.

Done at ...

For the European Parliament

The President

For the Council

The President

(1) OJ C 356, 31.12.1985, p. 55. OJ C 36, 8.2.1998, p. 1.

(2) OJ C 263, 20.10.1986, p. 13.

(3) OJ C 332, 30.10.1998, p. 13.

(4) Opinion of the European Parliament of 13 March 1987 (OJ C 99, 13.4.1987, p. 211), confirmed on 2 December 1993 (OJ C 342, 20.12.1993, p. 30), Council Common Position of 17 July 2000 and Decision of the European Parliament of ... (not yet published in the Official Journal).

(5) OJ L 126, 26.5.2000, p. 1. Directive as amended by Directive 2000/28/EC (OJ L ...).

(6) OJ L 135, 31.5.1994, p. 5.

(7) OJ L 166, 11.6.1998, p. 45.

(8) Three years after publication in the Official Journal of the European Communities.

STATEMENT OF THE COUNCIL'S REASONS

I. INTRODUCTION

On 9 January 1986 the Commission forwarded to the Council a proposal for a Directive based on Article 47(2)(1) of the EC Treaty.

The European Parliament delivered its opinion at first reading on 13 March 1987(2). The Economic and Social Committee delivered its opinion on 2 July 1986. Following these opinions the Commission submitted an amended proposal on 11 January 1988. The European Monetary Institute gave its opinion on 12 June 1996.

On 17 July 2000, the Council adopted its Common Position pursuant to Article 251 of the Treaty.

The title of the Common Position has been adapted to take account of the adoption of Directive 94/19/EC of the European Parliament and of the Council of 30 May 1994 on deposit guarantee schemes(3).

II. OBJECTIVES

In order to guarantee equal treatment of creditors and the smooth functioning of the reorganisation and the winding-up of credit institutions within the European Union, the Directive aims to ensure that:

- the administrative and judicial authorities of the home Member State have sole power to adopt and to implement reorganisation measures and winding-up proceedings according to the law and practices in force in that Member State, except where the Directive provides otherwise, and

- the rights of creditors domiciled in Member States other than the home Member State are safeguarded.

The Directive does not aim at harmonising national legislation but at ensuring mutual recognition of Member States' reorganisation measures and winding-up proceedings as well as the necessary cooperation.

In order to achieve these aims, the Common Position amends and gives a more explicit formulation of some provisions compared to the Commission proposal. It further introduces some new provisions, largely based on Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings(4), hereinafter referred to as the Insolvency Regulation. This has been done in order to ensure consistency in Community legislation and, where appropriate, to align the specific rules on insolvency issues in the banking sector with the rules on similar issues in the Insolvency Regulation which applies generally within the European Union. These provisions are aimed at enhancing the objectives set out above and primarily concern the protection of the position of creditors domiciled in a Member State other than the home Member State of the credit institution in winding-up proceedings, the definition of the powers and obligations of the administrator/liquidator and the introduction of provisions enhancing legal certainty by laying down which law will be applicable in certain specific cases, e.g. concerning immovable property.

III. ANALYSIS OF THE COMMON POSITION

A. GENERAL REMARKS

The Common Position takes into account the adoption of:

- second Council Directive of 15 December 1989 on the coordination of laws, regulations and administrative provisions relating to the taking up and the pursuit of the business of credit institutions and amending Directive 77/780/EEC(5),

- Directive 94/19/EC of the European Parliament and of the Council of 30 May 1994 on deposit guarantee schemes,

- Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and securities settlement systems(6),

- Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings,

- Directive 2000/12/EC of the European Parliament and of the Council of 20 March 2000 relating to the taking up and pursuit of the business of credit institutions(7) which represents a codification of a number of Directives concerning credit institutions, in particular Directive 77/780/EEC (the First Banking Directive) and Directive 89/646/EEC (the Second Banking Directive). As a result all cross-references to provisions in the Directives concerned have been adapted to refer to the codified text.

Credit institutions and insurance undertakings were both exempted from the Insolvency Regulation on account of the specific regulation of these sectors. These two sectors have a number of similar legislative features (home Member State regulation, authorisation requirement, etc.). The amended proposal for a Directive of the European Parliament and of the Council on the reorganisation and winding up of insurance undertakings(8) has been examined by the Council over the same period as the current proposal for the reorganisation and winding up of credit institutions and, where the specific conditions in each sector made this possible, similar solutions have been chosen.

Following the adoption of Directive 94/19/EC of the European Parliament and of the Council of 30 May 1994 on deposit guarantee schemes the title of the Directive was amended, see above, and Title IV in the Commission proposal was deleted and replaced by a new Title IV concerning provisions common to reorganisation measures and winding-up proceedings.

B. TITLE 1 - SCOPE AND DEFINITIONS

The drafting of Article 1, which defines the scope of the Directive, is unchanged from the amended Commission proposal except for a more specific reference to the exemptions in Directive 2000/12/EC. The European Parliament's proposed amendment to Article 1 of the Commission proposal is thus included in the Common Position.

Articles 2 and 16 of the amended Commission proposal relating to the annexes which listed the measures and proceedings covered by the Directive, have been deleted. The Council finds that the definitions of "reorganisation measure", "winding-up proceedings", "competent authorities" and "administrative and judicial authorities" set out in Article 2 of the Common Position are sufficient to determine the scope of the Directive. This solution further avoids the legally and technically difficult question of how to incorporate future changes in national law into the Directive. The amendment to Article 2 of the Commission proposal and new Article 2a as well as new Article 15a on winding-up proceedings, proposed by the European Parliament are therefore not included in the Common Position, except for the fact that winding-up proceedings are now defined.

Article 2 of the Common Position (Article 3 of the amended Commission proposal) has been amended and now includes definitions of a number of additional terms in order to set out more clearly the terms used in the Directive.

The definitions of "home Member State", "host Member State" and "competent authorities" now correspond to the definitions of these terms in current legislation. A definition of "branch" has been added in line with current legislation.

In order to avoid confusion over the authorities referred to in the Directive a definition of "administrative and judicial authorities", meaning those responsible for the purposes of the reorganisation measures or winding-up proceedings as opposed to those responsible for the supervision of credit institutions, has been added. Since these definitions cover authorities responsible for both reorganisation measures and winding-up proceedings the Common Position includes the substance of the amendment proposed by the European Parliament to Article 3 of the Commission proposal.

"Reorganisation measures" and "winding-up proceedings" have been defined to take account of the deletion of the annexes, see above. The definition of "reorganisation measures" now includes a key element in these measures, namely that they could affect third parties' pre-existing rights, and recitals 8 to 10 further set out the reasons behind this definition. The definition of "winding-up proceedings" includes a point based on the Insolvency Regulation, namely that the term includes proceedings terminated by a composition or other analogous measure. Since the definitions cover both reorganisation measures and winding-up proceedings the Common Position includes part of the substance of new Article 2a proposed by the European Parliament and included in Article 2 of the amended Commission proposal, where a definition of winding-up proceedings, not defined in the original Commission proposal, was set out.

Definitions of "administrator" and "liquidator" have been added, in line with the Directive on the reorganisation and winding up of insurance undertakings, with a view to defining the scope of Articles referring to these functions.

The definitions of "regulated market" and "instruments" have been inserted with a view to defining the scope of Article 20 relating to the law applicable in certain specific cases.

C. TITLE II - REORGANISATION MEASURES

Article 3 (Article 4 of the amended Commission proposal) is the key article of the Directive as regards reorganisation measures. The Common Position maintains, with slightly different drafting, paragraphs 1 and 2 of the Commission proposal, which lay down the principle of universal application of measures decided by the home Member State. In order not to weaken the principle of supervision by the home Member State authorities the Council has deleted paragraph 3, which left open the possibility of a host Member State applying reorganisation measures to a branch only.

The obligation to inform the authorities of the host Member State set out in Article 4 (Article 5 of the amended Commission proposal) is maintained in the Common Position with some minor changes. The Common Position makes it clear on which authorities the obligation falls and sets out more explicitly the information which must be communicated. In line with the principle of home Member State control, the Council has chosen not to maintain the obligation for the home Member State to consult the authorities of the host Member State on the effects of a reorganisation measure. The Common Position follows the European Parliament's proposed amendment to Article 5, since it does not include the exception to the information obligation proposed by the Commission. In allowing for the adoption of measures without prior information in urgent cases, the Common Position takes account of the spirit of Article 6a concerning urgent cases proposed by the European Parliament.

The obligation to inform the authorities of the home Member State set out in Article 5 (Article 6 of the Commission proposal) is maintained with some minor changes aimed at making the text clearer. As in Article 3, the Council has chosen not to maintain the second subparagraph, which left open the possibility of a host Member State applying reorganisation measures to a branch.

Article 6 concerning publication maintains Article 7 of the amended Commission proposal with some minor changes. The reference to shareholders has been deleted for the reasons set out in recital 8. In the light of Article 7 of the Common Position, see next paragraph, the Council has not found it necessary to maintain paragraph 2 of the Commission proposal concerning individual notification of creditors. In line with Article 3 the regulation of the deadline for appeal has to be done in national law. The Common Position makes publication mandatory and thus incorporates the amendment proposed by the European Parliament relating to Article 7 of the Commission proposal, which was only partly included in the amended Commission proposal.

Article 7 introduces specific provisions on the duty to inform known creditors and the right to lodge claims in order to protect the rights of creditors domiciled in Member States other than the home Member State of the credit institution. These provisions are aligned on similar provisions relating to winding-up proceedings, which again are aligned on similar provisions in the Insolvency Regulation, as noted later.

Since there is no coordination in Community law of provisions applicable to branches of third country credit institutions, the Council has chosen to limit Article 8 concerning such branches to a requirement for the administrative and judicial authorities to inform the authorities in other Member States where the same credit institution has branches and to endeavour to coordinate their actions. Since an administrator is not always appointed Article 8 does not impose any obligation on administrators to coordinate their actions, in contrast with the case for liquidators in winding-up proceedings, as noted later. Information must be transmitted under the same conditions as information to host Member States of branches of Community credit institutions, set out in Article 4.

Following the deletion of the annexes, Article 9 of the amended Commission proposal has been deleted. Article 10 of the amended Commission proposal is considered superfluous in the light of Article 3 of the Common Position.

D. TITLE III - WINDING-UP PROCEEDINGS

Article 9 (Article 11(1) and (3) of the amended Commission proposal) maintains the key principle of universality set out in Article 11 of the amended Commission proposal, but in a modified form. The text is now aligned on the corresponding text concerning reorganisation measures, Articles 3 and 4 of the Common Position; it highlights the principle of universality and, in order to ensure consistency within the Directive, introduces the same information procedure as for reorganisation measures.

Article 10(1) underlines the principle of universality laid down in Article 11(2) of the amended Commission proposal. Since Article 10 makes no reference to the application of the convention on bankruptcy, now the Insolvency Regulation, as was the case in the original Commission proposal the Common Position includes the amendment proposed by the European Parliament to Article 11 of the Commission proposal and taken over by the Commission in its amended proposal. Paragraph 2 has been added in order to illustrate the scope of the universality principle laid down in paragraph 1, in line with the drafting of Article 4(2) of the Insolvency Regulation, by giving a list of examples of what is determined by the law of the home Member State.

Article 11 relating to voluntary winding up maintains Article 12 of the amended Commission proposal with some drafting amendments aimed at making the text more clear. Paragraph 2 in the Common Position simply states that voluntary winding up shall not preclude reorganisation measures or winding-up proceedings. The provisions relating to such measures and proceedings are stipulated elsewhere in the Directive and the competent authorities of the home Member State may always, where appropriate, decide on a reorganisation measure or winding up proceedings, even after voluntary winding up has commenced.

Article 12 (Article 13 of the Commission proposal) introduces drafting changes and other changes which follow from the principle of home Member State control. Paragraph 3 has been deleted since the rules for authorisation are laid down in Directive 2000/12/EC.

Article 13 on publication corresponds to Article 14(3) of the amended Commission proposal and has been aligned on the publication requirement for reorganisation measures in Article 6(1). In including this provision the Common Position incorporates the amendment proposed by the European Parliament relating to Article 14 of the Commission proposal which was accepted by the Commission in its amended proposal. Article 14(1) of the Commission proposal has been deleted in the light of Article 9(1) and 10 of the Common Position. The powers of the liquidator are regulated in Article 21(2) of the Common Position, and Article 14(2) which dealt with this subject has been deleted in consequence.

Articles 14, 15, 16 and 17 have all been added in the light of the adoption of the Insolvency Regulation, as explained in the general observations on the Common Position, in order to supplement the Directive in respect of aspects which were not regulated in the Commission proposal.

Article 14 on information to creditors is aligned on Article 40 of the Insolvency Regulation and lays down provisions on the obligation to inform known creditors and the content of the information to be provided. The objective is to safeguard the position of creditors domiciled in Member States other than that of the home Member State of the insolvent credit institution.

Article 15 on the honouring of obligations is aligned on Article 24 of the Insolvency Regulation. Despite the provisions on publication, the situation may arise where a debtor of the insolvent credit institution honours an obligation for the benefit of the credit institution when it should have been honoured for the benefit of the liquidator, and Article 15 aims at protecting the debtor who acts in good faith. However, the provision covers only the rare case where an obligation has been honoured for the benefit of a credit institution which is a physical person or a partnership of physical persons, since the danger of a credit institution accepting a payment in bad faith and without informing the liquidator is supposed to be present only in such a case.

Article 16 lays down two fundamental principles for the winding-up procedure. Paragraph 1, which is aligned on Article 39 of the Insolvency Regulation, stipulates that all creditors, including public authorities in other Member States, have the right to produce their claim. The expression "lodge claims or submit written observations relating to claims" has been chosen since national law in some Member States does not require the lodging of a claim but only observations relating to claims. Paragraph 2 underlines an essential principle of the concept of universality, namely that the claims of all creditors shall be treated in the same way and accorded the same ranking as home Member State creditors. Paragraph 3, which is aligned on Article 41 of the Insolvency Regulation, regulates the contents of a claim presented by a creditor domiciled in another Member State.

Article 17, which is aligned on Article 42 of the Insolvency Regulation, regulates the language regime applicable to the lodgement of claims. The basic rule is that the language of the home Member State applies. The key words "Invitation to lodge a claim/submit observations relating to a claim. Time limits to be observed" must, however, be indicated in all the official languages of the Union. For a creditor domiciled in another Member State the basic rule is the right to lodge a claim in the language or one of the languages of that State, although a translation may be required, with only the key words "Lodgement of claims/Submission of observations relating to claims" in the language of the home Member State.

With a view to ensuring the rights of the creditors in the course of the proceedings a new provision, Article 18, has been introduced obliging the liquidators to keep the creditors informed with regard to the progress of the winding-up procedure.

Since branches of third country credit institutions are not regulated at Community level the Council has decided, as was also the case in Article 8 on reorganisation measures, to limit Article 19, Article 15 of the amended Commission proposal, to information and coordination requirements. Paragraph 1 regulates the information to be given to the authorities in other host Member States before the opening of winding-up proceedings and is aligned on the corresponding information procedure in Article 8(1). The ex post information requirement, found in Article 15(3) of the Commission proposal, is set out in paragraph 2, which imposes an additional information requirement when winding-up proceedings have been opened and authorisation withdrawn. The procedure for communicating this information is aligned on paragraph 1. Paragraph 3 is aligned on Article 8(2), and imposes, in addition, an obligation for the liquidators to coordinate their actions since the work of the liquidators may be as important as that of the authorities.

Article 16 of the amended Commission proposal has been deleted following the deletion of the Annexes, see above.

E. TITLE IV - PROVISIONS COMMON TO REORGANISATION MEASURES AND WINDING-UP PROCEEDINGS

This title is a new feature in comparison with the Commission proposal. As already described, in order to achieve the aims of the Directive and to ensure legal consistency in Community legislation, the Council has deemed it appropriate to introduce some additional provisions to a large extent based on the Insolvency Regulation. The majority of these supplementary provisions are set out in Title IV, which groups provisions common to reorganisation measures and winding-up proceedings.

Article 20 contains provisions on the effects of the measures and proceedings on certain contracts and rights. This Article derogates from the basic principle of the application of the law of the home Member States set out in Articles 3 and 10. The overall objective of this Article to ensure legal certainty in particular cases where it is thought that the importance or the special nature of the contract justifies the derogation from the principle of universality.

The first derogation, set out in paragraph 1(a), relates to employment contracts and relationships which shall be governed solely by the law of the Member State applicable to the employment contract. This provision, which is aligned on Article 10 of the Insolvency Regulation, is introduced to protect employees of a branch of the credit institution in a host Member State against the risk of seeing their contract suddenly subjected to the law of another Member State.

The second derogation set out in paragraph 1(b), which is aligned on Article 8 of the Insolvency Regulation, regulates contracts relating to immovable property. In all Member States such contracts are subject to special regulation both to protect the contracting parties and to protect the general interests of the Member State where they are situated. The Council has therefore found it appropriate to derogate from the principle of universality and to stipulate that both a contract conferring the right to make use of immovable property, typically a rental contract, and a contract conferring the right to acquire immovable property situated within a Member State, are governed by the law of that Member State. To avoid any doubt which may arise since the rules on exactly what constitutes immovable property may vary between Member States, it is laid down that the law of the Member State where the property is situated shall determine whether a property is movable or immovable.

Paragraphs 1(c) and (d) concern contractual netting agreements (agreements to set off positive and negative balances) between a credit institution and its counter party and repurchase agreements (an agreement between a seller and a buyer of securities where the seller agrees to repurchase the securities at an agreed price) respectively. In both cases the law of the Member State applicable to the agreement applies. Such agreements are commonly used on the financial markets and the Council considers that the special function of such contracts requires a derogation from the principle of universal application of home Member State law in order to protect the functioning of the financial markets and to ensure legal certainty for the contracting parties.

Paragraph 1(e) concerns rights subject to registration in a public register which shall be governed solely by the law of the Member State under the authority of which the register is kept. This provision, which is based, but not totally aligned, on Article 11 of the Insolvency Regulation, is introduced in order to avoid a conflict with national systems of registration for immovable property, ships or aircrafts when the law of the home Member State contains provisions which may be incompatible with the law of the register.

Paragraph 1(f) concerns rights in securities, whether dematerialised or not, which are recorded in a register or in an account or held in a centralised deposit system in a Member State. This provision aims at protecting the rights in these securities against the potential negative effects of reorganisation measures or insolvency proceedings opened according to the law of a Member State which is different from the law of the Member State where the register, account or deposit system is held. In parallel with point (e) the impact of the reorganisation measure or insolvency proceedings against a credit institution on rights in securities held by the insolvent institution shall be determined solely by the law of the Member State where the account, the register or the centralised deposit system in which the relevant rights are recorded, is held or located.

Regarding transactions carried out on a regulated market (a stock exchange) as defined in Article 2, paragraph 1(g) stipulates, in line with Article 9 of the Insolvency Regulation, that independently of point (f) the effects of the reorganisation measure or the opening of insolvency proceedings shall be governed solely by the law of the Member State applicable to that market. The aim of this provision is to ensure the functioning of these markets and protect the balance maintained by the law applicable to the market from the potentially disruptive effects of the application of reorganisation measures or insolvency proceedings opened according to another legal system, which could have a negative impact far beyond the insolvent institution and its contracting parties.

A similar provision has been introduced in paragraph 1(h) concerning rights in rem and reservations of title in respect of assets belonging to the insolvent credit institution, which shall be governed solely by the law applicable to that right. This rule is based, though not aligned, on Articles 5 and 7 of the Insolvency Regulation. Rights in rem are not defined since it is not the aim of the Directive to introduce any harmonisation of this concept.

Paragraph 2 concerning set-off stipulates, in line with Article 6 of the Insolvency Regulation, that the right of a creditor to set off a claim is not affected by the reorganisation measure or the insolvency proceedings when such set-off is permitted by the law of the Member State applicable to the credit institutions claim, regardless of whether such set-off is permitted by the home Member State law or not.

Article 21(1) is aligned on Article 19 of the Insolvency Regulation. It sets out the formal requirements concerning the proof of the administrator's or liquidator's appointment in order to avoid any doubt on the subject. Paragraphs 2 and 3 are aligned on Article 18(1) and (3) of the Insolvency Regulation and set out the powers of the administrator/liquidator. In accordance with the principle of application of home Member State law the administrator/liquidator may exercise in all Member States the powers he could exercise in the home Member State. Since there is no possibility of secondary proceedings and since it is possible that the insolvent institution may have substantial commitments in one or more particular host Member States, paragraph 2 stipulates that the liquidator/administrator may appoint persons to assist them in order to help overcome any difficulties encountered by creditors in particular host Member States. Since the Directive does not aim at extending the executive or judicial powers of the home Member State paragraph 3 makes it clear that the administrator/liquidator must respect the law of the Member State within which he wishes to take action and that his powers do not include the use of force or the right to rule on legal proceedings or disputes.

Article 22 also aims at clarifying the powers of the liquidator/administrator. The principle of universal application of reorganisation measures and winding-up proceedings without further formalities are set out in Articles 3 and 9. However, specific registers play an important role in ensuring transparency and legal certainty in many Member States and it is therefore stipulated, in line with Articles 22 and 23 of the Insolvency Regulation, that the administrator/liquidator has the power to request the entry of the measure or the proceedings in the appropriate registers in other Member States.

Article 23(1) concerning detrimental acts is aligned on Article 13 of the Insolvency Regulation. It derogates from the principle of universal application of the home Member State law for winding-up proceedings in a specific case, namely where an act, for example a contract, would have been void according to the home State law, but where the other contracting party had entered into it in the belief that the contract could not be invalidated. The aim of the provision is to protect the just expectations of the contracting party in this case. For reorganisation measures paragraph 2 stipulates that the principle of universal application set out in Article 3(2) of the Common Position shall not apply in similar circumstances.

Article 24 is aligned on Article 14 of the Insolvency Regulation. It concerns acts, for example contracts, entered into by the insolvent credit institution after the adoption of a reorganisation measure or the opening of insolvency proceedings. It is motivated by the same aims as those underlying Article 20(1)(b), (e) and (f), in particular the need to ensure legal certainty for the contracting parties and public confidence in the registers or deposit systems concerned.

Article 25 on the effects on pending lawsuits is aligned on Article 15 of the Insolvency Regulation. It makes it clear that while the law of the home Member State regulates the enforcement proceedings of individual creditors in accordance with Articles 3(2), 9 and 10 it is the law of the Member State where the lawsuit is pending which governs the question of the effects of reorganisation measures or winding-up proceedings on a lawsuit pending concerning assets or rights of which the insolvent credit institution has been divested.

Article 26 on professional secrecy is introduced to bring this Directive into line with the requirements in Directive 2000/12/EC and to harmonise professional secrecy requirements for all aspects of banking regulation. The judicial authorities remain subject to existing national provisions applicable to them.

F. FINAL PROVISIONS

The provisions on implementation and entry into force have been adapted to current practices in Community legislation.

G. RECITALS

The recitals have been adapted and new recitals introduced to explain the changes set out above. The amendments to the recitals proposed by the European Parliament are redundant following the adoption of Directive 94/19/EC on deposit guarantee schemes and the Insolvency Regulation and are therefore not included in the Common Position.

IV. CONCLUSION

The Council considers that all the amendments made to the amended Commission proposal are fully in line with the objectives of the proposed Directive. The main part of the amendments proposed by the European Parliament has been included in the Common Position. All the changes made and the new provisions aligned on the Insolvency Regulation which have been introduced serve to enhance the objectives of the Directive and to ensure legal consistency in Community legislation.

(1) Then Article 57(2).

(2) Opinion confirmed 27 October 1999, (OJ C 154, 5.6.2000).

(3) OJ L 135, 31.5.1994, pp. 5 to 14.

(4) OJ L 160, 30.6.2000, p. 1.

(5) Directive 89/646/EEC (OJ L 386, 30.12.1989, pp. 1 to 13).

(6) OJ L 166, 11.6.1998, pp. 45 to 50.

(7) OJ L 126, 26.5.2000, p. 1.

(8) OJ C 253, 6.10.1989, p. 3.