Source: http://www.schubra.de/de/newsletter/LLP/Newsletter_eng_20161005.html
Timestamp: 2018-01-22 06:31:11
Document Index: 79497744

Matched Legal Cases: ['Art. 3', '§ 96', 'Art. 3', 'Art. 3', 'Art. 3', 'Art.1', '§ 96', 'Art. 53', 'Art. 1', 'Art. 3', 'Art. 6', 'Art. 6', 'Art. 6']

Newsletter SB III 20161005
FORUM Institut für Management GmbH, 60311 Frankfurt, 15.02.2017
RA Dr. Philipp Esser, LL.M. (Chicago), Attorney at Law (New York State)
Newsflash European Insolvency Regulation
Purchase price suit of an insolvency administrator and a challenged set-off by a foreign buyer against it: Which court has jurisdiction?
With its recent decision the German Federal Court of Justice (BGH) sets a limit for the category of annex proceedings according to Art. 3 (1) European Regulation on Insolvency Proceedings (“EIR”).
The courts of the fori concursus (location of the insolvent debtor) have no jurisdiction for a purchase price law suit, even if a set-off is declared against it and the insolvency administrator considered this to be inadmissible on the ground that the buyer has acquired the opportunity to set off the claim through an avoidable legal act under § 96 (1) Nr. 3 German Insolvency Code (“InsO”).
The basis of this case was a chicken fattening contract. The German insolvency debtor bought fattening chickens and feedstuff from a supplier in the Netherlands and sold them to a Dutch slaughterhouse after breeding and fattening. This contract provided for a set-off by the slaughterhouse against the invoices for the feedstuff and day-old chickens issued by the supplier. In addition, the parties agreed on a jurisdiction clause in favour of the court in the Netherlands.
The German insolvency administrator as plaintiff, pursued the outstanding purchase price for deliveries prior to the application against the defendant, the slaughterhouse, before the courts in Germany where the insolvency proceedings were pending. The defendant invoked the limitation and alternatively set-off defence with own claims and argued lack of international jurisdiction of the German courts. In support of the asserted jurisdiction of the German courts, the insolvency administrator alleged that the slaughterhouse has acquired the opportunity to set off a claim through an avoidable legal act. Thus, due to such insolvency connection, Art. 3 EIR would provide for the competence of the forum where he brought the suit.
The appeal to the highest German court, BGH, had finally no success after the law suit had been dismissed by the previous instances as inadmissible for lack of international jurisdiction of German courts.
The BGH stated that the case-law developed by the European Court of Justice – ECJ – in the Deko Marty case (C-339/07) regarding the international jurisdiction of the opening state according to Article 3 (1) EIR is not applicable in this case.
The extension of the jurisdiction of the courts of the member state commencing insolvency proceedings according to Art. 3 (1) EIR was intended for actions which result directly from an insolvency proceeding and thus are closely related, as in case of avoidance actions or actions of the insolvency administrator against the managing director for refund of payments, which were made after the occurrence of illiquidity (G.T. GmbH, ECJ – C-295/13) – so called vis attractiva concursus. This bundling of annex actions aims to improve the efficiency of cross-border insolvency proceedings and expedite litigation.
Conversely, the ECJ has not attributed such annex character to be associated with Art. 3 par.1 EIR to those actions, which were filed by a creditor against the insolvency administrator for recovering goods delivered under retention of title before the opening of the proceedings. Other actions were also rejected for not qualifying as annex procedures and hence lack of jurisdiction of the courts of the COMI-state such as an insolvency administrator’s claims under contracts, which were concluded by the insolvency debtor with third parties or for performance of transport services – as these causes of action have not been directly arisen from the insolvency proceedings.
The court pointed out that the term ‘civil and commercial matters’ contained in Art.1 para.1 Brussels I* and thus the scope of Brussels I should be interpreted broadly – opposed to the scope of the jurisdiction rules under the EIR dealing with insolvency matters excluded from Brussels I (* The regulation – also known as Brussels I - lays down rules governing the jurisdiction of courts and the recognition and enforcement of judgments in civil and commercial matters in European Union).
When examining the question whether or not an action arises directly from insolvency proceedings, the BGH did not consider the procedural context of the action, but rather the nature of its legal basis as the decisive criterion for determining the jurisdictional territory to which the matter would be attributed.
Preliminary issues, such as set-off and its asserted inadmissibility in insolvency (under § 96 InsO) are not relevant for the nature of the claim. These do not change the character of the dispute. Rather, mere exceptions and objections have no effect with respect to such jurisdiction – otherwise, this would be contrary to the principle of legal certainty (recital 11 of Brussels I).
The BGH went on to state that the purchase price claim in this law suit is rather based on Art. 53 CISG in conjunction with the chicken contract. The choice of Dutch law also follows impliedly from the jurisdiction clause in the contract and the Dutch language of the contract. The basisis thus a claim under Dutch commercial and civil law.
Therefore the BGH held that the application of the Brussels I is not excluded as an insolvency matter under Art. 1 (2) b) Brussels I of . Consequently, the EIR with its jurisdiction for annex procedures for insolvency related matters under Art. 3 EIR would not be applicable is this case.
The contracted exclusive jurisdiction clause bounds the insolvency administrator. Thus the action for payment of the purchase price by the administrator has to be made before the solely competent court in the Netherlands. The BGH dismissed the action due to lack of jurisdiction.
The clarifying judgment is to be welcomed. It provides a further guidance for the determination of so-called insolvency related matters and the correct legal venue for such annex procedures.
In the recast EU Insolvency Regulation (Regulation (EC) no. 848/2015 applicable as of 26 June 2017) the European legislator has newly codified what has been developed by case-law concerning the extended jurisdiction of the courts of the opening state in Art. 6 EIR for actions directly arising out of the insolvency proceedings and closely related to it, so-called annex procedures. Explicitly avoidance actions are mentioned. But the new recital 35 also makes reference to actions for obligations arising in the course of the insolvency proceedings and clarifies that actions for the fulfilment of obligations arising from a contract which was concluded by the debtor before the opening of the proceedings do not directly derive from the insolvency proceedings within the meaning of the new Art. 6 EIR.
This combination of new Art. 6 EIR and new recital 35 of EIR reflects the European Court of Justice jurisdiction.
Dr Annerose Tashiro, Attorney at law in Germany, Registered European Lawyer (London)