Tiger and Others (Judicial cooperation in civil matters - Insolvency proceedings - Judgment) [2019] EUECJ C-493/18 (04 December 2019)

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	Court of Justice of the European Communities (including Court of First Instance Decisions)
You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Tiger and Others (Judicial cooperation in civil matters - Insolvency proceedings - Judgment) [2019] EUECJ C-493/18 (04 December 2019) URL: http://www.bailii.org/eu/cases/EUECJ/2019/C49318.html Cite as: [2020] 2 All ER (Comm) 444, [2019] EUECJ C-493/18, ECLI:EU:C:2019:1046, [2020] ILPr 3, [2020] 1 WLR 2955, [2020] CEC 868, [2019] WLR(D) 660, EU:C:2019:1046, [2020] WLR 2955

(Reference for a preliminary ruling — Judicial cooperation in civil matters — Insolvency proceedings — Regulation (EC) No 1346/2000 — Article 3(1) — Actions which derive directly from insolvency proceedings and which are closely connected with such proceedings — Sale of immovable property and creation of a mortgage — Action brought by the trustee in bankruptcy seeking a declaration that the transactions concerned are ineffective — Article 25(1) — Exclusive jurisdiction of the courts of the Member State in which the insolvency proceedings were opened)

REQUEST for a preliminary ruling under Article 267 TFEU from the Cour de cassation (France), made by decision of 24 May 2018, received at the Court on 26 July 2018, in the proceedings

composed of S. Rodin, President of the Chamber, D. Šváby and K. Jürimäe (Rapporteur), Judges,

– the French Government, by D. Colas, D. Dubois and E. de Moustier, acting as Agents,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

1 This request for a preliminary ruling concerns the interpretation of Article 3(1) and Article 25(1) of Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings (OJ 2000 L 160, p. 1).

2 The request has been made in proceedings between UB, on the one hand, and VA, Tiger SCI, WZ, as UB’s trustee in bankruptcy, and Banque patrimoine et immobilier SA, on the other, concerning the sale of immovable property originally owned by UB and mortgages granted over that property by UB and the action taken by WZ to have those transactions declared ineffective as against the bankruptcy estate.

‘(2) The proper functioning of the internal market requires that cross-border insolvency proceedings should operate efficiently and effectively and this Regulation needs to be adopted in order to achieve this objective, which comes within the scope of judicial cooperation in civil matters within the meaning of Article 65 of the Treaty.

(6) In accordance with the principle of proportionality, this Regulation should be confined to provisions governing jurisdiction for opening insolvency proceedings and judgments which are delivered directly on the basis of the insolvency proceedings and are closely connected with such proceedings. In addition, this Regulation should contain provisions regarding the recognition of those judgments and the applicable law which also satisfy that principle.’

‘This Regulation shall apply to collective insolvency proceedings which entail the partial or total divestment of a debtor and the appointment of a liquidator.’

5 Article 3 of the regulation, entitled ‘International jurisdiction’, provides, in paragraph 1 thereof:

‘The courts of the Member State within the territory of which the centre of a debtor’s main interests is situated shall have jurisdiction to open insolvency proceedings. In the case of a company or legal person, the place of the registered office shall be presumed to be the centre of its main interests in the absence of proof to the contrary.’

‘1. Save as otherwise provided in this Regulation, the law applicable to insolvency proceedings and their effects shall be that of the Member State within the territory of which such proceedings are opened, hereafter referred to as the “State of the opening of proceedings”.

2. The law of the State of the opening of proceedings shall determine the conditions for the opening of those proceedings, their conduct and their closure. It shall determine in particular:

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

‘Any judgment opening insolvency proceedings handed down by a court of a Member State which has jurisdiction pursuant to Article 3 shall be recognised in all the other Member States from the time that it becomes effective in the State of the opening of proceedings.’

‘Judgments handed down by a court whose judgment concerning the opening of proceedings is recognised in accordance with Article 16 and which concern the course and closure of insolvency proceedings, and compositions approved by that court shall also be recognised with no further formalities. …

The first subparagraph shall also apply to judgments deriving directly from the insolvency proceedings and which are closely linked with them, even if they were handed down by another court.

The first subparagraph shall also apply to judgments relating to preservation measures taken after the request for the opening of insolvency proceedings.’

9 Paragraphs 1 and 2(b) of Article 1 of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (OJ 2001 L 12, p. 1) provide:

‘1. This Regulation shall apply in civil and commercial matters whatever the nature of the court or tribunal. It shall not extend, in particular, to revenue, customs or administrative matters.

(b) bankruptcy, proceedings relating to the winding-up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings’.

The dispute in the main proceedings and the questions referred for a preliminary ruling

10 On 7 August 2008, Wirecard, a company incorporated under German law, obtained from a court in the United Kingdom an order freezing the assets of UB, a Netherlands national. On that date, UB owned an apartment and a property complex in France.

11 On 22 August 2008, UB and his sister, VA, signed, before a French notary, an acknowledgement of debt by which UB acknowledged owing VA the sum of EUR 500 000 in respect of various loans. UB undertook to repay that sum by 22 August 2017 and subsequently mortgaged, in favour of VA, the apartment and the property complex which he owned in France.

12 On 18 and 24 March 2010, UB sold those properties, in return for payment of the sums of EUR 395 000 and EUR 780 000 respectively, to Tiger, which had been incorporated on 25 February 2010 by VA, who held 90% of the shares in that company.

13 On 10 May 2011, UB was, on his own petition, declared bankrupt by Croydon County Court (United Kingdom), pursuant to Regulation No 1346/2000 and the relevant United Kingdom bankruptcy law provisions. On 1 July 2011, WZ was appointed UB’s trustee in bankruptcy, with effect from 6 July 2011.

14 At WZ’s request, Croydon County Court authorised WZ on 26 October 2011 to bring an action before the French courts in order, first, to have the bankruptcy order registered and, second, to obtain a ruling that the sale of the properties referred to in paragraph 12 above and the mortgages granted over those properties to VA (‘the sales and mortgages at issue’) were transactions at an undervalue or for no consideration under the relevant United Kingdom bankruptcy law provisions. WZ thus sought a decision authorising the restitution of those properties to UB’s bankruptcy estate, for the purposes of their disposal.

15 On 12 December 2011, WZ, acting as UB’s trustee in bankruptcy, brought proceedings against UB, VA and Tiger before the Tribunal de grande instance de Paris (Regional Court, Paris, France) seeking a declaration that the sales and mortgages at issue were ineffective as against the bankruptcy estate. Banque patrimoine et immobilier, which had financed the acquisition of those properties, intervened in the proceedings.

16 Finding that UB had failed to fulfil his statutory obligations by not providing sufficient information on the existence of undisclosed assets that were not located in the United Kingdom, Croydon County Court ordered, on 3 July 2012, that the automatic end date for discharge of the bankruptcy be suspended until such time as UB complied with those obligations. By judgment of 19 November 2013, that court finally decided to lift the suspension and held that the date of actual closure of UB’s bankruptcy was the date of that judgment.

17 By judgment of the same date, the Tribunal de grande instance de Paris (Regional Court, Paris) ruled that the sales and mortgages at issue were ineffective as against WZ, in his capacity as UB’s trustee in bankruptcy, to the extent of the outstanding sums owed to creditors. By judgment of 13 May 2016, the cour d’appel de Paris (Court of Appeal, Paris, France) not only upheld that declaration of ineffectiveness, but also ruled that it should not be limited in that manner.

18 UB brought an appeal against that judgment before the referring court, the Cour de cassation (Court of Cassation, France). VA and Tiger brought a cross-appeal against that same judgment, as did WZ, in his capacity as UB’s trustee in bankruptcy. In support of their appeals, UB, VA and Tiger submit that, under Article 3(1) of Regulation No 1346/2000, the courts of the Member State within the territory of which the centre of a debtor’s main interests is situated have jurisdiction to open insolvency proceedings. They also argue that the Court of Justice ruled, in the judgments of 12 February 2009, Seagon (C‑339/07, EU:C:2009:83), and of 16 January 2014, Schmid (C‑328/12, EU:C:2014:6), that that provision must be interpreted as meaning that the courts of the Member State within the territory of which insolvency proceedings have been opened have jurisdiction to decide an action to set a transaction aside by virtue of the debtor’s insolvency. UB, VA and Tiger consider that, in the present case, only the courts of the United Kingdom have jurisdiction to rule on the action for a declaration that the sales and mortgages at issue are ineffective, since the insolvency proceedings against UB were opened in the United Kingdom. Consequently, by failing to raise, of its own motion, its lack of jurisdiction, the cour d’appel de Paris (the Court of Appeal, Paris) infringed, in particular, Article 3(1) of Regulation No 1346/2000.

19 WZ submits that the French courts in the main proceedings derive their international jurisdiction from the judgment of Croydon County Court of 26 October 2011, by which that court authorised WZ to bring his action before the French courts. According to WZ, that judgment enjoys recognition in France with no further formalities, pursuant to Article 25(1) of Regulation No 1346/2000.

20 The referring court observes that it is clear from the case-law of the Court of Justice relating to Article 3(1) of Regulation No 1346/2000 that the courts of the Member State within the territory of which the insolvency proceedings have been opened have jurisdiction to rule on an action to set a transaction aside by virtue of the debtor’s insolvency. However, the referring court has doubts as to the classification of the action in question in the main proceedings and as to the relationship between that provision of Regulation No 1346/2000 and Article 25(1) of that regulation, for the purpose of determining which court has international jurisdiction to hear and determine the dispute in the main proceedings.

21 In those circumstances, the Cour de cassation (Court of Cassation) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘(1) Does the action brought by the trustee in bankruptcy appointed by the court of the Member State in which the insolvency proceedings were opened seeking a declaration that mortgages registered over immovable property of the debtor located in another Member State and the sale of that immovable property in that State are ineffective as against the trustee, with a view to the restitution of those assets to the debtor’s estate, derive directly from the insolvency proceedings and is it closely linked to them?

(2) If so, do the courts of the Member State in which the insolvency proceedings were opened have exclusive jurisdiction to hear and determine the action brought by the trustee in bankruptcy or, on the contrary, do the courts of the Member State in which the immovable property is located alone have jurisdiction for that purpose, or is there concurrent jurisdiction between those various courts, and, if so, under what conditions?

(3) Can the judgment by which the court of the Member State in which the insolvency proceedings were opened authorises the trustee in bankruptcy to bring, in another Member State, an action falling, in principle, within the jurisdiction of the court which opened the proceedings, have the effect of imposing the jurisdiction of that other State, in so far as, inter alia, that judgment could be classified as a judgment concerning the course of insolvency proceedings within the meaning of Article 25(1) of Regulation No 1346/2000, which may, on that basis, be recognised with no further formalities, pursuant to that article?’

22 By its first and second questions, which it is appropriate to examine together, the referring court asks, in essence, whether Article 3(1) of Regulation No 1346/2000 must be interpreted as meaning that an action brought by the trustee in bankruptcy appointed by a court of the Member State within the territory of which the insolvency proceedings were opened seeking a declaration that the sale of immovable property situated in another Member State and the mortgage granted over it are ineffective as against the general body of creditors falls within the exclusive jurisdiction of the courts of the first Member State.

23 Article 3(1) of Regulation No 1346/2000 confers exclusive jurisdiction to open the main insolvency proceedings on the courts of the Member State within the territory of which the centre of the debtor’s interests is situated (judgment of 14 November 2018, Wiemer & Trachte, C‑296/17, EU:C:2018:902, paragraph 23 and the case-law cited).

24 It must be determined whether that provision is to be interpreted as meaning that that exclusive jurisdiction also extends to an action seeking a declaration of ineffectiveness in respect of past acts which are to the detriment of the rights of the general body of creditors, such as the action at issue in the main proceedings.

25 In that respect, in the first place, it should be noted that, relying on recital 6 of Regulation No 1346/2000, and in order to ensure the effectiveness of that regulation, the Court has held that Article 3(1) of that regulation confers on the courts of the Member State which has jurisdiction to open insolvency proceedings international jurisdiction to hear and determine actions which derive directly from those proceedings and which are closely connected with them (see, to that effect, judgment of 19 April 2012, F-Tex, C‑213/10, EU:C:2012:215, paragraphs 26 and 27 and the case-law cited).

26 Thus, in order to determine whether an action falls within the international jurisdiction of the courts of the Member State within the territory of which the insolvency proceedings were opened, it is necessary to determine whether that action meets those two cumulative criteria.

27 With regard to the first criterion, in order to determine whether an action derives directly from insolvency proceedings, it should be noted that it is clear from the Court’s settled case-law that the decisive factor for determining the area within which an action falls is not the procedural context of the action, but its legal basis. According to that approach, it must be determined whether the right or the obligation which forms the basis of the action derives from the ordinary rules of civil and commercial law or from derogating rules specific to insolvency proceedings (see, to that effect, judgment of 9 November 2017, Tünkers France and Tünkers Maschinenbau, C‑641/16, EU:C:2017:847, paragraph 22 and the case-law cited).

28 As regards the second criterion, for the purpose of determining whether an action is closely connected with insolvency proceedings, it is also settled case-law that it is the closeness of the link between that action and the insolvency proceedings that is decisive for the purpose of deciding whether the exception set out in Article 1(2)(b) of Regulation No 44/2001 is applicable (judgment of 9 November 2017, Tünkers France and Tünkers Maschinenbau, C‑641/16, EU:C:2017:847, paragraph 28 and the case-law cited).

29 In the second place, the Court has concluded from an analysis of the respective scope of Regulation No 44/2001 and Regulation No 1346/2000, as well as from the objectives of Regulation No 1346/2000, that the courts of the Member State within the territory of which insolvency proceedings have been opened, as referred to in Article 3(1) of that regulation, enjoy exclusive jurisdiction to hear actions which derive directly from those proceedings and are closely connected with them (see, to that effect, judgment of 14 November 2018, Wiemer & Trachte, C‑296/17, EU:C:2018:902, paragraph 36).

30 In the present case, it is apparent from the information provided by the referring court that, first, the action at issue in the main proceedings has its legal basis in the United Kingdom rules of law specifically relating to insolvency. Second, that action was, subject to verifications which it is for the referring court to carry out in that respect, initiated by UB’s trustee in bankruptcy as part of his general task of managing and liquidating the assets of the bankruptcy estate in the interests of the creditors.

31 Thus, an action by a trustee in bankruptcy appointed by a court of the Member State in which the insolvency proceedings were opened, such as the action in the main proceedings, the purpose of which is to obtain a declaration that mortgages registered over immovable property situated in another Member State and the sale of that property are ineffective as against the bankruptcy estate, derives directly from those proceedings and is closely connected with them.

32 It follows from the considerations set out in paragraphs 27 to 31 above that such an action falls within the exclusive jurisdiction of the courts of the Member State in which the insolvency proceedings were opened.

33 That reasoning cannot be called into question by the fact that the action at issue in the main proceedings concerns immovable property which is located within the territory of a Member State other than that in the territory of which the insolvency proceedings were opened.

34 Regulation No 1346/2000 does not impose any rule conferring on the courts of the place where immovable property is located international jurisdiction to hear an action for the restitution of those assets to the bankruptcy estate in insolvency proceedings. Furthermore, concentrating all the actions directly related to the insolvency proceedings before the courts of the Member State within the territory of which with those proceedings were opened is consistent with the objective of improving the efficiency and speed of insolvency proceedings having cross-border effects, referred to in recitals 2 and 8 of Regulation No 1346/2000 (see, to that effect, judgment of 14 November 2018, Wiemer & Trachte, C‑296/17, EU:C:2018:902, paragraph 33 and the case-law cited).

35 In the light of all of the foregoing considerations, the answer to the first and second questions is that Article 3(1) of Regulation No 1346/2000 must be interpreted as meaning that an action brought by the trustee in bankruptcy appointed by a court of the Member State within the territory of which the insolvency proceedings were opened seeking a declaration that the sale of immovable property situated in another Member State and the mortgage granted over it are ineffective as against the general body of creditors falls within the exclusive jurisdiction of the courts of the first Member State.

36 By its third question, the referring court asks, in essence, whether Article 25(1) of Regulation No 1346/2000 must be interpreted as meaning that a judgment by which a court of the Member State in which opened the insolvency proceedings were opened authorises the trustee in bankruptcy to bring an action in another Member State, even if that action falls within the exclusive jurisdiction of that court, has the effect of conferring international jurisdiction on the courts of that other Member State.

37 The first subparagraph of Article 25(1) of Regulation No 1346/2000 provides that judgments handed down by a court whose judgment concerning the opening of proceedings is recognised in accordance with Article 16 of that regulation and which concern the course and closure of insolvency proceedings are also to be recognised with no further formalities. The second subparagraph of paragraph 1 states that the first subparagraph is also to apply to judgments deriving directly from the insolvency proceedings and which are closely linked with them, even if they were handed down by another court.

38 Article 25(1) of Regulation No 1346/2000 cannot be interpreted in such a way as to call into question the exclusive nature of the international jurisdiction of the courts of the Member State within the territory of which the insolvency proceedings were opened to hear actions which derive directly from those proceedings and which are closely connected with them.

39 In any event, that article provides for a simplified system for the recognition and enforcement of judgments opening proceedings and not a mechanism for conferring international jurisdiction on a court other than the one which enjoys exclusive jurisdiction under Article 3(1) of Regulation No 1346/2000.

40 In that regard, the Court has held that the second subparagraph of Article 25(1) of Regulation No 1346/2000 covers only the recognition and enforceability of judgments deriving directly from the insolvency proceedings and which are closely linked with them, even if they were handed down by another court of the Member State within the territory of which the insolvency proceedings were opened. That provision merely allows for the possibility that the courts of a Member State within the territory of which insolvency proceedings have been opened pursuant to Article 3(1) of that regulation may also hear and determine an action which derives directly from those proceedings and is closely connected with them, whether that be the court which opened the insolvency proceedings under Article 3(1), or another court of that same Member State having territorial and substantive jurisdiction (see, to that effect, judgment of 14 November 2018, Wiemer & Trachte, C‑296/17, EU:C:2018:902, paragraph 42 and the case-law cited).

41 In the light of all the foregoing considerations, the answer to the third question is that Article 25(1) of Regulation No 1346/2000 must be interpreted as meaning that a judgment by which a court of the Member State in which the insolvency proceedings were opened authorises the trustee in bankruptcy to bring an action in another Member State, even if that action falls within the exclusive jurisdiction of that court, cannot have the effect of conferring international jurisdiction on the courts of that other Member State.

42 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

1. Article 3(1) of Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings must be interpreted as meaning that an action brought by the trustee in bankruptcy appointed by a court of the Member State within the territory of which the insolvency proceedings were opened seeking a declaration that the sale of immovable property situated in another Member State and the mortgage granted over it are ineffective as against the general body of creditors falls within the exclusive jurisdiction of the courts of the first Member State.

2. Article 25(1) of Regulation No 1346/2000 must be interpreted as meaning that a judgment by which a court of the Member State in which the insolvency proceedings were opened authorises the trustee in bankruptcy to bring an action in another Member State, even if that action falls within the exclusive jurisdiction of that court, cannot have the effect of conferring international jurisdiction on the courts of that other Member State.

Court of Justice of the European Communities (including Court of First Instance Decisions)