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*PIL Case Law

Published on October 23rd, 2018 | by efi kloyeri

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Summary: C-310/14 regarding the Insolvency proceedings under the Regulation No. 1346/2000

Key-words:“Reference for a preliminary ruling- Regulation (EC) No 1346/2000- Articles 4 and 13- Insolvency proceedings- Detrimental legal acts- Action for restitution of payments made before the date on which insolvency proceedings were opened- Law of the Member State in which insolvency proceedings were opened- Law of the Member State governing the legal act at issue- Law not allowing ‘any means of challenging that act in the relevant case’-Burden of proof”

A) The facts in the main proceedings and the questions referred

Sportland, established in Helsinki (Finland), was a retailer of goods supplied by Nike, established in Hilversum (the Netherlands), under a franchising agreement. Under that contract, governed by Netherlands law, Sportland paid Nike outstanding debts arising from the purchase of stocks set out in the agreement in ten separate instalments made between 10 February 2009 and 20 May 2009, totalling EUR 195 108.

The Helsingin käräjäoikeus (District Court, Helsinki) opened insolvency proceedings in respect of Sportland on 26 May 2009. Sportland brought an action before the above mentioned court requesting the annulment of the payments and that Nike to be required to make restitution of the amounts paid plus interest, in accordance with Paragraph 10 of the Law on recovery of assets. Nike sought an order that the action be dismissed. It relied, inter alia, on Article 13 of Regulation No 1346/2000 and claimed that the payments at issue were governed by Netherlands law. On the basis of Article 47 of the Law on insolvency, those payments were not able to be annulled.

The court granted Sportland’s action. It ruled, inter alia, that Nike had not demonstrated that, for the purposes of Article 13 of Regulation No 1346/2000, the payments could not be challenged. Nike, which considered that it had adduced sufficient evidence on the content of the Netherlands legislation, appealed against that decision before the Helsingin hovioikeus (Court of Appeal, Helsinki). Sportland claimed that the appeal should be dismissed on the ground, inter alia, that Nike had not adduced evidence as to the content of provisions of Netherlands law other than those in the insolvency legislation, or any general principles of Netherlands law.

In those circumstances, the Helsingin hovioikeus (Court of appeal, Helsinki) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘(1) Is Article 13 of Regulation No 1346/2000 to be interpreted to the effect that “the act in the relevant case” means that the act cannot be challenged after taking account of all the circumstances of the case?

(2) If the answer to question 1 is affirmative and if the party affected by the application to challenge the act has relied on a provision of the law within the meaning of the first indent of Article 13, according to which the payment of an outstanding debt may be challenged only in the circumstances provided for therein, which are not mentioned in the action based on the law of the State in which the insolvency proceedings have been opened,

(a) are there reasons prohibiting an interpretation of Article 13 to the effect that the party seeking to challenge the act must, after becoming aware of that legal provision, plead those circumstances if, in accordance with the national law of the State of the opening of insolvency proceedings, that party has to plead all the circumstances founding the action to challenge the act, or

(b) must the party affected by action to challenge the act prove that those circumstances did not exist and that therefore it is not possible to challenge the act under the provision in question, and the party seeking to challenge it does not need to rely specifically on those circumstances?

(3) Regardless of the answer to question 2(a), is Article 13 to be interpreted as meaning that

(a) the party affected by the action to challenge the act has the burden of proving that the circumstances provided for in the provision do not exist in the specific case, or

(b) may the burden of proof as to the existence of those circumstances be determined in accordance with the law of a Member State other than the State in which the insolvency proceedings were opened that is applicable to the act and which provides that the party challenging the act has the burden of proof, or

(c) may Article 13 also be interpreted in such a way that the issue of the burden of proof is determined in accordance with the national law of the State of the court seised?

(4) Is Article 13 to be interpreted as meaning that the expression “that law does not allow any means of challenging that act in the relevant case” includes the general provisions and principles of the law applicable to the act in addition to the insolvency rules of the law applicable to that act?

(5) If the answer to question 4 is affirmative,

(a) is Article 13 to be interpreted as meaning that the party affected by the action to challenge the act must prove that the law within the meaning of Article 13 does not contain any general or other provisions or principles on the basis of which it would be possible to challenge the act in the light of the facts presented, and

(b) under Article 13, may the court, if it considers that this party has adduced sufficient evidence, rule that the other party must establish the existence of a provision or principle of the insolvency law or general law of a Member State other than the State of the opening of insolvency proceedings within the meaning of Article 13 which is applicable to the act and on the basis of which that act may indeed be challenged?’

Β) Legal Context

Article 4(2)(m) and 13 of Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings

C) Consideration of the question referred

1. Article 13 of Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings must be interpreted as meaning that, after taking account of all the circumstances of the case, the article applies provided that the act at issue cannot be challenged on the basis of the law governing that act (lex causae).

2. For the purposes of the application of Article 13 of Regulation No 1346/2000 and in the event that the defendant in an action relating to the voidness, voidability or unenforceability of an act relies on a provision of the law governing that act (lex causae) under which that act can be challenged only in the circumstances provided for in that provision, it is for the defendant to plead that those circumstances do not exist and to bear the burden of proof in that regard.

3. Article 13 of Regulation No 1346/2000 must be interpreted as meaning that the expression ‘does not allow any means of challenging that act …’ applies, in addition to the insolvency rules of the law governing that act (lex causae), to the general provisions and principles of that law, taken as a whole.

4. Article 13 of Regulation No 1346/2000 must be interpreted as meaning that the defendant in an action relating to the voidness, voidability or unenforceability of an act must show that the law governing that act (lex causae), taken as a whole, does not allow for that act to be challenged. The national court before which such an action is brought may rule that it is for the applicant to establish the existence of a provision or principle of the lex causae on the basis of which that act can be challenged only where that court considers that the defendant has first proven, in accordance with the rules generally applicable under its national rules of procedure, that the act at issue cannot be challenged on the basis of the lex causae.

Angie-Eftihia Klogkiri

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