Case law

CJEU Rules on the Law Governing Action for Payment by Liquidator but Not Set-off

CuriaOn 21 November 2019, the Cour of Justice of the European Union ruled on the law governing an action for payment initiated by the liquidator of an insolvent company in CeDe Group AB v KAN Sp. z o.o. in bankruptcy (Case C‑198/18).

Insolvency proceedings had been opened against the plaintiff in Poland. The defendant was a Swedish company. The contract on the basis of which the liquidator was seeking payment was concluded before the opening of the insolvency and was governed by Swedish law. The defendant had claimed set-off in the Polish proceedings where its claim was rejected.

The liquidator sought a European order for payment in Sweden against the Swedish company. The latter claimed set-off again, and argued that Polish lw applied. The liquidator argued that, under Article 4 of the (old) Insolvency Regulation, set-off was governed by the law of the insolvency, i.e. Polish law.

Regarding whether the Insolvency Regulation applied in the context of the Swedish proceedings the Court ruled as follows:

Article 4 of [the Insolvency Regulation] must be interpreted as not applying to an action brought by the liquidator of an insolvent company established in one Member State for the payment of goods delivered under a contract concluded before the insolvency proceedings were opened in respect of that company, against the other contracting company, which is established in another Member State.

The Court, however, and most unfortunately, did not address expressly the issue of the law governing the claim for set-off before the Swedish courts, noting that its interpretation on the above issue did not “prejudge the law applicable to the application for set-off or the relevant rules for determining the law applicable to the action in the main proceedings”