Case law

CJEU Rules there is no Land Taboo in Insolvency Proceedings

CuriaOn 4 December 2019, the Court of Justice of the European Union held in UB v. VA, Tiger SCI and others (Case C‑493/18) that the location of assets is not a jurisdictional ground under the no longer in force Insolvency Regulation of 2000 (but the relevant provisions are the same in the Recast Insolvency Regulation).

More interestingly, the Court also ruled that the court having jurisdiction under the Insolvency Regulation cannot grant it to other courts in the EU.

An individual had petitioned an English court to open bankruptcy proceedings in his respect. However, a year before, the debtor (UB) had sold several French immovables to a company (Tiger SCI) incorporated and essentially owned by his sister (VA). The English trustee decided to challenge those sales. For that purpose, he sought and obtained authorisation from the English court to initiate proceedings in France.

Why in France and not in England, one may wonder? Maybe because there was some obstacle to seek avoidance of the transaction in England (see the thoughts of Geert van Calster here).

Whatever the reason, the trustee sued in Paris and won both at first instance and before the court of appeal, which declared the sales ineffective.

When the case reached the French Supreme Court (Cour de cassation), the debtor and his sister challenged the jurisdiction of French courts to rule on an insolvency action.

The CJEU agreed. There is no land taboo in European insolvency law. Contrary to the Brussels Ibis Regulation, jurisdiction is granted on the basis of the COMI of the debtor, and can, in principle, reach assets, of whichever nature, in other Member States. The Court held:

1. Article 3(1) of [the 2000 Insolvency Regulation] 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.

The trustee, then, put forward an innovative argument. His action in France had been authorized by an English court. This judgment was to be recognised in France without any formality.

Wouldn’t that mean that the English judgment would grant jurisdiction to the French court? The CJEU disagreed, on the formal ground that the provision in the Insolvency Regulation on the recognition of judgments is not meant to confer jurisdiction. The Court held:

2. Article 25(1) of [the 2000 Insolvency Regulation] 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.

Yet, in Gothaer (Case C-456/11), a case concerning the Brussels I Regulation, decided in 2012, the court accepted that judgments ruling on jurisdiction may be res judicata under EU law. It would have been useful if the Court had elaborated on what was different in the present case.

3 comments on “CJEU Rules there is no Land Taboo in Insolvency Proceedings

  1. Marco Farina

    May be the difference with Gothaer is that in that case a decision was handed down after ordinary proceedings, while in the case under examination the decision from the English court was not rendered with the participation of the other parties involved in the dispute.

  2. Dear Marco,

    That might surely be an important difference, although it is not impossible to consider that judgments could produce some effects with respect to third parties.

    Another reader has written to me directly to suggest that the subject matter of the recognition would have been different: in one case (Gothaer), the subject matter was the analysis of the foreign court on the enforceability of the jurisdiction clause while, in the other, the foreign court was (seemingly) granting directly jurisdiction to the forum.

    Finally, one could focus on whether issue estoppel should only apply to facts, on characterization, etc… and try to distinguish the cases.

    The only thing which seems clear is that it have would have been useful to know why the CJEU thought the English case did not produce this effect in this case.



  3. Marco Farina

    Dear Gilles,

    If I’m not wrong, the decision rendered by the English court was necessary only to grant the trustee with the power to bring an action.

    Accordingly, it could’ve not had the effect of deciding, in any manner, on the international jurisdiction for the action so authorised.

    It is true that in some exceptional cases a judgment can affect third parties who have significant connections with the issues decided and/or the parties to the main dispute. However, it seems impossible to me to believe that a possible Court’s decision on international jurisdiction over a certain dispute, rendered even before the dispute has been brought, can bind the main party to the dispute itself without the possibility for that party to be heard.

    The reality is, in my opinion, that a decision granting the trustee with the power to bring an action before a (national or foreign) the court is a mere decision regarding the course of the bankruptcy proceeding and it shall be recognised in another member State only to the extent it allows the trustee to exercise there his power.

    All the best,


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