Case law Developments in PIL

French Case on Irreconcilable Judgments under the Insolvency Regulation

This post was contributed by Thomas Mastrullo, who is an Associate Professor at the University of Luxembourg.


In a judgment of 3 March 2021, the French Court of Cassation allowed an appeal against the judgment of a court of appeal which had refused to declare the enforceability in France of a foreign decision rendered in insolvency proceedings by simply invoking a previous decision of the foreign court without analysing its content, nor finding that it was irreconcilable with the decision the enforcement of which was sought in France.

Decisions of the Court of Cassation on the enforcement of foreign decisions in insolvency proceedings are not frequent, which makes this decision interesting.

Background

In this case, the insolvency practitioner of insolvency proceedings opened in Germany had requested that a decision of the bankruptcy court of Ansbach – ordering the payment of a certain sum of money to the former manager of the debtor company – be declared enforceable in France. The application for enforceability was accepted by a declaration of the registrar, but rejected by the Court of Appeal. The insolvency practitioner appealed to the Court of Cassation. In particular, he criticised the Court of Appeal for refusing to declare the enforceability by simply referring – without any analysis – to an earlier decision of the Ansbsach District Court.

Irreconcilability of Decisions under the Brussels I Regulation

It is true that the enforcement of a decision can sometimes be excluded because of the existence of an earlier decision. But some conditions must be fulfilled.

For the enforcement of judgments, Regulation (EC) No 1346/2000 on insolvency proceedings refers to Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Regl. No 1346/2000, Art. 25. – Regulation No 1346/2000 actually refers to the Brussels Convention, the provisions of which are reproduced identically in Regulation (EC) No 44/2001). And Article 34(4) of Regulation (EC) No 44/2001 provides that a judgment shall not be recognised – and thus shall not be enforceable – only if “it is irreconcilable with an earlier judgment given in another Member State or in a third State involving the same cause of action and between the same parties, provided that the earlier judgment fulfils the conditions necessary for its recognition in the Member State addressed”. As a consequence, a national judge cannot refuse to recognise and enforce a judgment merely by noting the existence of an earlier judgment: such a refusal demands that the earlier judgment was given “between the same parties” in a dispute “involving the same cause of action” as the judgment for which recognition is sought, that it is able of being recognised in the Member State concerned and that the two judgments are irreconcilable.

Therefore, by merely referring to the judgment of the Ansbach District Court, the Court of Appeal “deprived its judgment of a legal basis”, i.e. did not examine fully whether the requirements of the applicable provision were fulfilled. As the Court of Cassation states, under Article 25 of Regulation (EC) No 1346/2000 and Article 34(4) of Regulation (EC) No 44/2001, the Court of Appeal could not simply refer to the earlier decision without “analysing” its content or “establishing its irreconcilability” with the decision the enforceability of which was sought in France.

Even if it seems self-evident, this reminder of the national judge’s role in the recognition and enforcement of decisions related to insolvency proceedings is welcome.

In any case, one can wonder if the existence of an earlier irreconcilable judgment from the same Member State as the judgment the recognition and enforceability of which is sought, as in the present case, is effectively able to prevent such recognition. Indeed, in the Salzgitter judgment of 26 September 2013, the Court of Justice ruled that Article 34 (4) of the Brussels I Regulation doesn’t cover irreconcilable judgments given by courts of the same Member State.

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