The newly enacted German rules on group insolvencies

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This post has been written by Nicolò Nisi, Research Assistant at Martin Luther University Halle-Wittenberg

On 10 March 2017, the German Bundestag finally voted the bill to facilitate the handling of domestic group insolvencies (Gesetzes zur Erleichterung der Bewältigung von Konzerninsolvenzen), which was initially presented in early 2013.

It is a much-awaited development, which follows the introduction in the new EU Insolvency Regulation (Regulation (EU) 2015/848) of specific provisions addressing the insolvency of EU groups of companies, i.e., groups where the parent company and the subsidiaries have their centre of main interests in at least two Member States.

Under current German law, each legal entity is subject to its own insolvency proceeding and the decision to open the proceedings is determined separately and independently for each entity (‘one company, one insolvency, one proceeding’). It means that different insolvency courts open separate proceedings for each insolvent group member, with the appointment – in many cases – of several insolvency practitioners. This approach has its benefits in terms of legal certainty, but it overlooks the wider picture of the group. It is, in fact, not suitable for the group restructuring or the sale of the group business as a going concern.

Although the principle that separate proceedings are to be opened in respect of different group members remains unchanged, the new provisions introduce four main innovations to the German Insolvency Code (Insolvenzordnung).

To begin with, they establish the possibility for a group company – not necessarily the (ultimate) parent – to apply for the opening of insolvency proceedings over the other insolvent group entities (so-called procedural consolidation), provided that such concentration of jurisdiction is justified by the common interests of the group’s creditors and the requesting company is not manifestly of minor importance for the group as a whole (§ 3a).

A ‘group venue’ is then established for all the group companies. In the case of more applications, a priority rule applies or, when not possible, the application made by the company with the highest number of employees in the previous financial year prevails. If a request to open insolvency proceeding against a group member is submitted afterward to a different court, the latter may transfer the proceeding to the group court (§ 3d).

Secondly, when insolvency proceedings in respect of various group members are opened in different courts, it is possible to appoint the same person as insolvency practitioner for all group companies concerned, insofar it is in the creditors’ interests and possible conflicts of interest may be covered by the appointment of a special practitioner (§ 56b). This should avoid the occurrence of frictions, inefficiencies and information asymmetries, which could endanger an optimal result.

Thirdly, the insolvency practitioners appointed in the proceedings opened in relation to different members of the same group are obliged to cooperate and share all relevant information, insofar as the interests of the creditors of the respective group company would not be prejudiced (§ 269a). Similar duties are also provided concerning insolvency courts (§ 269b) and creditors’ committees (§ 269c). Under the last provision, however, cooperation shall only take place by request of one of the creditors’ committees and through the appointment of a group creditors’ committee, which should assist the insolvency practitioners and the creditors’ committee within the individual proceedings.

Finally, each group company in whose respect an insolvency proceeding has been requested or already opened – alternatively the (preliminary) creditors’ committee of a group company – may request before the court of the group venue the opening of a ‘coordination proceeding’, which should further facilitate the coordinated liquidation or restructuring of insolvent groups (§ 269d). The coordination court shall then appoint an independent coordinator (§ 269e), who oversees the execution of the proceeding in the interest of creditors, in particular by submitting a coordination plan (§ 269f).

Such plan should describe in detail all the relevant measures to be implemented within the individual insolvency proceedings, including the proposals concerning (i) the restoration of economic performances of the group members; (ii) the settlement of intra-group disputes; and (iii) the contractual arrangements among insolvency practitioners (§ 269h).

It is worth stressing that the group coordination proceeding does not have a binding effect on the individual proceedings, in that the insolvency practitioners may decide not to follow the recommendations of the coordinator, only subject to the duty to explain to the creditors the reasons for doing so (‘comply or explain’) (§ 269i). However, if the creditors are not persuaded and vote in favour of the arrangements contained in the group plan, but the practitioner does not adapt accordingly the insolvency plan at the level of individual proceeding, he may risk to be held liable for damages.

Except for the first point on procedural consolidation, which is positively considered by the prevailing literature in the case of an integrated group as a tool to simplify the going-concern sale of the business or the global group-wide restructuring, the new German rules resemble closely the ones recently adopted in the Recast Insolvency Regulation. The latter, in fact, were proposed by the German delegations within the European Parliament and the Council. Also at the European level, a group coordination proceeding has been introduced in order to facilitate the group restructuring, even though the participation of various practitioners is not binding and rests on a voluntary basis (see Articles 61 et seq.).

This solution has been the object of different evaluations, mostly skeptical. Indeed, it seems that the introduction of a coordination proceeding will not make a significant difference in the practice of group insolvencies. Even overlooking the problems arising from non-compliance with the coordinator’s recommendations, one should pay attention to limiting the costs (including the coordinator’s remuneration under § 269g) and the duration of the proceeding, in order to preserve its efficiency and to ensure its success in the interest of creditors, thus avoiding it may result in additional complexity.

Save the date: 17 e 18 marzo 2017, a Torino, il secondo tirocinio formativo per avvocati sul regolamento Bruxelles I bis

Corsi, convegni, eventi formativi

Si terrà a Torino, il 17 e il 18 marzo 2017, il secondo tirocinio formativo dedicato al regolamento n. 1215/2012 concernente la competenza giurisdizionale, il riconoscimento e l’esecuzione delle decisioni in materia civile e commerciale (Bruxelles I bis), il quarto evento organizzato nella cornice del progetto European Civil Procedure for Lawyers: Promoting Training to Improve the Effectiveness of Transnational Justicecofinanziato dalla Commissione europea (si veda questo post).

Si tratta, come i precedenti (organizzati a Lucca e a Torino, per cui vedi qui, qui e qui), di un un tirocinio formativo a partecipazione attiva con presentazione, discussione e risoluzione di casi concreti rientranti nell’ambito di applicazione del regolamento Bruxelles I bis. La prima giornata sarà dedicata ai criteri di giurisdizione e agli accordi di attribuzione della competenza giurisdizionale, mentre nel secondo giorno si parlerà di riconoscimento ed esecuzione delle decisioni. I lavori saranno presieduti da Elena D’Alessandro (Univ. Torino), Silvana Dalla Bontà (Univ. Trento), Paolo Lombardi (Foro di Torino), Ester di Napoli (Foro di Firenze), Violetta Zancan e Carlo Negro (entrambi Foro di Torino).

La partecipazione al seminario è gratuita, prevede la distribuzione di materiali didattici e l’attribuzione di 4 crediti formativi per gli avvocati. L’evento è aperto fino ad un massimo di 30 partecipanti.

Per maggiori informazioni scrivere a: info@europeancivilprocedureforlawyers.eu. La locandina dell’evento è disponibile qui.

The second meeting of the Special Commission charged with preparing the future Hague Convention on judgments

Norme e lavori preparatori

The Special Commission set up by the Council on General Affairs and Policy of the Hague Conference on Private International Law to prepare a preliminary draft convention on the recognition of judgments in civil and commercial matters (the Judgments Project) met for the second time between 16 and 24 February 2017.

Building on the draft text elaborated in 2016, the Special Commission completed a new draft (the February 2017 draft Convention), which should form the basis for a new round of discussions in November 2017.

Recognition of judgments and procedural guarantees / Efficacia delle decisioni e garanzie processuali

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hazelhorstMonique Hazelhorst, Free Movement of Civil Judgments in the European Union and the Right to a Fair Trial, Springer, 2017, ISBN 9789462651616, pp. 448, EUR 155,99

This book examines the attainment of complete free movement of civil judgments across EU member states from the perspective of its conformity with the fundamental right to a fair trial. In the integrated legal order of the European Union, it is essential that litigants can rely on a judgment no matter where in the EU it was delivered. Effective mechanisms for cross-border recognition and the enforcement of judgments provide both debtors and creditors with the security that their rights, including their right to a fair trial, will be protected. In recent years the attainment of complete free movement of civil judgments, through simplification or abolition of these mechanisms, has become a priority for the European legislator.

The parent-child relationship between two children born from surrogacy and the two men indicated as their fathers in birth certificates / Il rapporto di filiazione tra due minori nati da maternità surrogata e i due uomini indicati come padri nei certificati di nascita

Giurisprudenza nazionale

By an order of 23 February 2017, the Court of Appeal of Trento recognised the parent-child relationship of two twins born from foreign surrogacy with a same-sex couple.

One of the two men who formed the couple was the biological father of the twins, but a foreign judgment (the country of origin of which does not appear on the available copy of the order) had subsequently changed the birth certificates, indicating both men as the fathers of the children.

The couple had first tried to register the birth certificates in Italy, but their request had been denied by the civil registrar on the ground that it was at odds with the Italian public policy.

Seised of the recognition of the foreign judgment, the Court of Trento relied on a recent judgment of the Italian Supreme Court (judgment No 19599/2016, on the recognition of a parent-child relationship between a child born through medically assisted procreation and the two women indicated as the child’s mothers in a birth certificate issued in Spain), to assert that a child’s right to the continuity of the status lawfully acquired abroad is grounded, inter alia, on Article 33 of the Italian Statute on Private International Law (No 218 of 1995), regarding filiation.

This right, the Court added, is also implicitly enshrined in Article 8(1) of the UN Convention on the rights of the child, pursuant to which States Parties have undertaken ‘to respect the right of the child to preserve his or her identity, including nationality, name and family relations as recognized by law without unlawful interference’.

The Court further stated that despite surrogacy is prohibited in Italy under Law No 40 of 2004 on medical assisted procreation, that prohibition is not enough to deny the recognition of such foreign measures, issued in accordance with the law applicable in the country of origin, as recognise a parent-child relationship between the non-biological parent and the children born from surrogacy in the framework of a parental project.

Actually, according to the Court, ‘the consequences of the violation of the rules set forth in Law No 40 of 2014 committed by adults should not fall back on the new born’.

Con ordinanza depositata il 23 febbraio 2017, la Corte d’appello di Trento ha riconosciuto lo status di figlio a due gemelli nati da un contratto di maternità surrogata all’estero stipulato da una coppia di persone dello stesso sesso.

Si evince dalla decisione che uno dei due uomini era il genitore biologico dei gemelli e che un provvedimento straniero (gli omissis che compaiono nel testo attualmente disponibile dell’ordinanza impediscono di identificare lo Stato d’origine) aveva successivamente modificato gli atti di nascita dei minori in modo che entrambi gli uomini risultassero padri dei gemelli.

La coppia aveva dapprima richiesto la trascrizione dei certificati di nascita nei registri dello stato civile, ma l’istanza era stata respinta in ragione della sua contrarietà all’ordine pubblico italiano. Chiamata a pronunciarsi sull’efficacia del provvedimento straniero, la Corte trentina ha fatto leva sui rilievi svolti dalla Cassazione nella sentenza n. 19599/2016 relativa al riconoscimento del rapporto di filiazione tra un minore e le due donne indicate come madri nel relativo atto di nascita, formato in Spagna. Essa ha così rilevato che “il diritto alla continuità [dello status di figlio legittimamente acquisito all’estero] è conseguenza diretta del favor filiationis scolpito [nell’art.] 33 commi 1 e 2 della legge n. 218 [del 1995, di riforma del sistema italiano di diritto internazionale privato] ed [è] implicitamente riconosciuto nell’art. 8 par. 1 della convenzione di New York [sui diritti del fanciullo]”, in virtù del quale gli Stati contraenti si sono impegnati, fra l’altro, a rispettare l’identità, dei minori, compresa la loro nazionalità, il nome e le relazioni familiari, così come riconosciute dalla legge, senza ingerenze illegittime.

La Corte ha poi affermato che il divieto di ricorrere alla maternità surrogata, sancito dalla legge n. 40 del 2004, sulla procreazione medicalmente assistita, non basta a “negare effetti nel nostro ordinamento al provvedimento [straniero] che, in applicazione della legge [del paese d’origine] ha riconosciuto un rapporto di filiazione tra il [genitore non biologico] ed i minori nati facendo ricorso alla maternità surrogata e nell’ambito di un progetto genitoriale”.

Secondo la Corte, infatti, “le conseguenze della violazione delle prescrizioni e dei divieti posti dalla legge n. 40 del 2014 imputabili agli adulti … non possono ricadere su chi è nato”.

The European certificate of succession / Il certificato successorio europeo

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cop Quaderni Blu:cop. impresaIlaria Riva, Il certificato successorio europeo. Tutele e vicende acquisitive, Edizioni Scientifiche Italiane, 2017, ISBN 9788849532630, pp. 228, EUR 28

Il lavoro propone in primis un’analisi dei contenuti più rilevanti per lo studioso del diritto privato del recente Regolamento UE n. 650/2012 sulle successioni internazionali, particolarmente significativo per le scelte in materia di legittima e di patti successori. In un’ottica più generale, emerge come il Regolamento segni un momento di svolta per il diritto delle successioni, ponendosi quale primo passo verso una possibile armonizzazione di una branca del diritto notoriamente refrattaria all’uniformazione e quale chiaro segnale dell’urgenza di una nuova attenzione a questa materia: una nuova attenzione rivestita da una rinnovata sensibilità alla prospettiva europea e internazionale. Lo studio si concentra poi sul tema del certificato successorio europeo, introdotto in Italia e negli altri Stati aderenti al Regolamento con l’intento di fornire ai soggetti coinvolti a vario titolo in successioni per causa di morte aventi collegamenti con diversi Stati membri una sorta di «documento di legittimazione» proveniente da una pubblica autorità, utile a far valere ovunque la propria qualità e i propri poteri. I rilevanti effetti di diritto sostanziale riconosciuti al certificato, in un’ottica di tutela dell’affidamento dei terzi e di sicurezza della circolazione dei beni di provenienza ereditaria, conducono l’indagine verso il tema delle vicende circolatorie dei diritti, e precisamente all’interno della multiforme categoria degli acquisti a non domino.

South Asian States’ Practice in Private international law / Il diritto internazionale privato degli Stati dell’Asia meridionale

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PIL South Asian States' PracticePrivate International Law – South Asian States’ Practice, edited by / a cura di S. R. Garimella, J. Stellina, Springer, 2017, ISBN 9789811034572, 442 pp., EUR 207,99.

This book shows how, with the increasing interaction between jurisdictions spearheaded by globalization, it is gradually becoming impossible to confine transactions to a single jurisdiction. Presented in the form of a compendium of essays by eminent academics and practitioners in the field, it provides a detailed overview of private, international law practice in South Asian nations, addressing contemporary discourse within this knowledge domain. Conflict of laws/private international law arises from the universal acknowledgment that it is difficult to govern human transactions solely by the local law. The research presented addresses the three major threads of private international law – jurisdiction, choice of law and enforcement – within each of the South Asian countries in the areas of family law and commercial law. The research in family law domain includes traditional areas such as marriage, divorce and maintenance, as well as some of the contemporary concerns in this region – inter-country child retrieval, surrogacy, and the country statement on accession to the Hague Conventions related to this domain. In commercial law the research explores the concerns raised with regard to choice of law issues in transnational contracts, and also enforcement of foreign judgment/arbitral awards in the nations of this region.

The State control on international arbitral awards / Il controllo statale delle sentenze arbitrali internazionali

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le-controle-etatique-des-sentences-arbitrales-internationalesLe contrôle étatique des sentences arbitrales internationales, Jérémy Jourdan-Marques, L.G.D.J., 2017, ISBN 978-2-275-05552-7, 576 pp. Eur 56.

Par un étonnant paradoxe, le contrôle étatique des sentences arbitrales internationales conduit à réintroduire la justice étatique là où les parties avaient voulu l’exclure. Mais ce paradoxe pourrait n’être qu’apparent. Une approche fondée sur la distinction entre les intérêts publics et les intérêts privés ouvre de nouvelles perspectives. L’examen réalisé par le juge étatique l’invite à s’assurer, d’une part, du respect par les arbitres des intérêts privés des parties et, d’autre part, à contrôler la compatibilité de la sentence avec ses intérêts publics. Aussi paraît-il concevable que l’intérêt en cause puisse modifier directement la nature du contrôle exercé. Parallèlement, le juge compétent est tantôt indirectement désigné par les parties, tantôt déterminé par le lieu d’exécution de la sentence. Par conséquent, il est légitime d’assigner aux juges de l’annulation et de l’exequatur une mission distincte, mais complémentaire. Le juge de l’annulation examinerait les intérêts privés et le juge de l’exequatur garantirait la conformité de la sentence aux intérêts publics. En définitive, la distinction des intérêts privés et des intérêts publics pourrait devenir un instrument de redéfinition du contrôle étatique des sentences arbitrales internationales. À la fois plus respectueux de la volonté des parties, plus protecteur des intérêts étatiques et offrant une solution au désordre actuel du contrôle des sentences arbitrales, ce nouveau paradigme concourrait à l’efficacité de l’arbitrage.

The (non) applicability of the EU harmonised rules on commercial agency to non-EU agents

Giurisprudenza dell’Unione europea

The Court of Justice rendered on 16 February 2017 its judgment in Agro Foreign Trade & Agency Ltd v Petersime NV (Case C‑507/15), a case involving a commercial agency contract concluded between a Belgian principal and a Turkish agent. The contract had been submitted by the parties to Belgian law and featured a choice-of-forum clause conferring jurisdiction to the courts of Ghent, in Belgium.

The issue submitted to the Court concerned the interpretation of Directive 86/653 on the coordination of the laws of the Member States relating to self-employed commercial agents and of the 1963 Agreement establishing an association between the EU and Turkey, together with the Additional Protocol thereto.

Specifically, the Court was asked to determine whether the above texts preclude national legislation transposing the directive into the law of a Member State (Belgium, in the case at issue), which excludes from its scope of application a commercial agency contract in the context of which the agent is established in Turkey, where it carries out activities under that contract, and the principal is established in that Member State. The exclusion was such that, in the circumstances, the agent could not rely on rights which the directive guarantees to commercial agents after the termination of the contract.

The Court held that the Directive and the Association Agreement do not preclude such national legislation.

In its reasoning, the Court began by focusing on the scope of application of the Directive. Having noted that the situation of a contract between a EU principal and a non-EU agent is not expressly referred to in the Directive, the Court observed, relying on the second and third recitals of the Directive, that the harmonising measures provided thereunder seek to protect commercial agents in their relations with their principals, to eliminate restrictions on the carrying-on of the activities of commercial agents, to make the conditions of competition within the Community uniform, to promote the security of commercial transactions, and to facilitate trade in goods between Member States by harmonising their legal systems within the area of commercial representation.

It added that the purpose of the regime established in Articles 17 to 19 of the Directive is to protect freedom of establishment and the operation of undistorted competition in the internal market.

Accordingly, where the commercial agent carries out its activities outside the EU, the fact that the principal is established in a Member State does not present a sufficiently close link with the EU for the purposes of the application of the Directive.

The Court then moved on to determine whether the application of the Directive to commercial agents established in Turkey can follow from the Association Agreement.

The Court acknowledged that, pursuant to the Agreement, the provisions of the Treaties on the free movement of workers and the freedom to provide services must be extended, so far as possible, to Turkish nationals to eliminate restrictions on the freedom to provide services between the contracting parties.

It noted, however, that the interpretation given to the provisions of EU law concerning the internal market cannot be automatically applied by analogy to the interpretation of an agreement concluded by the EU with a non-Member State, and that the Association Agreement, which is intended essentially to promote the economic development of Turkey, does not establish any general principle of freedom of movement of persons between Turkey and the European Union. Its purpose is rather to guarantee the enjoyment of certain rights only within the territory of the host Member State.

By contrast, the Court stressed that, in the context of EU law, the protection of the freedom of establishment and the freedom to provide services, by means of the regime provided for by Directive 86/653 with respect to commercial agents, reflects the objective of establishing an internal market, conceived as an area without internal borders, by removing all obstacles to the establishment of such a market.

The Court concluded that the differences between the Treaties and the Association Agreement preclude the system of protection laid down by the Directive from being held to extend to commercial agents established in Turkey, in the context of that agreement.

Jean-Sylvestre Bergé (University of Lyon) has published an interesting analysis of the judgment in his blog Droit & Pluriel.   

The Grand Chamber of the ECtHR in the case of Paradiso and Campanelli v. Italy / La Grande Camera della Corte EDU nel caso Paradiso e Campanelli c. Italia

Giurisprudenza della Corte europea dei diritti dell’uomo

On 24 January 2017, the Grand Chamber of the ECtHR rendered its judgment in the case of Paradiso and Campanelli v. Italy. The case involves a child born in Russia following a gestational surrogacy contract entered into by an Italian couple with a Russian woman. The couple complained that the measures taken by the Italian authorities in respect of the child, which resulted in the latter’s permanent removal, had infringed their right to respect for private and family life, guaranteed by Article 8 of the Convention.

The Grand Chamber held that Italy did not violate Article 8 of the ECHR. Having regard to the absence of any biological tie between the child and the intended parents, the short duration of the relationship with the child and the uncertainty of the ties between them from a legal perspective, and in spite of the existence of a parental project and the quality of the emotional bonds, the Court considered that the conditions for the existence of family life had not been met. The Court accepted, however, that the facts of the case fell within the scope of the applicants’ private life.

In the Court’s opinion, the Italian authorities, having concluded that the child would not suffer grave or irreparable harm as a result of the separation from the Italian couple, struck a fair balance between the different interests at stake, while remaining within the State’s margin of appreciation. 

Il 24 gennaio 2017, la Grande Camera della Corte europea dei diritti dell’uomo si è pronunciata nel caso Paradiso e Campanelli c. Italia. Il caso riguarda un minore nato in Russia a seguito di un contratto di maternità surrogata concluso da una coppia di italiani con una donna russa. La coppia si lamentava del fatto che le misure assunte dalle autorità italiane, che avevano comportato l’allontanamento del minore, integravano una violazione del diritto alla vita privata e familiare garantito dall’art. 8 della Convenzione europea dei diritti dell’uomo.

La Grande Camera ha concluso che non vi è stata alcuna violazione dell’art. 8 da parte delle autorità italiane. Considerata la mancanza di un legame biologico tra il bambino ed i genitori committenti, la breve durata del rapporto con il minore e l’incertezza dei legami giuridici, e nonostante l’esistenza di un progetto genitoriale nonché la qualità dei legami affettivi, la Corte ha ritenuto che le condizioni per l’esistenza della vita familiare non fossero soddisfatte. La Corte ha riconosciuto, tuttavia, che la fattispecie interessasse la vita privata dei ricorrenti.

Per la Corte, le autorità italiane, nel considerare che il minore non avrebbe sofferto un pregiudizio grave o irreparabile dalla separazione dalla coppia, hanno effettuato un giusto bilanciamento tra tutti gli interessi in gioco, nel rispetto del margine di apprezzamento lasciato allo Stato.

A series of seminars in Messina / Un ciclo di seminari a Messina

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The University of Messina and ILSA, the International Law Students Association, organise a series of seminars on current problems of international law. Two seminars will be devoted to private international law issues. They are scheduled to take place on 26 April 2017 (Marcella Distefano will address surrogate motherhood) and on 11 May 2017 (Livio Scaffidi will speak of registered partnerships). See here for more information.

L’Università di Messina organizza assieme a ILSA, la International Law Students Association, un ciclo di seminari dedicati a questioni attuali del diritto internazionale. Due seminari riguardano tematiche internazionalprivatistiche e sono programmati rispettivamente per il 26 aprile 2017 (Marcella Distefano parlerà di maternità surrogata) e per l’11 maggio 2017 (Livio Scaffidi si occuperà di unioni civili). Maggiori informazioni a questo indirizzo.