Chapter 2 Scope of EIR Recast

• Jurisdiction: United States

2. Scope of EIR Recast

The EIR Recast is an EU instrument of private international law, governing (international) jurisdiction for opening insolvency proceedings and actions that directly derive from them. It also contains provisions on recognition and enforcement of judgments issued in such proceedings, and norms governing law applicable to insolvency matters (Recital 6 EIR Recast). Being an instrument of (mostly) procedural nature, it coexists with other European instruments, most notably the Regulation (EU) No. 1215/2012 of 12 December 2012 (Brussels I Recast), which handles jurisdiction and recognition and enforcement of judgments in civil and commercial matters. The Brussels I Recast has repealed the Regulation (EC) No. 44/2001 and applies from 10 January 2015. According to Article 1(2)b of Brussels I Recast, it does not apply to bankruptcy, proceedings relating to the winding-up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings. Such matters fall under the ambit of the EIR Recast, provided that conditions for its application are met. Therefore, EIR Recast presents a carve-out from the more general and extended scope of the Brussels I Recast. It occupies a specific niche, dealing exclusively with matters of insolvency (or insolvency-related) law.

The interpretation of the EIR Recast should as much as possible avoid regulatory loopholes between the two mentioned instruments (Recital 7 EIR Recast). The CJEU repeatedly held that they both must "be interpreted in such a way as to avoid any overlap between the rules of law that those instruments lay down and any legal vacuum." (para. 26 in Case C-649/13, Comité d'entreprise de Nortel Networks SA v. Cosme Rogeau liquidator, ECLI:EU:C:2015:384 (June 11, 2015)). At the same time, as confirmed by the CJEU with regard to the original EIR 2000, the scope of application of the EIR 2000 should not be broadly interpreted (para. 18 in Case C-641/16, Tunkers France and Tunkers Maschinenbau GmbH v. Expert France, ECLI:EU:C:2017:847 (Nov. 9, 2017)). Following this reasoning, the CJEU has consistently held that only actions that derive directly from insolvency proceedings and are closely connected with them are excluded from the scope of the Brussels I Recast. Consequently, only those actions fall within the scope of the EIR 2000 (now Recast) (para. 23 in Case C-157/13, Nickel & Goeldner Spedition GmbH v. "Kintra" UAB, ECLI:EU:C:2014:2145 (Sep. 4, 2014)). Conversely, the concept of "civil and commercial matters" underpinning the Brussels I Recast deserves broad interpretation.

For instance, in Case C-649/16, Peter Valach v. Waldviertler Sparkasse Bank AG, ECLI:EU:C:2017:986 (Dec. 20, 2017), the CJEU had to decide whether an action for liability in tort filed by the shareholders of the insolvent debtor against members of the creditors' committee on the basis of their conduct fell within the scope of the EIR 2000. The members of the creditors' committee were accused of voting against the proposed restructuring plan, allegedly in violation of their duty to act for the benefit of creditors, including shareholders as residual claimants. The court found that the action for liability at issue was the direct and inseparable consequence of the performance by the committee of creditors, a statutory body established when insolvency proceedings are opened, of the task specifically assigned to them by the provisions of national law governing such procedures. To ascertain whether the liability of the members of the committee of creditors may be engaged because of the rejection of the restructuring plan, it was necessary to analyze in particular the extent of that committee's obligations in the insolvency proceedings. This analysis clearly presented a direct and close link with the insolvency proceedings, and was therefore considered to be closely connected with the course of those proceedings. In such circumstances, the court was persuaded that the action in question did not fall within the broad scope of the Brussels I Recast.

Where the basic concepts and norms of the EIR 2000 have not been altered under the EIR Recast, it is generally accepted that unless clearly overruled, the judgments of the CJEU applying the former EIR 2000 should be followed when applying the EIR Recast. When interpreting the regulation, the court looks at the purpose of the respective provisions ("purposive...