Comite d’entreprise de Nortel Networks SA and others v Rogeau
The ECJ has ruled that courts of EU member states which have opened main and secondary proceedings have concurrent jurisdiction to determine which of the debtor's assets fall within the secondary proceedings, with the first decision being binding on both member states' courts.
In January 2009 Nortel Networks SA ("NNSA"), a French registered company, was placed into Administration in England thereby opening main insolvency proceedings. In May 2009, the Joint Administrators of NNSA made an application in France which had the effect of opening secondary proceedings in France.
In July 2009, industrial action at NNSA was brought to an end by a memorandum of agreement settling the action. The agreement provided for the making of two severance payments, one was paid immediately, with the other ("Deferred Payment") payable after operations had ceased at NNSA. The Deferred Payment was to be made from any available funds arising from the sale of NNSA assets net of the payment of costs from continuing NNSA's activities during the main and secondary proceedings and the Administration expenses.
Ultimately the Nortel group's assets were sold on a global basis and the sale proceeds placed in an escrow account.
In November 2010 the French Liquidator sought to pay the Deferred Payment from the escrow account but was unable to do so because a cash flow forecast for NNSA showed a deficit of €6 million mainly due to operating costs and Administration expenses.
The works council of NNSA, on behalf of NNSA's employees, commenced proceedings in France and argued the funds held in the escrow account were an asset within the secondary proceedings and accordingly sought payment of the Deferred Payment.
The French court referred the matter to the ECJ, asking for a preliminary ruling on whether they had jurisdiction to rule on which assets fell within the secondary proceedings, whether this was sole or concurrent with the English jurisdiction, and whether the appropriate law was that of the main proceedings or secondary proceedings.
The ECJ ruled that the French court had jurisdiction to determine which assets fell within the secondary proceedings, pursuant to Article 3(2) of the Insolvency Regulation, which coincided with the fundamental objective of secondary proceedings; to protect local interests.
It was also decided that the courts of the main and secondary proceedings would have concurrent jurisdiction to determine which of the debtor's assets fall within the secondary proceedings. They acknowledged this could give rise to concurrent, irreconcilable judgments, and stated that Article 25 of the Insolvency Regulation would require a court in which a related action is brought to recognise an earlier judgment given by a court with jurisdiction under Article 3 of the Insolvency Regulation.
In relation to the question of which law was applicable to determine which assets were within the scope of the secondary proceedings, the ECJ ruled that the debtor's assets must be determined in accordance with Article 2(g) of the Insolvency Regulation.
This judgment could cause some concern as it could influence decisions by Insolvency Practitioners to be the first to court in order to gain control over assets by keeping them in their jurisdiction. However, ultimately both courts will be applying the same legal principles and should therefore reach the same conclusion.
SwissMarine Corp Ltd v OW Supply and Trading A/S (In Bankruptcy)  EWHC 1571
The English High Court has provided useful guidance on the application of foreign insolvency law where an IDSA Agreement between two parties contained an English jurisdiction clause.
Swiss Marine Corporation Limited ("Swiss Marine") sought an anti-suit injunction restraining a Danish action commenced by O.W. Supply & Trading A/S ("the Danish company"). The underlying dispute was in relation to an ISDA 2002 Master Agreement covering derivatives contracts ("the Agreement"). The Agreement, which contained standard terms, provided that the Agreement itself and any transactions under it were to be governed by English law. It also contained a jurisdiction clause stating that for any action or proceedings arising out of or in connection with the Agreement, the jurisdiction of the English courts was to be non-exclusive provided the proceedings did not involve a "Convention Court" (defined in the Agreement as a court bound to apply article 17 of either the Brussels Convention or the 1988 Lugano Convention). Otherwise, the Agreement provided that the English Courts were to have exclusive jurisdiction.
After the Danish company filed for bankruptcy in Denmark, Swiss Marine brought proceedings in England claiming that it was entitled to rescind the Agreement due to a misrepresentation as to the Danish company's solvency in the Agreement. The Danish company began an action in Denmark and sought payment of the sums allegedly due under the Agreement on grounds that Swiss Marine was required to continue to make payments under Danish law, irrespective of the Danish company's insolvency. Subsequently, Swiss Marine sought an anti-suit injunction to prevent the Danish company from proceeding with the Danish action on grounds that 1) the English Court had exclusive jurisdiction over the subject-matter of the Danish action, and 2) the action was vexatious or oppressive.
The anti-suit injunction was refused by the English High Court. The Judge took a formal approach to interpretation of the jurisdiction clause and, following AWB (Geneva) SA v North America SS Ltd  EWCA 739, held the Danish action did not concern the parties' contractual obligations, but rather the application of insolvency law. Therefore, the action was outside the scope of the jurisdiction clause.
In any event, even if the jurisdiction agreement did apply to the Danish action, this was non-exclusive as the proceedings did not involve a Convention Court as defined within the Agreement and the parties were free to bring proceedings elsewhere.
In relation to Swiss Marine's second argument, the Judge found the Danish action was neither oppressive or vexatious. In particular the Danish action does not seek to decide the proper construction of the Agreement or Swiss Marine's rights and obligations under it. The appropriate forum to determine matters was the Danish Court.
This decision serves as a useful reminder that, in the event of insolvency, despite the contractual position between two parties in a standard form agreement such as an ISDA agreement, parties may still be permitted to rely on their own national insolvency laws. The extraneous circumstances of the parties will not affect the Court's interpretation of the wording of such agreements.
Abu Dhabi Global Market
Abu Dhabi's financial free zone, the Abu Dhabi Global Market ("ADGM"), has published its first set of binding commercial regulations relating to non-financial services and are now accepting licensing applications from existing entities within ADGM (other than financial service providers). The regulations substantially reproduce the English Companies Act 2006. ADGM has also published draft financial services legislation which includes the Financial Services and Markets Regulations and accompanying rules in addition to the Limited Liability Partnership Regulations for open market consultation from 29 June to 11 August 2015.
Italy amends Bankruptcy Act
The Italian Cabinet has recently approved Law Decree No. 83 which amends Royal Decree No. 267 16 March 1942 (the Bankruptcy Act), the civil code and the code of civil procedure, and certain tax provisions. The amendments aim to facilitate debt restructurings, support distressed companies in their turnaround attempts, and facilitate quicker Liquidations in Bankruptcy proceedings.
Final text of EC Insolvency Regulation published in the Official Journal
The EC Insolvency Regulation (EU) 2015/848 (OJ reference L 141/19) was published in the Official Journal on 5 June 2015. Amongst other things, the changes to the Regulation will extend the application of the Regulation to insolvency procedures including CVAs, widen the list of secondary proceedings and further clarify the meaning of "Centre of Main Interests". Whilst the majority of the provisions will not apply until 26 June 2017, the profession can now begin to prepare for the amendments which are no longer subject to change.