CeDe Group AB v KAN Sp. z o.o. in bankruptcy (C-198/18)

Contents

Judgment of the Court (Fourth Chamber)21 November 2019^note(Reference for a preliminary ruling — Regulation (EC) No 1346/2000 — Articles 4 and 6 — Insolvency proceedings — Applicable law — European order for payment procedure — Failure to pay a contractual claim before bankruptcy — Exception of set-off based on a contractual claim arising prior to bankruptcy)In Case C‑198/18,REQUEST for a preliminary ruling under Article 267 TFEU from the Högsta domstolen (Supreme Court, Sweden), made by decision of 12 March 2018, received at the Court on 20 March 2018, in the proceedingsCeDe Group ABvKAN sp. z o.o., in liquidation,THE COURT (Fourth Chamber),composed of M. Vilaras, President of the Chamber, S. Rodin, D. Šváby, K. Jürimäe (Rapporteur) and N. Piçarra, Judges,Advocate General: M. Bobek,Registrar: A. Calot Escobar,having regard to the written procedure,after considering the observations submitted on behalf of:– the Spanish Government, initially by M.A. Sampol Pucurull and subsequently by S. Centero Huerta, acting as Agents,– the European Commission, by M. Heller, E. Ljung Rasmussen, G. Tolstoy and K. Simonsson, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 30 April 2019,gives the following

Judgment

1This reference for a preliminary ruling concerns the interpretation of Articles 4 and 6 of Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings (OJ 2000 L 160, p. 1), as amended by Council Regulation (EC) No 788/2008 of 24 July 2008 (OJ 2008 L 213, p. 1) (‘Regulation No 1346/2000’).

2The reference has been made in proceedings between CeDe Group AB, a company established in Sweden, and KAN sp. z o.o. (‘KAN’), a Polish company in liquidation, concerning the refusal of CeDe Group to pay KAN the sum of 1532489 Swedish kronor (SEK) (approximately EUR 143951).

Legal context

Regulation No 1346/2000

3As set out in recital 6 of Regulation No 1346/2000:(6) In accordance with the principle of proportionality this regulation should be confined to provisions governing jurisdiction for opening insolvency proceedings and judgments which are delivered directly on the basis of the insolvency proceedings and are closely connected with such proceedings. In addition, this regulation should contain provisions regarding the recognition of those judgments and the applicable law which also satisfy that principle.’

4Article 1(1) of that regulation provided:‘This regulation shall apply to collective insolvency proceedings which entail the partial or total divestment of a debtor and the appointment of a liquidator.’

5Article 3(1) of that regulation provided as follows:‘The courts of the Member State within the territory of which the centre of a debtor’s main interests is situated shall have jurisdiction to open insolvency proceedings. In the case of a company or legal person, the place of the registered office shall be presumed to be the centre of its main interests in the absence of proof to the contrary.’

6Under Article 4 of that regulation, entitled ‘Applicable law’:1. Save as otherwise provided in this regulation, the law applicable to insolvency proceedings and their effects shall be that of the Member State within the territory of which such proceedings are opened, hereafter referred to as the “State of the opening of proceedings”.2.The law of the State of the opening of proceedings shall determine the conditions for the opening of those proceedings, their conduct and their closure. It shall determine in particular:…(d) the conditions under which set-offs may be invoked;(e) the effects of insolvency proceedings on current contracts to which the debtor is party;…(g) the claims which are to be lodged against the debtor’s estate and the treatment of claims arising after the opening of insolvency proceedings;…’

7Article 6 of Regulation No 1346/2000, entitled ‘Set-off’, provided, in paragraph 1:‘The opening of insolvency proceedings shall not affect the right of creditors to demand the set-off of their claims against the claims of the debtor, where such a set-off is permitted by the law applicable to the insolvent debtor’s claim.’

The Rome I Regulation

8Article 3(1) of Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I) (OJ 2008 L 177, p. 6; ‘the Rome I Regulation’) provides:‘A contract shall be governed by the law chosen by the parties. The choice shall be made expressly or clearly demonstrated by the terms of the contract or the circumstances of the case. By their choice the parties can select the law applicable to the whole or to part only of the contract.’

9Article 17 of that regulation provides:‘Where the right to set-off is not agreed by the parties, set-off shall be governed by the law applicable to the claim against which the right to set-off is asserted.’

The dispute in the main proceedings and the questions referred for a preliminary ruling

10On 9 June 2010, CeDe Group concluded a contract for the supply of goods with PPUB Janson sp.j., a company established in Poland. That contract contained a clause pursuant to which Swedish law applies as regards any question relating to the interpretation of the contract.

11In January 2011, a collective proceeding was opened in Poland against PPUB Janson. In July 2011, the liquidator appointed under that collective procedure applied to the Kronofogdemyndigheten (the public enforcement authority, Sweden) for a European order for payment against CeDe Group concerning a claim of SEK 1532489 (approximately EUR 143951), together with interest, corresponding to the payment for goods that PPUB Janson had delivered to CeDe Group under that contract.

12The liquidator of PPUB Janson applied to the Malmö tingsrätt (District Court, Malmö, Sweden), which was seised of that procedure, for an order that CeDe Group pay to it the amount of the debt in question, together with interest. CeDe Group opposed that application, arguing that it had a claim against PPUB Janson for a debt in an amount greater than that of the sum claimed from the group, amounting to more than SEK 3.9 million (approximately EUR 366497), corresponding to the compensation for deliveries not made and goods delivered defective. CeDe Group therefore claimed a set-off of the debts, to which the liquidator of the PPUB Janson objected, on the ground that it had rejected the claim alleged by CeDe Group in the collective procedure opened in Poland.

13Before the Malmö tingsrätt (District Court, Malmö), the question arose concerning the law applicable to CeDe Group’s claim for set-off.

14The liquidator of PPUB Janson argued that Polish law was applicable, in accordance with the wording of Article 4(1) of Regulation No 1346/2000. He claimed that account should also be taken of the fact that Article 4(2)(d) of that regulation provides that the law of the Member State of the opening of insolvency proceedings is to determine the conditions for the enforceability of compensation. The liquidator also argued that Article 6(1) of that regulation is applicable only where the law of the Member State in which the insolvency proceedings were opened does not accept the offsetting of claims in the context of such a procedure as a means of discharging the reciprocal debts. In its view, that is not the case, in the main proceedings, of Polish law.

15CeDe Group argued that Swedish law applied to the offsetting of the claims. The claim of the liquidator of PPUB Janson concerns a debt arising out of contractual relations governed by the contract of 9 June 2010, which contains a clause designating Swedish law as the law applicable to that contract. The mandatory application of this clause follows from the provisions of Article 3(1) of the Rome I Regulation. In any event, in the absence of an agreement between the contracting parties, Article 17 of that regulation provides that a set-off is governed by the law applicable to the obligation against which it is invoked, in this case Swedish law.

16In addition, CeDe Group argued that, under Article 6(1) of Regulation No 1346/2000, insolvency proceedings have no effect on the right of a creditor to claim a set-off of the claim if that is permissible under the law applicable to the debtor’s claim subject to the collective procedure. In the view of CeDe Group, Swedish law was applicable to the claim of the liquidator of PPUB Janson. It is therefore also applicable to the offsetting of the claims concerned.

17The Malmö tingsrätt (District Court, Malmö) found that, under the general rule laid down in Article 4(1) of Regulation No 1346/2000, Polish law was applicable to the dispute before it. It excluded the application of Article 6(1) of that regulation on the ground that Polish law did not limit or prohibit the offsetting of claims.

18CeDe Group appealed against that judgment to the Hovrätten över Skåne och Blekinge (Court of Appeal for Skåne and Blekinge, Sweden). During those proceedings, the liquidator of PPUB Janson assigned the claim at issue in the main proceedings to KAN, a Polish company which took the place of the liquidator of PPUB Janson in those proceedings.

19That court of appeal upheld the judgment delivered at first instance. It found that there was no need to depart from the principle that the law applicable is that of the Member State in which the insolvency proceedings were opened. In its view, the rejection by the liquidator of PPUB Janson of the request for set-off made by CeDe Group does not affect that finding.

20CeDe Group argued before the Högsta domstolen (Supreme Court, Sweden) that Swedish law is the law applicable to the request for offsetting of claims. For its part, KAN requests that the judgment delivered on appeal be upheld.

21During the proceedings before the Högsta domstolen (Supreme Court), a collective procedure was opened in respect of KAN. The administrator of KAN stated that the pool of creditors was not maintaining the request made by KAN. It is therefore now KAN in liquidation which is a party to the proceedings before that court.

22The referring court notes that the Court has ruled on several occasions on the scope of Regulation No 1346/2000 as regards the international jurisdiction of the courts of the Member States in matters of insolvency, in particular by examining the respective scope of that regulation and of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (OJ 2001 L 12, p. 1).

23To that end, the Court attached particular importance not to the procedural context of the action but to its legal basis.

24The referring court considers that the dispute in the main proceedings raises the question whether the action, formed by the body of creditors, for payment of a debt which arose before the opening of the insolvency proceedings, falls within the scope ratione materiae of Article 4 of Regulation No 1346/2000. For the purpose of interpreting that article, it asks, in essence, whether it is appropriate to transpose the reasoning adopted by the Court on the interpretation of Article 3 of that regulation relating to the attribution of international jurisdiction in matters of insolvency.

25In the event that Regulation No 1346/2000 is found to be applicable to an action such as that envisaged in the preceding paragraph, that court also raises the question of the relationship between Articles 4 and 6 of that regulation for the purposes of determining the law applicable to an application for set-off of claims such as that at issue in the main proceedings.

26In those circumstances, the Högsta domstolen (Supreme Court) decided to refer the following questions to the Court for a preliminary ruling:(1) Must Article 4 of Regulation No 1346/2000 be interpreted as meaning that it applies to an action which is brought before a Swedish court by the liquidator of a Polish company — which is the subject of insolvency proceedings in Poland — against a Swedish company for payment of goods delivered under an agreement into which the companies entered before that insolvency?(2) If the answer to the first question is in the affirmative, is it of any importance that, during the proceedings before the courts, the liquidator transfers the claim at issue to a company which enters the proceedings in the place of the liquidator?(3) If the answer to the second question is in the affirmative, is it of any importance if the company which has entered the proceedings thereafter becomes insolvent?(4) If the defendant in the proceedings before the courts in the situation set out in the first question claims that the liquidator’s claim for payment should be set off against a counterclaim which arises from the same agreement as the claim, is that set-off situation covered by Article 4(2)(d) [of Regulation No 1346/2000]?(5) Is the relationship between Article 4(2)(d) and Article 6(1) of Regulation No 1346/2000 to be interpreted as meaning that Article 6(1) applies only if it is not possible under the law of the State of the opening of proceedings to apply a set-off, or can Article 6(1) also apply to other situations, for example where there is only a certain difference between the level of possibility of set-off in the legal orders in question or where there are no differences at all but set-off is nonetheless refused in the State of the opening of proceedings?’

Consideration of the questions referred

The first question

27By its first question, the referring court asks, in essence, whether Article 4 of Regulation No 1346/2000 must be interpreted as meaning that it applies to an action brought by the liquidator of an insolvent company established in one Member State for the payment of goods delivered, pursuant to a contract concluded before the insolvency proceedings were opened in respect of that company, against the other contracting company, which is established in another Member State.

28Under Article 4(1) of Regulation No 1346/2000, save as otherwise provided in the regulation, the law applicable to insolvency proceedings and their effects is that of the Member State within the territory of which the insolvency proceedings are opened. Article 4(2) of that regulation, first, states that the law of the State of the opening of proceedings is to determine the conditions for the opening, procedure and closing of the insolvency proceedings and, second, contains a non-exhaustive list of the various matters in the proceedings which are governed by the law of State of the opening of proceedings (see, to that effect, judgment of 21 January 2010, MG Probud Gdynia, C‑444/07, EU:C:2010:24, paragraph 25). That list includes, in point (d) of that provision, the conditions under which set-offs may be invoked; in point (e), the effects of insolvency proceedings on current contracts to which the debtor is party; and in point (g), the claims which are to be lodged against the debtor’s estate and the treatment of claims arising after the opening of insolvency proceedings.

29Thus, in order to determine whether the law of the Member State of the opening of insolvency proceedings is applicable to an action for the payment of goods delivered under a contract concluded before the opening of the insolvency proceedings, where that action is brought by the liquidator of a bankrupt company established in a Member State against the other party to the contract, a company established in different Member State, it must be determined whether such an action is part of the insolvency proceedings or its effects, within the meaning of Article 4 of Regulation No 1346/2000.

30In that regard, it should be noted, as did the Advocate General in point 33 of his Opinion, that it follows from a combined reading of Articles 3 and 4 of Regulation No 1346/2000 that that legislation is intended, in principle, to reach a correspondence between courts which have international jurisdiction and the law applicable to insolvency proceedings. Other than in situations in respect of which that regulation expressly provides for provisions to the contrary, the law applicable, pursuant to Article 4 of that regulation, follows the international jurisdiction determined in accordance with Article 3 of that regulation.

31The Court has held, with regard to the scope of Article 3 of Regulation No 1346/2000, read in the light of recital 6 of that regulation, that only actions which derive directly from insolvency proceedings or which are closely connected with them fall within the scope of that regulation (see, to that effect, judgment of 6 February 2019, NK, C‑535/17, EU:C:2019:96, paragraphs 25 and 26 and the case-law cited). In that context, the decisive criterion adopted by the Court to identify the area within which an action falls is not the procedural context of which that action is part, but the legal basis thereof. According to that approach, it must be determined whether the right or the obligation which forms the basis of the action has its source in the ordinary rules of civil and commercial law or in derogating rules specific to insolvency proceedings (judgment of 6 February 2019, NK, C‑535/17, EU:C:2019:96, paragraphs 28 and the case-law cited).

32It follows therefrom that, when an action has its source in derogating rules specific to insolvency proceedings, it falls within the scope of Article 4 of Regulation No 1346/2000, save where that regulation expressly provides to the contrary (see, to that effect, judgment of 10 December 2015, Kornhaas, C‑594/14, EU:C:2015:806, paragraph 17).

33However, as the Advocate General has emphasised in point 34 of his Opinion, that provision has a broader scope than that of Article 3 of that regulation, in so far as it applies not only to insolvency proceedings but also to their effects. Thus, it cannot be inferred from the mere fact that an action does not derive from the derogating rules specific to insolvency proceedings that such an action does not fall within the scope of Article 4 of Regulation No 1346/2000.

34It remains to be ascertained whether the action in question is part of the effects of insolvency proceedings within the meaning of that article, ensuring at the same time that such an action is not the direct and inseparable consequence of such proceedings.

35In that regard, as the Advocate General noted in point 36 of his Opinion, the reference in Article 4(2)(d) and (e) of Regulation No 1346/2000 to the conditions for invoking set-offs and to the effects of insolvency on current contracts cannot mean that any claim relating to a contract where a party to that contract is subject to insolvency proceedings falls automatically within the concept of ‘insolvency proceedings and their effects’.

36In particular, the mere fact that a liquidator has brought such an action is not decisive for the purposes of assessing whether that liquidator is covered by the concept of ‘insolvency proceedings and their effects’. First, an action for payment of goods delivered in accordance with a contract may, in principle, be brought by the creditor himself, such that that action does not fall within the exclusive powers of the liquidator. Second, the bringing of such an action in no way depends on the opening of insolvency proceedings, in so far as such an action for payment may be brought independently of any insolvency proceedings. Accordingly, an action for payment of goods delivered in accordance with a contract, such as that at issue in the main proceedings, cannot be regarded as the direct and inseparable consequence of such proceedings (see, by analogy, judgment of 6 February 2019, NK, C‑535/17, EU:C:2019:96, paragraph 36).

37Consequently, it must be held that the concept of ‘insolvency proceedings and their effects’, within the meaning of Article 4(1) of Regulation No 1346/2000, does not cover an action for the payment of goods delivered under a contract concluded before the opening of insolvency proceedings, where that action is brought by the liquidator of an insolvent company established in one Member State against the other contracting company established in another Member State.

38That being the case, the interpretation set out in the preceding paragraph of this judgment does not in any way prejudge the law applicable to the application for set-off or the relevant rules for determining the law applicable to the action in the main proceedings.

39In the light of the foregoing considerations, the answer to the first question is that Article 4 of Regulation No 1346/2000 must be interpreted as not applying to an action brought by the liquidator of an insolvent company established in one Member State for the payment of goods delivered under a contract concluded before the insolvency proceedings were opened in respect of that company, against the other contracting company, which is established in another Member State.

The second to fifth questions

40It is apparent from the information provided by the referring court, summarised in paragraph 25 of this judgment, that the second to fifth questions were referred only if the first question were to be answered in the affirmative.

41Accordingly, in view of the answer given to the first question, there is no need to answer the second to fifth questions.

Costs

42Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

Operative part

On those grounds, the Court (Fourth Chamber) hereby rules: Article 4 of Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings, as amended by Council Regulation (EC) No 788/2008 of 24 July 2008, must be interpreted as not applying to an action brought by the liquidator of an insolvent company established in one Member State for the payment of goods delivered under a contract concluded before the insolvency proceedings were opened in respect of that company, against the other contracting company, which is established in another Member State.