Discussion on Chapter VII Incorporation of the UNCITRAL

Discussion on Chapter VII (Incorporation of the UNCITRAL Model Law) Moderator: Daniel Fritz, HERMANN RWS, Frankfurt am Main Prof. Bob Wessels, University of Leiden, Leiden Law School Dr. Nicolas Croquet, Mc. Kenna Long & Aldridge, Brussels

Incorporation in EU Insolvency Regulation of the UNCITRAL Model Law? Prof. Bob Wessels University of Leiden Law School

Themes of Today • • • Introduction Present state of enactment – MSs: Model Law enactors – MSs: Other recent changes Interim conclusion Short test of selected general provisions – A “non-EU proceeding” – Excluded proceedings – Existing international treaties and agreements – Competent court – Interpretation Provisional conclusions

http: //ec. europa. eu/civiljustice/glossary_en. htm#recognition “Judgments basically have effect only in the State where they are given. Recognition in another State is possible only if the law of the other State so allows or if an international convention or a Community instrument provides for it. ” Under the EU Ins. Reg recognition is “automatic” (Art. 16) and the opening judgment “shall, with no further formalities, produce the same effects in any other Member State as under the law of the State of the opening of proceedings” (unless Ins. Reg provides otherwise and as long as no secondary proceedings are opened in other MSs) (Art. 17).

UNCITRAL

UNCITRAL - Working Group V – www. uncitral. org • The core legal body of the United Nations system in the field of international trade law, with universal membership specializing in commercial law reform worldwide for over 40 years • UN Committee on International Trade Law (UNCITRAL)'s business is the modernization and harmonization of rules on international business • “Trade means faster growth, higher living standards, and new opportunities through commerce. ” In order to increase these opportunities worldwide, UNCITRAL is formulating modern, fair, and harmonized rules on commercial transactions. These include: conventions (e. g. ‘Vienna Convention Int’l Sales), model laws (e. g. Int’l Commercial Arbitration), legislative guides, recommendations etc. • Updated information on case law and enactments of uniform commercial law [CLOUT] • Technical assistance in law reform projects, regional seminars etc.

UNCITRAL Model Law (1997): Four main legal topics • Granting access to local courts in [enacting State] to foreign representatives and creditors • According recognition to certain orders from foreign courts (recognition is foreign representative’s sole entry point to [State] court systems (except to collect debtor’s accounts receivable) (next slide) • Providing relief considered necessary for orderly and fair conduct of x-border insolvency case (subsequent slide) • Promoting cooperation among courts of the States where the debtor’s assets are located (additional slide)

Recognition (Art. 15 Model Law) 1. A foreign representative may apply to the court for recognition of the foreign proceeding in which the foreign representative has been appointed. 2. An application for recognition shall be accompanied by: (a) A certified copy of the decision commencing the foreign proceeding and appointing the foreign representative; or (b) A certificate from the foreign court affirming the existence of the foreign proceeding and of the appointment of the foreign representative; or (c) In the absence of evidence referred to in subparagraphs (a) and (b), any other evidence acceptable to the court of the existence of the foreign proceeding and of the appointment of the foreign representative. [……]

Two tier system for review relief Article 19 – Interim Relief ‘Pre-recognition, i. e. between the filing of the application and the order for recognition, the court may provide relief, including: – Staying an execution against the debtor’s assets – Entrusting the administration of realisation of the debtor’s assets to the foreign representative – Suspending the right to transfer assets of the debtor – Providing through examination of witnesses taking of evidence or delivery of information – Granting any additional relief that may be available under the laws of [State] Article 20 – Automatic Relief Upon recognition of foreign proceedings: – Commencement or continuation of individual actions or proceedings concerning the debtors assets is stayed. – Execution against the debtors assets is stayed. – The right to transfer, encumber or otherwise dispose of any assets the debtor is suspended.

Cooperation 25 -27 ML • • • • Article 25. Cooperation and direct communication between a court of this State and foreign courts or foreign representatives 1. In matters referred to in article 1, the court shall cooperate to the maximum extent possible with foreign courts or foreign representatives, either directly or through a [insert the title of a person or body administering a reorganization or liquidation under the law of the enacting State]. 2. [……. . ] Article 26. Cooperation and direct communication between the [insert the title of a person or body administering a reorganization or liquidation under the law of the enacting State] and foreign courts or foreign representatives […………. . ] Article 27. Forms of cooperation Cooperation ………………may be implemented by any appropriate means, including: (a) Appointment of a person or body to act at the direction of the court; (b) Communication of information by any means considered appropriate by the court; (c) Coordination of the administration and supervision of the debtor’s assets and affairs; (d) Approval or implementation by courts of agreements concerning the coordination of proceedings; (e) Coordination of concurrent proceedings regarding the same debtor; (f) [The enacting State may wish to list additional forms or examples of cooperation].

INSOL Europe Revision Report 2012 • Reasons: – Global support for Model Law – No “mutual trust”, need for a “court controlled” system of recognition – “A unified approach to insolvency proceedings opened outside the European Union will enhance the proper functioning of the internal market and support a unified external trade policy. ” New recital 32 – Urgency? Yukos-case (in NL)

Legislation having enacted the Model Law • Some 20 countries have enacted legislation that – to a varying extent – incorporates the Model Law into domestic law. These countries are: Australia (2008), British Virgin Islands (2003), Canada (2009), Colombia (2006), Eritrea (1998), Great Britain (England, Wales and Scotland, 2006), Greece (2010), Japan (2000), Mauritius (2009), Mexico (2000), Montenegro (2002), New Zealand (2006), Poland (2003), Republic of Korea (2006), Romania (2003), Serbia (2004), Slovenia (2007), South Africa (2000), and the United States (2005).

MSs: Model Law enactors

Romania 2002 • Pre-EU Membership enactment • Text followed nearly verbatim • Article 2 excludes: banks and insurance companies, but also: stock exchanges, clearing houses, brokers and traders, as well as agents of insurance companies • Romania’s version of Article 17 Model Law (“Decision to recognise a foreign proceeding”) includes a reciprocity requirement

Poland

Poland - 2003 • Also pre-EU Membership • Not enacted: Article 9 ML (“Right of direct access”) and Article 14 (“Notifications to foreign creditors”), however, other provisions in Polish law seem broad enough to capture their content • E. g. Article 19 (interim relief) and Article 32 (hotch-pot rule) do not seem to be reflected in the text. • Article 8 (“Interpretation”) has not been included. Poland should be “solely bound by the provisions of Polish law and any binding international agreement to which Poland is a party” (Barłowski)

England

England, Wales, Scotland (2006) - Northern Ireland (2007) • Section 426 – relevant countries • “Cross-Border Insolvency Regulations 2006” (nearly verbatim) • Allows non-EU tax claims (like Article 39 Ins. Reg) • Competent court – High Court (London) – Court of Sessions (Edinburgh) • The court “may” cooperate

Slovenia 2008 • 2008 Chapter 8 “International Insolvency Procedures” Arts. 445 -488 (includes domestic procedural rules) • Extends art. 4 -15 Ins. Reg • Competent court: Court of Ljubljana • Cooperation may include “the conclusion and carrying out of agreements which refer to the coordination of insolvency proceedings with foreign courts” (!)

Greece 2010 • Foreign proceeding must (i) involve “insolvency of the debtor” and must result (ii) “in the debtor being deprived, in part or in whole, of the power of management over the debtor’s assets and the appointment of a representative” • (i) [Model Law: a proceeding “pursuant to a law relating to insolvency” (ii) Model Law applies to a proceeding in which “the assets and affairs of the debtor are subject to control or supervision by a foreign court”. • So: no recognition of foreign proceedings that do not involve “insolvency” (e. g. scheme of arrangement) or do not involve “the appointment of a representative” (debtor-in-possession proceedings where these are organised with judicial supervision but without the appointment of an administrator or liquidator) • Cross-border cooperation can include “the approval or implementation by the courts of agreements concerning the coordination of proceedings”

Germany / Belgium / NL

German Insolvency Act (2003) § 343 “Recognition” (1) The opening of foreign insolvency proceedings shall be recognised. This shall not apply: 1. if the courts of the state of the opening of proceedings do not have jurisdiction in accordance with German law; 2. where recognition leads to a result which is manifestly incompatible with essential principles of German law (wesentlichen Grundsätzen des deutschen Rechts) , in particular where it is incompatible with basic rights. (2) [………. . ]

German Insolvency Act (2003) • Extension of Art. 4 -15 Ins. Reg • Since 1 March 2012 (ESUG): § 348(2): “When the requirements for recognition of a foreign insolvency proceeding have been met, the insolvency court may cooperate with the foreign insolvency court, more particularly provide information, which is meaningful for the foreign proceeding”. Also applies to Ins. Reg cases (Remmert)

PIL Code Belgium (2004) Art. 21 (“Public policy exception”) The application of a provision of the foreign law designated by the present statute is refused in so far as it would lead to a result that would be manifestly incompatible with public policy [. . …. ] Art. 25 (“Grounds for refusal of recognition and enforcement”) § 1. A foreign judgment shall not be recognized or declared enforceable if: 1º the result of the recognition or enforceability would be manifestly incompatible with public policy; upon determining the incompatibility with the public policy special consideration is given to the extent in which the situation is connected to the Belgian legal order and the seriousness of the consequences, which will be caused thereby. [2º – 9º]

Chapter XI – Collective Insolvency Proceedings Art. 116. Scope of application “This chapter applies to collective proceedings that entail the divestment of the debtor. ” Art. 117. Definitions Art. 118. International jurisdiction with respect to insolvency Art. 119. Law applicable to collective insolvency proceedings Art. 120. Duty to inform and cooperate [reciprocity] • • • Art. 121. Effect of foreign insolvency judgments § 1. A foreign judgment concerning the opening, the conduct or the closure of insolvency proceedings, which is not rendered on the basis of the insolvency regulation, will be recognized or declared enforceable in Belgium in accordance with article 22: 1◦ as a judgment in principal proceedings, if the judgment was given by a judge in a State where the debtor had its main establishment at the time when the action was introduced. 2◦ as a judgment in territorial proceedings, if the judgment was given by a judge in a State where the debtor had another establishment than its main establishment at the time when the action was introduced; in this event the recognition and enforcement of the judgment may only relate to assets located in the territory of the State where the proceedings were opened. [………. ]

Pre-draft Insolvency Act (“Voorontwerp”) Replacing BA 1896 (!!)? Insolvency Law Committee (2003 – November 2007) 350 legal provisions – 200 pages Explanatory memorandum Main reasons: • postponement of payment (“surseance”) does not function • civil law changes as of 1992 influencing the BA • inconsistent partial changes - inconvenient organization of text • law partly in court cases, partly in BA • no solid system of international provisions • www. justitie. nl. onderwerpen/wetgeving/insolventiewet • http: //bobwessels. nl/wordpress/? p=228

Article 10. 3. 1 • “Request for the Recognition of Foreign Insolvency Proceedings” 1. Foreign insolvency proceedings will be recognised in the Netherlands, whether or not as foreign main insolvency proceedings, at the request of the debtor, the foreign liquidator or a creditor. The application for recognition is to be filed with the District Court of The Hague. Recognition will be denied: (a) if the foreign court, according to international accepted norms, does not have jurisdiction to open insolvency proceedings; (b) insofar as the effects of recognition would be manifestly contrary to public policy. • Extension of Art. 4 -15 Ins. Reg

Cooperation • Article 10. 5. 1 – Cooperation and Exchange of Information by Courts in the Netherlands […………. ] 2. The power within the meaning of the first paragraph applies equally in cases to which the EC Insolvency Regulation applies. • Article 10. 5. 2 – Deviating provisions Mindful of the [need for] effective and efficient international cooperation regarding the settlement of the debtor’s insolvency, the court may also take measures within the meaning of Article 2. 2. 10 at the request of the administrator, the liquidator or the foreign liquidator appointed in insolvency proceedings whichhave been recognised on the basis of Chapter 3. • Article 10. 5. 3 – Cooperation and Exchange of Information by the Administrators

Present NL system: case law

Rules re relationships with non-EU MSs 1. Model Law Poland, Romania, UK, Slovenia, Greece 2. Mix + Extension Ins. Reg Spain, NL (Title 10 pre-draft Nov. 2007) 3. Own system + Extension Germany (+ Austria) 4. Own system (part of PIL) Belgium

Rules re relationships with non-EU MSs Differences: (i) in the UK and Germany cross-border cooperation in international cases is discretionary for a court (ii) Romania and Spain use reciprocity provisions (related to recognition), as Belgium does (related to cross-border cooperation) (iii) In England Wales, Scotland Slovenia: “court concentration”

Revision report 2012 • Survey of enactment in other MSs? • Incudes “extension”: in the event that the court grants relief (in the meaning of Article 21 / Article 77 proposal) the court “will apply Articles 5, 6, 7, 8, 9, 10 paragraph 1, 11, 12, 13, 15 and 18 paragraph 3” Ins. Reg • Article 27(f) Model Law, allowing the enacting State to list additional forms or examples of cooperation, with Slovenia and Greece as ground-breaking examples (adding cross-border insolvency agreements), is not mirrored in the proposal.

“non-EU proceedings” • Article 2(p), termed “non-EU proceedings”, which shall mean: “a collective judicial or administrative proceeding in a non. Member State, including an interim proceeding, pursuant to a law relating to insolvency in which proceeding the assets and affairs of the debtor are subject to control or supervision by a court from a non-Member State, for the purpose of reorganization or liquidation; ”

Excluded proceedings • Art. 58(2): “This Chapter does not apply to a proceeding concerning insurance undertakings and credit institutions. ”

Existing Int’l treaties and agreements • Article 59 (“Relations with existing international conventions and agreements”): “This Regulation shall not affect the application of bilateral or multilateral conventions and agreements to which one or more Member States are party at the time of adoption of this Regulation and which concern matters governed by this Regulation, without prejudice to the obligations of Member States under Article 307 of the Treaty Establishing the European Community. ”

Competent court • Article 60 (“Competent court”): “The functions referred to in this Chapter relating to recognition of non-EU proceedings and cooperation with courts from non-Member States shall be performed by the courts of the Member States as specified in their legislation. ” Concentration to specified courts? England (High Court), Scotland (the Court of Sessions in Edinburgh), Australia (Federal Court of Australia for individuals; the Supreme courts and the Federal Court as for other debtors), Mauritius (Supreme Court), the Netherlands (draft: Court of The Hague) and New Zealand (High Court).

Interpretation • Article 64 (“Interpretation”): “In the interpretation of this Chapter, regard is to be had to its international origin and to the need to promote uniformity in its application and the observance of good faith. ”

COMI [controversies continue? ] • High Court of New Zealand in: Williams v Simpson (2010): “[32] In considering the authorities, it is necessary to bear in mind that the Model Law and the EC Regulation use the term centre of main interests for different purposes. The EC Regulation uses the term to provide jurisdiction for the opening of a main insolvency proceeding in a Member State. Such proceedings have universal scope and encompass all the debtor’s assets within the European Union. On the other hand, the expression is used in the Model Law purely for recognition purposes. ” • Federal Court Australian Ackers v Saad Investment Co Ltd. (2010) “ 49. Given the importance to international commerce and, to third parties, of having an objective ascertainable basis upon which to commence and decide proceedings that will govern winding up and insolvency of a debtor under the Model Law, in my opinion, the approach adopted in Eurofood … and Stanford Bank … should be followed here …. That approach leads to a more predictable and orderly international outcome than the less certain approach adopted by some of the Bankruptcy District Courts in the United States ….

Provisional conclusions • To be discussed

Governing non-EU Member State insolvency proceedings in EU legislation: what constitutional implications for the Union? Dr. Nicolas Croquet Mc. Kenna Long & Aldridge Brussels

Overview I. Legal basis for regulating non-EU insolvency proceedings II. Exercise of the legal basis III. Extra-territoriality debate 47

Part I - Legal basis for regulating non-EU insolvency proceedings 1. Duality of legal basis? • Judicial cooperation in civil matters • Internal market-building legal basis • Determination of the predominant legal basis 2. Theory of implied powers • Broad and narrow approach • EU case-law on implied powers doctrine 48

1. Duality of legal basis EU Courts’ case-law: in case of competing legal bases, the predominant legal basis must prevail Articles 81 TFEU: (i) elimination of obstacles to the proper functioning of civil proceedings; (ii) compatibility of the rules applicable in the Member States concerning conflict of laws and of jurisdiction; (iii) mutual recognition and enforcement between Member States of judgments and of decisions in extrajudicial cases 114(1) TFEU: harmonization of national provisions that “have as their object the establishment and functioning of the internal market” 49

2. Theory of implied powers • Restrictive approach: any power of action “reasonably necessary” to the exercise of an express power of action may be exercised by the EU political institutions • Broad approach: the EU political institutions may exercise any power “reasonably necessary” to the achievement of an objective set forth in the EU constitutive Treaties even in the absence of any express power of action provided for in relation to that objective 50

2. Theory of implied powers European Court of Justice (‘ECJ’) in Joined Cases 281, 283 -285, 287/85 Germany v. Commission [1987] ECR 3203 para. 28: “[W]here an Article of the EEC Treaty – in this case Article 118 – confers a specific task on the Commission it must be accepted, if that provision is not to be rendered wholly ineffective, that it confers on the Commission necessarily and per se the powers which are indispensable in order to carry out that task” 51

2. Theory of implied powers Case T-240/04 France v Commission [2007] ECR II-4035 para. 36 “The Court has accepted that powers, which have not been expressly provided for in the provisions of the Treaties, can be used if they are necessary to achieve objectives set by those treaties (…). When an article of the EAEC Treaty gives the Commission a specific and precise task, it must be accepted, if that provision of the EAEC Treaty is not to be rendered wholly ineffective, that it implicitly confers on the Commission necessarily and per se the powers which are indispensable in order to carry out that task (…). It must therefore be recognised that the provisions laid down by a treaty imply that rules, without which those provisions could not be usefully or reasonably applied, may be adopted. Therefore, the provisions of the EAEC Treaty relating to normative powers of the institutions must be interpreted in light of the overall scheme of that Treaty (…). ” 52

2. Theory of implied powers According to the ECJ, this theory is of strict interpretation because it constitutes an exception to the principle of conferral of competences Emphasis in the EU case-law on the principle of effectiveness Need for objective evidence supporting the close relationship between the implied power and the express competence (K. Lenaerts & P. V. Nuffel, European Union Law 120 -121) 53

2. Theory of implied powers In order to effectively eliminate obstacles to the proper functioning of civil proceedings at the intra-Community level, need to harmonize the rules on judicial and extra-judicial cooperation with third country courts / liquidators → reasonable relation between express powers of action (harmonization measure with a view to judicial cooperation in civil matters) and the proposed provisions on third country cooperation 54

Part II - Exercise of legal competence 1. Subsidiarity 2. Proportionality 55

1. Subsidiarity • • Article 5(3) of the Treaty on European Union (‘TEU’) stipulates that: “in areas which do not fall within its exclusive competence, the Union shall act only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States, either at central level or at regional and local level, but can rather, by reason of the scale or effects of the proposed action, be better achieved at Union level” = next step after determination of legal basis. According to the Subsidiarity and Proportionality Protocol, the subsidiarity question must be the object of a detailed statement in the legislative proposal: qualitative as well as (to the extent it is feasible) quantitative indicators must support any conclusion that the proposed action can be better achieved at EU level. Furthermore, any subsidiarity finding found in the draft legislative act must be premised on the need to minimize the financial and administrative burden falling upon the Union, national / regional / local authorities, economic operators and citizens in such a way that the intensity of the regulatory treatment is in proportion with the assigned objective. 56

1. Subsidiarity • The Court of Justice reserves the right to annul an EU secondary act that is contrary to this principle of subsidiarity even though hitherto it has never done so. It may account for the “multifarious development of national laws” in its subsidiarity analysis: Case, C-491/01 The Queen v. Secretary of State for Health, ECR 2002 I-11453. 57

1. Subsidiarity Lack of uniformity between those Member States that adhere to all or most provisions of the UNCITRAL Model Law and those which apply flexible rules of judicial cooperation with non-EU insolvency courts / liquidators Risk of forum shopping: companies may decide to establish their headquarters, subsidiary or offices in EU Member States that have a more or less open approach to third country judicial cooperation Need for efficiency and effectiveness in the treatment of complex international insolvency situations 58

2. Proportionality raises the following questions: 1. If the scale and effects of the subject area justify action at EU level, do the content and the form of the proposed measure not exceed what is necessary to achieve the Treaty objective it is designed to pursue? 2. Does the proposed EU measure minimize the financial and administrative burden placed upon national authorities in a way that is commensurate with the underlying Treaty objective? 3. Does the nature of the subject area justify the adoption of a highly centralized EU instrument (cf. a Regulation) or instead an EU act conducive to decentralization in the decision-making (cf. a Directive)? Proportionality therefore should be the next step in the constitutional reasoning after the question of legal basis and of subsidiarity (even though the Court of Justice has in The Queen v. Secretary of State for Health inaccurately reviewed proportionality before subsidiarity). 59

2. Proportionality Case, C-491/01 The Queen v. Secretary of State for Health, ECR 2002 I 11453, para. 122: “the principle of proportionality, which is one of the general principles of Community law requires that measures implemented through Community provisions should be appropriate for attaining the objective pursued and must not go beyond what is necessary to achieve it” EMPHASIS ON THE SUITABILITY AND NECESSITY TESTS 60

2. Proportionality The proposed revision uses, in many instances, permissive language (the court ‘may’ grant the appropriate relief under Article 77; cooperation between Member States’ liquidator and courts / liquidator of a non. Member State “to the maximum extent possible” under Article 82; intervention by a non-EU liquidator in a Member State’s insolvency proceedings “provided the requirements of the law of the relevant Member State are met” under Article 80; conditions attached to the granting of a relief under Article 78) The proposed revision offers Member States’ courts a temporary opt out through the invocation of derogation grounds (cf. Article 62 public policy exception) Although a Regulation is a more centralized EU instrument than a Directive, the proposed EU Insolvency Regulation would confer important discretionary grounds upon Member States’ courts (cf. choice of the forms of cooperation with non-Member States’ courts/liquidators) 61

Part III - Extra-territoriality debate 1. Competition law cases 2. 3. ETS judicial saga How about the proposed revision? 62

1. Competition law cases Case 22/71 Béguelin [1971] ECR 949 para. 11: “The fact that one of the undertakings which are parties to the agreement is situate in a third country does not prevent application of that provision since the agreement is operative on the territory of the common market. ” EMPHASIS ON THE ESSENCE OF AN IMPLEMENTATION CRITERION 63

1. Competition law cases Case C‑ 89/85 Ahlström Osakeyhtiö and Others v Commission [1988] ECR 5193 para. 16 (Wood Pulp case): “It should be observed that an infringement of Article 85, such as the conclusion of an agreement which has had the effect of restricting competition within the common market, consists of conduct made up of two elements, the formation of the agreement, decision or concerted practice and the implementation thereof. If the applicability of prohibitions laid down under competition law were made to depend on the place where the agreement, decision or concerted practice was formed, the result would obviously be to give undertakings an easy means of evading those prohibitions. The decisive factor is therefore the place where it is implemented. ” EMPHASIS ON THE IMPLEMENTATION CRITERION 64

1. Competition law cases Case T-102/96 Gencor v. Commission [1999] ECR II-753 para. 90: “Application of the Regulation is justified under public international law when it is foreseeable that a proposed concentration will have an immediate and substantial effect in the Community”. EMPHASIS ON A QUALIFIED FORM OF EFFECTS DOCTRINE 65

2. ETS judicial saga Case C‑ 366/10 The Air Transport Association of America and Others, Opinion of Advocate General Kokott of 6 October 2011, para. 148 -149: “It is by no means unusual for a State or an international organisation also to take into account in the exercise of its sovereignty circumstances that occur or have occurred outside its territorial jurisdiction. The principle of worldwide income thus applies in many countries under income tax law. ” “The decisive element from an international-law perspective is that the particular facts display a sufficient link with the State or international organisation concerned. The particular connecting factor can be based on the territoriality principle, the personality principle or – more rarely – on the universality principle. ” 66

2. ETS judicial saga Case C‑ 366/10 The Air Transport Association of America and Others, judgment of 21 December 2011, para. 129: “Furthermore, the fact that, in the context of applying European Union environmental legislation, certain matters contributing to the pollution of the air, sea or land territory of the Member States originate in an event which occurs partly outside that territory is not such as to call into question, in the light of the principles of customary international law capable of being relied upon in the main proceedings, the full applicability of European Union law in that territory” SILENCE ON THE EXISTENCE OF THE EFFECTS DOCTRINE BUT BROAD INTERPRETATION OF THE CONCEPT OF TERRITORIAL COMPETENCE 67

2. ETS judicial saga Competence may be territorial, personal or exceptionally universal (= implicit message of AG Kokott) Principle of territorial sovereignty may not be prima facie breached subject to justification: all-or-nothing approach (= implicit message of the CJEU) Broad and generous approach to territorial sovereignty by the CJEU: the EU political institutions may account for factors taking place outside of the EU territory when exercising their intracommunity competence: need for a ‘sufficient link’ or ‘connecting factor’ between the said factor and EU’s proposed action 68

3. How about the proposed revision? v Presence of a ‘sufficient link’ or ‘connecting factor’ between the third country insolvency proceedings and EU harmonized rules on cooperation with non-EU courts/liquidators given the interdependency of consolidated corporate assets v A Member State’s liquidator may act in a non-Member State on behalf of a Member State’s insolvency proceeding provided that his/her intervention is “permitted by the applicable foreign law” Principle of territorial sovereignty is hereby complied with 69

Questions from the floor