8. Recognition and effectiveness of
insolvency proceedings
Dr Marek Porzycki
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scope: any judgment opening insolvency
proceedings handed down by a court of a
Member State competent under Art. 3  both
main and territorial proceedings
automatic recognition ie. no other formalities
required  no exequatur, no need for formal
recognition by the court (cf. different approach
taken by the UNCITRAL Model Law and Art. 386404 of the Polish BL)
precondition: effectiveness in the State of the
opening of proceedings (effective ≠ final, see
e.g. Art. 51(2) of the Polish BL)
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applies to main insolvency proceedings, as long as
no territorial proceedings are opened in the Member
State in question
„extension model” – extension of the effects of the
opening of insolvency proceedings to the whole
territory of the EU (minus Denmark)
effects according to the law of the State of the
opening of proceedings (Art. 4 EIR/Art. 7 EIR-r) 
example: automatic stay, ban on individual
enforcement against the debtor, if the law of the
State of the opening so provides (Art. 4(2)(f) EIR/Art.
7(2)(f) EIR-r)
limited effectiveness of territorial/secondary
proceedings (Art. 17(2) EIR/Art. 20(2) EIR)
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relation between the EIR/EIR-r and the Regulation (EU) No.
1215/2012 on jurisdiction and the recognition and
enforcement of judgments in civil and commercial matters
(recast) (“Brussels Ia”, earlier the 1968 Brussels Convention
and then Regulation No. 44/2001)
„Brussels Ia” does not apply to „bankruptcy, proceedings
related to the winding-up of insolvent companies or other
legal persons, judicial arrangements, compositions and
analogous proceedings” (Art. 1(2)(b) of „Brussels Ia”)
ECJ judgment in Gourdain vs. Nadler (Case 133/78,
22.2.1979, available on Eur-Lex): judgments related to
insolvency proceedings are also excluded from the Brussels
Convention if they derive directly from these proceedings
and remain within close bounds of the bankruptcy or
composition proceedings
the EIR aims to bridge the gap left by „Brussels Ia”
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judgments on the course and closure of insolvency
proceedings (example: discharge of the debtor,
changes in the scope of „debtor-in-possession”
arrangements, changes between winding-up and
reorganization options in insolvency proceedings),
compositions or arrangements approved by the
court:
automatic recognition,
enforceability according to Art. 39-44 and 47-57
of “Brussels Ia”, with exception of its provisions on
refusal of enforceability  „ without any
declaration of enforceability being required” (Art.
39 of „Brussels Ia”) - no exequatur needed
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insolvency-related judgments, even if handed down by
another court, Art. 25/32(1), 2nd subparagraph
(examples: avoidance actions, disputes concerning
inclusion of assets in the insolvency estate, disputes on
recognition of claims, actions on the liquidator’s liability
for damages) – automatic recognition, enforcement
according to „Brussels Ia”
judgments on preservation measures handed down prior
to the opening of main proceedings - automatic
recognition, enforcement according to „Brussels Ia”, with
attention to the following:
after Eurofood some preliminary measures may actually
constitute an opening of main proceedings under the EIR
a temporary administrator may also request any national
preservation measures under Art. 38 EIR/Art. 52 EIR-r
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other judgments (not directly related to
insolvency proceedings) – recognition and
enforcement according to Brussels Ia,
provided that Brussels Ia is applicable (Art.
25(2) EIR/Art. 32(2) EIR-r)
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28.5.2009 – insolvency proceedings opened against Kintra in
Lithuania. Lithuanian liquidator sued Nickel & Goeldner
Spedition, a debtor based in Germany, for payment of an amount
owed to Kintra. The lawsuit was brought to a Lithuanian court.
The liquidator based the competence of the Lithuanian court on
a provision of Lithuanian insolvency law.
Nickel & Goeldner Spedition claimed that German court would be
competent, as provided for Brussels I Regulation and the 1956
Convention on the Contract for the International Carriage of
Goods by Road.
Question: does an action for the payment of a debt brought by
the insolvency administrator of an insolvent undertaking in the
course of insolvency proceedings opened in one Member State
and directed against the recipient of those services, established
in another Member State, fall within the scope of the EIR or of the
Brussels I (Ia) Regulation?
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Answers:
actions which fall outside the scope of Article 3(1) EIR fall within the
scope of Brussels I (Ia) Regulation
broad definition of the concept of ‘civil and commercial matters’
under Brussels I Regulation; by contrast, the scope of application of
the EIR should not be broadly interpreted
only actions which derive directly from insolvency proceedings and
are closely connected with them are excluded from the scope of the
Brussels I (Ia) Regulation
application of the EIR: actions based on provisions derogating from
the general rules of civil law, based in the national rules relating to
insolvency proceedings (examples: actions against former managers
of a bankrupt company, action to set aside a detrimental act of the
debtor)
application of Brussels I (Ia) Regulation: if question of law raised in
an action is independent of the opening of insolvency proceedings.
EXAMPLE: an action by the liquidator to pursue a contractual claim
belonging to the estate
application determined incidentally (automatic
recognition rules out any formal proceedings to
recognize insolvency proceedings)
 „grounds for non-recognition should be reduced to the
minimum necessary” (recital 22 to the EIR/recital 65 to
the EIR-r)  Art. 26/33 to apply in exceptional cases,
no review of the judgment opening the proceedings
 in particular a breach of fundamental principles or the
constitutional rights and liberties of the individual
 example given by the ECJ in Eurofood:
- flagrant breach of the fundamental right to be heard,
which a person concerned enjoys  but no
transposition of the national concept of the right to be
heard to foreign proceedings
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Liquidator/insolvency practitioner in main proceedings (Art.
18(1) EIR/ Art. 21(1) EIR-r): exercising powers granted by the
law of the State of the opening in other Member States,
subject to territorial proceedings or preservation measures in
other Member States
in particular removing the debtor’s assets from the territory of
other Member States
liquidator in territorial proceedings (Art. 18(2) EIR/Art. 21(2)
EIR-r):
„right to pursue assets”
bringing avoidance actions in the interest of creditors
requirement to comply with the law of the Member State in
question
no coercive measures, no right to rule on disputes
Case A: Main insolvency proceedings have been opened
against Schuldner AG, a spare part dealer, in Austria. The
debtor has spare parts located at a warehouse in Poland. Is
the Austrian liquidator entitled to bring those spare parts
from Poland to Austria?
 Case B:Main insolvency proceedings have been opened
against Schuldner AG in Austria and secondary insolvency
proceedings have been opened in Slovakia where the
debtor has an establishment. The debtor has spare parts
located at a warehouse in Poland. Some of those parts
were brought to Poland before the opening of secondary
proceedings but another batch was transported from
Slovakia to Poland 2 days after the opening of secondary
proceedings.
Is the Slovak liquidator entitled to bring those spare parts
from Poland to Slovakia?
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Facts of the case:
 MG Probud Gdynia sp. z o.o. – a company of Polish law
with registered office in Poland and a branch in
Germany
 Polish insolvency proceedings (upadłość obejmująca
likwidację) opened on 9 June 2005 by the Sąd Rejonowy
Gdańsk-Północ
 Customs Office of Saarbrücken, Germany applied for
attachment of assets of the debtor (balance held on a
banking account in Germany and claims against
German parties), in order to secure claims resulting
from alleged infringement against social security
regulations.
 Attachment order issued by the Amtsgericht
Saarbrücken on 11 June 2005
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Appeal against the attachment order was dismissed
by the Landsgericht Saarbrücken on 4 August 2005.
Fear that Polish liquidator would transfer the
amounts in question to Poland was quoted as reason
for upholding the attachment order.
No secondary proceedings in Germany
Sąd Rejonowy Gdańsk-Północ questioned the
lawfulness of the attachment, as under Polish
bankruptcy law (Article 146 of the then Bankruptcy
and Rehabilitation Law) attachment of assets
belonging to the bankruptcy estate is not allowed 
according to the general rule that bankruptcy
proceedings exclude singular enforcement
proceedings against the debtor.
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Polish decision to open insolvency proceedings did not indicate
grounds for international jurisdiction
Registered office of the debtor in Poland + no grounds to rebut the
presumption of Art. 3(1) EIR  COMI in Poland, Polish proceedings
are main proceedings
Main insolvency proceedings opened in Poland  automatic
recognition and universal effect under Art. 16(1) and 17(1) EIR
[subsequently also Art. 19(1) and 20(1) EIR-r]
Polish law decides whether enforcement measures related to the
assets of the debtor are allowed (Art. 4 EIR [later also Art. 7 EIR-r])
German authorities are not entitled to order enforcement measures
related to assets of the debtor if Polish law does not allow them.
Attachment by German authorities is unlawful, Polish liquidator can
presumably transfer the assets to Polish main proceedings (Art.
18(1) EIR [Art. 21(1) EIR-r]), unless secondary proceedings are
opened in Germany.