Asset Tracing and Recovery in European Cross-border Insolvency Proceedings*

direzione scientifica Laura De Simone, Massimo Fabiani, Salvo Leuzzi cofondatore Paolo Trombini

comitato scientifico Sido Bonfatti, Giuseppe Bozza,
Bruno Inzitari, Giovanni Nardecchia,
Ilaria Pagni, Luciano Panzani,
Renato Rordorf, Giuliana Scognamiglio

Giovedì 26 Dicembre 2024

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Asset Tracing and Recovery in European Cross-border Insolvency Proceedings*

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Asset Tracing and Recovery in European Cross-border Insolvency Proceedings*

Antonio Leandro, Associate Professor of International law-University of Bari “Aldo Moro”

21 Dicembre 2021

*Saggio sottoposto in forma anonima alla valutazione di un referee.

Cambia dimensione testo

Tracing and recovering assets are crucial means for the purposes of insolvency proceedings. When it comes to cross-border cases, several problems of private international law arise. In the EU context, solving these problems requires coordination between various instruments at the disposal of courts and insolvency practitioners.

Riproduzione riservata

Sommario:

1 . Introductory notes

2 . Wide concepts for “tracing”, “recovery”, “asset”, and “estate”. The assets’ location according to the EIR

3 . Cross-border use of national measures

4 . The EIR and multiple insolvency proceedings

5 . Cross-border insolvency and Regulation (EU) 2020/1783 on taking of evidence

6 . Asset tracing, disclosure orders and the Brussels Ibis Regulation

7 . Asset tracing and insolvency-related judgments: coordination between the EIR and the Brussels Ibis Regulation

8 . Tracing/recovery tools and public policy: a) measures of lex fori concursus unknown to the requested State

9 . Tracing/recovery tools and public policy: b) the fair trial perspective

10 . Ex parte tracing and freezing of bank accounts: the European Account Preservation Order in support of cross-border insolvency proceedings

11 . Tracing/recovery tools and digital assets

12 . Tracing/recovery tools and digitalization of justice

13 . A closing look beyond the EU judicial space

1 . Introductory notes

Tracing and recovering assets amount to crucial means to preserve the estate in insolvency proceedings. The proceedings’ outcome may depend on a successful liquidation, which, in turn, can succeed insofar as the concerned assets are traced and recovered smoothly. Besides, insolvency-related disputes, such as the avoidance disputes, may benefit from instruments that help find debtor’ assets or recover payments.

Cross-border insolvency proceedings exhibit peculiar features in this respect because of the debtor’s assets and affairs being in touch with different States. Multiple laws and jurisdictions, with differing or even divergent underlying legal traditions, may in fact be concerned with tracing and recovery.

Moreover, tracing and recovery may affect individuals (e.g., debtors, directors, shareholders, secured creditors, third parties) whose interests clash with those of insolvency proceedings, especially that of satisfying creditors through the proceeds of liquidated assets. If such persons have connections (e.g., citizenship, seat, habitual residence, domicile, as well as affairs, rights, obligations, etc.) with different States, including other States than that in which the assets are located, the cross-border context gets wider.

Against this backdrop, intermingled problems of private international law arise, including assessing the courts having jurisdiction to issue tracing or recovering measures, the authorities that may apply and take action, the law governing the measures and the enforcement thereof, the recognition of foreign tools aimed at detecting and recovering the assets. All these problems lie on a terrain where issues of characterization, state sovereignty and cooperation between foreign authorities are interwoven.

The paper intends to explain how to melt this skein within the EU civil judicial space[1].

When it comes to EU cross-border insolvency, any survey fucuses mainly on Regulation (EU) 2015/848 of 20 May 2015 on insolvency proceedings (“EIR”)[2]. However, as will be noted, the wide concepts of “assets”, “tracing”, and “recovery” make it possible to apply other EU instruments in support of the EIR.

Finally, despite dealing with EU cross-border insolvencies, the analysis also looks at international instruments that have commonalities with the European insolvency law. The main example comes from the UNCITRAL instruments, starting from the 1997 Model Law on Cross-border Insolvency (and related documents[3]). Incidentally, UNCITRAL has already indirectly addressed the topic in the 2018 Model Law on Cross-border Recognition and Enforcement of Insolvency-related Judgments[4], and has on the agenda the adoption of a specific instrument concerning asset tracing and recovery in insolvency proceedings[5].

2 . Wide concepts for “tracing”, “recovery”, “asset”, and “estate”. The assets’ location according to the EIR

Once adopted a cross-border perspective, it proves fitting to engage a broad concept of “tracing”, “recovery”, “assets” and “estate”, so as to cover as much asset tracing and recovery national tools as possible.

A recent UNCITRAL’s document is as useful as illustrative in this regard[6]. “Tracing” refers to a legal process of identifying and locating assets and their proceeds, including by taking evidence concerning the asset’s existence or location. “Recovery” includes measures aimed to return assets to their legitimate owner, including by freezing or seizing assets before them being dissipated, suing the wrongdoer before courts, and enforcing orders or judgments. The notion of “assets” has a wide-ranging scope as well, as it can include anything of value, including tangibles, intangibles, movable or immovable, rights and interests, contracts, and other economic resources. “Estate” includes, in turn, debtor’s assets, assets acquired after the opening of the proceedings, assets recovered through avoidance actions, irrespective of such assets being originally disclosed, undisclosed or concealed[7].

Tracing and recovery intermingle for the simple reason that the first is necessary to perform the second. Tracing operations vary depending on the asset at stake and get thornier for intangible assets.

The EIR somehow helps the interpreter find the assets by providing a uniform definition of “the Member State in which assets are situated” (Article 2 no. 9)[8].

The definition includes (i) registered shares in companies other than book entry securities: the relevant Member State is that in which the company having issued the shares has its registered office; (ii) financial instruments, the title to which is evidenced by entries in a register or account maintained by or on behalf of an intermediary (“book entry securities”): the relevant Member State is that in which the register or account in which the entries are made is maintained; (iii) cash held in accounts with a credit institution: the relevant Member State is that indicated in the account's IBAN, or, for cash held in accounts with a credit institution which does not have an IBAN, the Member State in which the credit institution holding the account has its central administration or, where the account is held with a branch, agency or other establishment, the Member State in which the branch, agency or other establishment is located; (iv) property and rights, ownership of or entitlement to which is entered in a public register other than registered shares in companies: the relevant Member State is that under the authority of which the register is kept; (v) European patents: the relevant Member State is that for which the European patent is granted; (vi) copyright and related rights: the relevant Member State is that in which the owner of such rights has its habitual residence or registered office; (vii) tangible property, other than that referred to in points (i) through (iv): the relevant Member State is that in which the property is situated; (viii) claims against third parties, other than those relating to cash held in accounts with a credit institution: the relevant Member State is that in which the third-party debtor has the COMI.

The list appears capable of embracing every asset. Nevertheless, the interpreter might struggle with certain “not-listed” assets, such the digital ones. We will return on this point[9].

3 . Cross-border use of national measures

It is well known that the EIR lets main proceedings and secondary proceedings coexist under the so-called limited universality principle.

Each proceeding may have its own insolvency practitioner (“IP”). For the sake of brevity, the IP appointed in the main proceedings and that appointed in the secondary proceedings will be referred to respectively as “main IP” and “secondary IP”.

The IPs are vested with powers stemming from the law of the Member State in which they are appointed (lex concursus). The EIR endows IPs with further powers for their cross-border activity. The EIR also establishes a regime of cooperation between main and secondary IPs.

So equipped, the IPs carry out the multi-faced role envisaged in Article 2 no. 5, namely “to verify and admit claims submitted in insolvency proceedings; to represent the collective interest of the creditors; to administer, either in full or in part, assets of which the debtor has been divested; to liquidate the assets; or to supervise the administration of the debtor's affairs”.

Each role is plausibly combined with the others and entails (if not consists in) tracing and recovery assets. It suffices to note that “administration and liquidation of assets” require information as to where the assets are located and entail all steps necessary to protect and preserve the assets, including taking action against unduly disposals. “Supervising the administration of the debtor’s affairs” may instead call for getting information about the debtor’s affairs.

The extraterritorial powers of main and secondary IPs differ because of the differences between main and secondary proceedings in terms of effects.

The mutual recognition, the applicability of the lex concursus to determine the “powers of […] the insolvency practitioner” (Article 7(2 (c)), the extraterritoriality governed by Article 21 (1), warrant the main IP to employ “national and uniform tools” in other Member States.

In particular, the IP may recover the debtor’s assets situated therein, utilise local legal tools, access to national registers. The IP may also bring actions in rem upon the judgment opening the insolvency proceedings. Other examples are the administration of debtor’s assets and the provisional attachment obtained from local courts to secure and preserve debtor’s assets from the risk of being removed from the State of the insolvency proceedings. This option is also available to the temporary administrator appointed under Article 52 against “fleeing of assets and capitals” pending the decision on the opening request.

The IPs may wield such powers provided that no secondary proceedings have been open in the State where they intend to take action, and no preservation measures to the contrary have been taken in relation to the opening of secondary insolvency proceedings. For instance, the main IP could remove assets unless third parties having a right in rem on such assets have previously requested a preservation measure[10].

Other limitations arise from Article 21 (3): should the IP intend to recover and realize the debtor’s assets, it must comply with the local law, i.e., the law of the State in which the assets are located. Furthermore, the IP may not use coercive measures without authorization of the local courts. Mutual recognition does not override the principle (based on public international law) whereby each State governs the use of coercive acts in its territory.

Secondary IPs may instead claim in any other Member States “that moveable property has been removed from the territory of the State of the opening to the territory of that other Member State after the opening of the secondary proceedings […]” (Article 21(2)). The IP is endowed with judicial and extrajudicial means to put forward this claim as Article 21 (2) gives her/him the options to act through courts or out of court. The IP may also bring any action to set aside which is in the interests of the creditors.

In other words, secondary IPs recover assets from abroad to the benefit of the secondary proceedings by means of judicial actions, enforcement measures demanded upon the recognition either of the judgment opening the insolvency proceedings or the judgment setting aside the transaction, or by means of extrajudicial means such as contracts entered into with the asset’s owner. As a result, Articles 21 (2), read in conjunction with Articles 19 and 20, aims to strike a balance between the interest of the proceedings to the integrity of the estate and the principle whereby secondary proceedings (and secondary IP’s powers) have territorial effects.

Finally, if the COMI’s court were to appoint a temporary administrator to preserve the debtor's assets, “that temporary administrator shall be empowered to request any measures to secure and preserve any of the debtor’s assets situated in another Member State, provided for under the law of that Member State, for the period between the request for the opening of insolvency proceedings and the judgment opening the proceedings” (Article 52). This provision deals with pre-commencement protective measures and assumes that assets are to be (have been) traced for the sake of an upcoming insolvency proceeding.

4 . The EIR and multiple insolvency proceedings

Cooperation between IPs gets urgent when multiple insolvency proceedings are open with respect to the same debtor or to different members of a multinational group. The EIR calls, in fact, IPs and courts to cooperate with each other (Articles 41-43, 56-58, 72(2)(d), 74 EIR). Cooperation duties also turn up when the request of opening is still pending.

Cooperation and coordination are mostly governed by the EIR irrespective of the leges concursus contents. IPs are also advised to take account of principles and guidelines adopted by European and international organizations active in the area of insolvency law[11].

For the purposes of this paper, the communication may include the tools at disposal of IPs to trace and recovery assets. Under the caveat to communicate and collaborate, IPs should be reciprocally informed of all the national tools aimed at tracing/recovering assets. It suffices to note that Article 41(2)(c) compel the IPs to “coordinate the administration of the realisation or use of the debtor's assets and affairs”.

On the other hand, in the case of multiple proceedings the question arises as to whether the assets pertain to the main or the secondary proceedings and even earlier which court has competence to determine their location.

The CJEU held that such determination lies with both the COMI’s court and the courts of the establishments[12], thereby causing conflicts of jurisdiction in this respect. In the same vein, an action for the verification of claim may be brought before both courts[13]. Accordingly, also recovery measures issued by courts that deem assets falling within their own jurisdiction could conflict with each other.

Lacking a lis pendens rule (akin to that provided in the “Brussels Ibis Regulation”[14]) that indicates which request must prevail, such conflicts will be settled at the stage of recognition by giving prominence to the first measure which “becomes effective in the State of the opening of proceedings” (reasoning under Article 19(1))[15]. Admittedly, up until that time, there is uncertainty as to the proceedings under which the asset falls. The uniform definition of “the Member State in which assets are situated” provided in Article 2 no. 9 should at least ward off the risk of having different grounded-on-national law assets’ locations.

5 . Cross-border insolvency and Regulation (EU) 2020/1783 on taking of evidence

As noted above, tracing assets includes detecting and discovering elements of evidence. This occurs frequently in the case of ancillary proceedings (such as the avoidance disputes), which may require to take evidence outside the State of the insolvency proceedings. The Regulation (EU) 2020/1783 of 25 November 2020 on taking of evidence (recast) applies in this respect[16].

Actually, Regulation (EU) 2020/1783 will repeal Regulation (EC) No 1206/2001 as of 1st July 2022, except for the new rules governing the transmission whose application has to wait for the decentralised IT system envisaged in Article 7 to be operative. As regards the scope, nothing has substantially changed in the recast process[17]. Therefore, we can refer hereinafter to the new Regulation.

Generally speaking, Regulation (EU) 2020/1783 represents an instrument supporting all the civil judicial cooperation EU measures, irrespective of being measures that set forth grounds of jurisdiction, govern the enforcement of judgments or establish uniform procedures.

Although conceived of as the main instrument for simplifying and speeding up the judicial cooperation between Member States in the field of evidence, the Regulation allows for the use of other instruments, including the cooperative regime set up by the EIR. The simplest and most effective will be preferred[18]. It will be thus clear why the courts having jurisdiction on the merits may examinate a witness that have seat in another Member State by ordering to appear rather than by performing that hearing according to the Regulation[19].

Regulation (EU) 2020/1783 applies in civil or commercial matters without exceptions such as those restricting the scope of the Brussels Ibis Regulation. Notably, the Brussels Ibis Regulation does not apply to “bankruptcy, proceedings relating to the winding-up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings” (Article 1 (2) (b)).

This means that Regulation (EU) 2020/1783 may be of support to the EIR in order for insolvency courts to request “the competent court of another Member State to take evidence” or to take evidence “directly in another Member State”.

The practical applicability of Regulation (EU) 2020/1783 in insolvency cases depends mostly on what notion of obtaining evidence the Regulation adopts. Undoubtedly, documents discovery for evidence purposes and examination of persons to get information concerning the debtor’s assets, affairs, rights, obligations, or liabilities, are tools to which the Regulation plainly applies.

Contrariwise, all measures that fall short of cooperation between “authorities” such as disclosure orders or any orders to obtain assets without the purpose of taking evidence, are excluded.

Moreover, the Regulation covers evidence which is intended for use in “judicial proceedings” (Article 1 (2)). Confidential proceedings and out-of-court proceedings are not covered.

Assuming that cooperation to obtain evidence is required within an insolvency proceeding, Article 14 allows the insolvency court to designate its “representatives” to assist or participate in the taking of evidence. Since “representative” includes either judicial personnel or other persons (Article 14 (2)), the court may appoint the IP to participate in the taking of evidence process. Nothing excludes that the IP might prompt the court to submit the request, including its being present or taking part.

The authority to designate representatives depends on the lex fori concursus (as the “law of the Member State of the requesting court” under Article 14 (1)), while the lex loci (i.e., the law governing the execution of the request) will oversee the representative’s participation in the taking of evidence course. Both laws apply in this respect in the same way as Article 21 (3) EIR states that “in exercising its [extraterritorial] powers [stemming from the lex concursus], the [IP] shall comply with the law of the Member State within the territory of which it intends to take action”.

When it comes to coercive measures, the IP must comply with the local law (Article 15 Regulation (EU 2020/1783). The regime this time recollects Article 21 (3) EIR, which does exclude coercive measures amid the IP’s powers, unless ordered by local courts.

Article 19 of Regulation (EU 2020/1783 permits the court to take the evidence directly in another Member State. This procedure works upon a voluntary basis without resorting to coercive measures. Article 19 (3) clarifies that the “taking of evidence shall be carried out by a member of the judicial personnel or by any other person, such as an expert, who is designated in accordance with the law of the Member State of the requesting court”. This range of representatives includes the IPs if the lex fori concursus so provides.

Regulation (EU) 2020/1783 also applies to pre-commencement phases, provided that they result in judicial [insolvency] proceedings. Accordingly, rogatoiresor direct taking of evidence that are activated for proceedings “being contemplated” also encompass preliminary phases to the insolvency proceedings that fall within the EIR.

It seems that such preliminary steps also include the designation of a temporary administrator to take evidence through the schemes of Regulation (EU) 2020/1783. As per Article 52 EIR, the temporary administrator may “request any measures to secure and preserve any of the debtor's assets situated in another Member State, provided for under the law of that Member State, for the period between the request for the opening of insolvency proceedings and the judgment opening the proceedings”. Regulation (EU) 2020/1783, which obviously does not cover preservation measures such as those envisaged in Article 52 EIR, grants the administrator the option of tracing assets abroad as a representative of the “would-be” insolvency court.

6 . Asset tracing, disclosure orders and the Brussels Ibis Regulation

In the light of the foregoing, disclosure or protective measures regarding assets located abroad do not fall within Regulation (EU) 2020/1783. They do not constitute a “taking of evidence” within the meaning of that Regulation, and do not correspond to the cooperation arrangements set out therein.

Nor do disclosure or protective measures for evidence purposes (such as measures ordering pre-trial hearings or the disclosure of assets or information) qualify as provisional/protective measures under the Brussels Ibis Regulation. The CJEU made it clear in the St. Paul Dairy Industries case in respect of national provisions that allow a court to order the taking of evidence upon application of the party that seeks evidence ahead of the proceedings[20]. Without dwelling on the case, it suffices to note that the Court did not see in such measures the minimum requirements for being qualified as protective measures according to the Brussels Ibis Regulation.

Actually, the Court reasoned under Article 24 of the Brussels Convention (today, Article 35 of the Brussels Ibis Regulation), which grants jurisdiction to issue provisional, including protective, measures to the court of the Member State in which the measure is available “even if the courts of another Member State have jurisdiction as to the substance of the matter”. The Court wanted this exorbitant jurisdiction to work restrictively, i.e., when the applicant needs a measure that provisionally protects the disputed substantive right against the periculum in mora of the main proceedings, thereby preserving the legal and factual elements underlying the dispute. Only to this end, and provided that the measure may be reversed, is the competence of a court other than that ruling on the merits warranted.

This means, on the one hand, that orders for disclosing assets or hearing witness, as well as evidence orders generally, lie only with the court competent on the merit without qualifying as provisional/protective measures under the Brussels Ibis Regulation. On the other hand, these orders never come within the scope of Article 35 of the Brussels Ibis Regulation, which strictly covers provisional/protective measures.

However, there is the notable exception of disclosure and protective orders aimed at obtaining information or preserving evidence according to Articles 6 and 7 of Directive 2004/48/EC of 29 April 2004 on the enforcement of intellectual property rights. Recital 25 of the Brussels Ibis Regulation states that “the notion of provisional, including protective, measures should include” such orders as may be available under the Directive.

As a result, evidence orders issued by the court competent on the merits concerning infringement of intellectual property rights may circulate as “provisional-protective measures” even though they should qualify as “measures protecting the evidence”. Orders issued under Article 35 have local effects.

Any other measure concerning assets tracing and recovery fall into the Brussels Ibis Regulation as the definition of “judgments” is far enough to include “any judgment given by a court or tribunal of a Member State, whatever the judgment may be called, including a decree, order, decision or writ of execution, as well as a decision on the determination of costs or expenses by an officer of the court” (Article 2 (a)).

Consequently, assets tracing or recovery orders which protect rights without evidence purposes may be issued both by courts having jurisdiction on the merits and courts competent under Article 35. Only in the first case, may the measure circulate abroad[21]. Article 2 (a) clarifies that, “for the purposes of Chapter III, ‘judgment’ includes provisional, including protective, measures ordered by a court or tribunal which by virtue of this Regulation has jurisdiction as to the substance of the matter”.

It only remains to assess to what extent the Brussels Ibis Regulation is of help in cross-border insolvency asset tracing and recovery.

7 . Asset tracing and insolvency-related judgments: coordination between the EIR and the Brussels Ibis Regulation

In order to address the question, let’s start with the case of the examination of a person. Actually, this is not a theoretical play as the Guide to Enactment of the UNCITRAL Model Law on Recognition and Enforcement of Insolvency-Related Judgments includes a “judgment for the examination of a director of the debtor who may be located in a third jurisdiction” among the judgments that qualify as insolvency-related judgments (§ 60 (f)).

In view of the above, it should be clear that such judgment does not amount to a “request of evidence” in the Regulation (EU) 2020/1783 perspective.

It may instead be considered as an “order to hear a witness” under the Brussels Ibis Regulation. Consequently, this judgment may circulate abroad if it is rendered by the court having jurisdiction on the merits.

The insolvency exception drags such judgments out of the direct application of the Brussels Ibis Regulation, which gets back through Article 32 EIR as far as the enforcement is concerned. Judgments rendered under the competence of Article 3 and 6(1) EIR Recast benefit, in fact, from the mutual recognition under Articles 19 and 32 EIR and from the enforcement under the Brussels Ibis Regulation. They include decisions concerning the course and closure of proceedings, composition, “insolvency-related judgments” and preservation measures surrounding the request to open the insolvency proceedings.

Nothing seems to impede the insolvency court to render an “order to hear the person”, as well as any order aimed to the examination of assets abroad, provided that such measures are contemplated in national law (lex fori concursus). The Brussels Ibis Regulation governs the enforcement. On the other hand, should the “evidence” measure lack basis in insolvency law or is not “procedurally ancillary” to the insolvency proceedings, the Brussels Ibis Regulation would govern recognition and enforcement according to Article 32 (2) EIR (unless the judgment itself falls outside the Brussels Ibis Regulation).

A concluding step back to Article 21(1) EIR is needed to appreciate the difference between enforcement of recovery judicial measures and acting to recovery abroad. The main IP wields abroad, under the principle of universality and the mutual recognition of the judgment opening the insolvency proceedings, all the powers stemming from the lex concursus. Consequently, the IP draws the power to recovery debtor’s assets from the mutual recognition of the insolvency proceedings. Recollecting that “in exercising its powers, the [IP] shall comply with the law of the Member State within the territory of which it intends to take action” (Article 21(3)), the IP would employ extraterritorially such powers upon the mutual recognition instead of requesting the enforcement of recovery measures issued by the COMI’s court.

8 . Tracing/recovery tools and public policy: a) measures of lex fori concursus unknown to the requested State

What if the measures sought by the IP were unknown to the State in which the assets are located?

Under Article 33 EIR, “any member State may refuse to recognise insolvency proceedings opened in another Member State or to enforce a judgment handed down in the context of such proceedings where the effects of such recognition or enforcement would be manifestly contrary to that State's public policy, in particular its fundamental principles or the constitutional rights and liberties of the individual”.

This provision should also entail that the IPs “power to trace and recovery assets” under the lex concursus is barred when running at odds with the public policy of the requested State. A comparable block arises in respect of a “request of evidence with special procedures” set out in the lex processus (Article 12(3) Regulation (EU) 2020/1783).

As a result, if tracing and recovery measures were unknown to the State in which the assets are located because they are incompatible with its public policy, the measures would not be enforced. Being unknown does not in itself stand in the way of enforcement.

Needless to say, the more harmonization among national tracing tools increases, the less the based-on-public policy refusal may succeed. On the other hand, this refusal works only exceptionally in the EU area because of the mutual trust underlying the judicial cooperation. Furthermore, the fact that the “tracing’s outcome” is designed for the insolvency proceedings for which the IP wields powers in another State weakens the connection between the measures and the interests of that State that may trigger the public policy exception in defence of its fundamental principles.

9 . Tracing/recovery tools and public policy: b) the fair trial perspective

The prism of public policy also helps weighing up the impact of the fair trial on cross-border tracing and recovery.

Overall speaking, any instrument of judicial cooperation in civil matters is inspired by the fair trial as a backbone of the European public policy common both to Member States and to the EU itself.

As regards the topic in question, it may prove appropriate to focus separately on evidence measures, disclosure orders concerning the debtor’s assets, and ex parte recovery measures.

To begin with evidence measures, the fair trail underlies Article 13 Regulation (EU) 2020/1783 which lets parties assist or participate in the taking of the evidence. Parties and representatives may be present and/or participate if the lex processus requires that taking of evidence be conduct through adversarial proceedings regardless of cross-border implications, or when is the requested court to call for such involvement in order to comply with the adversarial requirement established by its lex fori (Article 13(5)). This scenario is without prejudice to the ability of the requesting court’s delegates to be present or participate pursuant to Article 14.

Conversely, Regulation (EU) 2020/1783 makes it possible to curtail the judicial cooperation whenever the “special requests” submitted by foreign courts (i.e., the request to take evidence “in accordance with special procedures” of the lex processus) are incompatible with “national law” of the requested State, including the fair trial principles (Article 12 (3)). Similarly, direct taking of evidence that is “contrary to fundamental principles” of the requested State may be refused (Article 19 (7)(c)).

On a different standpoint, virtual presence and participation through communications technology (such as videoconference or teleconference) are supportive of the fair trial as they make the taking of evidence faster and cheaper, thereby improving the access to justice. However, IT technology cannot undermine the right to assist or participate in person, as well as to communicate in person with the representative, as corollaries of the right to defense (and, thus, of the fair trial)[22].

Turning to disclosure orders, it seems that no fair-trial principle impedes them to be enforced throughout the EU judicial space. A recent case before the Italian Supreme Court is illustrative in this respect[23].

The Italian Supreme Court ruled on the enforcement of a civil judgment which had been rendered after the issuance of a disclosure order followed by a worldwide freezing order[24].

The Court did not deem both the freezing injunction and the preliminary disclose order incompatible with the Italian public policy notwithstanding the injunction was sanctioned with contempt of court in the origin State (Guernsey). The Court reasoned in the light of the debtor’s general duties not to depauperate assets and to collaborate with judges by revealing its assets’ location. A disclosure order leads debtors to fulfil such duties for the effectiveness of the civil proceedings.

In this perspective, the Court made an interesting comparison with the information system that Regulation (EU) No 655/2014 establishing the European Account Preservation Order (“EAPO” [25]) grants the courts to get information on where the assets targeted through the preservation order are[26]. From such comparison, the Court concluded that no disclosure foreign order, even the more impactful because of the related sanctions[27], triggers incompatibility with the public policy. Actually, the more the measure is impactful, the more it makes the civil proceedings effective.

Moreover, when it comes to obtaining documents or information from persons under the scheme of Regulation (EU) 2020/1783, the law of the requested State and the lex processus (i.e., the lex fori concursus) may provide differently as to the sanctions against withholding the required asset. Under that regime, and according to the principle of territoriality of the procedural law, the law of the requested State applies (Article 12). In particular, the witness may refuse to be interrogated in accordance with the that law (Article 16). The witness may refrain from answering even if he has no significant contact with the requested State. He could even “take refuge” therein to escape the examination[28]. It follows that, if the lex fori concursus were to provide for tougher sanctions, the court could sidestep the Regulation and issue disclosure orders or orders of witness hearing, thereby remitting the consequences of inobservance to its lex fori.

It remains to be seen if there is any tension between national ex parte measures and fair trial. A tension can be traced, indeed, between the surprise effect of an ex parte order – aimed to protect the substantive rights of creditors by issuing and enforcing the order without prior notification to the debtor so as to prevent the latter from relocating the assets into a foreign country – and the debtor’s right to oppose the measure ahead of seeing its assets attached.

This tension lies beneath Article 2 (a) of the Brussels Ibis Regulation when stating that the notion of ‘judgment’ for the purposes of recognition and enforcement “does not include a provisional, including protective, measure which is ordered by such a court or tribunal without the defendant being summoned to appear, unless the judgment containing the measure is served on the defendant prior to enforcement”.

The provision follows up a well-consolidated CJEU’s case law. Since the Denilauler case[29], concerning an ex parte bank account freezing order, the CJEU has been consistently stressing that scheme and principles of the Brussels I Regulation surround only judgments rendered after an adversary proceeding, or a proceeding in which the defendant not appearing was duly summoned before the enforcement. In other words, the Brussels system is “fundamentally concerned with judicial decisions which, before the recognition and enforcement of them are sought […] have been, or have been capable of being, the subject in [the] State of origin and under various procedure, of an inquiry in adversary proceedings”[30].

Thus, the lack of adversary nature prevents ex parte provisional or protective measures from yielding effects outside the State of origin. Conversely, nothing in the Court’s rulings precludes ex parte measures to have local effects. Actually, parties may request all such measures as may be available under the law of the State in which the assets are located.

What if ex parte measures are ordered by insolvency courts in the scheme of the EIR? Given that the EIR relies on the Brussels Ibis Regulation as far as the enforcement is concerned, any national measures should undergo the Denilauler test.

Nonetheless, ex parte measures that the IPs activate to recovery debtor’s assets should be differently treated from ex parte measures concerning disputed third-party’s assets in ancillary adversary proceedings, such as those arising out of avoidance actions.

The first measures pertain to the powers to recovery the debtor’s assets that the IPs wield under (and in compliance with) Article 21. They pose no problems with respect to the debtor's right of defence, let alone when the debtor is divested. Insolvency-related adversary proceedings regarding third-party assets should instead comply with the third-party right of defence (as a right of respondent in the ancillary proceedings) so as for the proceedings to meet the fair trial principles. Therefore, the cross-border recognition of ex parte measures is likely to infringe the Denilauler principles in the second case. The same is for ex parte measures ordered in relation to proceedings commenced or to be commenced by the IP before courts having jurisdiction under the Brussels Ibis Regulation[31].

All in all, the IPs’d better demand ex parte measures to local courts, i.e., in the State where the assets are located, and the measures are to be enforced.

10 . Ex parte tracing and freezing of bank accounts: the European Account Preservation Order in support of cross-border insolvency proceedings

On the other hand, IPs may look beyond the lex fori concursus or the lex loci and make use of an EAPO when it comes to freezing bank accounts.

The EAPO aims to facilitate cross-border debt recovery in civil and commercial matter, to simplify civil proceedings, to strengthen the enforcement of judgments, and, as a general objective, to enhance the effectiveness of the right of access to justice. The EAPO Regulation, on the one hand, determines the conditions under which an EAPO may be issued as a provisional and protective ex parte measure. On the other hand, it attempts to strike a balance between the surprise effect and the rights of defence by forging a complex system of remedies available to the debtor after the EAPO has been issued and enforced.

Key to this analysis is how the EAPO Regulation goes on stage in cross-border insolvency proceedings.

The EAPO Regulation does not apply to “claims against a debtor in relation to whom bankruptcy proceedings, proceedings for the winding-up of insolvent companies or other legal persons, judicial arrangements, compositions, or analogous proceedings have been opened” (Article 2(2)(c)). In compliance with the general principle that prohibits individual actions, the EAPO is not available for individual claims against the debtor after the opening of insolvency proceedings[32].

Besides, Article 46(2) EAPO Regulation provides that “[t]he effects of the opening of insolvency proceedings on individual enforcement actions, such as the enforcement of a Preservation Order, shall be governed by the law of the Member State in which the insolvency proceedings have been opened” (emphasis added). By way of derogation from the lex loci executionis, Article 46(2) calls the lex concursus to determine the effects of the proceedings on the EAPO. In so doing, the provision replicates what Article 7(2)(f) EIR generally states in matters of effects of the insolvency proceedings on individual enforcement actions[33]. Article 48(c) clarifies, finally, that the EAPO Regulation “is without prejudice to” the EIR.

In other words, if the debtor were to fall into insolvency proceedings in a Member State, the effects of the opening of the proceedings on the enforcement of an EAPO previously issued in another Member State are governed by the lex concursus.

What opens the EAPO’s doors to the IPs is Recital 8 that reads: “[T]he scope of [the EAPO Regulation] should cover all civil and commercial matters apart from certain well-defined matters. In particular, [the] Regulation should not apply to claims against a debtor in insolvency proceedings. This should mean that no Preservation Order can be issued against the debtor once insolvency proceedings as defined in [the EIR] have been opened in relation to him. On the other hand, the exclusion should allow the Preservation Order to be used to secure the recovery of detrimental payments made by such a debtor to third parties” (emphasis added).

Hence, nothing in the EAPO Regulation prevents the IPs from making use of the EAPO in avoidance disputes to trace and recover assets abroad.

It’s worth noting that the EAPO Regulation deals with the effects of insolvency proceedings on an EAPO (by recalling the lex concursus) and the case of an EAPO issued after the opening of the insolvency proceedings (by impeding creditors from using it), but it does not expressly address the case of an EAPO which has been requested but not yet enforced at the time of the opening of the insolvency proceedings.

In such a hypothetical case, Articles 2 (2) (c) and 46 (2), read in the light of the EAPO Regulation’s general purposes, lead to stowing all the issues concerning the relationship between enforcement of individual measures and insolvency proceedings within the EIR as a general EU instrument which determines the law applicable to: a) the effects of insolvency proceeding on individual actions; and b) the IPs’ powers. Accordingly, the effects of the opening of insolvency proceedings on an EAPO which has been previously requested but not yet enforced at the time of the opening should be governed by the lex concursus.

Finally, a tricky issue seems to arise in the interplay between EAPO Regulation and Article 8 EIR. As well known, this provision makes safe rights in rem on debtor’s assets located outside the Member State of the insolvency proceedings that have been validly constituted under the lex rei sitae to secure creditors or third parties before the opening of the insolvency proceedings. The opening notwithstanding, Article 8 permits secured parties to still enforce the right, by also blocking recovery measures that the IPs wish to activate against the concerned assets.

That being said, an EAPO may per se be relied upon to constitute a right in rem on the bank account in terms of Article 8 EIR. As the Lutz case before the CJEU illustrates, an attachment on bank accounts may create a right in rem if the law of the State in which the attached bank account is located so provides. Put simply, the law of the bank account would represent the lex rei sitae in the mechanism of Article 8 and an EAPO would confer a preferential position on creditors[34].

As noted above, Article 46(2) EAPO Regulation provides that “[t]he effects of the opening of insolvency proceedings on the [EAPO] enforcement shall be governed by the [lex concursus]”.

The question arises as to whether Article 8 EIR can also work when the lex concursus is called by the EAPO Regulation instead of the EIR.

We are inclined to answer in the affirmative. Article 8 seeks (not without criticisms) to protect secured parties who rely on the enforceability of their right (by means of segregation or separate settlement) against the insolvency proceedings. This skill explains why Article 8 is also designed to foster and facilitate the granting of credit[35]. Actually, a person is much more likely to grant credit when the collateral rights validly constituted under law “A” withstand the effects of insolvency proceedings subsequently opened against that debtor under law “B”.

All things considered, since Article 8 shares with the EAPO Regulation the aim of protecting secured creditors, it may constrain the effects of the insolvency proceedings even in case the lex concursus is called by the EAPO Regulation.

11 . Tracing/recovery tools and digital assets

As noted in the introductory notes, tracing process gets thornier in respect of digital assets. The definition of Article 2 no. 9 EIR seems wide enough to cover them as well. Much depends on the efforts to expand each entry. If this task looks easy with respect to digital registration (e.g., registers of financial instruments) in order to qualify the resulting right or interest as a “digital asset”, things get tough as regards assets that come to existence in the digital world and remains always anchored to it when being subject to economic operations and legal transactions (“crypto-assets”).

Crypto-assets certainly deserve a bespoke survey to shed light on how they may be traced. Notably, they require many problems to be solved before dragging it into a category of “assets” under Article 2 no. 9 EIR. It is sufficient to note that the recent Proposal for a Regulation Markets in Crypto-assets define them as “digital representation of value or rights which may be transferred and stored electronically, using distributed ledger technology or similar technology”[36]. The Proposal deals with persons that are engaged in the issuance of crypto-assets or provide services related to crypto-assets in the Union. However, it accepts a wide-ranging notion of crypto-assets that include financial instruments, electronic money, deposits, transferable securities, money-market instruments, or units in a collective investment undertaking for other EU acts to be applicable.

If rights or interests relating to crypto-assets were to arise in cross-border insolvency proceedings, how could they be traced and recovered? Do they amount to financial instruments? May they be object of security rights? The answers to such questions shift the characterization process towards one or more category of “assets” encapsulated in Article 2 no. 9 EIR – e.g., from “claims” to “financial instruments” – and reveals how reasonable it might be to insert a “crypto-asset” during the next recast process.

Nor should the impact of data protection on asset tracing be underestimated.

On the one hand, it is undisputed that data represent either a tool to get information, or a means to accessing information (passwords), as well as assets that unfold per se economic value[37]. On the other hand, cross-border cases get into connection with legal regimes that differ as much in terms of data collection and processing as in terms of data protection during tracing proceedings. Undeniably, problems lessen among Member States because of the EU legislation in matters of data protection[38].

12 . Tracing/recovery tools and digitalization of justice

On a different prospect, digital ways may facilitate and speed up the process of tracing assets as the EU policies aimed to improve the “digitalization of justice” illustrate.

The EU is taking up at stages the process of digitalization[39]. The first forthcoming step consists in setting up a system of interoperability between national platforms in order to make the transmission of documents and the process of taking evidence digitalized in compliance with fundamental rights and data protection[40]. The second step will see the entire judicial cooperation in civil (and criminal) matters embrace the IT systems as a default means for electronic communication between competent authorities, electronic payment of fees, and videoconferencing in proceedings.

In this respect two initiative somehow cross over assets tracing and recovery in cross-border insolvency.

The first is the 2020 Proposal for a Regulation on a computerized system for communication in cross-border civil and criminal proceedings[41]. The main purpose is to turn e-CODEX into the European default system of communication. Annex I to the Proposal mentions the civil judicial cooperation measures that should avail of e-CODEX. The list includes the EIR, the EAPO Regulation, and the Directive (EU) 2019/1023.

It seems clear that “e-CODEX currently facilitates electronic communication between citizens and courts, and between Member State administrations in some cross-border civil”[42]; and that “there is a clear need to do more at both the European and national level to ensure that justice systems take full advantage of digital technologies for the communication between authorities and with citizens and business”[43].

Moreover, the general approach of 28 May 2021 remarks that “it is important that appropriate channels are developed to ensure that justice systems can efficiently cooperate in a digital way. Therefore, it is essential to establish, at Union level, a tool to promote the digitalisation of communications between Member States in the context of cross-border judicial cooperation in civil and criminal matters” (§ 3). It also reads: “in the context of increased digitalisation of judicial cooperation in civil and criminal matters, the aim of the e-CODEX system is to improve the efficiency of cross-border communication between the competent authorities and facilitate access to justice of citizens and businesses” (§ 5).

The second initiative is the 2021 Proposal for a Regulation on the digitalisation of judicial cooperation and access to justice in cross-border civil, commercial, and criminal matters, and amending certain acts in the field of judicial cooperation[44]. Article 22 sets out some amendments to the EIR which should lead courts and IPs to use electronic means grounded on secure and reliable decentralised IT system to communicate each other. Other provisions deal with revising in same terms the EAPO Regulation along with all the civil judicial cooperation EU acts.

The lesson to be learned is that, in so far as cross-border insolvency proceedings require obtaining and exchanging information on assets and affairs of the debtor, they will soon rely on IT systems, and this will be even mandatory in the process of taking evidence once the decentralised IT system envisaged by Regulation (EU) 2020/1783 will be operative.

13 . A closing look beyond the EU judicial space

The foregoing legal framework of EU tools designed to trace or recover assets abroad only pertains to the EU judicial space.

Actually, after the CJEU made it clear that Article 2 no. 9 EIR is also applicable when the concerned assets “must be regarded as situated in a third State”[45], Members State courts and IPs could deal also with assets located outside the EU space to decide at least that such assets “are not situated in a Member State” for the purposes of the EIR.

Moreover, when dealing with an action to set aside brought in the main proceedings against a person whose place of residence was located outside the EU, the CJEU held that the universal effect of the main proceedings and the need to ensure certainty and uniformity to the jurisdiction criteria imply that the vis attractiva principle is not limited to ancillary disputes involving defendants domiciled or resident in a Member State[46]. The Court further said that a defendant who is domiciled outside the EU could have assets in a Member State, where the ancillary judgments presumptively will not find obstacles to be recognized and enforced[47]. Putting aside the problem of enforcing the same judgments in third countries, this means, inter alia, that even on the occasion of universal exercise of the vis attractiva, the insolvency proceedings may require asset tracing and recovery to be performed in respect of assets located in the EU space.

Very different scenarios emerge when it comes to tracing for recovering outside the EU boundaries or when appointed IPs in third countries seek assets in EU Member States.

Despite not being object of this paper[48], the topic deserves at least some remarks in order to highlight how the European integration succeeded in improving the efficiency of cross-border insolvency proceedings.

Assuming no multilateral treaties governing the matter in general terms[49], the lack of mutual recognition between third countries and EU Member States, even in the system provided for by the 1997 UNCITRAL Model Law, cause foreign IPs to request the recognition of the decision opening the insolvency proceedings and a relief from local courts before yielding whatsoever powers in the requested State[50]. On the other hand, States that have enacted the 1997 Model Law may at least rely on a harmonized system of recognition which, while falling short of the EU mutual recognition, undoubtedly ease the enforcement, the cooperation, and the IP’s tracing and recovery powers. It is noteworthy that only a handful of Member States have adopted the Model Law to date.

However, only local law reliefs may be relied upon by IPs. Such reliefs, measures at disposal of IPs, let alone the requirements thereof, change from State to State[51].

Besides, in situations lacking mutual trust, marked differences among national asset tracing and recovery tools may trigger the public policy exception more frequently than it happens in the EU judicial space. Since national courts may refuse under the public policy exception to recognize foreign proceedings or certain foreign orders, or may dismiss IP’s requests, the entire process of tracing and recovery risk being hampered.

As regards the taking of evidence, judicial assistance is available under the 1970 Hague Convention on Taking of Evidence[52], which has worked as a model for the 2001 and 2020 EU Regulations. However, the Hague system does not provide for the direct transmission between judicial bodies. The commissions rogatoiresgo through the Central Authorities before the taking of evidence might start. This filtering step evidently increases time and costs of the taking of evidence[53]. Nor does the Hague system provide for direct taking of evidence.

In terms of substantive scope, the 1970 Hague Convention seemingly covers judicial acts other than the taking of evidence. Article 1 precises, though, that such “other judicial acts” do not include “the issuance of any process by which judgments or orders are executed or enforced, or orders for provisional or protective measures”. Furthermore, many States have declared, in accordance with Article 23, not to execute obtaining pre-trial discovery of documents “as known in Common Law countries”.

Finally, despite the Hague Conference on Private International Law (“HCCH”) being seriously interested in the use of IT systems for modernizing the global judicial cooperation, to date the outcomes fall short of those obtained (and upcoming) by the EU[54]. This may not come as a surprise given the differences between the EU and the HCCH in terms of structure, scope, and policy.

Note:

[1]

The paper does not deal with criminal aspects of insolvency proceedings. Consequently, it leaves out the (very interesting) topic of criminal asset tracing and recovery. However, certain topics, such as piercing the corporate veil when companies are used to launder proceeds or hide assets, are at the intersection of civil and criminal law.

[2]

The literature on the Regulation (and on its predecessor, the Regulation (EC) No 1346/2000) is vast. See particularly: S. Bariatti and P. Omar (eds), The Grand Project: Reform of the European Insolvency Regulation (INSOL Europe 2014); R. Bork and R. Mangano, European Cross-Border Insolvency Law (OUP 2016); R. Bork and K. van Zwieten (eds), Commentary on the European Insolvency Regulation (OUP 2016); G. Corno and S. Bariatti, ‘Il Regolamento (UE) 2015/848 del Parlamento Europeo e del Consiglio del 20 maggio 2015 relativo alle procedure di insolvenza (rifusione). Una prima lettura’ (2015) <www.fallimentarista.it>; G. Cuniberti, P. Nabet and M. Raimon, Droit européen de l’insolvabilité (LGDJ 2017); R. Dammann and M. Sénéchal, Le droit de l’insolvabilité internationale (JOLY 2018); P. De Cesari and G. Montella, Il nuovo diritto europeo della crisi d’impresa (Giappichelli 2017); F.J. Garcimartín Alférez, ‘The EU Insolvency Regulation Recast: Scope, Jurisdiction and Applicable Law’ (2015) Zeitschrift für Europäisches Privatrecht 695; B. Hess, P. Oberhammer and T. Pfeiffer (eds), European Insolvency Regulation. Heidelberg-Luxembourg-Vienna Report (Beck-Hart-Nomos 2013); B. Hess,‎ P. Oberhammer,‎ S. Bariatti,‎ C. Koller,‎ B. Laukemann, M. Requejo Isidro, and F. C. Villata (eds), The Implementation of the New Insolvency Regulation. Improving Cooperation and Mutual Trust (Nomos 2018); A. Leandro, Il ruolo della lex concursus nel regolamento comunitario sulle procedure di insolvenza (Cacucci 2008); A. Leandro, ‘A First Critical Appraisal of The New European Insolvency Regulation’ (2016) Il Diritto dell’Unione Europea 215; A. Leandro, A. Nuzzo, and G. Meo (eds), Crisi transfrontaliera di impresa: orizzonti internazionali ed europei (Cacucci 2018); P. Mankowski, M. Müller, and J. Schmidt, EuInsVO 2015. Europäische Insolvenzverordnung 2015. Kommentar (Beck 2016); G. Moss, I. Fletcher, and S. Isaacs (eds), Moss, Fletcher and Isaacs on The EU Regulation on Insolvency Proceedings (3rd edn, OUP 2016); P. Omar, European Insolvency Law (Ashgate 2004); C. Paulus, EuInsVO - Europäische Insolvenzverordnung (6th edn, Recht und Wirtschaft 2021); K. Pannen (ed.), European Insolvency Regulation (De Gruyter 2007); I. Queirolo, Le procedure di insolvenza nella disciplina comunitaria. Modelli di riferimento e diritto interno (Giappichelli 2007); I. Tirado, ‘An Evolution of COMI in the European Insolvency Regulation: From ‘Insolvenzimperialismus’ to the Recast’ (2015) Annual Review of Insolvency Law 691; R. van Galen, An Introduction to European Insolvency Law (Wolters Kluwer 2021); M. Virgós Soriano and F. J. Garcimartín Alférez, The European Insolvency Regulation: Law and Practice (Kluwer Law International 2004); B. Wessels, International Insolvency Law. Part II. European Insolvency Law (4th ed., Wolters Kluwer 2017); B. Wessels and P. Omar (eds), The European Insolvency Regulation: An Update (INSOL Europe 2010).

[3]

A Guide to Enactment and Interpretation as well as further guidelines on more detailed profiles (such as the cooperation among authorities involved in the proceedings and the enterprise group insolvency) followed the 1997 Model Law. It is well known that UNCITRAL deals also with the normative harmonization of national insolvency beyond international implications: see, for instance, the Legislative Guides on Insolvency Law (parts one and two of 25 June 2004, part three on treatment of enterprise groups in insolvency of 1 July 2010; part four on director’s obligation in the period approaching insolvency (including in enterprise groups) of 18 July 2013 and 15 July 2019).

[4]

Adopted on 2 July 2018 with a Guide to Enactment.

[5]

The Working Group V (Insolvency Law) will be starting its work at the Vienna meeting convened on 13-17 December 2021.

[6]

UNCITRAL, Civil asset tracing and recovery in insolvency proceedings. Note by the Secretariat, 4 October 2021 (A/CN.9/WG.V/WP.175), § 29. See previously the Report of the Colloquium on Civil Asset Tracing and Recovery (Vienna, 6 December 2019) (A/CN/9/1008). The documents are available at www.uncitral.org.

[7]

UNCITRAL, Note by the Secretariat (n 6), § 9.

[8]

In Case C-649/13 Nortel Networks [ECLI:EU:C:2015:384], the CJEU made it clear, with respect to Article 2 (g) of Regulation (EC) No 1346/2000, that “although [the provision] refers expressly only to [assets] situated in a Member State, that provides no ground for inferring that that provision is not applicable if the [assets] in question must be regarded as situated in a third State” (point 52).

[9]

See § 11.

[10]

This “safeguard clause” looks after third parties’ rights in rem against the extraterritorial power of the IP, thereby sharing the purpose of Article 8 to protect analogous rights in relation to assets situated in another Member State against the opening of the insolvency proceedings. Similar treatment also covers the reservation of title according to Article 10.

[11]

Recital 48 gives the example of the guidelines prepared by the UNCITRAL, such as the Practice Guide on Cross-Border Insolvency Cooperation adopted in support of Article 27 of the 1997 Model Law. Other examples are the European Communication and Cooperation Guidelines for Cross-Border Insolvency (CoCo Guidelines) (INSOL 2007), the EU Cross-Border Insolvency Court-to-Court Cooperation Principles (University of Leiden and University of Nottingham Law School 2014), the ALI-III Global Principles for Cooperation in International Insolvency Cases (American Law Institute and International Insolvency Institute 2012), the IBA Cross-Border Insolvency Concordat (International Bar Association 1995).

[12]

Case C-649/13 Nortel Networks (n 8), regarding an action that sought a declaration that certain debtor’s assets fall within the secondary insolvency proceedings.

[13]

Case C-47/18 Skarb Pánstwa v Stephan Riel [ECLI:EU:C:2019:754].

[14]

Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters [2012] O.J. L 351/1.

[15]

Case C-649/13 Nortel Networks (n 8), point 45.

[16]

Regulation (EU) 2020/1783 of the European Parliament and of the Council of 25 November 2020 on cooperation between the courts of the Member States in the taking of evidence in civil or commercial matters (taking of evidence) (recast) [2020] O.J. L 405/1.

[17]

On the subject see recently A. Leandro, L’assunzione delle prove all’estero in materia civile nell’era della innovazione digitale. La rifusione delle norme applicabili ai rapporti fra gli Stati membri dell’Unione europea (Giappichelli 2021).

[18]

See Article 29. See also Case C-332/11 ProRail BV [ECLI:EU:C:2013:87].

[19]

Case C-170/11 Lippens [ECLI:EU:C:2012:540], point 32. See also § 9.

[20]

Case C-104/03 St. Paul Dairy Industries [ECLI:EU:C:2005:255], ruling on Article 186 of the Netherlands Civil Procedural Code.

[21]

See recently Case C-581/20 Skarb Państwa v TOTO SpA [ECLI:EU:C:2021:808], point 57.

[22]

The fair-trial test on IT technologies is at center of the EU policies on the digitalization of justice: see European Commission, Communication on digitalisation of justice in the European Union. A toolbox of opportunities (COM(2020) 710 final) 2 December 2020; see earlier the Council Recommendations, Promoting the use of and sharing of best practices on cross-border videoconferencing in the area of justice in the Member States and at EU level [2015] O.J. C 250/1. On the digitalization see also § 12.

[23]

Order 16 September 2021 no. 25604.

[24]

As a “successor” of Mareva injunctions, the worldwide freezing injunctions commonly ground on the judgment rendered on 11 April 2006 by the English Court of Appeal in the Dadourian case (Dadourian Group Int. Inc. v. Simms and Others [2006] EWCA Civ 399), available at https://www.bailii.org/ew/cases/EWCA/Civ/2006/399.html. The Court also set out some guidelines on how to exercise discretion to permit a party to enforce a worldwide freezing order abroad. The guidelines have been clarified in subsequent judgments.

[25]

Regulation (EU) No 655/2014 of the European Parliament and of the Council of 15 May 2014 establishing a European Account Preservation Order procedure to facilitate cross-border debt recovery in civil and commercial matters [2014] O.J. L 189/59.

[26]

The Court also relies on the legislative decree 26 October 2020 no 152 that provides for some implementing national rules to the EAPO Regulation.

[27]

One example is the astreinte. Article 11 (2) of the French Civil Procedural Code states “si une partie détient un élément de preuve, le juge peut, à la requête de l’autre partie, lui enjoindre de le produire, au besoin à peine d’astreinte. Il peut, à la requête de l’une des parties, demander ou ordonner, au besoin sous la même peine, la production de tous documents détenus par des tiers s’il n’existe pas d’empêchement légitime”. A fine may be imposed in case of withholding documents or information.

[28]

These hypotheses mostly arise from the divergences between states regarding the discipline of “secrets” (e.g., banking secrecy); such divergences are often smoothed through international treaties or concerted best practices.

[29]

Case 125/79 Bernard Denilauler [ECLI:EU:C:1980:130]. See also Case C-474/93 Hengst Import BV [ECLI:EU:C:1995:243]; Case C-39/02 Mœrsk Olie & Gas [ECLI:EU:C:2004:615].

[30]

Case 125/79 Bernard Denilauler (n 29) point 13.

[31]

According to Article 6, the IPs may even join such actions with those falling under vis attractiva concursus. For the scope of Article 6 EIR in general see the relevant commentaries in the bibliographic list in n 2 as well as A. Leandro, ‘The minefield at the interface of the Brussels Ibis Regulation and the European Insolvency Regulation (Recast)’ in P. Mankowski (ed.), Research Handbook on the Brussels Ibis Regulation (Edward Elgar 2020) 188. See also the CERIL Report 2021-1 on identifying annex actions under Article 6(1) of the European Insolvency 2015 prepared by the CERIL Working Party 11 on Matters regarding the European Insolvency Regulation 2015 under the supervision of S. Madaus and B. Wessels, available at https://www.ceril.eu/news/ceril-report-2021-1-on-identifying-annex-actions-under-article-6.

[32]

Case C-294/02 Commission v. AMI Semiconductor and others [ECLI:EU:C:2008:378]; Case C-212/15 ENEFI Energiahatekonysagi Nyrt [ECLI:EU:C:2016:841], point 33; Case C-250/17 Virgílio Tarragó da Silveira [ECLI:EU:C:2018:398], point 31.

[33]

Case C-212/15 ENEFI (n 32), points 32-35.

[34]

Case C-557/13 Hermann Lutz [ECLI:EU:C:2015:227]. The case related to the liquidation of an Austrian bank account that had commenced after the opening of insolvency proceedings in Germany but under a seizure issued beforehand. The “right to seize” the bank account was qualified by the referring court as a “right in rem” for the effects of Article 8 EIR (point 25 of the CJEU’s judgment; the Court ruled on under Article 5 Regulation (EC) No 1346/2000). The Court did not object to this characterization. It only pointed out that a right to seize bank account may qualify as a right in rem, in the subcategory of the “exclusive right to recover a claim” (point 27), provided that it exists, is validly constituted and amounts to an exclusive right according to the law of the State in which the account is located.

[35]

See Recital 68 EIR and Case C-527/10 ERSTE [ECLI:EU:C:2012:417], point 41.

[36]

(COM (2020) 593 final) 24 September 2020, Article 3, § 1 (1).

[37]

UNCITRAL, Report of the Colloquium on Civil Asset Tracing and Recovery(n 6), § 11.

[38]

Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) [2016] O.J. L 119/1; Regulation (EU) 2018/1725 of the European Parliament and of the Council of 23 October 2018 on the protection of natural persons with regard to the processing of personal data by the Union institutions, bodies, offices and agencies and on the free movement of such data, and repealing Regulation (EC) No 45/2001 and Decision No 1247/2002/EC [2018] O.J. L 295/39.

[39]

See European Commission, Communication on digitalisation of justice in the European Union. A toolbox of opportunities (n 22).

[40]

See A. Leandro (n 17), Chapter I.

[41]

(COM(2020) 712 final) 2 December 2020. The list is part of the Impact Assessment accompanying the Proposal (SWD(2020) 541 final) 2 December 2020).

[42]

Explanatory Memorandum to the Proposal (n 41) 2.

[43]

Explanatory Memorandum to the Proposal (n 41) 5.

[44]

(COM (2020) 759 final) 1 December 2021.

[45]

Case C-649/13 Nortel Networks (n 8), point 52.

[46]

Case C-328/12 Ralph Schmid [ECLI:EU:C:2014:6]; Case C-295/13 H v HK [ ECLI:EU:C:2014:2410].

[47]

Case C-328/12 Ralph Schmid (n 46), point 38.

[48]

Accordingly, asset tracing and recovery in situations involving the UK and the EU Member States after the Brexit are outside the paper as well. On the Brexit’s effects on cross-border insolvency from the EU standpoint see, among others, A. Leandro, ‘Brexit and Cross-border Insolvency Looking Beyond the Withdrawal Agreement’ (2020) Diritto del commercio internazionale 153 also for further references.

[49]

Noteworthy specific instruments include the Cape Town Convention of 16 November 2001 on International Interests in Mobile Equipment and its Protocols as they provide for special cross-border tracing tools (for instance, the Space Protocol of 2012 features the Tracking, Telemetry and Control mechanism (ITTC&C) which helps repossess satellites and other space assets). The Cape Town system is even more worth noting as the EU acceded to it as a mixed agreement (see, however, the declaration by the EU pursuant to Article 55 whereby Member States court will apply Article 13 and 43 of the Cape Town Convention for interim relief only in accordance with the principles governing the scope of Article 35 of the Brussels Ibis Regulation in matters of provisional and protective measures).

[50]

Under the 1997 Model Law regime, the requested court may grant wide-ranging reliefs either upon the application for recognition of foreign proceedings or afterwards, including enabling the foreign IP to examine witnesses or acquire information about the debtor’s assets or affairs (Articles 19-21).

[51]

Lacking uniform worldwide regimes, differences also arise at global scale as to the law applicable to insolvency proceedings. Not by chance UNCITRAL has started dealing with this topic along with asset tracing and recovery. See the Note by the Secretary of 4 October 2021 (A/CN.9/WG.V/WP.176), available at www.uncitral.org.

[52]

On the applicability of the Hague Convention to insolvency proceedings see the Report on the work of the Special Commission of April 1989 on the operation of the Hague Conventions of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters and of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters, drawn up by the HCCH Permanent Bureau, § 26; see also the Note on Article 1 (1) of the 2016 Preliminary Draft [Judgment] Convention and the term “civil or commercial matters” drawn up by the co-Rapporteurs of the draft Convention and the HCCH Permanent Bureau, § 19 and the case law mentioned in Annexe III. The documents are available at the HCCH website www.hcch.net.

[53]

To date, the 1970 Hague Convention binds 64 States, including Denmark, to which the Regulation (EU) 2020/1783 does not apply, and the UK, which is no longer a Member State. Since Austria, Belgium and Ireland are not contracting States of the 1970 Hague Convention and the UK is not a contracting State of the Convention of 1 March 1954 on Civil Procedure (instead ratified by Austria and Belgium), their judicial cooperation in evidence matters will occur on bilateral basis or through diplomatic means.

[54]

See A. Leandro (n 17) 21 ff.

Asset Tracing and Recovery in European Cross-border Insolvency Proceedings*

Sommario:

informativa sul trattamento dei dati personali

Articoli 12 e ss. del Regolamento (UE) 2016/679 (GDPR)