A&L Goodbody LLP
  November 1, 2005 - Ireland

Insolvency/EU Law – Insolvency Regulation – Jurisdiction for Bringing Insolvency Proceedings – Parmalat – Irish Subsidiary Eurofood IFSC Limited

Eurofood IFSC Limited: Opinion of Advocate General Jacobs, 27 September 2005, Case C-341-04 This significant opinion by Advocate General Jacobs clarifies provisions of the Insolvency Regulation (1346/2000) concerning a company’s centre of main interests (COMI) and the recognition of judgments in the courts of other EU Member States. While concerning Irish and Italian entities, the case has attracted interest across the EU. Facts: Eurofood is an Irish-registered wholly owned subsidiary of Parmalat SpA, the Italian food company which faced serious financial problems in 2003, forcing it and a number of its subsidiaries into liquidation in late 2003. Eurofood, with debts of $122 million, was one of these subsidiaries. A petition for winding up Eurofood was presented to the Irish High Court by a creditor on 27 January 2004. A provisional liquidator was appointed at the same time. On 20 February 2004 the Italian court declared Eurofood insolvent and appointed an administrator over the liquidation of the company. On 23 March 2004 the Irish High Court ruled that the insolvency proceedings had been opened in Ireland at the date of the presentation of the petition (27 January 2004). There was, therefore, a conflict as to where the main insolvency proceedings should be held. The Italian administrator appealed the Irish High Court decision to the Supreme Court, who referred questions on the interpretation of Regulation 1346/2000 to the ECJ. The questions concerned: 1. the jurisdiction in which main insolvency proceedings should be opened; and 2. whether the court of one Member State could refuse to recognise the judgment of a court of another Member State, if the court of the first Member State is satisfied that there has been a disregard of fair procedures in coming to that decision. Held: 1. Where insolvency proceedings are first opened by a court in the Member State in which a company’s registered office is situated and which the company conducts its business, the courts of other Member States do not have jurisdiction to open main insolvency proceedings. Additionally, the jurisdiction of main insolvency proceedings will not be the jurisdiction of the parent company solely because the parent controls the policy of the subsidiary. 2. A Member State is not bound to give recognition to a decision of the courts of another Member State, in a situation where the court of the first Member State is satisfied that the decision has been made in disregard of a person’s right to fair procedures and a fair hearing. The essence of the Advocate General’s decision is that the main insolvency proceedings should be held in Ireland, not Italy. While this decision is not binding, it will be strongly persuasive in the ECJ. Judgment from the ECJ is expected later this year.


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