ROMANIA

BUCURESTI TRIBUNAL - VII CIVIL SECTION

CIVIL JUDGMENT NO. 3220

PUBLIC SESSION OF 25.05.2018

Court constituted by:

PRESIDENT - SYNDIC JUDGE - ***

COURT OFFICER - ***

Through the application filed on 25.04.2018, the petitioner ** - representative **, as provisional liquidator, requested recognition of the insolvency proceedings carried out in New Zealand, under Article 289 para. 2(A) of Act No. 85/2014.

In the application the applicant states that it is an insurance company registered in New Zealand, subject to main insolvency proceedings under judgment No NYHC 264/23.02.2018 of the High Court of New Zealand in case No CIV -2018 44-00306.

The documents required by section 287 of Act No. 85/2014 were attached to the file.

On 17. 05.2018 ** filed an application for intervention in its own interest, which was admitted in principle by judgment of 18.05.2018.

Through the request for intervention, the inadmissibility of the request was invoked, with reference to the provisions of Art. 274 para. 2(B) of Act No. 85/2014 which exclude insurance companies from the recognition procedure and the prematurity and lack of interest of the application by reference to the absence of a final decision of the New Zealand courts opening insolvency proceedings, so that there are no foreign insolvency proceedings within the meaning of Act No. 85/2014.

It was also claimed that the condition of reciprocity of the effects of judgments between the two countries had not been met.

Having analysed the documents and the file, the Court finds as follows.

Recognition of insolvency proceedings opened in non-EU countries is governed by the provisions of Articles 287-289 of Law No 85/2014, part of Chapter II of Title III - Cross-border Insolvency of Law No 85/2014.

The scope of application of this chapter is set out in Article 274 of Law No 85/2014, the court will first examine whether the provisions on the recognition of insolvency proceedings are applicable to the petitioner, and then whether the conditions set out in Article 289 of Law No 85/2014 for a recognition decision are met.

Although they have been submitted in the form of procedural objections, in the light of the arguments put forward in support of those submissions by the intervener, the court finds that the plea in fact alleges non-compliance with the conditions laid down by Law No 85/2014 for recognition of the judgment, namely the inapplicability of the recognition procedure laid down in Articles 287 to 289 of the law, in relation to the scope of application thereof, as restricted by Article 274(2) of Law no. 85/2014 , i.e. failure to meet the requirement provided for by Art. 289 para. 1(A) of Law no. 85/2014 regarding the nature of foreign proceedings.

The court thus qualifies the exceptions raised as substantive defences which will be analysed in the considerations underlying the resolution of the application and are not procedural exceptions which make it unnecessary to resolve the merits of the case within the meaning of Article 245 of the Code of Civil Procedure.

On the merits of the application, the court finds as follows.

The applicant is an insurance company registered in a non-EU Member State, New Zealand, in respect of which the New Zealand High Court of Justice has appointed a provisional liquidator to administer insolvency proceedings.

In general, at national and international level, judicial cooperation proceedings, recognition of insolvency proceedings and the effects of insolvency proceedings opened in other States are treated separately from general proceedings for the recognition of judgments, due to the particularities of such proceedings.

Thus, at European level, insolvency proceedings involving more than one Member State are treated separately by Regulation 848/2015, which derogates from the general rule established at European level on recognition of judgments within the framework of Regulation 1215/2012. For its part, Regulation 848/2015, which governs insolvency proceedings at European level, does not apply to insurance companies, which are expressly excluded from the provisions of Article 1 paragraph 2 alongside the proceedings of credit institutions, investment firms and collective investment undertakings.

Point 19 of the Preamble to the Regulation explains the inapplicability of the Regulation to insurance proceedings by the special regime of insolvency proceedings concerning these companies and the wider powers of intervention that national authorities must have.

Regulation 848/2015 is, of course, not applicable in this case, but it gives an indication as to why it is generally accepted that international judicial cooperation in insolvency proceedings concerning insurance companies cannot be carried out under the same conditions as other insolvency proceedings. Thus, at the origin of the different treatment in the field of cooperation are the particularities of an insurance company, reflected in specific insolvency proceedings, derogating from the common law rules.

As far as national law is concerned, insolvency proceedings in the field of insurance companies are governed separately by rules derogating from the ordinary law on the subject, namely Chapter IV Title II of Law No 85/2014.

Cross-border insolvency is regulated in Law No 85/2014 by Title III, which contains separate chapters for relations with third countries - non-members of the European Union (Chapter II), private international law relations in the field of credit institutions (Chapter IV) and private international law relations in the field of bankruptcy of insurance companies (Chapter V).

Chapter II covers general relations with third countries, not only the recognition of insolvency proceedings but also the effects of such proceedings, once recognised, as well as cooperation in the event of simultaneous main and territorial proceedings.

According to Article 274(2) of Law No 85/2014, the provisions contained in Chapter II, including those governing the recognition of insolvency proceedings conducted in a third State which are relied upon by the petitioner, do not apply to insolvency proceedings for which there are special rules derogating from ordinary law and which concern insurance companies, credit institutions or investment institutions.

Under the previous legislation, Article 2 of Law No 637/2002, the exception was defined solely by the object of the company's activity (insurance, credit, or investment institutions). In the current text of the law, a reference to the existence of special derogating rules concerning the insolvency proceedings of these types of companies has been added, which, although it seems to be cumulative condition, only clarifies the reasons for restricting the application of this chapter.

The derogating rules do not concern the procedure for recognition of foreign insolvency proceedings, but special rules governing the actual insolvency proceedings in domestic law, rules which exist in Law No 85/2014 regarding the procedures applicable to all these types of companies and which derive from the specific nature of their business.  This conclusion follows directly from the wording of the text of the law, i.e., "insolvency proceedings for which there are derogating rules".

This is generally the reasoning behind the exclusion of insurance companies from the generally applicable rules on international cooperation, the existence of specific national rules governing the insolvency proceedings of such companies by reference to their object of activity.

Moreover, Article 274(2)(a) of Law 85/2014 excludes from its application the entire chapter governing relations with third countries in insolvency matters, not only the procedure applicable to recognition.

Even if we were not to refer the existence of derogating rules to the procedure governing the domestic insolvency proceedings of insurance companies, the derogatory rules can only be interpreted to relate to the cross-border insolvency of insurance companies as a whole. The rules on cross-border insolvency of insurance companies are regulated separately in Chapter IV of Title III of Act No 85/2014, so that it can be considered that there are also special rules for cross-border insolvency of insurance companies.

It is true that the Romanian legislator intended to regulate and recognise only insolvency proceedings concerning insurance companies from Member States with branches in Romania or branches in Member States of insurance companies from third countries, in respect of which insolvency proceedings are being carried out in Member States and which have been active on the territory of Romania, in the context that cross-border legal relationships concerning the insolvency of insurance companies have not been regulated at European level.

Precisely because of the specific nature of insurance companies, the rules governing the cross-border insolvency of these companies with head offices or branches in Member States are viewed differently from the rules governing the cross-border insolvency of other companies, as the legislator's conception is different.

Thus, while in the case of ordinary companies, whether they have their registered office in Member States and are subject to Regulation 848/2015 or whether they have their registered office in third countries and the provisions of Chapter II of Title III of Law No 85/2014 are applicable, there is the possibility of conducting main proceedings and territorial proceedings exclusively in respect of rights and assets in the territory of a State where they have a seat, in the case of insurance companies the rule is that insolvency proceedings are conducted only in the State where the company has its registered office and also has effects on the other branches (Articles 324 and 332 of Law no. 85/2014), and the effects are those derived from the law under which the procedure is conducted.

Given that the Romanian legislature intended to treat the cross-border insolvency of insurance companies with head offices/branches in Member States differently from the insolvency of other companies covered by Regulation No 848/2015, it cannot be considered that the legislature's intention was to allow the application of the general rules governing the cross-border insolvency of companies with a regular object of activity in relations with third countries and insolvency proceedings concerning insurance companies with head offices in those States.

In this context, the provisions of Article 274(2)(a) of Law No 85/2014 can only be interpreted as meaning that the legislator intended to exclude insurance companies, for which it provided specific rules both in domestic insolvency proceedings and cross-border insolvency, from the applicability of Chapter II of Title III of Law No 85/2014, including with regard to the recognition of insolvency proceedings conducted in third countries that are not members of the European Union.

An interpretation of the provisions of Art. 2 of Law No 85/2014 in the sense invoked by the petitioner, in which the derogating provisions for companies having as their object banks, insurance companies and investment services must regulate the recognition of insolvency proceedings of such companies established in a third state, would mean that these limitations in relation to the object of activity would never apply, but the text of the law must be interpreted in the sense that it produces legal effects, not in the sense that it produces no effect.

If, in relation to the object of activity of the company applying for recognition of the insolvency proceedings, it is found that the whole of Chapter II of Title III of Law 85/2014 is not applicable, it is no longer necessary to examine whether the conditions laid down in Article 289 of Law 85/2014 for recognition of the judgment have been met.

In view of these considerations, the court shall dismiss the application for recognition and allow the application for intervention.

FOR THESE REASONS

IN THE NAME OF THE LAW

DECIDES

Dismisses the application for recognition of insolvency proceedings filed by the debtor .... - in intermediate liquidation, with registered office .... New Zealand, by representative...., as unfounded.

Admit the application to intervene in its own interest made by ....SA with registered office in ....

With an appeal within 7 days of notification.

The appeal shall be lodged with the Bucharest Court, Civil Section VII.

Delivered in public sitting today, 25.05.2018, by making the solution available to the public through the court registry.

                    PRESIDENT                                    COURT OFFICER