International jurisdiction in insolvency matters
The Council of the European Union’s Regulation on insolvency proceedings and the Spanish Insolvency Act are the main criteria to determine the international jurisdiction when a company of a member state declares itself insolvent.
Both regulations establish that jurisdiction to hear an insolvency case lies with the courts of the Member State where the debtor habitually conducts the administration of his interests (which can be ascertained by third parties). This place is the COMI (center of main interests).
It means that the courts where the debtor has its registered office do not necessarily have insolvency jurisdiction. The courts where the debtor has his center of main interests or its effective business, its COMI, may open the proceedings.
In other words, the creditors can identify ex-ante the rules to which they will have recourse in the event of insolvency of the company.
However, given that the European Regulation and the Spanish Insolvency Act presume that the registered office is in the Member State where its center of main interests is located, the creditors will have to prove that the COMI is in another Member State. In this regard, the law sets specific rules to avoid confusion on the matter.
- Art. 4: Examination as to jurisdiction
- Art. 5: Judicial review of the decision to open the main insolvency proceedings
- Recitals 27, 32, 33, and 34
The Court of Justice of the European Union has ruled on this matter many times. Identifiable and verifiable objective criteria for third parties are necessary to determine the location of the COMI. Especially relevant are the creditors’ opinions and perceptions of where the debtor is effectively conducting its business.
For additional information regarding international jurisdiction in insolvency matters,
This article is not considered legal advice