delivered on 8 May 2013 (1)

Case C‑251/12

(acting as administrators in the insolvency of Grontimmo SA)v

(Request for a preliminary ruling from the Tribunal de commerce de Bruxelles (Belgium))

Judicial cooperation in civil matters — Regulation (EC) No 1346/2000 — Insolvency proceedings — Honouring of an obligation for the benefit of an insolvency debtor — Payment by a third party to a creditor of the insolvency debtor — No awareness of the opening of insolvency proceedings

I – Introduction

1.This is the first case that relates to the interpretation of Article 24 of Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings (‘Regulation 1346/2000’ or ‘the Regulation’). (2) That provision protects the good faith of a person who, being unaware of the opening of insolvency proceedings, honours an obligation to an insolvency debtor even though that obligation could thereafter be effectively honoured only to the liquidator.

2.In the dispute in the main proceedings, the liquidators are seeking payment of funds originally held by the insolvency debtor which the bank, on presentation of a cheque issued by it (in accordance with an instruction given by the insolvency debtor prior to the opening of insolvency proceedings) has already paid to a third party. The bank does not wish to make a second payment, this time to the liquidators, and relies in its defence on Article 24 of the Regulation.

II – Legal framework

Article 24(1) of Regulation No 1346/2000 provides:

‘Honouring of an obligation to a debtor

Where an obligation has been honoured in a Member State for the benefit of a debtor who is subject to insolvency proceedings opened in another Member State, when it should have been honoured for the benefit of the liquidator in those proceedings, the person honouring the obligation shall be deemed to have discharged it if he was unaware of the opening of proceedings.’

III – Facts and main proceedings

4.On 11 May 2006, the Association des copropriétaires du quartier des arts made an application to the Tribunal de commerce de Bruxelles (Commercial Court, Brussels) for insolvency proceedings to be opened in respect of the company Grontimmo SA. (3)

5.On 22 and 24 May 2006, two companies issued cheques made payable to Grontimmo and amounting in total to EUR 1 400 000, in part settlement of their existing liabilities to Grontimmo.

6.On 29 May 2006, new liquidators were appointed at Grontimmo. On the same day, Grontimmo and Kostner Development Inc., (4) a company incorporated under Panamanian law which had been founded only a short time before, signed an agreement under which Grontimmo acquired from Kostner a purchase option for the price of EUR 1 400 000. That purchase option related to shares in a company incorporated under Luxembourg law and shares in a company incorporated under the law of the Netherlands Antilles.

7.On 2 June 2006, the new liquidators of Grontimmo instructed Dexia Internationale Luxembourg (5) (i) to open an account to cash the cheques amounting in total to EUR 1 400 000, and (ii) to issue a Dexia bank cheque for EUR 1 400 000 payable to Kostner and chargeable to Grontimmo. On 14 June 2006, the cheques amounting in total to EUR 1 399 900 were paid into Grontimmo’s account at the bank.

8.On 4 July 2006, the Tribunal de commerce de Bruxelles opened insolvency proceedings against Grontimmo. The effect of this under Belgian law was, according to the referring court’s account of the matter, to divest the insolvent company of its authority to manage the entirety of its assets, that divestment automatically taking full effect from the first hour of that day. In particular, from that point onwards, Belgian law prevented third-party debtors from honouring obligations to the insolvency debtor with debt-discharging effect. The liquidators published a notice of the opening of proceedings in Belgium only, but not in Luxembourg.

9.On 5 July 2006, that is to say the day after the opening of insolvency proceedings, the bank, in accordance with the instruction given by Grontimmo on 2 June 2006, issued a cheque for the price of the purchase option of EUR 1 400 000 which was made payable to Kostner. Kostner cashed that cheque on the very same day and the bank debited Grontimmo’s account accordingly.

10.Grontimmo’s liquidators then asked the bank to deposit the amount paid to Kostner in Grontimmo’s account. They stated that that payment had been made in breach of the divestment of the insolvency debtor’s authority to manage its property and was therefore unenforceable against its available assets.

11.The bank relied on Article 24 of Regulation No 1346/2000 and pointed out that, when it issued and paid the cheque on 5 July 2006, as instructed, it had been unaware of Grontimmo’s insolvency, with the result that it was under no obligation to reimburse the aforementioned amount to the assets in the insolvency estate. The liquidators then brought an action for payment against the bank before the referring court.

IV – Request for a preliminary ruling and procedure before the Court

By order of 26 April 2012, the referring court stayed the proceedings before it and referred the following questions to the Court of Justice for a preliminary ruling:

‘(1) How should the words “obligation … for the benefit of a debtor” in Article 24 of Regulation No 1346/2000 of 29 May 2000 be interpreted?

(2) Must those words be interpreted as including a payment made to a creditor of the insolvency debtor at the latter’s request, in the case where the party which carried out that payment obligation on behalf and for the benefit of the insolvency debtor did so while unaware of the existence of insolvency proceedings which had been opened against the debtor in another Member State?’

13.In the procedure before the Court of Justice, written observations were submitted and oral argument was presented by the liquidators in the insolvency of Grontimmo, Banque Internationale à Luxembourg, the Belgian Government and the European Commission. Written observations were submitted by the French and Portuguese Governments. In addition, the hearing was attended by the German Government.

V – Legal assessment

14.The referring court is asking the Court for an interpretation of the expression ‘honouring of an obligation for the benefit of a[n] [insolvency] debtor’ in Article 24 of Regulation No 1346/2000. It would like to ascertain whether that expression is also capable of including a payment which was made not to the insolvency debtor but, on his instruction, to one of his creditors, in particular on behalf and for the benefit of the insolvency debtor.

15.Before I turn to the interpretation of Article 24, it is necessary to give a brief description of the place which that provision occupies within the general normative context of the Regulation. Regulation No 1346/2000 provides for the immediate recognition of judgments concerning the opening of insolvency proceedings. (6)

As a result of that automatic recognition, the effects attributed to the proceedings by the law of the State in which the proceedings were opened are extended to all other Member States.

16.Under the laws of the Member States, the insolvency debtor generally loses the authority to manage and dispose of his assets once insolvency proceedings have been opened. As a result, he also loses the power to take receipt of the performance of an obligation: a debtor of the insolvency debtor (a third-party debtor) can no longer honour an obligation to an insolvency debtor with debt-discharging effect. If the third-party debtor does honour an obligation to an insolvency debtor, the honouring of that obligation does not have a debt-discharging effect. The liquidator, to whom the power to take receipt of the performance of an obligation has now been transferred, does not have to allow a payment made in discharge of such an obligation to be enforced against the assets under his authority. In that event, the third-party debtor is therefore, in principle, required to honour the obligation a second time, that is to say to the liquidator.

17.Since the Regulation requires the automatic recognition of the effects of the opening of insolvency proceedings in all Member States, third-party debtors therefore run the risk of honouring an obligation to the wrong person because they are unaware that insolvency proceedings have been opened in another Member State. That risk is particularly significant where insolvency proceedings are opened in other Member States because a third-party debtor is unlikely to be able to obtain a daily-updated overview of proceedings opened in all other Member States. In particular, a third-party debtor cannot simply confine itself to checking the notices of the opening of insolvency proceedings published in the Member State where it is located, since the Regulation does not lay down any obligation requiring the opening of insolvency proceedings to be publicised in all Member States. So it was, in this case too, that the opening of insolvency proceedings against Grontimmo was not publicised in Luxembourg.

18.Against that background, Article 24 seeks to offer protection to third-party debtors who, acting in good faith in a way that conflicts with the new legal situation, honour an obligation after insolvency proceedings have been opened. In order to protect persons who honour an obligation to a debtor because they are unaware that foreign proceedings have been opened when they should in fact have honoured the obligation to the foreign insolvency administrator, the Regulation provides that the honouring of that obligation has a debt-discharging effect.

19.In my opinion, the scope of Article 24 of Regulation No 1346/2000 covers not only the honouring of obligations for the benefit of an insolvency debtor which take the form of a direct payment to that debtor or the direct contribution of some other asset to him, but also, more generally, contributions to third parties where the third-party debtor makes such contributions on the instruction and on behalf of the insolvency debtor. These contributions, too, are to be classified as the ‘honouring of an obligation for the benefit of an insolvency debtor’ within the meaning of Article 24 of Regulation No 1346/2000. This is clear from the interpretation of the wording as well as the spirit and purpose of Article 24 of the Regulation.

20.The applicants in the main proceedings and the Belgian, German and Portuguese Governments argue that the expression ‘honouring of an obligation’ should be interpreted as also including a contribution by a bank (third-party debtor) to a creditor of the insolvency debtor which is made on the instruction of the insolvency debtor or with the latter’s consent.

21.The wording of Article 24 of the Regulation does not preclude such an interpretation. This is particularly true of, inter alia, the English, French, Spanish and Italian language versions of the Regulation, [the latter three of] which refer to ‘fulfilment for the benefit of a debtor’. After all, a contractual obligation is fulfilled for the benefit of an insolvency debtor not only where, as a result of such fulfilment, the insolvency debtor takes direct receipt of a sum of money or of some other asset, and therefore, figuratively speaking, immediately has something to show for the fact that the obligation has been honoured.

22.On the basis of the general meaning of the words, an obligation is automatically ‘fulfilled for the benefit of a debtor’ also in cases where, although the third-party debtor makes a contribution to a third party, he is in fact fulfilling an obligation owed by him, the third-party debtor, towards the insolvency debtor. If, for example, the obligation entered into vis-à-vis the insolvency debtor is to transfer something to a third party, the fulfilment of that obligation for the benefit of the debtor is the transfer to the third party.

23.Such a contribution to a third party may also be regarded as the fulfilment of an obligation for the benefit of the insolvency debtor from yet another point of view. After all, in so far as the insolvency debtor has an obligation to that effect towards the third party, for example to make a payment in fulfilment of a claim to a purchase price, the insolvency debtor is discharged from his obligation by honouring the obligation for the benefit of the third party. In this sense, too, therefore, the contribution made by the third-party debtor to the third party operates ‘[to] the benefit’ of the insolvency debtor. So it is in this case too: the payment to Kostner operates to the benefit of Grontimmo, since the latter is thus discharged from the claim to the purchase price which was held over it by Kostner.

24.The German version of Article 24 of the Regulation uses the expression ‘wer an einen Schuldner leistet’ which in English, for example could be translated literally as whoever honours an obligation towards a debtor. The German version could therefore be narrower than certain other language versions which use the expression ‘for the benefit of the debtor’. However, the German formulation ‘wer an einen Schuldner leistet’ also readily supports such an interpretation. On a normal meaning, a contribution amounts to the ‘honouring of an obligation’ where the contribution relates to a particular relationship of debt. Linguistically, therefore, ‘an obligation to a debtor is honoured’ also in cases where a third-party debtor makes a contribution to a third party on account of a relationship of debt existing between that third-party debtor and the insolvency debtor. That relationship of debt transforms the contribution to the third party into the honouring of an obligation to the insolvency debtor.

25.That interpretation of Article 24 of the Regulation is also confirmed by recital 30 in the preamble to the Regulation, according to which the expression ‘honouring of an obligation’ in Article 24 covers not only payments but also all other forms of honouring obligations to the insolvency debtor. However, unlike a payment, the honouring of an obligation for the benefit of the insolvency debtor does not necessarily have to involve a direct contribution to the debtor.

26.The question whether such a relationship of debt existed between the third-party debtor and the insolvency debtor is determined, as the German Government has rightly submitted, in accordance with national law. In the present case, it is true that there is nothing to indicate why such a relationship should be found not to exist. Through its contribution to the third party (Kostner), the third-party debtor (the bank) honours in relation to the insolvency debtor (Grontimmo) the obligation laid down in the agreement between it and the insolvency debtor. After all, the bank had a contractual obligation to Grontimmo to pay funds to Grontimmo or to third parties on Grontimmo’s instruction, or – as is the case here – to issue and cash cheques drawn against Grontimmo’s account. In the present case, the bank sought to fulfil its obligation to Grontimmo by issuing and cashing cheques.

27.I therefore take the view that a situation such as that at issue here is automatically covered by the wording of Article 24 of the Regulation, without any need for an expansive interpretation of that provision. In issuing and cashing cheques payable to Kostner and drawn on Grontimmo’s account, the bank is honouring an obligation to its customer, the insolvency debtor.

28.As I have already stated, the Regulation provides for the automatic recognition of insolvency proceedings opened in another Member State, without at the same time making it compulsory for the opening of proceedings to be publicised in all Member States. Against that background, Article 24 seeks to protect third parties who, in good faith in a way that conflicts with the new legal situation, still honour an obligation to the insolvency debtor, who no longer has the power to take receipt of the performance of an obligation, after insolvency proceedings have been opened. Third parties who act in good faith in this way should not have to honour the obligation twice, the second time to the liquidator in the insolvency proceedings.

29.The need to protect a third party acting in good faith who honours an obligation to an insolvency debtor by making a contribution to a third party in accordance with the insolvency debtor’s instruction is no different in this regard from the need to protect a third party who honours an obligation to an insolvency debtor by means of a direct contribution. After all, in both cases, the third-party debtor performs its contractual obligation towards the insolvency debtor only because it is unaware of the latter’s insolvency.

This is also confirmed by consideration of the facts in the main proceedings. If a bank has no knowledge of the fact that insolvency proceedings in respect of the assets of one of its customers have been opened in another Member State, there is no reason why, in a situation where, pursuant to an obligation to issue and cash cheques duly entered into prior to the opening of the insolvency proceedings, it pays funds held by the insolvency debtor to a third party while unaware of the former’s insolvency, it should be placed in a worse position than in the case of a direct payment of those funds to the insolvency debtor.

31.The referring court rightly points out in this regard that a bank cannot be expected, before processing payment orders from foreign customers, to conduct a daily check of the notices of insolvency proceedings posted in other Member States or to obtain the issue of a confirmation that no insolvency proceedings have been opened, which would in any event be valid only for the day of its issue. As some of the Member States have rightly submitted, any other interpretation would lead to a significant restriction on cross-border payments.

32.The fact that this particular case might concern a transaction by which the insolvency debtor may have reduced the insolvency estate with injurious or fraudulent intent does not justify a restrictive interpretation of Article 24 of the Regulation to the detriment of the bank. After all, it is precisely the bank’s good faith that that provision is intended to protect. Had it been aware of any improper disposal of assets on the part of the insolvency debtor, the bank would not in any event have acted in good faith and could not derive any rights from Article 24 of the Regulation.

33.The Commission’s argument to the effect that the interpretation set out here would encourage a reduction of the insolvency estate is also unconvincing. It makes no difference in this regard whether the insolvency debtor reduces the estate by having funds paid to it which it then passes on in cash to an unassailable third party, or by using its bank to make the payment. In both cases, the insolvency debtor would be infringing national law and would have to be prosecuted on that account under criminal law or otherwise, as the case may be. There is, however, no apparent reason why the bank should be liable only in the second scenario.

34.In so far as the Commission takes the view that it is for national law to determine whether that law contains a provision on good faith under which a bank is discharged from a payment obligation in a situation such as that in this case, that view is contrary to the rationale of harmonisation that underpins Article 24 of Regulation No 1346/2000. After all, unlike most of the other provisions of the Regulation, Article 24 of the Regulation does not make any reference to national law but contains an independent provision of substantive law which, moreover, must be applied uniformly in all Member States. Consequently, an interpretation of that provision which is independent for the purposes of EU law, as set out here, is also required.

35.Finally, the Commission takes the view that, as an exception to the principle of the automatic recognition of decisions to open proceedings, Article 24 must automatically be interpreted restrictively. That argument is untenable in this case, however, since the interpretation set out above is to be found within the wording of the provision itself and does not, as the Commission contends, represent an unauthorised expansive interpretation.

VI – Conclusion

36.I therefore propose that the Court answer the questions referred for a preliminary ruling as follows:

A payment to a creditor of the insolvency debtor constitutes the honouring of an obligation ‘for the benefit of a debtor’ within the meaning of Article 24 of Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings where that payment is made in fulfilment of an obligation entered into with the insolvency debtor.

* * *

(1) Original language: German.

(2) OJ 2000 L 160, p. 1.

(3) ‘Grontimmo’.

(4) ‘Kostner’.

(5) Now Banque Internationale à Luxembourg, ‘the defendant bank’ or ‘the bank’.

(6) See recital 22 in the preamble to Regulation No 1346/2000.

(7) See recital 22 in the preamble to Regulation No 1346/2000.

(8) See recital 30 in the preamble to the Regulation.

(9) Again, see recital 30 in the preamble to the Regulation.

(10) The Belgian and Portuguese Governments and the applicants in the main proceedings.

(11) The German Government.

(12) ‘Exécution au profit du débiteur’; ‘where an obligation has been honoured in a Member State for the benefit of a debtor’; ‘ejecución a favor del deudor’ and ‘prestazioni a favore del debitore’.

(13) Virgós, M., and Schmit, E., Erläuternder Bericht zu dem EU-Übereinkommen über Insolvenzverfahren, deutsche Fassung nach Überarbeitung durch die Gruppe der Rechts- und Sprachsachverständigen, Der Rat der Europäischen Union, Doc. 6500/1/96 REV 1, Paragraph 187.