Re Eurofood Ifsc Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Kelly
• Judgment Date: 23 March 2004
• Neutral Citation: [2004] IEHC 607
• Court: High Court
• Docket Number: No 33 cos/2004
• Date: 23 March 2004

[2004] IEHC 607

THE HIGH COURT

Kelly

No 33 cos/2004

EUROFOOD IFSC LTD, RE

IN THE MATTER OF

EUROFOOD IFSC LIMITED

AND

IN THE MATTER OF

THE COMPANIES ACTS 1963 - 2003

Citations:

EEC REG 1346/2000 ART 3

FINANCE ACT 1980 S39(B)(2)

DECREE NO 347 (ITALY)

EEC REG 1346/2000 ART 47

EEC REG 1346/2000 RECITAL 22

EEC REG 1346/2000 ART 2

EEC REG 1346/2000 ART 1(1)

EEC REG 1346/2000 ANNEX A

EEC REG 1346/2000 ANNEX C

EEC REG 1346/2000 ART 3.3

EEC REG 1346/2000 ART 3.1

EEC REG 1346/2000 ART 3.2

EEC REG 1346/2000 ART 3.4

EEC REG 1346/2000 ART 16

EEC REG 1346/2000 ART 17

EEC REG 1346/2000 ART 26

COMPANIES ACT 1963 S220(2)

EEC REG 1346/2000 ART 16.1

EEC REG 1346/2000 ART 2(B)

EEC REG 1346/2000 ART 2(F)

EEC REG 1346/2000 RECITAL 13

MOSS FLETCHER ISSACS EC REGULATION ON INSOLVENCY PROCEEDINGS OUP 2002

BRAC RENT A CAR INTL INC, RE 2003 2 AER 201

BRUSSELS CONVENTION ON RECOGNITION & ENFORCEMENT OF JUDGMENTS IN CIVIL & COMMERCIAL MATTERS 1968 ART 27.1

EC REG 44/2001 ART 34.1

DAISYTEK ISA LTD, RE 2003 BCC 562

GEVERAN TRADING CO LTD V SKJEVESLAND 2003 BCC 209

EUROPEAN CONVENTION ON HUMAN RIGHTS & FUNDAMENTAL FREEDOMS ART 6

TRANSOCEAN MARINE PAINT ASSOCIATION V COMMISSION OF THE EUROPEAN COMMUNITIES 1974 ECR 1063

KROMBACH V BAMBERSKI 200 ECR-I 1935

EEC REG 1346/2000 ART 4

Synopsis:

[2004] 4 IR 370

COMPANY LAW

Winding up

Liquidation - Company law - Jurisdiction - Forum for insolvency proceedings - Cross border insolvency - Location of company's centre of main interests - Time of opening of insolvency proceedings - Insolvency of company - Petition by creditor to wind up company - Whether presentation of petition for winding up of company opened "main insolvency proceedings" - Whether company's centre of main interests in Ireland - Whether main insolvency proceedings opened in Ireland - Council Regulation (EC) 1346/2000, articles, 2, 3, 16 and 26 - Companies Act 1963, section 220(2) (2004/33COS - Kelly J - 23/3/2004)

In re Eurofood IFSC Ltd

Facts: Council Regulation EC 1346/2000, article 3, provides that the courts of a Member State within the territory of which the centre of a debtor's main interests is situated shall have jurisdiction to open insolvency proceedings. In the case of a company the place of the registered office shall be presumed to be the centre of its main interests in the absence of proof to the contrary. Where the centre of a debtor's main interests is situated within the territory of a Member State, the courts of another Member State shall have jurisdiction to open insolvency proceedings against that debtor only if he possesses an establishment within the territory of that other Member State and the effects of those proceedings is restricted to the assets of the debtor situated in the territory of the latter Member State. Article 3.3 provides that where insolvency proceedings have been opened under article 3.1, any proceedings opened subsequently are to be secondary proceedings which latter proceedings must be "winding up" rather than "insolvency" proceedings. Article 16 provides that: "any judgment opening insolvency proceedings handed down by a court of a Member State which has jurisdiction pursuant to article 3 shall be recognised in al the other Member States from the time that it becomes effective in the State of the opening of the proceedings". Article 26 provides that any Member State may refuse to recognise insolvency proceedings opened in another Member State...where the effects of such recognition...would be manifestly contrary to that states public policy, in particular its fundamental principles or the constitutional rights and liberties of the individual.

The company, which was registered in Ireland and which was a subsidiary of Parmalat SpA, a company registered in Italy, became insolvent and a petition was presented for its winding up. The petitioning creditor was concerned that there was an attempt to alter the company's "centre of main interests" (within the meaning of Council Regulation EC 1346/2000) to Italy, which, if it were to occur, could prevent the Irish courts from winding up the company other than as secondary proceedings, the practical effect of which would be to limit the Irish liquidator to the company's local assets only. A provisional liquidator was appointed in Ireland and subsequently a separate petition for the company's winding up was presented in Italy, notice of which was never given to the petitioner or the provisional liquidator prior to the hearing date (they became aware informally). The Italian court held that the centre of main interests of the company was in Italy and admitted it into insolvency. The petitioner complained that he had not been given adequate notice of the application to the Italian court and that the Italian court had no jurisdiction to make the orders it did as the company had already been placed into liquidation by the Irish court.

Held by Kelly J in ordering that the company be wound up as of the date of the presentation of the petition to the High Court that two elements were necessary in order to give rise to the opening of main insolvency proceedings in Ireland: that the centre of main interests of the company be in Ireland, and; that insolvency proceedings should actually be opened in Ireland.

That, in determining where the centre of main interests of a company is, one begins with the presumption that it is the place of the registered office in the absence of proof to the contrary and, in any event, should correspond to the location where it conducts the administration of its interests on a regular basis. The company, accordingly, had its "centre of main interests" in Ireland. There was no requirement that the High Court expressly declare that the centre of main interests of a company be in Ireland before making an order that a company was insolvent in main insolvency proceedings under the Regulation.

That a decision of the High Court appointing a provisional liquidator was a judgment in relation to the opening of insolvency proceedings within the meaning of article 3.1 of the Regulation.

That the "time of the opening of proceedings" was expressly defined in article 2(f) of the Regulation as "the time at which the judgment opening proceedings becomes affective, whether it is a final judgment or not". As the order of the High Court appointing the provisional liquidator became effective on the day upon which it was made, that date was the time of the opening of the insolvency proceedings. Even if there never had been a provisional liquidator appointed, the time of the opening of the proceedings would have been the same date as the petition had been presented on the same day, as section 220(2) of the Companies Act 1963 provides that an order appointing an official liquidator becomes effective as of the date of the presentation of the petition. That, accordingly, the Italian court lacked jurisdiction under Regulation 2000 to do what it purported to do and was obliged under article 16 of the Regulation to recognise the order of the High Court. It was not open to the High Court to cede jurisdiction to the Italian court.

Obiter dictum: that the general principles of European law included the right to a fair hearing which implied that the party concerned should be given sufficient notice for the hearing to prepare a defence. Any breach of this right to due process was contrary to public policy and warranted refusal of recognition of insolvency proceedings opened in another Member State, under Article 26 of the Regulation.

Reporter: P.C.

1 Mr. Justice Kelly delivered on 23rd day of March 2004.

The Question

2 Did the presentation of a petition for the winding up of Eurofood IFSC Limited (Eurofood) and the appointment of a provisional liquidator to it by this court on the 27 ^th January, 2004 bring about the opening of main insolvency proceedings under Article 3 of Council Regulations (EC) 1346/2000? That is the central issue which falls for determination in this judgment.

3 The answer to the question has international implications as will be evident when I come to consider the factual background against which the question is posed.

Eurofood

4 Eurofood was incorporated in Ireland as a company limited by shares on the 5 ^th November, 1997. It has a paid up capital of US$100,000 and €2.54. Its registered office is now and has at all times been in Dublin. It is a wholly owned subsidiary of Parmalat SpA (Parmalat) a major global food company incorporated in Italy. Eurofood's principal business activity was that of providing financing facilities for companies in the Parmalat group.

5 Eurofood operated pursuant to a certificate issued by the Irish Minister for Finance pursuant to s. 39(b)(2) of the Finance Act 1980. That certificate was granted subject to a number of conditions. Amongst the conditions was a requirement that the company keep available for inspection by the Irish Revenue Authorities its records and accounts and furthermore that it would commence and continue to carry on its trading operations within a specified area within the State. A further condition was that any material change in the control of the company, including shareholding, should be pre-cleared with the Department of Finance in Ireland. The company was therefore subject to supervision by the Irish Ministry of Finance, the Irish Revenue Authorities and the Central Bank of Ireland. The tax benefits enjoyed by Eurofood were conditional upon it being managed and operated in Ireland.

6 The day to day administration of Eurofood was conducted on its behalf by the Bank of America in Ireland in accordance with the terms of an administration agreement which was governed by Irish law and contained an Irish jurisdiction clause.

7 Eurofood's annual accounts were prepared and audited in accordance with Irish law and accounting principles. Its books of account were...