1.

…

2.

bankruptcy, proceedings relating to the winding-up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings;’

1.

The respondent has expressed misgivings as to the wording of the question. They are that the Court is wrongly asked to classify the proceedings taken under Article 99 of the French Law No 67-653, that is to say, to bring them within the concepts of the Convention on jurisdiction and enforcement. This is nothing but an invitation to the Court to apply the law which it is not empowered to do in a reference for an interpretation and moreover such application also concerns the interpretation of national law, namely the French Law which has been mentioned.

That view must be endorsed and it must be confirmed that the Court's only task — and the question has to be construed in this way — is to give an abstract interpretation of Community law and to this end if necessary to extract the essential criteria according to subparagraph 2 of the second paragraph of Article 1 of the Convention on jurisdiction and enforcement. On the other hand it also goes without saying however that this must only be done with reference to the issues in the main action and that here the special features of the national rules under consideration, in so far as they are not disputed, can definitely be taken into consideration.

2.

A preliminary observation can be made without any difficulty. Although subparagraph 2 of the second paragraph of Article 1 of the Convention on jurisdiction and enforcement reads that the Convention shall not apply to bankruptcy, proceedings relating to the winding-up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings, this certainly is not to be taken as indicating that the law to be applied is, for example, the national law either of the State in which the judgment was given or of the State where enforcement is sought. On the contrary we are concerned with a concept of Community law which has to be interpreted independently, to be precise, taking into account the objective and system of the Convention and also the general legal principles which can be found in this field in the Member States. In my view, which is also shared by all the parties to these proceedings, this point was settled by the findings relating to the concept ‘civil and commercial matters’, which is also found in Article 1 of the Convention, in the Court's judgment of 14 October 1976 in Case 29/76 LTU Lufttransportunternehmen GmbH & Co. KG v Eurocontrol [1976] 2 ECR 1541. If this applies to the basic concept which demarcates the scope of the Convention then logically it can only be assumed that the same applies to the concepts which specify the exceptions to the scope of the Convention. In the interest of a uniform application of the Convention they must naturally be given a uniform definition as well. Any other view would be contrary to the recognizable common intention of the parties to the Convention on jurisdiction and enforcement when they drew it up their intention being that the scope of this convention should be the complement to that of the Convention on Bankruptcy which was in preparation at the time (cf. Schlosser, Konkurs und konkursähnliche Verfahren im geltenden Europarecht [Bankruptcy and winding-up and analogous proceedings in current European law], in Festschrift für Friedrich Weber [commemorative publication for Friedrich Weber], 1975, p. 396).

3.

Before I turn my attention to the interpretation of the concept ‘bankruptcy, proceedings relating to the winding-up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings’ allow me now first of all to summarize what has been stated in these proceedings about the development and the distinctive features of the statutory liability in Article 99 of the French Law No 67-563 of managers of legal persons, which apparently is not found in a similar form in the legal systems of other Member States.

As far as I can see originally provision was simply made for the liability of managers of legal persons in France — and presumably also in the legal systems of all the Member States — in the Companies Acts. According to those Acts members of the Board of Directors of an Aktiengesellschaft [incorporated public company] — the same applied to Gesellschaften mit beschränkter Haftung [limited liability companies] — were liable under general principles of law for mistakes and negligence in the management of the company, their liability being the same as that of a paid agent under the Code Civil [Civil Code].

Then in 1940 there was a change in the law relating to incorporated public companies, which from 1953 also applied to limited liability companies, to the effect that a legal person's liabilities which have been ascertained in winding-up proceedings, could, if the assets were insufficient, be imposed on to the managers of the legal person. Even this modification — so we were told — was in fact based on liability for mistakes and negligence. The change consisted in essence of a reversal of the burden of proof, this liability being avoidable only if the manager concerned could prove that he had shown the diligence and energy expected of a paid agent. Furthermore the liability was not linked to a findings of damage and according to the case-law it also attached to de facto managers of the legal person; the court was able to decide in the matter whether the managers of a legal person and which of them had to bear the liabilities.

The French Law No 67-563 went a step further. As is stated in the legal opinion produced by the respondent this Law further reinforced those elements of the law on the winding-up of the affairs of companies which relate to the liability of the managers of legal persons. According to that opinion there is no reference to the general legal principles of the law of obligations — and this applies equally to de jure and de facto managers; reference is no longer made to the energy and diligence of a paid agent. Accordingly it is no longer sufficient — and it is therefore better to talk about a presumption of liability than about a presumption of negligence — to prove that there was no mismanagement; on the contrary the manager of a legal person has to show that he made every effort to look after its interests. It must in addition be borne in mind — this emerges clearly from the wording of Article 99 of the French Law which I have just quoted — that the manager of a legal person can be proceeded against not only on the application of the ‘syndic’ for the ‘faillite’ or ‘règlement judiciaire’ but also by the court having jurisdiction in the winding-up of its own motion. Furthermore a notable feature is that the application is barred on the expiration of the period of three years from the date when the final list of claims is drawn up, that the court in the event of non-compliance ‘prononce le règlement judiciaire ou la liquidation des biens de ceux des dirigeants à la charge desquels a été mis tout ou partie du passif d'une personne morale [shall order the “règlement judiciaire” on the “liquidation des biens” of those managers who have been made responsible for all or part of the assets of a legal person]’ (Article 100) and that the court ‘peut prononcer la faillite personnelle ou l'interdiction de diriger, gérer, administrer ou contrôler, soit toute entreprise commerciale, soit seulement une personne morale, contre le débiteur ou, s'il s'agit d'une personne morale commerciale, contre les dirigeants de droit ou de fait, apparents ou occultes, rémunérés ou non" [may order the “faillite personnelle” of the debtor or, if the debtor is a legal person engaged in business of the de jure or de facto managers, apparent or concealed, paid or unpaid, or prohibit the said debtor or managers from directing, managing, conducting or supervising either any commercial undertaking or a legal person alone]’ (Article 108).

4.

I would also like to make some preliminary observations on the method of interpretation.

5.

If we now consider how the concepts ‘bankruptcy, proceedings relating to the winding-up of .insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings’ in Article 1 of the Convention on jurisdiction and enforcement are to be understood the starting point chosen by the respondent is, in my view the correct one. According to him the first thing to do is to determine the essential nature of the bankruptcy, winding-up or analogous proceedings with reference to the principles applicable in the legal systems of the Member States. In this way one comes to the conclusion that the purpose of such bankruptcy and winding-up proceedings is to get in and realize under the supervision of an officially appointed liquidator or trustee in bankruptcy the assets of the insolvent company or property of the person unable to meet his debts in order to pay off the creditors on a pro rata basis. The essential concern of such a proceeding is to get in the entire assets or property of the insolvent company or debtor by adopting a procedure specially designed for this purpose.

The finding in the Jenard Report that individual proceedings connected with bankruptcy or winding-up are to be regarded as bankruptcy or winding-up proceedings if they arise directly out of the bankruptcy or winding-up is useful. Moreover Article 22 (4) of the relevant Benelux Treaty, which has not yet entered into force, uses such wording. In the corresponding bilateral treaties such as the Franco-Belgian Treaty of 8 July 1899 or the Belgo-Netherlands Treaty of 28 February 1925 the determinative question is whether the claim put forward is founded in bankruptcy or winding-up, whether the legal consequence of the claim put forward is provided for by the law of bankruptcy or winding-up (cf. Schlosser loc. cit., p. 406). So with individual actions the question is whether there is a very close material connexion with bankruptcy or winding-up proceedings so that those rules and special features as it were determine the nature of the proceedings.

The latter undoubtedly applies to rights such as those arising out of the invalidation of certain assignments and payments prior to bankruptcy or winding-up which are peculiar to bankruptcy and winding-up and which are therefore granted under the law of bankruptcy and winding-up and are not merely general rights modified for the purpose of bankruptcy and winding-up. I draw the Court's attention to the Report on the Preliminary Draft of a Convention on bankruptcy and winding-up by Noël-Lemontey, which in this connexion contains the conclusion that the rights to invalidate certain assignments and payments prior to bankruptcy or winding-up have their origin in bankruptcy and winding-up. I also refer to comparative law research by Schlosser in his treatise (page 407), to which I again refer, and which shows that such an opportunity of invalidating pre-bankruptcy assignments and payments is known in the law of bankruptcy and winding-up of all six original Member States of the Community.

However, the same must also be assumed to apply to rights, which, although they arise under the general law, are modified by the law of bankruptcy and winding-up to such a substantial extent as to suggest the conclusion that viewed as a whole their nature is entirely determined by the law of bankruptcy and winding-up. In my view this represents an intelligible formula enabling decisions to be given which is definitely supported by the conclusions of the Jenard Repon. This formula also includes the liability created in Article 99 of the relevant French Law in this case. That liability presupposes the winding-up of a company; the court which made the winding-up order also has jurisdiction to consider it. The ‘syndic’ may ask for a declaration of liability or the court may make the declaration of its own motion and the purpose of the declaration is to make the manager answerable for the company's debts and consequently not give compensation for specific damage. We also come across an unusual reversal of the burden of proof, which moreover is not limited to negligence and what is more is only discharged if it is proved that the person whom it is sought to make liable, has applied himself to the management of the business with the requisite energy and diligence. Last but not least it must also be borne in mind that if the company's debts are not paid the manager whom it is sought to make liable may himself be adjudicated bankrupt and penalties may be imposed upon him for specific bankruptcy offences.

Viewed in this way the interpretation given by the applicant in the main action that the application is simply a special application for a declaration of liability based on a particular rule concerning liability of civil and commercial law according to which liability arises if particular conditions are fulfilled can certainly not be regarded as convincing. A comparison between Article 244 and Article 248 of the French ‘Code des Sociétés [Companies Act]’ surely refutes this interpretation. According to the first mentioned article the ‘administrateurs [directors]’ of a public company are liable for breaches of the provisions governing public companies, and of the Memorandum and Articles and for mistakes made in the management of the company and according to the commentaries they give rise to payment of compensation if ‘faute [negligence]’ is proved. On the other hand Article 248 provides :

‘En cas de règlement judiciaire ou de liquidation des biens de la société, les personnes visées par la législation sur le règlement judiciaire, la liquidation des biens, la faillite personelle et les banqueroutes, peuvent être rendues responsables du passif social dans les conditions prévues par ladite législation.

[In the event of a “règlement judiciaire” or a “liquidation des biens” of a company the persons specified by the laws relating to the “règlement judiciaire”, the “liquidation des biens”, the “faillite personnelle” and “banqueroutes” may be declared liable for the company's liabilities in accordance with the conditions laid down by the said laws].’

On the contrary more convincing is the respondent's interpretation which stresses that the real purpose of the proceedings in question is to get in all the outstanding assets of a company, so that there is a sort of restitution in kind in that the situation which would exist had it not been for the mistakes in the management of the company has to be reestablished. If however the proceedings are for compensation for running down the assets it is in fact natural, having regard to the function of the proceedings under Article 99 of law No 67-563, to say that they are clearly part and parcel of the winding-up proceedings.

In support of the view that the issue is whether a claim arises out of bankruptcy or winding-up the representative of the Federal Government has referred lastly, with justification, to Article 27 of the Convention on jurisdiction and enforcement. This article provides in connexion with the recognition of judgments for the court of the Member State in which recognition is sought to consider certain preliminary questions, for example status. Although however this only applies to the matters mentioned in subparagraph 1 of the second paragraph of Article 1 to which the Convention does not apply and does not relate to the law on bankruptcy and winding-up, there is surely every reason to define with caution the scope of the Convention as far as concerns rights which are conditional upon an adjudication or winding-up order.

6.

However I do not intend to end my examination of the case yet in that way without considering the Preliminary Draft of a Convention on bankruptcy and winding-up which has been mentioned and upon which the Commission's main argument had rested, in order to see whether it could upset the result which has so far been arrived at.

In the first place the Commission attaches importance to the fact that the Convention on bankruptcy and winding-up does not provide any general definition of the proceedings specified in subparagraph 2 of the second paragraph of Article 1 of the Convention on jurisdiction and enforcement to which the latter Convention does not apply. These proceedings on the contrary are listed in detail in a Protocol annexed to the Convention on bankruptcy and winding-up and the scope of that Convention is defined in this way. Since however — the Commission reasons — the proceeding under Article 99 of the French Law on bankruptcy and winding-up is not included in the list set out it cannot be assumed that it is intended to fall within the scope of a Convention on bankruptcy and winding-up. Although on the other hand Article 12 of the latter Convention mentions proceedings such as those instituted under Article 99 of the French Law that is done merely for the purpose of establishing a particular jurisdiction but not to give expression thereby to the fact that they fall in general within the scope of the Convention on bankruptcy and winding-up. In any case it is significant that according to Article 61 of the Preliminary Draft of this Convention the recognition and enforcement of judgments in actions concerning liability referred to in Article 12 are to be governed by the Convention on jurisdiction and enforcement but this must be understood as being only declaratory having regard to the other conclusions already mentioned which are to be drawn concerning the Convention on bankruptcy and winding-up.

This argument seems to me — quite apart from the objections in principle to invoking the Preliminary Draft of a Convention on bankruptcy and winding-up as being determinative — to be unconvincing.

As far as I am concerned the conclusion that only those proceedings expressly mentioned in the Protocol annexed to the Convention on bankruptcy and winding-up can be regarded as forming part of bankruptcy and winding-up is not convincing. It is clear that only the so-called basic proceedings are for the most part mentioned there. Consequently the question whether any particular proceedings fall within the Convention on bankruptcy and winding-up must also be deducible from other provisions, otherwise such proceedings which arise directly out of bankruptcy and winding-up and to which according to the beforementioned Jenard Report the Convention on jurisdiction and enforcement is simply not intended to apply would be governed by that Convention.

On the other hand as far as concerns the value and significance of the reference in Article 61 of the Preliminary Draft of a Convention on bankruptcy and winding-up it cannot only be pointed out in connexion with the view that the provision is only declaratory that it can scarcely be assumed that the legislature is providing for the incorporation in the Convention of a superfluous and consequently rather confusing provision. In particular it must not be overlooked that Article 61 also refers to the proceedings set out in Article 17 of the Convention on bankruptcy and winding-up. However it is quite certain judging by a number of them — I call attention again on this point to the beforementioned treatise by Schlosser — that they are typical proceedings in bankruptcy and winding-up. Thus it is reasonable not only to find in Articles 12 and 17 of the Convention on bankruptcy and winding-up rules for determining jurisdiction but also to assume that they are intended to give expression to the inclusion of these matters in that Convention, and furthermore Article 59 (4) of the Convention on bankruptcy and winding-up supports this view. This suggests that the reference in Article 61 of the Convention on bankruptcy and winding-up be regarded as substantive.

Moreover this interpretation of the Convention on bankruptcy and winding-up seems also to be in every way appropriate. It leads to the conclusions that only when the general recognition of bankruptcy and winding-up has been secured by a specific convention can there also be recognition of judgments concerning rights, which are conditional on a valid bankruptcy or winding-up and which rank as rights arising out of the very essence of bankruptcy and winding-up.

7.

I therefore suggest that the following answer be given to the question referred to the Court by the Bundesgerichtshof for a preliminary ruling.

In addition to the basic proceedings those proceedings connected with bankruptcy and winding-up proceedings which must be presumed to stem from bankruptcy or winding-up and arise directly thereout fall within the exception contained in subparagraph 2 of the second paragraph of Article 1 of the Convention on jurisdiction and enforcement. This applies to proceedings concerning rights which arise only under the law of bankruptcy and winding-up as well as to rights which exist under the general civil law but which in the law relating to bankruptcy and winding-up undergo such a decisive modification that, having regard to their specific object they are to be regarded as falling within the law of bankruptcy and winding-up.