PART 1                                                                                                         

September 2008


41.2 EC Regulation on Insolvency Proceedings – brief introduction

The EC Regulation on Insolvency Proceedings (“the Regulation”) was adopted by the Council of the European Union on 29 May 2000 and came into force throughout the EU (with the exception of Denmark – see paragraph 41.7) on 31 May 2002.

The purpose of the Regulation is to improve the efficiency and effectiveness of cross-border insolvency proceedings within the EU by simplifying or removing formalities concerning the recognition and enforcement of insolvency orders.

The Regulation takes effect where the debtor’s “centre of main interests” (see Part 5 of this Chapter) is within the EU.  Where the debtor’s centre of main interests is outside the EU, or in Denmark (see paragraph 41.7), reference should be made to Chapter 42.


41.3 History of the Regulation

The process that led to the adoption of the Regulation began with the signing of the Treaty Establishing the European Economic Community on 25 March 1957.  This treaty, commonly known as the (first) Treaty of Rome, committed the member states to negotiating a convention to simplify the formalities governing the reciprocal recognition and enforcement of judgments of courts or tribunals.

The various negotiations in the interim years led to the development of the European Union Convention on Insolvency Proceedings which was opened for signature of 23 November 1995 and was signed by 14 of the 15 members of the EU (the exception being the UK) before the time allowed for signature expired in May 1996.  The project was revived under the presidencies of Germany and Finland and was adopted as a Regulation on 29 May 2000, coming in to force on 31 May 2002.


41.4 EU legislation

There are three main types of legislation that can be made under the EC Treaty.  These are Regulations, Directives and Decisions.  Regulations have general application and are binding in their entirety and directly applicable to member states.  Directives are binding as to the result to be achieved, but it is left to the national authorities of the relevant member state(s) to choose the form and method of implementation.  A Decision can be directed specifically at an individual, a company or a state.  It is binding in its entirety upon those to whom it is addressed.  It is also possible for Recommendations and Opinions to be issued under the EC Treaty, but these have no binding force.


41.5 Status and effect of a Regulation

As outlined in paragraph 41.4, a Regulation has direct effect and there is no need for a member state to pass legislation giving effect to the Regulation.  In fact, states are under an obligation not to pass legislation or other measures giving effect to the Regulation, unless implementing steps are expressly required in the Regulation (this is not the case with the Insolvency Regulation) or where states choose to adopt rules to make the Regulation fully workable and enforceable within the existing national legal framework. 

As a result of the direct applicability of the Regulation, any existing provisions of national law (including case law precedents) which are contradictory to the provisions of the Regulation cease to be applicable automatically upon the Regulation being given effect.


41.6 Members of the EU

For ease of reference the members of the EU are:

  • Austria
  • Belgium
  • Bulgaria
  • Cyprus
  • Czech Republic
  • Denmark (see paragraph 41.7)
  • Estonia
  • Finland
  • France
  • Germany
  • Greece
  • Hungary
  • Ireland (Eire)
  • Italy
  • Latvia
  • Lithuania
  • Luxembourg
  • Malta
  • Netherlands
  • Poland
  • Portugal
  • Romania
  • Slovakia
  • Slovenia
  • Spain
  • Sweden
  • United Kingdom *

The current list of members of the EU can be viewed at http://europa.eu/abc/european_countries/index_en.htm

* For the purposes of the Regulation the United Kingdom is comprised of England and Wales, Scotland, Northern Ireland and Gibraltar as a single state.

The Isle of Man is not included as an EU member nor are the Channel Islands.


41.7 The position regarding Denmark

Although Denmark is a full member of the EU, it negotiated a special exemption from the EC Treaty in respect of any legislative measures adopted under the treaty.  Therefore, the Regulation has no effect in Denmark and any references to the EU can, for the purposes of this chapter, be taken to exclude Denmark.  From this point of view, Denmark would be treated as a country outside the EU, for which reference can be made to Chapter 42.



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