In its judgement of 4 October 2018, the Court of Justice of the European Union (Second Chamber, Case C-337/17, Feniks sp. z o.o. v Azteca Products & Services SL) deals with two important aspects related to the application of Regulation (EU) No 1215/2012 (Brussel I-bis) with respect to a so called actio pauliana. The first aspect concerns the distinction between the scope of application of Brussel I-bis Regulation and that of the Insolvency Regulation No 1346/2000 [now replaced by Regulation (EU) No 848/2015]. The second aspect concerns the scope of application of Article 7(1)(a) of Regulation No 1215/2012 and, in particular, the relationship between – on one side – «the contract» the place of performance of which is considered for the application the rule of special jurisdiction provided in that article and – on the other side – the applicant’s claim.
The judgement also deserves some attention for two main reasons. Firstly, the Court of Justice comes back after 30 years to rule ex professo on the actio pauliana (see cases Reichert I, C-115/88, and Reichert II, C-261/90), known in many countries although with some differences. The second reason is that, within a few months, the Court of Justice had the chance to rule again on Article 7(1) and seems to confirm the trend expressed in the decision flightright (judgment of 7 March 2018, Third Chamber, joined Cases C-274/16, C-447/16 and C-448/16, mentioned in this decision), stressing the importance of an independent interpretation of the place of performance of the contract as a rule of special jurisdiction.
The Polish company Coliseum, with head office in Poland, entered, as a general contractor, into a contract for construction works in Gdansk (Poland) with the Polish company Feniks, acting as an investor and also established in Poland. For the performance of the contract Coliseum availed itself of several subcontractors; some of them were not paid. Feniks, as investor in the project, was bound to pay such subcontractors according to some provisions of the Polish Civil Code and became consequently creditor of Coliseum for a relevant sum in PLN (more than EUR 300 000).
In 2012 Coliseum sold to the company Azteca, with head office in Alcora (Spain), immovable property located in Szczecin (Poland) for a sum corresponding to almost EUR 1.5 million, by partially setting off the credit for the price against earlier debts towards Azteca, which nevertheless still owed Coliseum a sum of approximately EUR 262 000. According to the information provided by Feniks, on the date on which the sale was concluded, 30 January 2012, Coliseum and Azteca, this latter through Horkios Gestion SA (also established in Alcora), were managed by the same person. Coliseum being insolvent (not paying, see below), in July 2016 Feniks brought an action, based on Article 527 et seq. of the Civil Code, against Azteca before the Szczecin Regional Court, seeking a declaration that the above contract of sale was ineffective in relation to it, because it was concluded by its debtor in fraud of the creditor’s rights.
In establishing the jurisdiction of that court, Feniks relied on Article 7(1)(a) of Regulation No 1215/2012, according to which «A person domiciled in a Member Stain may be sued in another Member State: […] in matters relating to a contract, in the courts for the place of performance of the obligation in question». Azteca alleged that the Polish courts lack jurisdiction and stated that the international jurisdiction of a court to hear and determine such an action should be established according to the general rule of Article 4(1) of Regulation No 1215/2012, in favour of the Spanish courts where the “defendant” had its head office. Furthermore it claimed that the action would not be qualified as ‘matters relating to a contract’ within the meaning of Article 7(1)(a) of the same regulation.
The Sąd Okręgowy w Szczecinie (Szczecin Regional Court) decided to stay the proceedings and to refer the two questions to the Court of Justice by asking, in essence, whether an actio pauliana, whereby the person entitled to a debt requests that an act by which his debtor has transferred an asset to a third party and which is allegedly detrimental to his rights be declared ineffective in relation to the creditor, is covered by the rule of international jurisdiction provided for in Article 7(1)(a) of Regulation No 1215/2012.
The Court of Justice firstly recalled that Regulations No 1215/2012 and No 1346/2000 (now 848/2015) should be interpreted in such a way as to avoid any overlap between the rules of law that those instruments lay down and any legal vacuum. By citing its own case-law the Court clarified that Regulation 1346/2000 (now 848/2015) applies to actions related to bankruptcy or winding-up, i.e. actions deriving directly from the bankruptcy or winding-up and are closely connected with the proceedings for the liquidation of assets or composition proceedings. That does not occur in the present case, where the action brought by Feniks does not seem to be at all connected with proceedings and, apparently, no insolvency proceedings were begun against Coliseum. The actio pauliana foreseen by Polish Civil Code falls within the notion of civil and commercial matters within the meaning of Article 1(1) of Regulation No 1215/2012.
After recalling the general rule, set out in Article 4(1) of that regulation, according to which persons domiciled in a Member State are to be sued in the courts of that State, irrespective of the nationality of the parties, the Court of Justice mentioned the restrictive interpretation which must be applied to alternative grounds of jurisdiction, such as those of Article 7(1)(a), which are based on a close connection between the court and the action or facilitation of the sound administration of justice.
With regard to the special jurisdiction laid down in Article 7(1)(a) in actions concerning the concept of ‘matters relating to a contract’, the Court, by mentioning its recent judgment flightright and Others (C-274/16, C-447/16 and C-448/16), underlined that this concept must be interpreted independently in order to ensure that it is applied uniformly in all the Member States. The Court also recalled that the notion of ‘contract’ in the above provision has to be interpreted, according to its case-law, as a related to a legal obligation freely consented to by one person towards another and on which the claimant’s action is based (Engler C-27/02, par. 51; ÖFAB, C-147/12; etc.). Consequently, the applicability of the rule set out in Article 7(1)(a) is not in any way invalidated by the fact, arising in the present case from Article 531(1) of the Polish Civil Code, that the action was brought against the third party and not the debtor.
The Court considered that, although Feniks’ obligation to pay the subcontractors used by Coliseum for the performance of construction works derives from a provision in national law which establishes the joint and several liability of the investor towards the performers of the works, both the security that Feniks has over the debtor’s estate and the present action regarding the ineffectiveness of the sale concluded by the debtor with a third party originate in the obligations freely consented to by Coliseum with regard to Feniks upon the conclusion of their contract relating to those construction works.
On these grounds, the Court held that an actio pauliana, once it is brought on the basis of the creditor’s rights created upon the conclusion of a contract, falls within ‘matters relating to a contract’ within the meaning of Article 7(1)(a) of Regulation No. 1215/2012. With regard to the present case the Courts specified that, since construction works fall into the notion of ‘provision of services’ foreseen in Article 7(1)(b), second indent, of Regulation No. 1215/2012, this last special provision would apply rather than Article 7(1)(a).
For the Court these conclusions meet the objective concerning the predictability of the rules relating to jurisdiction since a professional who has concluded a contract for the sale of immovable property may, where the creditor of the other contracting party objects that the contract obstructs the performance of obligations which the other contracting party has towards that creditor, reasonably expect to be sued in the courts of the place of performance of these obligations.