A&L Goodbody LLP
  October 3, 2005 - Ireland

Company/Insolvency Case Law– Insolvency Regulation 1346/2000 – jurisdiction issues – insolvency – insolvency regulation

In the Matter of Flightlease Ireland Limited (In Voluntary Liquidation) and in the Matter of the Companies Acts 1963 to 2003 and in the Matter of an Application for Directions Pursuant to Section 280 of the Companies Act 1963, unreported High Court, 27 July 2005 Background: Flightlease Ireland Limited (Flightlease), a Swissair holding company, was declared insolvent, and an arrangement was put in place with Societe d’Explotiation OAM Air Liberte (Air Lib) whereby Air Lib’s holding company would take on the trading activities of Flightlease. In return, Swissair agreed to pay Air Lib for this service. Following the September 11, 2001 attacks in the US, Swissair discontinued its payments to Air Lib. Soon after this, Air Lib instituted proceedings in France against Flightlease, as part of larger debt collection proceedings brought by Air Lib. The proceedings in France were pending at the date of this application. In 2003, Air Lib was placed in liquidation, and its liquidators sought to recover the money owed by Swissair. The liquidators of Air Lib submitted a proof of claim in the liquidation of Flightlease, which was rejected. In response, Air Lib requested a stay on the liquidation, which Flightlease rejected. Flightlease instituted proceedings in Ireland (the centre of economic interest for Flightlease), seeking an interpretation of certain insolvency proceedings under Council Regulation 1346/2000 (the Regulation). The parties agreed, and Laffoy J directed that the following issues were required to be determined by the court: (1) Does Article 4 of the Regulation require the claim made by the liquidators of Air Lib in the winding-up of Flightlease be determined by the Irish Court in accordance with Irish law governing the lodging, verification and admission of claims in insolvency proceedings? (2) Does Article 15 of the Regulation require that the effect of the winding-up of Flightlease on certain proceedings before the courts in France be governed by the law of France? Held: Question 1 - The primary rule in relation to insolvency proceedings is governed by Article 4 of the Regulation: “the law applicable to the proceedings shall be that of the Member State in which the proceedings have been opened.” Furthermore, Article 4(h) states that the law governing the lodging, verification and admission of claims in insolvency proceedings is to be that of the State in which the proceedings were opened (which in this case was the law of Ireland). These rules apply “save where otherwise provided in the Regulation.” It was not shown that Air Lib fell within any of the exceptions. Question 2 – Article 15 of the Regulation requires that “a lawsuit pending concerning an asset or a right of which the debtor has been divested, should be governed solely by the law of the Member State in which that lawsuit is pending.” This is a specific exception to Article 4. Since the claim pending in France was for a money sum and did not relate to “an asset or right” of which the debtor had been divested, the exception did not apply. Therefore the answer to the second question was “No”.


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