European Court of Justice resolves – Peeters/Gatzen claim falls within the scope of Regulation (EU) 1215/2012 (Brussels I recast) instead of Regulation (EU) 2015/848 (Insolvency Regulation)

1. Facts

PI was a bailiff, who had two bank accounts: a current account at Fortis in Belgium and a clients’ account at Rabobank in the Netherlands. In September 2008, PI transferred an amount of EUR 550,000 from the clients’ account to the current account. Only a few days later, the amount of EUR 550,000 was withdrawn from the current account. PI and its company (PI Gerechtsdeurwaarderskantoor B.V.) were declared bankrupt on 2 March 2010 and 23 June 2009 respectively. Mr Rosbeek was appointed as bankruptcy trustee.

According to the bankruptcy trustee, Fortis acted unlawfully towards the joint creditors of PI, as it did not fulfil its obligations under the Belgium Money Laundering and Terrorist Financing Prevention Act (Wwft) and enabled PI to withdraw the amount of EUR 550.000. Consequently, PI’s creditors were prejudiced by Fortis’ behaviour and therefore Fortis should repay the amount of EUR 550,000.

The basis for the bankruptcy trustee’s claim is a “Peeters/Gatzen claim”. I will elaborate further on certain characteristics of a Peeters/Gatzen claim below.

In cassation, the Dutch Supreme Court concluded that there are well-founded reasons for doubting whether the Peeters/Gatzen claim falls within the scope of Brussels I or the Insolvency Regulation, and subsequently asked the CJEU to answer the following preliminary question:

“Does the Peeters/Gatzen claim fall under the exception of Article 1(2)(b) of Brussels I, i.e. bankruptcy, proceedings relating to the winding-up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings?“

2. Peeters/Gatzen claim’s characteristics

If, according to a bankruptcy trustee, a person or entity has acted unlawfully against the joint creditors of the bankrupt entity, the bankruptcy trustee can bring an action against that person or entity. This type of claim is referred to in the Netherlands as a “Peeters/Gatzen claim”, as it is based on the Supreme Court’s ruling in the Peeters/Gatzen case (ECLI:NL:HR:1983:AG:4521). The claim has the following characteristics:

1. the Peeters/Gatzen claim can be instigated by the bankruptcy trustee for the benefit of the joint creditors, even if the bankrupt entity did not have a claim towards the third party involved;
2. the basis for the bankruptcy trustee’s authority to instigate the Peeters/Gatzen claim, is his general duty as reflected in clause 68 of the Dutch Bankruptcy Act (“DBA“); the administration and liquidation of the bankrupt estate;
3. any proceeds generated through a successful Peeters/Gatzen claim form part of the estate (and must be paid to the estate account);
4. the legal basis for the Peeters/Gatzen claim is an unlawful act, within the meaning of clause 162 of Book 6 of the Dutch Civil Code;
5. the third party against which the action has been brought cannot use against the bankruptcy trustee the defences which it would have available against the creditors individually; and
6. the individual creditors whom have been prejudiced by the defendant’s behaviour can also commence proceedings against such third party, however, for efficiency purposes, if the bankruptcy trustee has also commenced proceedings with regard to the same facts, the court will (in principle) hear the bankruptcy trustee’s case first.

3. The CJEU’s decision

3.1. General remarks regarding Brussels I and Insolvency Regulation

In its ruling, the CJEU first refers to certain general principles of the relationship between Brussels I and the Insolvency Regulation.

1. Firstly, Brussels I and the Insolvency Regulation must be interpreted in such a way as to avoid any legal vacuum or any overlap between the rules of law that those texts lay down  (ECLI:EU:C:2017:847);
2. Secondly, Brussels I should be broad in its scope, whilst the Insolvency Regulation should not be broadly interpreted  (ECLI:EU:C:2017:847);
3. Thirdly, only actions which derive directly from insolvency proceedings or which are closely connected with them are excluded from the scope of Brussels I and fall within the scope of the Insolvency Regulation  (ECLI:EU:C1979:49, ECLI:EU:C:2012:215);
4. Fourthly, the decisive criterion adopted by the Court to identify the area within which an action falls is not the procedural context of which that action is part, but the legal basis of the action. Therefore, it must be determined whether the right or obligation which forms the basis of the action has its source in the ordinary rules of civil and commercial law, or in derogating rules specific to insolvency proceedings (ECLI:EU:C:2014:2145, ECLI:EU:C:2017:847, ECLI:EU:C:2017:986); and
5. Fifthly, the fact that, after the opening of insolvency proceedings, a claim is brought by the bankruptcy trustee appointed in those proceedings and that he acts in the interests of the creditors does not substantially amend the nature of the claim, which is independent from the insolvency proceedings and remains subject, in terms of the substance of the matter, to the rules of ordinary law (ECLI:EU:C:2009:544, ECLI:EU:C:2014:2145).

3.2. Which regulation applies?

The CJEU continues by listing certain characteristics of the Peeters/Gatzen claim which, according to the CJEU, form part of the procedural context of the Peeters/Gatzen claim. As to the legal basis of the claim, the CJEU notes that the claim is based on a wrongful act and thus the ordinary rules of civil and commercial law apply rather than the derogating rules specific to insolvency proceedings. The CJEU further rules that as the claim can also be brought by creditors, it does not fall under the exclusive competence of the bankruptcy trustee and is independent of the opening of insolvency proceedings. Therefore, pursuant to the CJEU, the Peeters/Gatzen claim cannot be considered a direct and inherent result of those proceedings.

In conclusion, as the Peeters/Gatzen claim is based not on derogating rules specific to insolvency proceedings but, on the contrary, on the ordinary rules of civil and commercial law, it does fall within the scope of Brussels I.

4. Observations

As follows from the above, the CJEU has decided to keep a very tight rein on the interpretation of Brussels I and the Insolvency Regulation. Indeed, the Peeters/Gatzen claim is based on the ordinary rules of civil and commercial law (unlawful act, clause 162 of Book 6 of the Dutch Civil Code). However, doubt may remain over whether the CJEU’s statement that “the claim can also be brought by creditors” is correct. It is correct that a creditor and the bankruptcy trustee can commence proceedings simultaneously against a third party on the basis of an unlawful act, but the statement that these claims are the same is, in my opinion, quite an oversimplification. Whether the Peeters/Gatzen claim is (i) the sum of the individual creditors’ claims, or (ii) a reconstruction claim that can only be brought by the bankruptcy trustee on behalf of the joint creditors (similar to a claim based on fraudulent preference, i.e. actio pauliana), is frequently debated in legal literature. In any event, a claim instigated by a creditor is never considered to be a Peeters/Gatzen claim.

Additionally, from a practical point of view, the applicability of Brussels I is not the most desirable outcome. For example, commencing proceedings for a EUR 25,000 claim on a third party in Italy, stemming from an event that also occurred in Italy, might not be worth the trouble. It goes without saying that this might detract from certain objectives of a bankruptcy, such as fraud prevention, generating the highest possible proceeds for the benefit of the joint creditors or facilitating an efficient liquidation.

5. Conclusion

According to the CJEU, a Peeters/Gatzen claim falls within the scope of Brussels I. Therefore, a claim on that basis should be brought before the court where the harmful event occurred or before a court in the member state where the defendant is domiciled. One could question whether the CJEU’s line of reasoning is well-founded, and whether it may lead to many practical issues. In any event, however, it is likely that this ruling will cause many to reach for their pens.