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Bankruptcy: Fringe Benefits from Recognition of Foreign Judgments Conventions

Published online by Cambridge University Press:  21 May 2009

Kurt H. Nadelmann
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Netherlands International Law Review , Volume 30 , Issue 2 , August 1983 , pp. 214 - 217
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Copyright © T.M.C. Asser Press 1983

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References

1. Oberlandesgericht (Court of Appeal), Düsseldorf, , 17 08 1982, reported in 3 Zeitschrift für Wirtschaftsrecht und Insolvenzpraxis (ZIP) (1982) p. 1341Google Scholar. Standard German practice witholding the names of the parties is followed in the ZIP report. The bankruptcy occurred in Tilburg. The funds were at a D Bank branch in Kaldenkirchen, where the petitioner had his domicile. The petition had gone to Landgericht Krefeld, which thought that the bankruptcy in the Netherlands did not allow the grant of a sequestration order.

2. German Zivilprozessordnung (ZPO) [Code of Civil Procedure] para. 917.

3. Ground for a sequestration order is the risk that enforcement of the judgment would be rendered impossible, or very difficult, without such order. Need of enforcement abroad is made a sufficient statutory basis.

4. The German Bankruptcy Act, Konkursordnung (KO) of 1877/98.

5. Reichsgericht, 1 May 1937, RG vol. 153, pp. 200, 205; Mentzel, F. and Kuhn, G., Konkursordnung-Kommentar, para. 237, n. 4, 9th edition, , Uhlenbruck, ed. (1979)Google Scholar. Emergency measures may be asked for.

6. KO para. 237 (2).

7. A Bankruptcy Convention was signed by the German Federal Republic and Austria in Vienna on 25 May 1979. Text in 1 ZIP (1980) p. 483. Ratified in Austria; ratification in Germany pending.

8. ZPO para. 804 (3).

9. ZPO para. 804 (2). This is subject, however, to provisions in the bankruptcy and arrangement laws on voidance of preferences.

10. For discussion of the result see, e. g., Nadelmann, Rehabilitating International Bankruptcy Law: Lessons Taught by Herstatt and Company, 52 NYUL Rev. (1977) pp. 1, 7; Nadelmann, , Assumption of Bankruptcy Jurisdiction over Non-Residents, 41 Tul. L. Rev. (1966) pp. 75, 78Google Scholar.

11. Literature listed by Uhlenbruch in Mentzel, supra n. 5, para. n. 1; See esp. Hanisch, Auslandvermögen des Schuldners im Inlands-Insolvenzverfahren und vice versa, in Festschrift “Einhundert Jahre Konkursordnung 1877–1977” (1977) p. 139; Spennemann, G., Insolvenzverfahren in Deutschland-Vermögen in America: Das Beispiel Herstatt (1981) p. 321Google Scholar.

12. ZPO of 1877–1955, para. 23.

13. The assets may be insignificant. ZPO para. 23 is among the jurisdictional bases classified as exorbitant in the Supplementary Protocol of 1966 to the Hague Convention on Recognition and Enforcement of Foreign Judgments prepared the same year. 15 Am. J. Comp. L. (1967) pp. 362, 396 (Protocol). Under a redraft of 1977 by a German “Commission to Revise the ZPO”, for movables, section 23 would be transformed into a forum arresti jurisdiction (the earlier law of some German states): see Stein, and Jonas, , Kommentar zur Zivilprozessordnung, comments 31 (c) to 31 (i) to para. 23, 20th edition, , Schumann ed. (1980)Google Scholar, but the limitation of the judgment on the claim to the res attached is not suggested; hence the exorbitance would remain. On the subject in general, see J. Schröder, Internationale Zuständigkeit (1971) pp. 374–388; Juenger, Der Kampf urns Forum, 46 Rabels Z (1982) pp. 708, 715 n. 31. No thought is given to the further limitation suggested by Shaffer v. Heitner, 433 US 186 (1977), that minimum contact must exist between claim and forum. An Austrian redraft of the corresponding para. 99 JN would require a reasonable relation in value between claim and local assets. See Hover, , 95 Zeitschrift für Zivilprozess (ZZP) (1982) pp. 151, 160–61Google Scholar.

14. EEC Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, as amended by the Accession Conventions of 9 October 1978, OJ 30 October 1978, L 304; 18 ILM (1979) p. 8; Dalhuisen, J., International Insolvency in Bankruptcy (1980) Vol. 2 App. 4Google Scholar.

15. Art. 3. See Fletcher, I., Conflict of Laws in European Community Law (1982) pp. 103, 116Google Scholar. Under arts. 4(2), 26, EEC Members are obliged to recognize judgments against nonresidents of the Market, even if rendered on an exorbitant basis. See Fletcher at 117; Nadelmann, Clouds over International Efforts to Unify Rules of Conflict of Laws, 41 Law & Contemp. Probl. (1977) No. 2, pp. 54, 58Google Scholar; von Mehren, Recognition and Enforcement of Foreign Judgments-General Theory and the Role of Jurisdictional Requirements, 167 Hague Recueil pp. 19, 98(1980 II).

16. Convention, Art. 24.

17. The beneficiary of the sequestration order must open suit for the principal within a set time-limit. Failure to do so leads to annulment of the sequestration. ZPO para. 926.

18. German bankruptcy law, KO para. 14, and Dutch bankruptcy law, Faillissement Wet (FW) art. 33 (as cited by the court).

19. Leading Bundesgerichtshof cases: BGH 4 February 1960, NJW 1960 774;30May 1962, NJW 1962, 1511; BGH 16 March 1970, BGH Z 53, 332, 336; BGH 2 April 1970, BGH Z 53, 383, 387.

20. Literature collected in Mentzel, and Kuhn, , 9th edition, , Uhlenbruch ed., supra n. 5, para. 237, at p. 989Google Scholar; Hanisch, , supra n. 11 at p. 139Google Scholar; Spennemann, , supra n. 11 at p. 83Google Scholar.

21. For the history of KO para. 237 see Nadelmann, , The German Bankruptcy Act's Conflict of Laws Rule Revisited in the Company of Zimmermann, 41 Z. Rabels (1977) pp. 707, 709–714Google Scholar; citing, among reactions abroad, Asser, T.M.C., Schets van het Intemationaal Privaatrecht (1880) p. 173Google Scholar.

22. KO para. 237 was written so as not to leave to courts the making of distinctions between foreign countries. See Nadelmann, , supra at pp. 711–714Google Scholar.

23. See cases listed supra note 19.

24. Reichsgericht, 5 January 1937, Spaar en Emissie Bank N.V. v. St., RGZ 153, 200, 1937 J.W. 1505, 4 Nouv. Rev. d.i.p. (1937) p. 122; See Nadelmann, Codification of Conflicts Rules for Bankruptcy, XXX Annuaire Suisse de Droit International (1974) pp. 57, 66.

25. F.W. arts. 203–205. See Levy, Die internationalrechtlichen Bestimmungen des Niederlandischen Konkursgesetzes v. 30 September 1893–6 September 1895, in Nadelmann, Internationales Insolvenzrecht: Die Kosmos-Entscheidung des Reichgerichts; Leopold Levy und Kohler, Josef, 40 Konkurs-, Treuhand- und Schiedsgerichtswezen (K. T. S.) (1979) pp. 229, 231–232Google Scholar.

26. The “Kosmos”, Reichsgericht, 28 March 1903, RGZ 52, 193, text also in Nadelmann, , supra n. 25, at p. 229Google Scholar; Bay. Ob. L. G. 1908, Leipziger Z 550, 63 Scuff. Arch. 302 (1908); OLG Köln, 9 March, 1978, KTS 49 (1978) 249; OLG Hamm, 14 July, 1982, ZIP 3 (1982) 1343. See Hanisch, , supra n. 11, at p. 154Google Scholar; Hanisch, Gegenseitigkeit, Comitas und Gläubiger gleichbehandlung im internationalen Insolvenzrecht, KTS 39 (1978) p. 193; Spennemann, , supra n. 11, 133 at p. 148Google Scholar; Böhle-Stamschräder, Konkursordnung para. 14 (2) (a), at p. 75, 13th edition by Kilger (1981).

27. EEC Judgments Convention, supra, n. 14, art. 1 (2), interpreted by the Court of Justice of the European Communities, e. g., in Gourdain v. Nadler, 22 February 1979, (1979) ECR 733, (1979) 3 CMLR 180. See Fletcher, , supra n. 15, at p. 114Google Scholar.

28. Under the marshalling or “hodge-podge” rule. See Nadelmann, , supra n. 24, at p. 77Google Scholar; Nadelmann, Praktische Bemerkungen zur Reform des internationalen Konkursrechts, 43 KTS (1982) p. 23. (French adaptation in 35 Revue trim, de droit commercial (1982) p. 241).