JUDGMENT OF 2. 5.

2006 - CASE C-341/04

JUDGMENT OF THE COURT (Grand Chamber)

2 May 2006 *

In Case C-341/04,

REFERENCE for a preliminary ruling under Articles 68 EC and 234 EC from the
Supreme Court (Ireland), made by decision of 27 July 2004, received at the Court on
9 August 2004, in the proceedings

Eurofood IFSC Ltd,

THE COURT (Grand Chamber),

composed of V. Skouris, President, P. Jann (Rapporteur), C.W.A. Timmermans,

A. Rosas and J. Malenovský, Presidents of Chambers, J.-P. Puissochet, R. Schintgen,
N. Colneric, J. Klučka, U. Lõhmus and E. Levits, Judges,
* Language of the case: English.

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Advocate General: F.G. Jacobs,

Registrar: K. Sztranc, Administrator,

having regard to the written procedure and further to the hearing on 12 July 2005,

after considering the observations submitted on behalf of:

— Mr Bondi, by G. Moss QC and B. Shipsey SC, J. Gleeson, G. Clohessy and

E. Barrington, barristers-at-law, and by B. O'Neil, D. Smith and C. Mallon,
solicitors,

— the Bank of America NA, by M.M. Collins SC and L. McCann SC, and by
B. Kennedy, barrister-at-law, and W. Day, solicitor,

— Mr Farrell, Official Liquidator, by M.G. Collins SC and D. Murphy, barrister-at-

law, and by T. O'Grady, solicitor,

— the Director of Corporate Enforcement, by A. Keating, principal solicitor, and

C. Costello, barrister-at-law,

— the Certificate/Note holders, by D. Baxter, solicitor, D. McDonald SC, and

J. Breslin, barrister-at-law,
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— Ireland, by D. O'Hagan, acting as Agent, assisted by D. Barniville, barrister-at-

law,

— the Czech Government, by T. Boček, acting as Agent,

— the German Government, by W.-D. Plessing, acting as Agent,

— the French Government, by G. de Bergues, J-C. Niollet and A. Bodard-Hermant,

acting as Agents,

— the Italian Government, by I.M. Braguglia, acting as Agent, assisted by

O. Fiumara and M. Massella Ducci Teri, acting as Agents,

— the Hungarian Government, by P. Gottfried, acting as Agent,

— the Austrian Government, by C. Pesendorfer, acting as Agent,

— the Finnish Government, by T. Pynnä and A. Guimaraes-Purokoski, acting as

Agents,

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— the Commission of the European Communities, by C. O'Reilly and A.-M.

Rouchaud-Joët, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 27 September
2005,

gives the following

Judgment

1 This reference for a preliminary ruling concerns the interpretation of Council

Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings (OJ 2000
L 160, p. 1) ('the Regulation').

2 The reference was submitted in the context of insolvency proceedings concerning

the Irish company Eurofood IFSC Ltd ('Eurofood').

Legal context

Community legislation

3 According to Article 1(1) thereof, the Regulation applies 'to collective insolvency
proceedings which entail the partial or total divestment of a debtor and the
appointment of a liquidator'.
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4 According to Article 2 of the Regulation, headed 'Definitions':

'For the purposes of this Regulation:

(a) "insolvency proceedings" shall mean the collective proceedings referred to in

Article 1(1). These proceedings are listed in Annex A;

(b) "liquidator" shall mean any person or body whose function is to administer or
liquidate assets of which the debtor has been divested or to supervise the
administration of his affairs. Those persons and bodies are listed in Annex C;

(e) "judgment" in relation to the opening of insolvency proceedings or the

appointment of a liquidator shall include the decision of any court empowered
to open such proceedings or to appoint a liquidator;

(f) "the time of the opening of proceedings" shall mean the time at which the
judgment opening proceedings becomes effective, whether it is a final judgment
or not;

...'

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5 Annex A to the Regulation, concerning the insolvency proceedings referred to in

Article 2(a) of the Regulation, mentions under Ireland the procedure of 'compulsory
winding up by the Court'. By way of liquidators referred to in Article 2(b) of the
Regulation, Annex C indicates, in relation to Ireland, the 'provisional liquidator'.

6 Concerning the determination of the court having jurisdiction, Article 3(1) and (2)
of the Regulation provide:

'The courts of the Member State within the territory of which the centre of a
debtor's main interests is situated shall have jurisdiction to open insolvency
proceedings. In the case of a company or legal person, the place of the registered
office shall be presumed to be the centre of its main interests in the absence of proof
to the contrary.

Where the centre of a debtor's main interests is situated within the territory of a
Member State, the courts of another Member State shall have jurisdiction to open
insolvency proceedings against that debtor only if he possesses an establishment
within the territory of that other Member State. The effects of those proceedings
shall be restricted to the assets of the debtor situated in the territory of the latter
Member State'.

7 Concerning the determination of the law to be applied, Article 4(1) of the Regulation
provides:

'Save as otherwise provided in this Regulation, the law applicable to insolvency

proceedings and their effects shall be that of the Member State within the territory
of which such proceedings are opened ..."

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8 Concerning the recognition of insolvency proceedings, Article 16(1) of the

Regulation states:

'Any judgment opening insolvency proceedings handed down by a court of a

Member State which has jurisdiction pursuant to Article 3 shall be recognised in all
the other Member States from the time that it becomes effective in the State of the
opening of proceedings.'

9 Article 17(1) of the Regulation states:

'The judgment opening the proceedings referred to in Article 3(1) shall, with no
further formalities, produce the same effects in any other Member State as under
this law of the State of the opening of proceedings ..."

10 However, according to Article 26 of the Regulation:

'Any Member State may refuse to recognise insolvency proceedings opened in

another Member State or to enforce a judgment handed down in the context of such
proceedings where the effects of such recognition or enforcement would be
manifestly contrary to that State's public policy, in particular its fundamental
principles or the constitutional rights and liberties of the individual.'

11 According to Article 29(a) of the Regulation, the liquidator in the main proceedings
may request the opening of secondary proceedings.
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12 Article 38 of the Regulation provides that, where the court of a Member State which
has jurisdiction pursuant to Article 3(1) appoints a temporary administrator, that
temporary administrator 'shall be empowered to request any measures to secure and
preserve any of the debtor's assets situated in another Member State, provided for
under the law of that State, for the period between the request for the opening of
insolvency proceedings and the judgment opening the proceedings'.

National legislation

13 Section 212 of the Companies Act 1963 ('the Companies Act') confers on the High
Court jurisdiction to wind up any company.

14 Section 215 of the Companies Act provides that an application to the court for the
winding up of a company is to be by petition presented either by the company or by
any creditor or creditors.

15 Section 220 of the Companies Act provides:

'1. Where, before the presentation of a petition for the winding up of a company by
the court, a resolution has been passed by the company for voluntary winding up,
the winding up of the company shall be deemed to have commenced at the time of
the passing of the resolution, and unless the court, on proof of fraud or mistake,
thinks fit to direct otherwise, all proceedings taken in the voluntary winding up shall
be deemed to have been validly taken.

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2. In any other case, the winding up of a company by the court shall be deemed to
commence at the time of the presentation of the petition for the winding up.'

16 Section 226(1) of the Companies Act provides that the court may appoint a
provisional liquidator at any time after the presentation of a winding-up petition.
The appointment of the liquidator, pursuant to section 225, is otherwise made at the
time the winding-up order is made. Pursuant to section 229(1), a provisional
liquidator, once appointed, is obliged to 'take into his custody or under his control
all the property and things in action to which the company is or appears to be
entitled'.

Background and questions referred for a preliminary ruling

17 Eurofood was registered in Ireland in 1997 as a 'company limited by shares' with its
registered office in the International Financial Services Centre in Dublin. It is a
wholly owned subsidiary of Parmalat SpA, a company incorporated in Italy, whose
principal objective was the provision of financing facilities for companies in the
Parmalat group.

18 On 24 December 2003, in accordance with Decree-Law No 347 of 23 December

2003 concerning urgent measures for the industrial restructuring of large insolvent
undertakings (GURI No 298 of 24 December 2003, p. 4), Parmalat SpA was admitted
to extraordinary administration proceedings by the Italian Ministry of Production
Activities, who appointed Mr Bondi as the extraordinary administrator of that
undertaking.
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19 On 27 January 2004, the Bank of America NA applied to the High Court (Ireland)
for compulsory winding up proceedings to be commenced against Eurofood and for
the nomination of a provisional liquidator. That application was based on the
contention that that company was insolvent.

20 On the same day the High Court, on the strength of that application, appointed Mr
Farrell as the provisional liquidator, with powers to take possession of all the
company's assets, manage its affairs, open a bank account in its name, and instruct
lawyers on its behalf.

21 On 9 February 2004, the Italian Minister for Production Activities admitted

Eurofoods to the extraordinary administration procedure and appointed Mr Bondi
as the extraordinary administrator.

22 On 10 February 2004, an application was lodged before the Tribunale Civile e Penale
di Parma (District Court, Parma) (Italy) for a declaration that Eurofoods was
insolvent. The hearing was fixed for 17 February 2004, Mr Farrell being informed of
that date on 13 February. On 20 February 2004, the District Court in Parma, taking
the view that Eurofoods centre of main interests was in Italy, held that it had
international jurisdiction to determine whether Eurofoods was in a state of
insolvency.

23 By 23 March 2004 the High Court decided that, according to Irish law, the
insolvency proceedings in respect of Eurofood had been opened in Ireland on the
date on which the application was submitted by the Bank of America NA, namely 27
January 2004. Taking the view that the centre of main interests of Eurofood was in
Ireland, it held that the proceedings opened in Ireland were the main proceedings. It
also held that the circumstances in which the proceedings were conducted before

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the District Court in Parma were such as to justify, pursuant to Article 26 of the
Regulation, the refusal of the Irish courts to recognise the decision of that court.
Finding that Eurofood was insolvent, the High Court made an order for winding up
and appointed Mr Farrell as the liquidator.

24 Mr Bondi having appealed against that judgment, the Supreme Court considered it
necessary, before ruling on the dispute before it, to stay the proceedings and to refer
the following questions to the Court of Justice for a preliminary ruling:

'(1) Where a petition is presented to a court of competent jurisdiction in Ireland for

the winding up of an insolvent company and that court makes an order, pending
the making of an order for winding up, appointing a provisional liquidator with
powers to take possession of the assets of the company, manage its affairs, open
a bank account and appoint a solicitor all with the effect in law of depriving the
directors of the company of power to act, does that order combined with the
presentation of the petition constitute a judgment opening ... insolvency
proceedings for the purposes of Article 16, interpreted in the light of Articles 1
and 2, of Council Regulation (EC) No 1346/2000?

(2) If the answer to Question 1 is in the negative, does the presentation, in Ireland,
of a petition to the High Court for the compulsory winding up of a company by
the court constitute the opening of insolvency proceedings for the purposes of
that regulation by virtue of the Irish legal provision (section 220(2) of the
Companies Act, 1963) deeming the winding up of the company to commence at
the date of the presentation of the petition?
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(3) Does Article 3 of the said regulation, in combination with Article 16, have the
effect that a court in a Member State other than that in which the registered
office of the company is situated and other than where the company conducts
the administration of its interests on a regular basis in a manner ascertainable
by third parties, but where insolvency proceedings are first opened has
jurisdiction to open main insolvency proceedings?

(4) Where,

(a) the registered offices of a parent company and its subsidiary are in two
different Member States,

(b) the subsidiary conducts the administration of its interests on a regular basis
in a manner ascertainable by third parties and in complete and regular
respect for its own corporate identity in the Member State where its
registered office is situated and

(c) the parent company is in a position, by virtue of its shareholding and power
to appoint directors, to control and does in fact control the policy of the
subsidiary, in determining the "centre of main interests", are the governing
factors those referred to at (b) above or on the other hand those referred to
at (c) above?

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(5) Where it is manifestly contrary to the public policy of a Member State to permit
a judicial or administrative decision to have legal effect in relation [to] persons
or bodies whose right to fair procedures and a fair hearing has not been
respected in reaching such a decision, is that Member State bound, by virtue of
Article 17 of the said regulation, to give recognition to a decision of the courts
of another Member State purporting to open insolvency proceedings in respect
of a company, in a situation where the court of the first Member State is
satisfied that the decision in question has been made in disregard of those
principles and, in particular, where the applicant in the second Member State
has refused, in spite of requests and contrary to the order of the court of the
second Member State, to provide the provisional liquidator of the company,
duly appointed in accordance with the law of the first Member State, with any
copy of the essential papers grounding the application?'

25 By order of the President of the Court of Justice of 15 September 2004, the

application by the Supreme Court that the accelerated procedure provided for in the
first subparagraph of Article 104a of the Rules of Procedure be applied to the
present case was rejected.

The questions

The fourth question

26 By its fourth question, which should be considered first since it concerns, in general,
the system which the Regulation establishes for determining the competence of the
courts of the Member States, the national court asks what the determining factor is
for identifying the centre of main interests of a subsidiary company, where it and its
parent have their respective registered offices in two different Member States.
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27 The referring court asks how much relative weight should be given as between, on
the one hand, the fact that the subsidiary regularly administers its interests, in a
manner ascertainable by third parties and in respect for its own corporate identity,
in the Member State where its registered office is situated and, on the other hand,
the fact that the parent company is in a position, by virtue of its shareholding and
power to appoint directors, to control the policy of the subsidiary.

28 Article 3 of the Regulation makes provision for two types of proceedings. The
insolvency proceedings opened, in accordance with Article 3(1), by the competent
court of the Member State within whose territory the centre of a debtor's main
interests is situated, described as the 'main proceedings', produce universal effects in
that they apply to the assets of the debtor situated in all the Member States in which
the regulation applies. Although, subsequently, proceedings under Article 3(2) may
be opened by the competent court of the Member State where the debtor has an
establishment, those proceedings, described as 'secondary proceedings', are
restricted to the assets of the debtor situated in the territory of the latter State.

29 Article 3(1) of the Regulation provides that, in the case of a company, the place of
the registered office shall be presumed to be the centre of its main interests in the
absence of proof to the contrary.

30 It follows that, in the system established by the Regulation for determining the
competence of the courts of the Member States, each debtor constituting a distinct
legal entity is subject to its own court jurisdiction.

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31 The concept of the centre of main interests is peculiar to the Regulation. Therefore,
it has an autonomous meaning and must therefore be interpreted in a uniform way,
independently of national legislation.

32 The scope of that concept is highlighted by the 13th recital of the Regulation, which
states that 'the 'centre of main interests' should correspond to the place where the
debtor conducts the administration of his interests on a regular basis and is
therefore ascertainable by third parties'.

33 That definition shows that the centre of main interests must be identified by
reference to criteria that are both objective and ascertainable by third parties. That
objectivity and that possibility of ascertainment by third parties are necessary in
order to ensure legal certainty and foreseeability concerning the determination of
the court with jurisdiction to open main insolvency proceedings. That legal certainty
and that foreseeability are all the more important in that, in accordance with Article
4(1) of the Regulation, determination of the court with jurisdiction entails
determination of the law which is to apply.

34 It follows that, in determining the centre of the main interests of a debtor company,
the simple presumption laid down by the Community legislature in favour of the
registered office of that company can be rebutted only if factors which are both
objective and ascertainable by third parties enable it to be established that an actual
situation exists which is different from that which locating it at that registered office
is deemed to reflect.

35 That could be so in particular in the case of a 'letterbox' company not carrying out
any business in the territory of the Member State in which its registered office is
situated.
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36 By contrast, where a company carries on its business in the territory of the Member
State where its registered office is situated, the mere fact that its economic choices
are or can be controlled by a parent company in another Member State is not
enough to rebut the presumption laid down by the Regulation.

37 In those circumstances, the answer to the fourth question must be that, where a
debtor is a subsidiary company whose registered office and that of its parent
company are situated in two different Member States, the presumption laid down in
the second sentence of Article 3(1) of the Regulation, whereby the centre of main
interests of that subsidiary is situated in the Member State where its registered office
is situated, can be rebutted only if factors which are both objective and ascertainable
by third parties enable it to be established that an actual situation exists which is
different from that which locating it at that registered office is deemed to reflect.
That could be so in particular in the case of a company not carrying out any business
in the territory of the Member State in which its registered office is situated. By
contrast, where a company carries on its business in the territory of the Member
State where its registered office is situated, the mere fact that its economic choices
are or can be controlled by a parent company in another Member State is not
enough to rebut the presumption laid down by the Regulation.

The third question

38 By its third question, which should be examined second, since it concerns the
recognition system established by the Regulation in general, the referring court
essentially asks whether, by virtue of Articles 3 and 16 of the Regulation, a court of a
Member State, other than the one in which the registered office of the undertaking is
situated, and other than the one in which that undertaking conducts the
administration of its interests on a regular basis in a manner ascertainable by third

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parties, but where insolvency proceedings are first opened, must be regarded as
having jurisdiction to open the main insolvency proceedings. The referring court is
thus essentially asking whether the jurisdiction assumed by a court of a Member
State to open main insolvency proceedings may be reviewed by a court of another
Member State in which recognition has been applied for.

39 As is shown by the 22nd recital of the Regulation, the rule of priority laid down in
Article 16(1) of the Regulation, which provides that insolvency proceedings opened
in one Member State are to be recognised in all the Member States from the time
that they produce their effects in the State of the opening of proceedings, is based on
the principle of mutual trust.

40 It is that mutual trust which has enabled a compulsory system of jurisdiction to be

established, which all the courts within the purview of the Convention are required
to respect, and as a corollary the waiver by those States of the right to apply their
internal rules on recognition and enforcement of foreign judgments in favour of a
simplified mechanism for the recognition and enforcement of decisions handed
down in the context of insolvency proceedings [see by analogy, in relation to the
Convention of 27 September 1968 on Jurisdiction and the Enforcement of
Judgments in Civil and Commercial matters (OJ 1978 L 304, p. 36; 'the Brussels
Convention'), Case C-116/02 Gasser [2003] ECR I-14693, paragraph 72; Case
C-159/02 Turner [2004] ECR I-3565, paragraph 24].

41 It is inherent in that principle of mutual trust that the court of a Member State
hearing an application for the opening of main insolvency proceedings check that it
has jurisdiction having regard to Article 3(1) of the Regulation, i.e. examine whether
the centre of the debtor's main interests is situated in that Member State. In that
regard, it should be emphasised that such an examination must take place in such a
way as to comply with the essential procedural guarantees required for a fair legal
process (see paragraph 66 of this judgment).
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42 In return, as the 22nd recital of the Regulation makes clear, the principle of mutual
trust requires that the courts of the other Member States recognise the decision
opening main insolvency proceedings, without being able to review the assessment
made by the first court as to its jurisdiction.

4 3 If an interested party, taking the view that the centre of the debtor's main interests is
situated in a Member State other than that in which the main insolvency
proceedings were opened, wishes to challenge the jurisdiction assumed by the court
which opened those proceedings, it may use, before the courts of the Member State
in which they were opened, the remedies prescribed by the national law of that
Member State against the opening decision.

4 4 The answer to the third question must therefore be that, on a proper interpretation
of the first subparagraph of Article 16(1) of the Regulation, the main insolvency
proceedings opened by a court of a Member State must be recognised by the courts
of the other Member States, without the latter being able to review the jurisdiction
of the court of the opening State.

The first question

45 By its first question, the referring court essentially asks whether the decision
whereby a court of a Member State, presented with a petition for the liquidation of
an insolvent company, appoints, before ordering that liquidation, a provisional
liquidator with powers whose legal effect is to deprive the company's directors of the

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power to act, constitutes a decision opening insolvency proceedings for the purposes
of the first subparagraph of Article 16(1) of the Regulation.

46 The wording of Article 1(1) of the Regulation shows that the insolvency proceedings
to which it applies must have four characteristics. They must be collective
proceedings, based on the debtor's insolvency, which entail at least partial
divestment of that debtor and prompt the appointment of a liquidator.

47 Those forms of proceedings are listed in Annex A to the Regulation, and the list of
liquidators appears in Annex C.

48 The Regulation is designed not to establish uniform proceedings on insolvency, but,

as its second recital states, to ensure that 'cross-border insolvency proceedings ...
operate efficiently and effectively'. To that end, it lays down rules which, as its third
recital indicates, are aimed at securing 'coordination of the measures to be taken
regarding an insolvent debtor's assets'.

49 By requiring that any judgment opening insolvency proceedings handed down by a

court of a Member State which has jurisdiction pursuant to Article 3 be recognised
in all the other Member States from the time that it becomes effective in the State of
the opening of proceedings, the first subparagraph of Article 16(1) of the Regulation
lays down a rule of priority, based on a chronological criterion, in favour of the
opening decision which was handed down first. As the 22nd recital of the Regulation
explains, '[t] he decision of the first court to open proceedings should be recognised
in the other Member States without those Member States having the power to
scrutinise the court's decision'.
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50 However, the Regulation does not define sufficiently precisely what is meant by a
'decision to open insolvency proceedings'.

51 The conditions and formalities required for opening insolvency proceedings are a
matter for national law, and vary considerably from one Member State to another. In
some Member States, the proceedings are opened very shortly after the submission
of the application, the necessary verifications being carried out later. In other
Member States, certain essential findings, which may be quite time-consuming,
must be made before proceedings are opened. Under the national law of certain
Member States, the proceedings may be opened 'provisionally' for several months.

52 As the Commission of the European Communities has argued, it is necessary, in

order to ensure the effectiveness of the system established by the Regulation, that
the recognition principle laid down in the first subparagraph of Article 16(1) of the
Regulation, be capable of being applied as soon as possible in the course of the
proceedings. The mechanism providing that only one main set of proceedings may
be opened, producing its effects in all the Member States in which the Regulation
applies, could be seriously disrupted if the courts of those States, hearing
applications based on a debtor's insolvency at the same time, could claim concurrent
jurisdiction over an extended period.

53 It is in relation to that objective seeking to ensure the effectiveness of the system

established by the Regulation that the concept of 'decision to open insolvency
proceedings' must be interpreted.

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54 In those circumstances, a 'decision to open insolvency proceedings' for the purposes

of the Regulation must be regarded as including not only a decision which is
formally described as an opening decision by the legislation of the Member State of
the court that handed it down, but also a decision handed down following an
application, based on the debtor's insolvency, seeking the opening of proceedings
referred to in Annex A to the Regulation, where that decision involves divestment of
the debtor and the appointment of a liquidator referred to in Annex C to the
Regulation. Such divestment involves the debtor losing the powers of management
which he has over his assets. In such a case, the two characteristic consequences of
insolvency proceedings, namely the appointment of a liquidator referred to in Annex
C and the divestment of the debtor, have taken effect, and thus all the elements
constituting the definition of such proceedings, given in Article 1(1) of the
Regulation, are present.

55 Contrary to the arguments of Mr Bondi and the Italian Government, that

interpretation cannot be invalidated by the fact that the liquidator referred to in
Annex C to the Regulation may be a provisionally-appointed liquidator.

56 Both Mr Bondi and the Italian Government acknowledge that, in the main
proceedings, the 'provisional liquidator' appointed by the High Court, by decision of
27 January 2004, appears amongst the liquidators mentioned in Annex C to the
Regulation in relation to Ireland. They argue, however, that this is a case of a
provisional liquidator, in respect of whom the Regulation contains a specific
provision. They note that Article 38 of the Regulation empowers the provisional
liquidator, defined in the 16th recital as the liquidator 'appointed prior to the
opening of the main insolvency proceedings', to apply for preservation measures on
the assets of the debtor situated in another Member State for the period between the
request for the opening of insolvency proceedings and the judgment opening the
proceedings. Mr Bondi and the Italian Government infer from that that the
appointment of a provisional liquidator cannot open the main insolvency
proceedings.

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57 In that respect, it should be noted that Article 38 of the Regulation must be read in
combination with Article 29, according to which the liquidator in the main
proceedings is entitled to request the opening of secondary proceedings in another
Member State. That Article 38 thus concerns the situation in which the competent
court of a Member State has had main insolvency proceedings brought before it and
has appointed a person or body to watch over the debtor s assets on a provisional
basis, but has not yet ordered that that debtor be divested or appointed a liquidator
referred to in Annex C to the Regulation. In that case, the person or body in
question, though not empowered to initiate secondary insolvency proceedings in
another Member State, may request that preservation measures be taken over the
assets of the debtor situated in that Member State. That is, however, not the case in
the main proceedings here, where the High Court has appointed a provisional
liquidator referred to in Annex C to the Regulation and ordered that the debtor be
divested.

58 In view of the above considerations, the answer to the first question must be that, on
a proper interpretation of the first subparagraph of Article 16(1) of the Regulation, a
decision to open insolvency proceedings for the purposes of that provision is a
decision handed down by a court of a Member State to which application for such a
decision has been made, based on the debtor's insolvency and seeking the opening of
proceedings referred to in Annex A to the Regulation, where that decision involves
the divestment of the debtor and the appointment of a liquidator referred to in
Annex C to the Regulation. Such divestment implies that the debtor loses the
powers of management that he has over his assets.

The second question

59 In the light of the answer given to the first question, there is no need to reply to the
second question.

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The fifth question

60 By its fifth question, the referring court essentially asks whether a Member State is
required, under Article 17 of the Regulation, to recognise insolvency proceedings
opened in another Member State where the decision opening those proceedings was
handed down in disregard of procedural rules guaranteed in the first Member State
by the requirements of its public policy.

61 Whilst the 22nd recital of the Regulation infers from the principle of mutual trust
that 'grounds for non-recognition should be reduced to the minimum necessary',
Article 26 provides that a Member State may refuse to recognise insolvency
proceedings opened in another Member State where the effects of such recognition
would be manifestly contrary to that State's public policy, in particular its
fundamental principles or the constitutional rights and liberties of the individual.

62 In the context of the Brussels Convention, the Court of Justice has held that, since it
constitutes an obstacle to the achievement of one of the fundamental aims of that
Convention, namely to facilitate the free movement of judgments, recourse to the
public policy clause contained in Article 27, point 1, of the Convention is reserved
for exceptional cases (Case C-7/98 Krombach [2000] ECR I-1935, paragraphs 19 and
21).

63 Considering itself competent to review the limits within which the courts of a
Contracting State may have recourse to that concept for the purpose of refusing
recognition to a judgment emanating from a court in another Contracting State, the
Court of Justice had held, in the context of the Brussels Convention, that recourse to
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that clause can be envisaged only where recognition or enforcement of the judgment
delivered in another Contracting State would be at variance to an unacceptable
degree with the legal order of the State in which enforcement is sought inasmuch as
it infringes a fundamental principle. The infringement would have to constitute a
manifest breach of a rule of law regarded as essential in the legal order of the State in
which enforcement is sought or of a right recognised as being fundamental within
that legal order (Krombach, paragraphs 23 and 37).

64 That case-law is transposable to the interpretation of Article 26 of the Regulation.

65 In the procedural area, the Court of Justice has expressly recognised the general
principle of Community law that everyone is entitled to a fair legal process (Case
C-185/95 P Baustahlgewebe v Commission [1998] ECR I-8417, paragraphs 20 and
21; Joined Cases C-174/98 P and C-189/98 P Netherlands and Van der Wal v
Commission [2000] ECR I-1, paragraph 17; and Krombach, paragraph 26). That
principle is inspired by the fundamental rights which form an integral part of the
general principles of Community law which the Court of Justice enforces, drawing
inspiration from the constitutional traditions common to the Member States and
from the guidelines supplied, in particular, by the European Convention for the
Protection of Human Rights and Fundamental Freedoms, signed in Rome on
4 November 1950.

66 Concerning more particularly the right to be notified of procedural documents and,

more generally, the right to be heard, referred to in the referring court's fifth
question, these rights occupy an eminent position in the organisation and conduct
of a fair legal process. In the context of insolvency proceedings, the right of creditors
or their representatives to participate in accordance with the equality of arms
principle is of particular importance. Though the specific detailed rules concerning

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the right to be heard may vary according to the urgency for a ruling to be given, any
restriction on the exercise of that right must be duly justified and surrounded by
procedural guarantees ensuring that persons concerned by such proceedings
actually have the opportunity to challenge the measures adopted in urgency.

67 In the light of those considerations, the answer to the fifth question must be that, on
a proper interpretation of Article 26 of the Regulation, a Member State may refuse
to recognise insolvency proceedings opened in another Member State where the
decision to open the proceedings was taken in flagrant breach of the fundamental
right to be heard, which a person concerned by such proceedings enjoys.

68 Should occasion arise, it will be for the referring court to establish whether, in the
main proceedings, that has been the case with the conduct of the proceedings before
the Tribunale civile e penale di Parma. In that respect, it should be observed that the
referring court cannot confine itself to transposing its own conception of the
requirement for an oral hearing and of how fundamental that requirement is in its
legal order, but must assess, having regard to the whole of the circumstances,
whether or not the provisional liquidator appointed by the High Court was given
sufficient opportunity to be heard.

Costs

69 Since these proceedings are, for the parties to the main proceedings, a step in the
action pending before the national court, the decision on costs is a matter for that

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court. Costs incurred in submitting observations to the Court, other than the costs
of those parties, are not recoverable.

On those grounds, the Court (Grand Chamber) hereby rules:

1. Where a debtor is a subsidiary company whose registered office and that of

its parent company are situated in two different Member States, the
presumption laid down in the second sentence of Article 3(1) of Council
Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings,
whereby the centre of main interests of that subsidiary is situated in the
Member State where its registered office is situated, can be rebutted only if
factors which are both objective and ascertainable by third parties enable it
to be established that an actual situation exists which is different from that
which location at that registered office is deemed to reflect. That could be
so in particular in the case of a company not carrying out any business in
the territory of the Member State in which its registered office is situated.
By contrast, where a company carries on its business in the territory of the
Member State where its registered office is situated, the mere fact that its
economic choices are or can be controlled by a parent company in another
Member State is not enough to rebut the presumption laid down by that
Regulation.

2. On a proper interpretation of the first subparagraph of Article 16(1) of

Regulation No 1346/2000, the main insolvency proceedings opened by a
court of a Member State must be recognised by the courts of the other
Member States, without the latter being able to review the jurisdiction of
the court of the opening State.
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3. On a proper interpretation of the first subparagraph of Article 16(1) of the

Regulation, a decision to open insolvency proceedings for the purposes of
that provision is a decision handed down by a court of a Member State to
which application for such a decision has been made, based on the debtor's
insolvency and seeking the opening of proceedings referred to in Annex A
to the Regulation, where that decision involves the divestment of the
debtor and the appointment of a liquidator referred to in Annex C to the
Regulation. Such divestment implies that the debtor loses the powers of
management that he has over his assets.

4. On a proper interpretation of Article 26 of the Regulation, a Member State

may refuse to recognise insolvency proceedings opened in another Member
State where the decision to open the proceedings was taken in flagrant
breach of the fundamental right to be heard, which a person concerned by
such proceedings enjoys.

[Signatures]

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