Irish court refused to recognize Italian insolvency proceedings due to lack of fair hearing and public policy concerns.

THE SUPREME COURT

147/04

Murray CJ

Denham J

McGuinness J

Geoghegan J

Fennelly J

IN THE MATTER OF EUROFOODS IFSC LIMITED

AND

IN THE MATTER OF THE COMPANIES ACTS 1963 TO 2001

JUDGMENT OF the Court delivered by Fennelly J on the 27th day of July, 2004.

1. Eurofood IFSC Limited (hereinafter "the Company"), a company incorporated and registered in Ireland and part of the Parmalat

Group of companies is insolvent. The High Court (Kelly J) has made a winding up order and appointed a liquidator. In doing so, he

interpreted Council Regulation (EC) No 1346/2000. He held that the centre of main interests of the Company was in Ireland. He

declined recognition, on grounds of public policy, to a judgment of an Italian court, which had already made an order placing the

Company in extraordinary administration under Italian law and determining that the centre of main interests was in Italy.

2. The Appellant before this Court is the extraordinary administrator appointed by the Italian Court. It is clear that this Court, in order

to be able to give judgment on the appeal, must refer questions for preliminary rulings on the interpretation of the Council Regulation

to the Court of Justice.

The Facts regarding Eurofood

3. The following facts are not disputed, with the exception of the extent to which Board meetings of the Company were held in

Dublin.

4. The Company was incorporated in Ireland as a company limited by shares on the 5th November, 1997. It has a paid up capital of

US$l00,000 and €2.54. The registered office of the Company is at 2 Harbourmaster Place, International Financial Services Centre,

Dublin 1. It is a wholly owned subsidiary of Parmalat SpA (hereinafter "Parmalat") a company incorporated in Italy. The Company’s

principal objective was the provision of financing facilities for companies in the Parma1at group.

5. The International Financial Services Centre (hereinafter “IFSC”) was established in 1987 at Custom House Dock in Dublin to provide

a location for internationally traded financial services, including banking, asset financing, fund management and administration and

specialised insurance operations. These may be provided only to non-resident persons or bodies. Incorporation within IFSC confers

certain tax benefits, subject to strict compliance with a regulatory regime including supervision by:

· The Minister for Finance;

· The Irish Financial Services Regulatory Authority;

· The Revenue Commissioners, i.e., the body charged with the collection of taxes;

· The Director of Corporate Enforcement;

· The Central Bank.

6. The Company, as it was required by law to do, carried on business at the IFSC at Custom House Docks, Dublin. In order to enjoy

the tax benefits flowing from that fact, it required, and did in fact acquire, a certificate from the Minister for Finance pursuant to

section 39B(2) of the Finance Act 1980, as inserted by section 30 of the Finance Act, 1987. That certificate authorized the Company

to operate as an agency treasury centre and was limited to the provision of financing facilities to the Parmalat Group. Amongst other

conditions, it required that the activities of the Company be carried on at IFSC and that the records and accounts of the business be

available for inspection by the Revenue Commissioners. The Company was required to pay tax in Ireland on any income arising from its

trading transactions.

7. Bank of America NT and SA, (hereinafter “Bank of America”,) a bank established in the United States of America, but with

branches, inter alia, in Dublin, London and Milan managed the day-to-day administration of the Company in accordance with the terms

of an administration agreement of 1997.

8. Up to December 2003, there were four directors of the Company. Two of these were Irish and based in Ireland and two were Italian

and based in Italy. One, Ms Catherine Meenaghan, was an employee of Bank of America. The Appellant states that the Italian

directors were executive directors and that the Irish directors were non-executive. However, as a matter of law, all are appointed

simply as directors. No such distinction appears in the Articles of Association of the Company. One of the Italian directors resigned on

12th December 2003 and the other on 20th January 2004. Under the Articles of Association, Parmalat, as holding company has power,

by notice in writing, to remove and appoint directors.

9. According to the report of the Provisional Liquidator, all Board meetings of the Company were held in Dublin with two Irish directors

or their nominees present at all times. The Italian directors usually attended in person, but sometimes communicated by telephone.

The evidence before this Court includes very detailed minutes of two meetings of the Board of Directors, held at 2 Harbourmaster

Place, Custom House Dock, Dublin on 18th September 1998 at which both Italian directors attended. Mr Fausto Tonna took the Chair

and Mr Luciano del Soldato also attended. Those meetings approved the two large financial transactions listed below, respectively

note issues to Venezuelan and Brazilian companies in the Parmalat Group.

10. The Appellant has disputed the extent to which Board meetings were held in Ireland. In an affidavit he, states:

“[T]here were twelve significant Meetings/Written Resolutions prior to the insolvency of the Parmalat group of companies in

December 2003. It would appear that only five were held in Ireland, two of these had only one Irish director present, five were

by telephone and the two written Resolutions included the significant Written Resolution of 8th August 2001 in respect of the

Swaps Transaction, which was in effect directed by the Bank of America. Both Written Resolutions were passed under the hand

of two Italian and one Irish director. The last two Board meetings held in December in December 2003 and January 2004 were

physically held in Dublin with two Irish directors present but at this stage the two Italian directors were in custody in Italy.”

11. Mr Wayne Porrit, for Bank of America, has sworn that in “fact, all but one of the meetings of the Board are stated in their

minutes to have been held in Ireland and were attended by both Irish and Italian directors.” He has produced a table, setting out

details of fourteen meetings between November 1997 and January 2004. The one exception mentioned describes the location of the

meeting as: “various locations… by phone.” Mr Fausto Tonna is recorded as being present on six occasions and by phone on four

occasions. Mr Luciano del Soldato was present on five occasions and on the phone on four. On some occasions the Irish directors

were recorded as attending “by phone” but usually as simply being present.

12. The audited financial statements of the Company were prepared by Grant Thornton, Chartered Accountants, Dublin, in

accordance with Irish law and accounting standards.

13. The Company engaged in three large financial transactions which were described as the Brazilian, Venezuelan and Swap

transactions respectively. These were as follows:

a) on 29th September 1998 the Company issued notes by way of private placement in an aggregate amount of US$80,000,000

(to provide collateral for a loan by Bank of America to Venezuelan companies in the Parmalat group)

b) on 29th September 1998 the Company issued notes by way of private placement in an aggregate amount of US$100,000,000

(to fund a loan by the Company to Brazilian companies in the Parmalat group).

c) there was a “Swap” agreement with Bank of America dated 10th August 2001.

14. The liabilities of the Company under the first two transactions were guaranteed by Parmalat.

15. The creditors of the Company under the first two transactions, hereinafter called “the note holders” are now owed in excess of

US$122 million. It is common case that the Company is unable to pay its debts.

Parmalat

16. Parmalat Spa, the parent of the Company, while incorporated in Italy, has operated through subsidiary companies in more than

thirty countries worldwide. Its turnover in the year 2002 was in excess of €7.5 billion. It has been the subject of a well publicized

worldwide insolvency crisis and is the subject of legal and regulatory investigations in several countries.

Insolvency Proceedings in Ireland

17. On the 27th January, 2004, Bank of America presented to the High Court a petition for the winding up of the Company, alleging

that the Company was insolvent and claiming a debt due to it of in excess of US$3.5 million. Although there was, in the affidavits filed

before the High Court, some dispute concerning that debt, the Appellant did not address any arguments to that court on that issue

and has not appealed against the High Court decision on the point. In any event, as the Appellant accepts, it is not necessary to

resolve the issue, because other creditors represented by Metropolitan Life Insurance on behalf of the note holders have indicated

their willingness to take over the petition of Bank of America, a procedure which is permitted under the Companies Acts. Bank of

America, on 27th January 2004, also applied, ex parte, for the appointment of a provisional liquidator at the same time as it presented

the petition.

18. In its affidavit grounding the petition, Bank of America expressed concern that an attempt would be made to move the centre of

main interests of the Company, for the purposes of Council Regulation (EC) No 1346/2000, from Ireland to Italy. It claimed that the

centre of main interests was in Ireland.

19. The High Court (Lavan J) duly appointed Mr Pearse Farrell as Provisional Liquidator to the company with powers to:

a) to take possession of all of the assets of the Company;

b) to manage the affairs of the Company;

c) to open a bank account in the name of the Company; and

d) to retain the services of a solicitor.

20. The High Court, at that stage, did not determine the issue of centre of main interests. The Provisional Liquidator took up his

appointment and notified the creditors of the fact. He took steps to preserve the assets of the Company and to investigate its

affairs. He also notified the Appellant, Dr Enrico Bondi, who had then been appointed as the Extraordinary Administrator of Parmalat in

Italy.

21. The Petition of Bank of America for the winding-up of the Company was heard in the High Court (Kelly J) from the 2nd to the 4th

March 2004. Bank of America, the provisional liquidator, the note holders and the Director of Corporate Enforcement were

represented. Kelly J, in a judgment of 23rd March 2004, decided that: -

1. Insolvency proceedings had been opened in Ireland at the date of the presentation of the petition.

2. The centre of main interests of the Company was and is in Ireland and therefore the proceedings opened in Ireland as of the

27th January 2004 were main insolvency proceedings within the meaning of the Regulation.

3. The purported opening of main insolvency proceedings by the Civil and Criminal Court of Parma (hereinafter “the Parma

court”) was contrary to Recital 22 and Article 16 of the Insolvency Regulation and could not alter the fact that main insolvency

proceedings were already extant in Ireland.

4. The failure of the Extraordinary Administrator to put the creditors of the Company on notice of the hearing before the Parma

court despite that court's directions on the matter and the failure to furnish the Provisional Liquidator with the petition or other

papers grounding the application until after the hearing had taken place, all amounted to a lack of due process, such as to

warrant the Irish Courts refusing to give recognition to the decision of the Parma court under Article 26 of the Regulation.

22. In the light of these conclusions and in circumstances where the Company was grossly insolvent Mr Justice Kelly made a winding

up order in respect of the Company and appointed the provisional liquidator as liquidator. He did not recognize the decision of the

Parma Court of 20th February.

Insolvency proceedings in Italy

23. Parmalat was discovered in late 2003 to be in deep financial crisis. This led to the insolvency of many of its key companies.

24. On the 23rd December, 2003 the Italian Parliament passed into law decree No. 347 which permits of extraordinary administration

of companies. On the 24th December 2003, Parmalat was admitted to extraordinary administration proceedings by the Italian Ministry

of Productive Activities. The Appellant was appointed as extraordinary administrator. On the 27th December, 2003 the Parma Court

confirmed that Parmalat was insolvent and placed it in extraordinary administration.

25. This Court has been informed on behalf of the Appellant that the object of the procedure of extraordinary administration is to

permit the economic and financial restructuring of companies on the basis of a recovery programme over a period of less than two

years. It applies only to large companies, i.e., those with more than 1,000 employees and debts of no less than €1 billion. The

Appellant must produce a report within 180 days.

26. On 10th February 2004, the Parma Court made an order in which it fixed 17th February 2004 as the date for the hearing of a

petition concerning the insolvency of the Company. In its order, it directed that notice of the application be served on interested

parties. The facts surrounding these proceedings are set out in more detail in the separate judgment of Fennelly J, with which the

other members of the Court agree. That judgment concerns the recognition of the judgment of the Parma Court.

27. On 20th February the Parma Court gave judgment opening insolvency proceedings concerning the Company, declaring the

Company to be insolvent, determining that its centre of main interests was in Italy and appointing the Appellant as extraordinary

administrator.

The Appeal

28. The Appellant has appealed to this Court against the decision of the High Court. The principal subjects of argument on the hearing

of the appeal were:

· Whether insolvency proceedings had been first opened in Ireland or Italy;

· Whether the centre of main interests of the Company was in Ireland or Italy;

· Whether there was such an absence of fair procedures leading up to the decision of the Parma Court that its decision should

not be recognised.

29. This Court has received written and oral submissions in connection with the appeal from counsel for the Appellant as well as for Mr

Pearse Farrell, the Provisional Liquidator, Bank of America, as Petitioning Creditor, the note holders, led by Metropolitan Life Insurance

and the Director of Corporate Enforcement. The Provisional Liquidator, while expressing his continued willingness to act, considered it

inappropriate for him to make submissions on the first two issues, but stated, particularly in oral submissions, that the conclusions of

the High Court on the third point, namely the failure to respect fair procedures at the Parma Court, were fully warranted.

30. It was generally agreed, at the hearing of the appeal, that this Court would be obliged to refer questions relating to these issues

to the Court of Justice for preliminary ruling pursuant to Article 234 of the Treaty Establishing the European Community as applied by

Article 68 of that Treaty.

Submissions on the opening of insolvency proceedings

31. Counsel for the Appellant, Mr Bill Shipsey, Senior Counsel, made, as his principal submission that insolvency proceedings had been

first opened in Italy, by the judgment of the Parma Court of 20th February. The concept had to be given an autonomous Community-

law meaning. The function of the Regulation is to allocate jurisdiction between Member States. Jurisdiction to open main insolvency

proceedings is not in the Member State in which application is first made but rather where the company has its centre of main

interests. He submitted that the appointment of a provisional liquidator is not the opening of insolvency proceedings for the purposes

of Article 3 of the Regulation. A provisional liquidator is appointed to preserve the assets and is, in reality, a temporary administrator,

who may be removed before the making of a winding-up order. Most importantly, counsel says that the inclusion of “provisional

liquidator” in Annex C of the Regulation is not relevant since there is no relevant proceeding in Annex A, and the winding up

commences only when an order to that effect is made.

32. Counsel for the petitioning creditor, Bank of America, Mr Michael Collins, Senior Counsel, submitted that insolvency proceedings

were opened in Ireland on the appointment of the provisional liquidator. This is based on the appointment of the provisional liquidator

and his inclusion in Annex C and, secondly, by virtue of the rule of Irish law that the winding up is “deemed to commence at the time

of the presentation of the petition for winding up.”(Section 220(2) of the Companies Act, 1963). The “judgment opening proceedings”

includes “the decision of any court empowered to open such proceedings or to appoint a liquidator.” The latter includes a provisional

liquidator, as listed in Annex C. Contrary to the argument of the Appellant, he submitted that, by virtue of Article 4(1) of the

Regulation, the effects of insolvency proceedings, including their commencement date, are to be governed by national law. He refers

to the definition in Article 2(f) the Regulation of “the time of opening of proceedings” as “the time at which the judgment opening the

proceedings becomes effective, whether it is a final judgment or not.” These arguments were also, in effect, advanced by the note

holders.

33. Mr Collins advanced an additional argument in favour of the proposition that main insolvency proceedings were opened at the time

of presentation of the petition. In this respect, he claimed that the Central Office of the High Court should be considered as falling

within the “broad meaning” of the term “court” for the purposes of the Regulation, as seen in recital 10, which also says that

“insolvency proceedings do not necessarily involve the intervention of a judicial authority.” Article 2(d) provides that “court” shall

“mean the judicial body or any other competent body empowered to open insolvency proceedings or to take decisions in the course

of such proceedings.” The Central Office were required to check the petition before receiving it and a Registrar had to fix a date for

hearing.

Submissions on Centre of Main Interests

34. The Appellant, relying principally on the opening of proceedings in Italy, presented only brief arguments on the appeal regarding

the determination of the issue of centre of main interests. In his notice of appeal, he claims that the learned High Court judge erred in

law on the facts in embarking on this issue when the Parma Court had already determined it and when no argument was addressed to

him (Kelly J) by the Appellant. In his written submissions on the appeal, he relies on the fact that this issue has been determined by

the Parma Court. He says that the presumption based on the location of the registered office was rebutted, stating that: “as is

evident from the affidavits filed the Company was a financial vehicle for other companies in the group.” This appears to be a

reference to an affidavit sworn by the Appellant on 20th February 2004, in which he places reliance on the judgment of the Parma

Court delivered on that day. In addition, the Appellant referred to the history of the Board meetings of the Company which has

already been quoted in detail above. He also stated that the Company had no employees in Ireland. In a further affidavit, sworn on

1st March, the Appellant replied to an affidavit sworn by Ms Jacqueline Jenkins on behalf of the note holders, stating that the fact

that the security documentation for the notes was governed by Irish regulatory authorities and Irish tax law did not mean that the

centre of main interests of the Company was in Ireland. He stated:

“The availing of the fiscal regime established in the Irish Financial Services Centre by the Company in issuing its bonds in the

United States is not and could not per se amount to the conducting of the administration of the interest of the Company on a

regular basis in the IFSC. Overwhelming evidence was presented to the Court in Parma that the persons who administered the

Company and made decisions with regard to the Company were at all times based in Italy.”

35. Bank of America and the note holders argued on the appeal in support of the determination by the High Court that the centre of

main interests was in Ireland. Counsel pointed to recital 13 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.” Counsel relied on the matters of fact which have been summarised above. He placed particular

emphasis on the place of the registered office, the conduct of Board meetings in Ireland and the clear perception of the main

creditors of the Company that they were dealing with a Company located in Ireland and subject to Irish fiscal and regulatory

provisions. The note holders state that the Company was very specifically established in Dublin to take advantage of the particular

fiscal and regulatory regime of the IFSC and that, for this purpose, the day to day affairs of the Company were required to be and

were in fact conducted within the Custom House Dock area pursuant to a management agreement with the Bank of America. They

submit that the perception of creditors is a crucial factor in determining a company’s centre of main interests.

Matters to be decided by this Court

36. It is clear that this Court, in order to give judgment on this appeal, must refer certain questions relating to the three main areas

of dispute for preliminary ruling to the Court of Justice. In order to assist that Court in its task, it will include the following matters in

its decision referring those questions:

· Its findings on relevant matters of relevant fact;

· Its rulings on certain matters of Irish law;

· Its views on certain aspects of the questions being referred.

The Facts

37. The facts set out above regarding the history of the Company, of Parmalat and of the history of the Irish and Italian proceedings

are not in dispute except in one respect.

38. The only disputed issue of fact concerned the extent to which Board meetings of the Company were held in Dublin. In the view of

this Court, the evidence is overwhelming that these meetings were properly and regularly held in Dublin and this Court so finds. There

were fourteen Board meetings between November 1997 and January 2004. It seems certain that the first of these can be ignored as it

took place before the Company changed its name to Eurofood as part of the Parmalat Group. In the case of twelve of the remaining

thirteen meetings, the minutes record the meeting as taking place at one or another address in Dublin. Ten meetings were attended

by at least two directors in person and an eleventh by one. On five occasions, one or more of the Italian and of the Irish directors

communicated with the meeting by telephone.

39. On one occasion only the meeting was conducted entirely by telephone. This was a perfectly regular and permissible practice. It

did not alter the fact that, as recorded in the minutes in all but one case, the meetings were held in Ireland. It is notable that the

two largest of the only three transactions ever effected by the Company were approved at a meeting of the Board in Dublin at which

both Italian and Irish directors. No Board meeting was held in Italy.

40. The Appellant’s statement, on affidavit, that only five of what he describes as “twelve significant Meetings/Written resolutions”

were held in Dublin is incorrect and contrary to the clear evidence. The Appellant has produced no evidence to support it.

41. The Appellant has described the Italian directors as “executive directors” and the Irish directors as “non-executive directors.” The

Articles of Association of the Company recognizes no such distinction. There is no basis for such distinction, as a matter of law. He

also says that the Company had no Irish employees, which is correct. However, one of the Irish directors, Ms Catherine Meenaghan,

was an employee of Bank of America, which was responsible for the day to day management of the Company, pursuant to the terms

of a comprehensive written administration agreement. The Bank of America thereby effectively undertook to be responsible for the

entire administration of the Company. This took place in Ireland. This was perfectly normal and regular.

42. This Court is satisfied that the Company complied fully with all the legal and regulatory requirements imposed by Irish company

and tax and financial-services law. These included observance of the requirements of the certificate issued to it by the Minister for

Finance, the filing of annual returns with the Companies Office and the auditing of annual financial statements. Its business was

properly and regularly conducted at the IFSC in Ireland. The Appellant has not, in fact, with the sole exception of the matter of the

location of Board meetings, already mentioned, alleged any irregularity in any of these respects.

Matters of Irish law

43. This Court addresses the following matters of Irish law:

· The consequences of the appointment of a Provisional Liquidator;

· The function of the Central Office of the High Court;

44. The Companies Act, 1963 governs the appointments of liquidators. Section 225 of that Act provides:

“For the purpose of conducting the proceedings in winding up a company and performing such duties in reference thereto as

the court may impose, the court may appoint a liquidator or liquidators.”

45. That power relates to the appointment of a liquidator at the time when a winding up order is being made. Section 226 additionally

provides:

“(1) Subject to subsection (2), the court may appoint a liquidator provisionally at any time after the presentation of a winding-

up petition and before the first appointment of liquidators.

(2) Where a liquidator is provisionally appointed by the court, the court may limit and restrict his powers by the order

appointing him.”

46. The grounds for appointment of a Provisional Liquidator are usually that the assets of the Company are in danger and that it is

necessary to take action to prevent them from being dissipated. The creditor applying for such an appointment must produce

evidence to satisfy the court that there are sufficient grounds for the appointment. The order appointing the provisional liquidator

must state the nature of and give a short description of the property which he is required to take into his possession and the duties

he is required to perform.

47. 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.” (section 229(1) of the Act). The legal effect of the appointment of a

Provisional Liquidator is that the directors of the company no longer have any power to deal with assets of the Company covered by

the order of the court.

48. The date of commencement of a winding up is dealt with by section 220(2) of the Act, which provides that “…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.”

49. It does not necessarily follow from the fact that a winding up petition has been presented or even that a Provisional Liquidator

has been appointed that a winding up order will in fact be made. Section 216 provides that on “hearing a winding-up petition, the

court may dismiss it, or adjourn the hearing conditionally or unconditionally, or make any interim order, or any other order that it

thinks fit…” The presentation of the petition and the order for winding up are distinct. A principal function of the relation-back

provision of section 220(2) is to confer validity on any acts that have been performed by a provisional liquidator following his

appointment at the time of the presentation of the petition.

50. The Rules of the Superior Courts contain provisions regarding the presentation of winding up petitions. A petition for the winding

up of a company must be “presented and retained at the Central Office…” of the High Court. That Office assigns a number to the

case and a Registrar is obliged to appoint the time and place at which the petition is to be heard and may alter or vary that time.

However, no Registrar has any power to open a hearing or to make any substantive order on the matter. In the view of this Court, it

is manifest that the Central Office of the High Court is not a body independent of the Court. It is the administrative office of the

Court. The acts referred to in the rules are ministerial acts only and involve no adjudicative act of any sort in the course of

insolvency proceedings. The Court does not consider that the Central Office of the High Court has any power to “open insolvency

proceedings.”

Consideration of the Issues

51. The conflict which has arisen between the decisions of the Irish and Italian courts concerns, in the first instance, the question of

whether insolvency proceedings were opened in Ireland with the presentation of the petition and the appointment of the Provisional

Liquidator on 27th January or with the order of the Parma Court on 20th February determining that the Company was insolvent and

ruling that the centre of main interests of the Company was in Italy.

Opening of Insolvency Proceedings

52. The Regulation applies, according to Article 1.1, to “collective insolvency proceedings which entail partial or total divestment of a

debtor and the appointment of a liquidator.” Article 2(a) says that these proceedings are listed in Annex A. That Annex includes

“compulsory winding up by the court,” in the case of Ireland. The petition presented to the High Court on 27th January was such a

proceeding. Moreover, the appointment of the Provisional Liquidator on 27th January did involve at least a “partial divestment” of the

debtor, insofar as it deprived the directors of their powers and required the Provisional Liquidator to take possession of the Company’s

property. Although the petition presented on 27th January was indeed one for such compulsory winding up, no order for winding up

was made on that date. Nonetheless, it is clear that the petition was for a winding up of the Company within the meaning of Article

1.1 and Annex A. If and when a winding up order is made—and one has been made by the High Court, subject to the effects of the

Regulation--- the effect of section 220(2) of the Companies Act, 1963 is that the order is deemed to have been made on 27th

January. Thus, so far as Irish law is concerned, the proceedings are deemed to have been opened on 27th January 2004. A question

of interpretation, therefore, arises as to the effect of this provision.

53. Whether the presentation of the petition and more particularly the appointment of the Provisional Liquidator on 27th January

constituted the opening of insolvency proceedings depends on the interpretation of certain definitions in the Regulation. In particular,

the term “judgment” in relation “to the opening of insolvency proceedings or the appointment of a liquidator” is defined in Article 2(e)

as including “the decision of any court empowered to open such proceedings or to appoint a liquidator.” The word “liquidator,” in the

case of Ireland, by virtue of Article 2(b) and Annex C, includes a provisional liquidator. Article 2(e) does not, however, refer to a

judgment appointing a liquidator, but to a judgment by a court “empowered” to make such an appointment. The question, therefore,

is whether an order appointing a provisional liquidator, which appears clearly to be a judgment within the meaning of Article 2(e), is to

be considered as a judgment opening insolvency proceedings, entitled to recognition pursuant to Article 16. It is not clear whether

Article 2(e) intends to create a distinction, for the purposes of Article 16, between the opening of insolvency proceedings and the

appointment of a liquidator. The definition of the appointment of a liquidator as a “judgment” does not appear to serve any purpose

within the Regulation if it does not benefit from the recognition provided by Article 16. Moreover, the appointment of a liquidator is an

essential component of the notion of collective insolvency proceedings within Article 1.1 of the Regulation.

54. Bank of America also relies strongly on Article 2(f), which defines the “time of the opening of proceedings” as meaning “the time

at which the judgment opening the proceedings becomes effective, whether it is a final judgment or not.” There is no doubt that, as

a matter of Irish law, the order appointing the Provisional Liquidator, even if not a final judgment, became effective on 27th January.

That argument is of assistance to Bank of America, provided that it can be shown that the expression, “time of the opening of

proceedings,” as defined is relevant to determining the priorities between the opening of proceedings where conflicting orders are

made in two Member States. The expression does not appear in Article 16, which lays down the principle of recognition. It appears

only in Articles 5 and 7, which deal with the preservation of certain third-party rights either in rem or by way of reservation of title.

However, the Virgos-Schmit report (point 66) says that this expression is “very important, since many questions are settled by

reference to it.” The question is whether this definition was intended to have effect on the determination of priorities between

proceedings purporting to open insolvency proceedings in two Member States.

55. In all these circumstances, this court requires preliminary rulings from the Court of Justice to enable it to give judgment on

whether the Irish Court first opened insolvency proceedings.

Centre of Main Interests

56. It is unnecessary to repeat the history of the Company. This is set out in detail earlier in this judgment. In the view of this Court,

the evidence overwhelmingly leads to the conclusion that the centre of main interests of the Company was in Ireland at all times prior

to its insolvency. The concept of centre of main interests is, of course, one of Community law. However, its assessment is

predominantly a matter of fact.

57. Recital 13 states:

“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.”

58. Article 3.1 states:

“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.”

59. It is common case that the presumption is in favour of the country of the registered office, in this case Ireland. The burden

should, therefore, be on those who assert the contrary to bring cogent proof.

60. Moreover, there are two elements in Recital 13, both of which need to be considered.

61. Firstly, the centre of main interests should be where the Company has conducted the administration of its interests on a regular

basis. This Court has found, as a fact, that the Company has at all times conducted its business lawfully and regularly in Ireland. It

has complied fully with all the legal and regulatory requirements imposed by Irish company, tax and financial-services law. The

Appellant has not contended to the contrary except in respect of the holding of Board meetings. This Court has resolved any conflict

of fact against the Appellant on this issue. The Appellant has produced no evidence at all for his assertion that only five meetings

were held in Ireland. His assertion is to the contrary of the available evidence. It is particularly striking that the two Board meetings

which approved the two transactions which represented the overwhelming bulk of the business ever done by the Company, took place

in Dublin, with both Italian directors in attendance. Accordingly, so far as the very extensive evidence before the High Court and this

Court is concerned, the Company clearly conducted the administration of its business fully and regularly in Ireland.

62. Secondly, the centre of main interests must be such as is ascertainable by third parties. The note holders have placed before the

High Court very detailed evidence of the lengths to which they went to satisfy themselves of the legal and financial character of the

Company and of the regulatory environment in which it operated. They clearly did not believe that they were transacting business

with a company whose centre of main interests was in Italy. Insofar as this matter is relevant, it also tends to show that the centre

of main interests was in Ireland.

63. It is then necessary to consider the matters upon which the Appellant relies to rebut the presumption. These matters are

principally, if not entirely:

· The Company was a wholly-owned subsidiary of Parmalat;

· The sole object of the Company was the provision of finance for companies in the Parmalat Group;

· The Company’s policy was decided at Parmalat headquarters in Italy, by Parmalat executives and the Company exercised no

independent decision-making function.

· The Company had no employees in Ireland.

· The liability of the Company to the note holders was guaranteed by Parmalat.

64. By reason of these matters, the Appellant claims that the Company was a mere financial vehicle for Parmalat, that it had only a

formal office in Ireland and that its exclusive point of reference the interests of the parent the Company.

65. These submissions are of a very far-reaching character so far as the fundamentals of company law are concerned. It is perfectly

normal and to be expected that subsidiary companies in a group will pursue and give effect to group policy. Parent companies form

subsidiaries either in their own states of incorporation or in other states for a wide variety of business, commercial and tax reasons.

Those subsidiaries are required to respect the now very complex legal, financial and regulatory regimes of their states of

incorporation. It seems to this Court to be deeply inimical to the need for respect for corporate identity and respect for the rules of

law (including Community law rules) relating to companies that the separate existence of such companies should be ignored.

66. Of particular importance, in the present case, is the compelling evidence placed before the High Court and this Court, which

demonstrates the very serious extent to which the principal, indeed the only, creditors relied on legal and financial advice that the

Company was a company incorporated in Ireland at the IFSC and subject to all the controls and regulation that that entailed. It would

have very serious implications for the future of international corporate structures if it were to be accepted that the test for centre of

main interests were to be ultimate financial control by a parent company rather than legal and corporate existence.

67. Insofar as this Court can make a judgment on the matter, it is clear that the centre of main interests of the Company was at all

relevant times in Ireland.

Questions for preliminary ruling

68. The Supreme Court finds that it is necessary for the purposes of giving judgment on the appeal pending before it to seek

preliminary rulings from the Court of Justice on a number of questions. It does not propose to refer any question relating to the

contention that the Central Office of the High Court has power to open main insolvency proceedings, since the Court finds that it is

quite clear that it does not. The questions listed below include a question relating to the issue of recognition of the judgment of the

Parma Court which arises from the separate judgment of Fennelly J.

69. The Court has been persuaded that it is a matter of great urgency to have rulings on these questions. The appointment by the

Irish Court of a Liquidator and by the Italian Court of an Extraordinary Administrator in respect of the same Company will render it

impossible, in practice, to administer the assets of the Company, to the detriment of the creditors. The Court respectfully requests

the Court of Justice to accord special priority to the matter.

70. The following are the questions:

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 of insolvency proceedings for the purposes of Article 16, interpreted in the light of Articles 1 and

2, of Council Regulation (EC) No 1346 of 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?

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 situate 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?'

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 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?