was one of the subject matters excluded from the scope
of the Brussels I Regulation. Nevertheless it was recognised
that there was a great need for a European instrument providing for the possibility
for an order in matters in insolvency law to be recognised
and enforced in all the Member States and which was neither restricted
in application by the borders of Member States nor by their national procedures,
very varied as they are. The activities of business undertakings
have more and more international as well as cross-border effects as a result of the development
of the internal market. In addition it was necessary
to seek to remove any incentives for business undertakings to transfer
assets from one Member State to another in an attempt to defeat the interests
of creditors and to seek to obtain
a more favourable legal position. Furthermore the proper functioning
of the internal market requires that cross-border insolvency
proceedings in the EU should operate efficiently
and effectively. Objectives of this nature
obviously could not be achieved to a sufficient degree
at the level of the Member States, thus rendering it necessary
for provisions on jurisdiction, recognition and applicable law
in insolvency to be expressed in a measure in European Law. Negotiations to this end were commenced
between the Member States in the early 1990s following the entry into force
of the Maastricht Treaty and concluded with the adoption
on November, 23 1995 of the text
of an international Convention among the then Member States. This Convention
never entered into force but was effectively the basis
for the subsequent Regulation adopted on May, 29 2000. The European Insolvency Regulation
contains provisions for the regulation of the interaction
of insolvency proceedings between Member States of the EU. The Regulation entered into force
on May, 31 2002 and applies to all proceedings
opened after this date. The Insolvency Regulation applies
to collective insolvency proceedings, whether the debtor is a natural person
or a legal person, a trader or an individual in which
the debtor is divested of property, in whole or in part, and a liquidator or administrator is
appointed in relation to the debtor. The proceedings concerned are defined
by article of the Regulation and listed specifically
in Annexes A and B thereto. In order
for the Insolvency Regulation to apply, proceedings must be officially
introduced and legally effective in the Member State
where they are opened. The Regulation
contains rules of jurisdiction to establish which court
in which Member State is competent to open and conduct
insolvency proceedings. It is based on the principle that there should in the EU
be only one procedure in relation to the insolvency
of a particular debtor. This should consist of main proceedings
with universal scope and eventual
further secondary proceedings. The competence for the opening
of the main proceedings should lie with the courts
in the Member State within the territory of which the
centre of the debtor’s main interests is situated. National proceedings
covering only assets situated in the State
of their opening, referred to as ‘secondary proceedings’, are allowed
alongside the main proceedings. In the situation
where national proceedings are opened before the main proceedings, they are called
‘territorial proceedings’ and continue until the main proceedings
are opened. Main insolvency proceedings
and secondary proceedings are conducted separately
and usually by different liquidators. They can, however, contribute to and result in the effective realisation
of the total assets only if all the concurrent proceedings
pending are coordinated. In order for that to happen, the various liquidators
must cooperate closely, in particular by exchanging
a sufficient amount of information about the progress
of the respective proceedings. The liquidators are to communicate
amongst other information, the lodging and verifying of claims as well as measures
aimed at terminating the proceedings. In order to ensure the dominant role
of the main insolvency proceedings, the liquidator in such proceedings
is given several possibilities for intervening
in secondary proceedings which are pending
at the same time. Every creditor
who has their habitual residence, domicile or registered office
in a Member State has the right to lodge their claims
in each of the insolvency proceedings pending in a Member State
relating to the debtor’s assets. However, in order to ensure
equal treatment of creditors, the distribution of proceeds
must be coordinated. Every creditor can keep
what they have received in the course
of insolvency proceedings, but is entitled only to participate
in distribution of total assets in other proceedings
if creditors with the same standing have obtained
the same proportion of their claims. Whether and on what conditions a creditor is admitted to request
the opening of secondary proceedings is determined
by the law of the Member State within the territory
of which these proceedings are opened. Similarly,
the effects of such proceeding are restricted
to the assets of the debtor which are situated within the territory
of the Member State where the secondary proceedings
take place. According to the principle
contained in Article 4 of the Insolvency Regulation, the law applicable to insolvency
proceedings and their effects is that of the Member State within the territory of which
such proceedings are opened. Thelex concursusdetermines all the
effects of the insolvency proceedings, both procedural and substantive, on the persons
and legal relations concerned. The Regulation furthermore sets out,
for the matters covered by it, uniform rules on conflict of laws
which replace, within their scope of application, national rules
of private international law. Provision is made for special rules
on applicable law in the case
of particularly significant rights and legal relationships such as rightsin rem, set-off, reservation of title
and contracts of employment. These exceptions to the general rule are provided to protect the legitimate
expectations of creditors and the certainty of transactions
in Member States other than that
in which proceedings are opened. The Regulation provides for immediate
recognition of judgments concerning the opening, conduct
and closure of insolvency proceedings which come within its scope
and of judgments handed down in direct connection
with such insolvency proceedings. As a rule, the judgment
opening insolvency proceedings shall be recognised
in all Member States from the time that it becomes effective
in the State of opening. It will produce,
with no further formalities, the same effects in other Member States as under the law
of the State of opening, unless the recognition would be manifestly contrary
to the public policy of a State. Furthermore, the appointment
of the liquidator and his powers as conferred
by the law of the State of opening will be fully recognised
in other Member States. The European Commission
published a proposal for reforming
the Insolvency Regulation on the same day
as the Report of December, 12 2012 on the application
of Council Regulation, No 1346/2000, of May, 29 2000
on insolvency proceedings. Negotiations on this proposal
are currently in their final stages. The reform will essentially consist
of the following elements: Scope. Extension of the scope
of the Regulation by revising the definition
of insolvency proceedings to include hybrid
and preinsolvency proceedings as well as debt discharge proceedings and other insolvency proceedings for natural persons which
currently do not fit the definition. These amendments, if adopted, would also bring the Regulation
more into line with the approach taken
by the UNCITRAL Model Law on cross-border insolvency. Jurisdiction. Clarification of the jurisdiction rules notably by complementing the definition of the Concept
of the Centre of Main Interest, COMI, and also
by improving the procedural framework for determining jurisdiction
by requiring courts and liquidators to examine the jurisdictional grounds
for an insolvency proceeding. Secondary proceedings. Provisions enabling more efficient
administration of insolvency proceedings by enabling the court to refuse
the opening of secondary proceedings if certain conditions are met, in particular if this is not necessary to protect the interests
of local creditors, by abolishing the requirement that secondary proceedings
must be winding-up proceedings and by improving the cooperation
between main and secondary proceedings, in particular by extending
the cooperation requirements to the courts involved. Publicity of proceedings
and lodging of claims. Requirement for Member States
to publish relevant court decisions in cross-border insolvency cases in a publicly accessible
electronic register and for the interconnection
of national insolvency registers. Groups of companies. Creation of a legal framework
for the treatment of the insolvency concerning different members
of the same group of companies, in particular by introducing
a group coordination procedure and by obliging the liquidators
and courts involved in the different main proceedings to cooperate
and communicate with each other.