Vol 12 (2015) - Issue 6

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C-557/12 Hermann Lutz v Elke Bäuerle

Introduction
In this case, the ECJ considered the interplay between Articles 4 and 13 of the Insolvency Regulation. Article 4 provides that the law applicable to insolvency proceedings shall be the law of the place where those proceedings are opened. This law shall govern all matters, including 'the rules relating to the voidness, voidability or unenforceability of legal acts detrimental to all the creditors.' Article 13 provides, however, that this will not be the case where 'the said act is subject to the law of a Member State other than that of the State of the opening of proceedings, and that law does not allow any means of challenging that act in the relevant case.'

Facts
Mr Lutz, an Austrian resident, had purchased a car from an Austrian company, ECZ. ECZ turned out to be a fraudulent operation, and did not deliver the car. Mr Lutz therefore obtained judgment against ECZ in Austria in March 2008 for the sum of EUR 9,566 plus interest.
In April 2008, ECZ applied to the German court to open bankruptcy proceedings. While that application was pending, in May 2008 the Austrian court attached the Austrian bank accounts of ECZ by way of enforcement of the March 2008 judgment obtained by Mr Lutz.
Main proceedings were subsequently opened in August 2008 respect of ECZ in Germany. On 10 March 2009 the liquidator wrote to ECZ’s Austrian bank giving notice that he reserved the right to challenge, in connection with the insolvency, any payment made in favour of ECZ’s creditors. However, on 17 March 2009, ECZ’s bank paid Mr Lutz EUR 11,778.48 pursuant to his lien over ECZ’s account. Ms Bäuerle was subsequently appointed as liquidator, and in October 2009, she brought an action against Mr Lutz, seeking to set aside the payment to him.
Ms Bäuerle was successful at first instance. Mr Lutz, however, appealed on the basis that his relationship with ECZ was governed by Austrian law, which had a one year limitation period, commencing with the opening of insolvency proceedings. Ms Bäuerle’s application was issued just over a year after the commencement of insolvency proceedings (the relevant period under German law was three years). Mr Lutz therefore argued that Austrian law 'does not allow any means of challenging' the security within the Article 13 sense. Ms Bäuerle argued that Article 13 could not apply where the payment to Mr Lutz was made after her appointment, and that in any event, Austrian law did allow a means of challenging such a payment, but simply would have imposed a procedural time bar in that particular case. The matter eventually reached the German Supreme Court, which referred the matter to the ECJ.

The reference
The German Supreme Court asked the following questions:
'(1) Is Article 13 of Regulation [1346/2000] applicable if the payment challenged by the insolvency administrator of a sum attached before the opening of the insolvency proceedings was made only after the opening of the proceedings?'
'(2) If the reply to the first question is in the affirmative: does the defence under Article 13 of Regulation [1346/2000] also apply to limitation periods or other time-bars relating to actions to set aside transactions under the law which governs the dispute concerning the contested legal transaction (lex causae)?'
'(3) If the reply to the second question is in the affirmative: are the relevant procedural requirements for asserting a claim for the purpose of Article 13 of Regulation [1346/2000] also to be determined according to the lex causae or by the lex fori concursus?'
In view of the importance of the matter, the ECJ heard submissions not only from the parties, but from the European Commission and four member states.