From the foregoing it can be seen that the Model Law and the EC Regulation both provide relatively comprehensive regimes for permitting licensor's and licensees to know which law will govern their IP licenses in the event of a bankruptcy of one of them. Further, they substantially mirror each other in their terms, with each regime mandating that parties must look to the country where the debtor has its Center of Main Interests to determine which country's laws would govern the treatment of the IP licenses.
Nonetheless, there are differences in approach and application of the two regimes.
In the application of the EC Regime the presumption that a corporate debtor's CoMI is where it has its registered office is stronger than that accorded by the Model Law, and the EC Regulation has greater reliance on factors which are ascertainable to third parties to rebut that presumption. Further the application of the Public Policy Exception is more restricted than that of the Model Law.
Finally, perhaps owing to the fact that all decisions of the EC Regulation are subject to review and are decisions issued by a single court—the European Court of Justice—the application of the EC Regulation has been far more uniform than that of the Model Law.
- Commonly referred to as “Conflict of Laws” in common-law countries, such as the United States and International Private Law in many German-speaking civil law countries (as well as Russia and Scotland), Private International Law is a set of rules and procedures to determine: (1) which nation’s courts have jurisdiction over disputes involving a foreign element and the conditions that need to be satisfied for judgments of foreign tribunals and courts to be recognized and enforced within a country (“jurisdiction and the recognition and enforcement of judgments”); and (2) which nation’s laws are to be applied to govern the substance of legal relationships involving a foreign element (“governing law”) in order to regulate conduct between private parties. See World Intellectual Property Organization, “The Role of Private International Law and Alternative Dispute Resolution,” retrieved from http://www.wipo.int/copyright/en/ecommerce/ip_survey/chap4.html. See also http://en.wikipedia.org/wiki/Conflict_of_laws.
- Within the European Union, this is set forth in Convention 80/934/EEC on the law applicable to contractual obligations opened for signature in Rome on 19 June 1980 (“the Rome Convention”) where, in article 3, it states that: “A contract shall be governed by the law chosen by the parties.The choice shall be made expressly or clearly demonstrated by theterms of the contract or the circumstances of the case. By theirchoice the parties can select the law applicable to the whole or topart only of the contract.”See also Paragraphs 11-14 of the European Council Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 (“Rome I”).
- See Johnston, Robert, “Party Autonomy in Contracts Specifying Foreign Law,” 7 William and Mary Law Review, 37 (1966), http://scholarship.law.wm.edu/wmlr/vol7/iss1/3, retrieved from http://scholarship.law.wm.edu/cgi/viewcontent.cgi?article=3090&context=wmlr&sei-redir=1&referer=http%3A%2F%2Fwww.google.com%2Furl%3Fsa%3Dt%26rct%3Dj%26q%3Dautonomy%2520to%2520contract%26source%3Dweb%26cd%3D4%26ved%3D0CD8QFjAD%26url%3Dhttp%253A%252F%252Fscholarship.law.wm.edu%252Fcgi%252Fviewcontent.cgi%253Farticle%253D3090%2526context%253Dwmlr%26ei%3Dg7mQUdL0HaLU0QWx04CQCg%26usg%3DAFQjCNEsAUfxyBk9kF_LYoSSb91D7R5E7A#search=%22autonomy%20contract%22. See also, Grundmann, Stefan, “Information, Party Autonomy and Economic Agents in European Contract Law,” Common Market Law Review 39: 269–293 (2002).
- The law of the forum.
- Levin, Morris, “Party Autonomy: Choice of Law Clauses in Commercial Contracts,” Georgetown Law Journal, 1957-1958, p 264, Para 2: “Courts are reluctant to apply the law of another jurisdiction when its enforcement would be contrary to the public policy of the forum. Conflict of Law, by its nature, is inherently concerned with public policy, and if any foreign rule of law is incompatible with the public policy of the forum, it will not be used.” See also, Paragraph 37 of Rome I and Johnston, supra, at pages 38-48.
- See Article 1(2) of the Rome Convention.
- See Article 10 of the EC Regulation.
- See Article 3 of the Rome Convention.
- For example, see Article 1(2) of the Rome Convention.
- See Article 1(2)(e) of the Rome Convention.
- There have been others, perhaps most notable among them being the Bustamante Code established by the Havana Convention of 1928 which was adopted by 15 Latin American countries and the Nordic Council (Copenhagen) Convention, 28 UNIT 113 (7 November 1933).
- Model Law on Cross-Border Insolvency, adopted by the United Nations Commission on International Trade Law on 30 May 1997, approved by resolution of the United Nations General Assembly on 15 December 1997 and published in Official Records of the General Assembly, Fifty-second Session, Supplement No 17 (A/52/17, annex I)(UNCITRAL Yearbook, Volume XXVIII: 1997, Part 3).
- While UNCITRAL’s adoption of the Model Law preceded adoption of the EU Regulation, the EU Regulation’s origin and the concepts underpinning it were developed prior to UNCITRAL’s formulation of the Model Law. See Jay Westbrook, MultinationalEnterprises in General Default: Chapter 15, The ALI Principles, and the EU Insolvency Regulation, 76 Am. Bankr. L.J. 1, 2-3 (Winter 2002) (“Beyond doubt, an important factor in [creating the Model Law] was the expertise developed by the delegates from the EU member states in the course of creating the EU Regulation”). The EU Regulation can be located at http://europa.eu.int/eur-lex/lex/LexUriServ/LexUriServ.do?uri=CELEX:32000R1346:EN:HTML.
- See the Preamble to the Model Law: The purpose of this Law is to provide effective mechanisms for dealing with cases of cross-border insolvency so as to promote the objectives of:
- Cooperation between the courts and other competent authorities of this State and foreign States involved in cases of cross-border insolvency;
- Greater legal certainty for trade and investment;
- Fair and efficient administration of cross-border insolvencies that protects the interests of all creditors and other interested persons, including the debtor;
- Protection and maximization of the value of the debtor’s assets; and
- Facilitation of the rescue of financially troubled businesses, thereby protecting investment and preserving employment.
- Australia (2008), British Virgin Islands (2005), Canada (2009), Colombia (2006), Eritrea (1998), Great Britain (2006), Greece (2010), Japan (2000), Mauritius (2009), Mexico (2000), Montenegro (2002), New Zealand (2006), Poland (2003), Rep. of Korea (2006), Romania (2003), Serbia (2004), Slovenia (2007), South Africa (2000), and the United States of America (2005). See UNCITRAL Texts and Statuses retrieved from http://www.uncitral.org/uncitral/en/uncitral_texts/insolvency/1997Model_status.html#$35287.
- EC Council Regulation 1346/2000 of 29 May 2000 that came into force on 31st May 2002.
- See Article 43 of the EC Regulation.
- Ibid.
- See Article 2(b) of the Model Law and Article 3(1) of the EC Regulation.
- See Articles 3(2) and (3) and Recital 12 of the EC Regulation and Article 2(c) of the Model Law. In the EC Regulations, such proceedings are also called “winding-up” proceedings. See Article 3(3) of the EC Regulation. See also, Article 2(f) of the Model Law which states that: “Establishment” means any place of operations where the debtor carries out a non-transitory economic activity with human means and goods or services.”
- See, for example, Recital 12 of the EC Regulation.
- See Article 17(2) of the Model Law wherein it is stated that: “The foreign proceeding shall be recognized:
- As a foreign main proceeding if it is taking place in theState where the debtor has the centre of its main interests; or
- As a foreign non-main proceeding if the debtor has anestablishment within the meaning of subparagraph (f) ofarticle 2 in the foreign State.”
- See Articles 20, 21 and 29 of the Model Law under which licenses, as assets, would be subject to the same powers as other assets of the debtor.
- Article 29(c) of the Model Law. See also Article 21(3) of the Model Law.
- See Article 29 of the Model Law. In this regard, it is interesting to note that, in Australia, the local court will even permit the Foreign Representative to avail itself of measures which, while available in Australia, are not available to the Foreign representative in the country where the main proceedings are taking place. See Tucker, In the matter of Aero Inventory (UK) Limited (No. 2), New South Wales District Registry, No. NSD 1285 of 2009, Federal Court of Australia (10 December 2009).
- See Steven Williams vs Alan Geraint Simpson, no. CIV 2010- 419-1174, High Court of New Zealand (19, 22 and 29 September 2010, 12 October 2010) wherein the New Zealand court refused to enforce an interim order seeking relief in the form of examining persons to determine ownership of certain assets on the grounds that such an order was not necessary.
- See Articles 3(2) and (3) of the EC Regulation.
- See Article 4 of the EC Regulation.
- See Articles 3(1) and 4 of the EC Regulation.
- See Article 4 of the EC Regulations.
- See Articles 16 and 25 of the EC Regulation.
- Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters 1968 which has now been replaced by Council Regulation (E.C.) 44/2001 on Jurisdiction and the Recognition of Judgments in Civil and Commercial Matters dated 22 December 2000 which came into force on 1 March 2002.
- See MG Probud Gdynia sp. z o.o., ECJ Case C-444/07 (21 January 2010), wherein, since Polish law, the law of the main proceedings, did not authorize attachment of funds by a national authority to pay workers and social security taxes due in Germany, the German law permitting such attachment could not be applied by the German court even though permitted under German law. The text of the decision of which can be found at http://eur-lex. europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62007CJ044 4:EN:HTML.
- See Seagon v. Deko Marty Belgium NV, ECJ Case C-339/07 (12 February 2009). See also, MG Probud Gdynia supre, wherein the ECJ held Articles 3, 4, 16, 17 and 25 of the EC Regulation must be interpreted as meaning that after the main insolvency proceedings have been opened in a Member State the competent authorities of another Member State, in which no secondary insolvency proceedings have been opened, are required, subject to the grounds for refusal derived from Articles 25(3) and 26 of that regulation, to recognize and enforce all judgments relating to the main insolvency proceedings and, therefore, are not entitled to order, pursuant to the legislation of that other Member State, different enforcement measures relating to the assets of the debtor that are situated in its territory when the legislation of the State of the opening of proceedings does not so permit and the conditions to which application of Articles 5 and 10 of the regulation is subject are not met.
- See Rastelli Davide e C. Snc v Jean-Charles Hidoux, in hiscapacity as liquidator appointed by the court for the company Médiasucreinternational, ECJ Case C-191/10 (Judgment of 15 December 2011) wherein, on the grounds that the liquidator’s application was not intended to open insolvency proceedings against Rastelli but to join it to the judicial liquidation already opened against Médiasucre, the it was attempted to make an Italian Defendant who did not have an establishment in France, a party to the French insolvency proceedings on the ground that its property was intertwined with that of the insolvent party, so that, under Article L. 621-2 of the Commercial Code, the court which has jurisdiction to rule on the application for joinder is the court before which the proceedings were initially brought.
- See Article 4 and, in particular, Article 4(2), and Article 28 of the EC Regulation. See also Recitals 21 and 23 of the EC Regulation.
- See, generally, Article 4(2) in conjunction with Article 18 of the EC Regulation.
- See Article 16 and 17 of the EC Regulation.
- See Article 3(2) of the EC Regulation.
- See Recital 12 and Article 3(1) of the EC Regulation and §§2(1) and 17(2)(a) of the Model Law.
- Articles 2(1) and 17(2)(a) of the Model Law, supra.
- Article 16(3) of the Model Law.
- See Ackers v Saad Investments Company Limited (in officialliquidation), no. NSD 1168 of 2010, Federal Court of Australia (22 October 2010).
- Lightsquared LP (Re), No. CV-12-9719-00CL, Superior Court of Justice, Ontario (6 July 2012)(Canada).
- See In the matter of Stanford International Bank Limited,et al., High Court of Justice, Chancery Division, (UK) Case Nos. 13338 and 13959 of 2009, (3 July 2009).
- See In the matter of Stanford International Bank Limited, etal., supra. in contrast with In re Bear Stearns High-Grade StructuredCredit Strategies Master Fund, Ltd., 74 B.R. 122 (Bankr. S.D.N.Y., 2007), affirmed on appeal In re Bear Stearns, Nos. 07-12383 and07-12384, (Bankr., S.D.N.Y., 22 May 2008).
- Lightsquared LP (Re), supra, citing and refining MassachusettsElephant & Castle Group, Inc. (Re), No. CIV-11-9279-00CL, Superior Court of Justice, Ontario (11 July 2011).
- 11 U.S.C. §1516(c).
- See In re SphinX, Ltd., No. 06-11760 (RDD), 06 Civ. 13215(RWS) (S.D.N.Y, 3 July 2007) and In re Tri-Continental ExchangeLtd., 349 B.R. 629 (Bankr. E.D. Cal., 2006). See In re: Bear Stearns,supra, affirmed on appeal in In re Bear Stearns, supra, for an example of a case where the presumption was rebutted.
- See In re Tri-Continental, supra, and In re SphinX, Ltd., supra.
- See, In re Bear Stearns High-Grade Structured Credit StrategiesMaster Fund, Ltd., supra. See also In re Klytie’s Developments,Inc., Klytie’s Developments, LLC, 07-22719-MER, (Bankr. D.C. Colorado, 8 February 2008).
- In re Fairfield Sentry Ltd., 440 B.R. 60 (Bankr. S.D.N.Y. 2010); Lavie v. Ran (In re Ran), 607 F.3d 1017 (5th Cir. 2010), 1025; Inre Betcorp Ltd., 400 B.R. 266 (Bankr. D. Nev 2009), CLOUT case No. 927 and Re Millennium Global Emerging Credit Master FundLimited, No. 11 Civ. 7865 (LBS)( Bankr., S.D.N.Y., 25 June 2012).
- See In re Betcorp Limited, supra, wherein the court held that the location of the debtor’s creditors did not overcome the fact that 91.4 per cent of the debtor’s shareholders resided in Australia, that 67.2 per cent of its shares were held by Australian residents, and that all but five of its directors resided in Australia (and none in the United States).
- See In the matter of Stanford International Bank Limited,et al., supra., and In re Tradex Swiss AG, Nos. 07-17180-JBR and07-17518-JBR (Bankr., D.C. Mass., 12 March 2008).
- Ibid.
- Article 16(3) of the Model Law and Article 3(4)(b) of the EC Regulation.
- Dicey and Morris on the Conflict of Laws (13th edition) (edited by Albert V. Dicey, C.G.J. Morse, McClean, Adrian Briggs, Jonathan Hill, & Lawrence Collins). London: Sweet & Maxwell 2000.
- Gainsford, in the matter of Tannenbaum vs Tannenbaum, no.QUD 216 of 2012 (Federal Court of Australia, 24 August 2012).
- Steven Williams vs Alan Geraint Simpson, supra.
- Article 3(1) of the EC Regulation.
- See Staubitz-Schreiber, ECJ Case C-1/04, (17 January 2006) http://curia.europa.eu/juris/showPdf.jsf;jsessionid=9ea7d2dc30db5fd6741832784b56aebfdf8636f09830.e34KaxiLc3qMb40Rch0SaxuKaNr0?docid=64087&pageIndex=0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=3518014, wherein the ECJ overturned a ruling of the Amtsgericht-Insolvenzgericht Wuppertal (which was upheld by the Landgericht Wuppertal) that the German courts did not have jurisdiction because the insolvent party who was resident in Germany at the time of the opening of insolvency proceedings had later moved her CoMI to Spain before the proceedings actually opened.
- Ibid.
- Paragraph 13, Recitals to the EC Regulation.
- Eurofood IFSC Ltd., ECJ Case C-341/01 (2 May 2006), the text of the decision of which can be found at http://curia.europa.eu/juris/document/document.jsf?text=&docid=49122&pageIndex=0&doclang=en&mode=lst&dir=&occ=first&part=1&cid=2178683.
- Interedil Srl v. Fallimento Interedil Srl, Intesa GestioneCrediti SpA, ECJ Case C-396/09 (20 October 2011), the text of the judgment in this case can be found by reference to http://curia.europa.eu/juris/document/document.jsf?text=&docid=111587&pageIndex=0&doclang=en&mode=lst&dir=&occ=first&part=1&cid=2198421.
- A copy of the Irish Supreme Court decision in In re EurofoodIFSC Limited, 147/04 (July 27, 2004) can be found at http://www.odce.ie/en/court_insolvencies_article.aspx?article=bac54653-5625-4595-b52f-7ebc16dd5042.
- In re Eurofood at 22.
- Eurofood, supra, at paragraph 34.
- Eurofood, supra, at paragraph 35.
- See Eurofood, at paragraph 30, wherein the ECJ stated that, “…each debtor constituting a distinct legal entity is subject to its own court jurisdiction.”
- See paragraph 59 of the Interedil decision.
- Interedil at paragraph 52.
- See §3(4)(b) of the EC Regulation.
- See Recital 13 of the EC Regulation.
- Article 3(4)(b) of the EC Regulation.
- Dicey and Morris on the Conflict of Laws (13th edition) (edited by Albert V. Dicey, C.G.J. Morse, McClean, Adrian Briggs, Jonathan Hill, & Lawrence Collins). London: Sweet & Maxwell 2000.
- See Article 6 of the Model Law. See also, Article 26 of the EC Regulation wherein it is stated that, “… the effects of such recognition would be manifestly contrary to its public policy, and in particular, its fundamental principles or the constitutional rights and liberties of an individual.”
- See Guide to the Enactment of UNCITRAL Model Law on Cross Border Insolvency at paragraphs 86-89.
- See Hartford Computer Hardware Inc. (Re), No. CV-11-9514-00CL, Superior Court of Justice, Ontario (Commercial List)(15 February 2012) (Canada).
- Seoul Central District Court, 2007 GOOKSEUNG 1 (18October 2007) (Korea).
- Indeed, language to this effect is in the legislative history of United States law adopting the Model Law (see 11 U.S.C. §1506, Article 6) as well as in the case law. See, for example, In re: NorthAmerican Steamships Ltd., No. 06- 13077 (RDD), (Bankr., S.D.N.Y.,25 January 2007) and In re Ephedra Products Liability Litigation (MuscletechResearch and Development, Inc., et al), Nos. 04 MD 1598 (JSR), 06 Civ. 538(JSR), 06 Civ. 539(JSR), (Bankr., S.D.N.Y., 11 August 2006) wherein the court noted that exceptional circumstances must justify a finding that recognition would be “manifestly contrary” to national public policy considerations, In re Gold & Honey, Ltd., 410 B.R. 357 (Bankr. E.D.N.Y. 2009), CLOUT case No. 1008. and more recently In re Millennium Global Emerging Credit Master FundLimited, No. 11 Civ. 7865 (LBS), (Bankr., S.D.N.Y., 25 June 2012).
- In re Qimonda AG Bankruptcy Litigation 433 B.R. 547, 568; CLOUT case No. 1212 (Bankr., E.D. Va., 19 November 2009, 28 October 2011). On interpretation of §1506, the court also cited Inre Tri-Continental Exchange, Ltd., 349 B.R 627, CLOUT case No. 766; In re Ephedra Prods. Liability Litig., 349 B.R. 333 (S.D.N.Y. 2006), CLOUT case No. 765 . See also, In re Metcalfe & MansfieldAlt. Invs., 421 B.R. 685 (Bankr. S.D.N.Y. 2010), CLOUT case No. 1007; and In re Gold & Honey, Ltd, 410 B.R. 357 (Bankr. E.D.N.Y. 2009), CLOUT case No. 1008.
- See In re Dr. Juergen Toft, No. 11-11049 (ALG) ( Bankr., S.D.N.Y., 22 July 2011) wherein the court, after analyzing the application of the public policy exception in section 1506 of Chapter 15 [article 6 MLCBI] in some detail, observed that this was one of the rare cases which called for its application, finding that the relief sought exceeded the traditional limits on the powers of a trustee in bankruptcy under United States law, constituted relief that was banned by statute in the United States and might subject those who carried it out to criminal prosecution. The court also found that providing such relief without notice to the debtor would also be contrary to United States law.
- In re Qimonda AG Bankruptcy Litigation, supra.
- In re Qimonda AG Bankruptcy Litigation, supra.
- In re MG Probud Gdynia sp. z o.o., it was clear that the German court’s motivation for not enforcing the order of the Polish Court was the fear that, as insolvency proceedings had been opened in Poland, there was reason to fear that those responsible within MG Probud would shortly collect the sums payable and transfer the corresponding amounts to Poland in order to prevent the German authorities from having access to them.
- See Article 17(1) of the EC Regulation.
- See Article 19 of the EC Regulation.
- Article 25 of the EC Regulation. See also, Seagon v. DekoMarty Belgium NV, supra, the text of the decision of which can be found at http://curia.europa.eu/juris/document/document.jsf?text=&docid=76240&pageIndex=0&doclang=en&mode=lst&dir=&occ=first&part=1&cid=2185311, wherein the ECJ held that the German courts had the power to order a Belgian entity to repay certain monies that were transferred to it by the debtor prior to bankruptcy.