Insolvency - Debt Restructuring Moratorium - 'lis pendens' (1988 Lugano Convention)

Author:Mr Frank Spoorenberg and Isabelle Fellrath
Profession:Tavernier Tschanz
 
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Originally published February 2010

The Swiss Supreme Court forced a creditor to argue simultaneously the same claim at the forum applicable to that claim and at the Swiss forum of a debt-restructuring moratorium. Belgium is now suing Switzerland before the International Court of Justice ("ICJ") for breach of the Lugano Convention on jurisdiction and the enforcement of judgments in civil and commercial matters (the "Lugano Convention").

Facts

In 1995, Swissair (subsequently renamed SAirGroup) and its subsidiary SAirLines acquired some equity in Sabena and entered a partnership with the Belgian State and three state-controlled Belgian companies. Various other contracts were entered into, between 1995 and 2001, among others, to secure the financing and joint management of Sabena, providing for the exclusive jurisdiction of the Brussels courts in the event of dispute and for the application of Belgian law.

On 3 July 2001, the Belgian State and three state-controlled Belgian companies (the "Belgian shareholders") initiated a judicial proceeding in Belgium against Swissair and SAirLines (the "Swiss Shareholders"). They alleged various contractual and extra contractual breaches, and sought compensation, inter alia, for the amount lost on investments made on the basis of representations by the Swiss Shareholders and for the expenses incurred. With a judgment dated 20 November 2003, the Commercial Court of Brussels acknowledged its jurisdiction to decide the contract and extra-contractual liability, based on Articles 17 and 5 (3) of the Lugano Convention. The Court admitted the breaches but denied all compensation claims. Both sides appealed this judgment; the appeal decision on the merits is pending to date.

In the meantime, on 4 October 2001, the Swiss Shareholders filed for a debt-restructuring moratorium (sursis concordataire) with the District Court (Tribunal d'arrondissement) of Zurich, as a result of which they were placed in liquidation. The Belgian shareholders sought to ensure that the claims pending in Belgium be listed on the schedule of claims (état de collocation) and be recognized in the apportionment of the SAirLines and SAirGroup's assets. The liquidators of the Swiss shareholders declined to register these debt claims, without awaiting the conclusion of the Belgian proceedings, based on the principle of territoriality of debt-restructuring proceeding under Swiss law. The Belgian shareholders contested SAirLines and SAirGroup's schedule of claims before the Swiss courts, seeking to have their debt claims registered thereon. They also lodged an administrative "complaint"...

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