27 March 2013

Ruud Hermans on the consequences of the German Equitable Life Decision

The consequences of the German Equitable Life Decision for the use of English schemes of arrangement in cross-border reorganizations.

On 15 February 2012, the German Federal Court of Justice rendered judgment in a case concerning the recognition of the English court-sanctioned scheme of arrangement of UK incorporated insurance company Equitable Life Assurance Society, which scheme compromised claims held by insurance policyholders domiciled in Germany.

The applicability of the Judgment Regulation to English court-sanctioned schemes of arrangement has two important consequences for the use of schemes in crossborder reorganizations:

First, it means that its recognition and enforcement is subject to the provisions laid down thereto in the Judgment Regulation – provided the decision sanctioning the scheme is regarded a ‘judgment’ as in article 32 or the scheme itself is regarded a ‘court settlement’ in the sense of article 58 Judgment Regulation.

More importantly though, this means the English Court sanctioning such a scheme must base its jurisdiction on Chapter II of the Judgment Regulation.

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Source: INSOL World, First Quarter 2013