The Logic and Limits of Cooperation in European Cross-Border Insolvency Cases

The International Insolvency Review (IIR) recently published my paper ‘From “Prisoner’s Dilemma” to Reluctance to Use Judicial Discretion: The Enemies of Cooperation in European Cross-Border Cases’. This paper employs game theory and theories on rule-based decision making to explain the prescriptions on cooperation and communication in EU Regulation 2015/848.

EU Regulation 2015/848 increased the duties of cooperation and communication imposed on courts and insolvency practitioners appointed in main and secondary proceedings (Arts. 41-44). Furthermore, the Regulation laid down duties of cooperation and communication as a regulatory device to regulate insolvencies within groups of companies (Arts. 56-60) – however, the latter fall outside of the scope of this piece. This choice of policy is expected to remove some cultural and legal (national) constraints which prevent civil law courts from cooperating to the same extent as those of common law jurisdictions and, especially, to make cooperation in cross-border insolvency cases smoother. Nevertheless, cooperation is still an open issue. This explains why a laudable piece of research that the Max-Planck Luxembourg has recently carried out together with the Universities of Milan and Vienna devotes much space to the prescriptions imposing duties of cooperation (Part 2, pp. 56-99).

But why is cooperation an ever-open issue? Bibliographies on private international law, international insolvency law and European cross-border insolvency law give long lists of books and papers that consider cooperation. However, these tend to focus either on the input to cooperation – for instance, in the European cross-border field they concentrate on the legal basis for cooperation, i.e. on Art 4(3) TEU and Art. 81(2)(a) and (c) TFEU; or they focus on the output from cooperation – for instance, a distinguished author wrote that ‘a new concept of “judicial comity” is evolving and that it is providing a framework of ground-rules for establishing and developing judicial dialogue’ (Wessels, ‘Towards a next step in cross-border judicial cooperation’ (2014) 27(7) Insolvency Intelligence 100, 105). By contrast, to date and to our knowledge, no writers have paid sufficient attention to the process of cooperation and, accordingly, to its logic and limits.

My paper makes an effort to try to fill this gap. It focuses directly on the process of cooperation, in order to facilitate the application of EU Regulation 2015/848. Two main ideas are put forward. The first idea is that cooperation requires a legal framework which is certain – otherwise, prescriptions imposing duties of cooperation and communication might produce ‘prisoner’s dilemmas’ and, paradoxically, an unwillingness to cooperate. The second idea is that prescriptions imposing duties of cooperation and communication have an intrinsic open texture – this characteristic ontologically requires courts and insolvency practitioners to make choices between different rulings and activities. These findings imply that, while interventions, both at European level and at national level, aiming at making the legal framework more certain are always welcome, any interventions aiming at better specifying contents and the extension of duties of cooperation and communication might even be useless and counterproductive. To rephrase the old Latin expression ‘dura lex, sed lex’, this means: dura natura legis, sed natura!

Renato MANGANO is Professor of Commercial Law and Insolvency Law at the University of Palermo