Welcome / Blog Archive / English / 2016-07-doc9 What language to use in EU insolvency cross-border cases?

2016-07-doc9 What language to use in EU insolvency cross-border cases?

Welcome to the European Union: 28 Member States, using over 20 authentic languages! When one comes to the use of language in cross-border insolvency cases in Europe, there is a large contrast between the languages that national courts are using, and the languages in which communication takes places between insolvency practitioners. Article 31 of the existing European Insolvency Regulation (EIR) is based on the assumption that insolvency practitioners appointed in different insolvency proceedings, communicate between themselves.

The article’s provisions oblige insolvency practitioners to identify a common language. This can be the language used in the court where main proceedings are pending; the language of one of the courts where one of the secondary proceedings is pending; or any language convenient to the insolvency practitioners involved, such as English, German, French or Spanish. As of 26 June 2017 similar communication duties apply to courts. Many European courts do understand that it is for the insolvency practitioners to smoothly and effectively run their proceedings, but in nearly all of the member states where I have done research, the general rule is that the use of the local language in proceedings is mandatory.

In certain states, however, several different languages have official status and therefore can be used in insolvency proceedings, for instance, French, German and Luxembourgish in Luxemburg; and French, German and Dutch in Belgium. Domestic law often prescribes that the court may – and generally will – request translations in the domestic language of any document submitted to the court. The Dutch District Court of Rotterdam decided in October 2014 that to deny a person the right to receive a translation of certain documents is unlawful and against Article 6 of the European Convention of Human Rights (see District Court of Rotterdam, 16 October 2014, ECLI:NL:RBROT:2014:8382). In Germany the legislation says that participants in (insolvency) proceedings have a right to inspect the court files, which in practice means these files should therefore be in German.

Last year, I published a set of EU cross-border insolvency court-to-court cooperation principles (the EU JudgeCo Principles) to try to overcome some of the present obstacles for courts in EU member states – such as formalistic and detailed national procedural law, uneasiness with the use of certain legal concepts and terms, and, of course, language. The 26 EU JudgeCo Principles include a set of 18 EU cross-border insolvency court-to-court communications guidelines (EU JudgeCo Guidelines), which aim to strengthen efficient and effective communication between courts in EU member states in insolvency cases with cross-border effects. The EU JudgeCo Principles are a sign of the times, in that they promote international cooperation in restructuring and insolvency, and strive to achieve greater, timely co-ordination among countries in multinational business reorganisations or restructurings.

The principles include some notes on the non-binding status of the principles themselves and their objectives. They also include stipulations on case management by courts and on the equal treatment of creditors, as well as principles about judicial decisions, judges’ reasoning, and, for instance, on granting a stay or moratorium. Several of the principles relate to the course of the proceedings, such as notification and authentication of documents; others to the outcome of judicial cooperation, for instance cross-border sales, assistance to a reorganisation, or rules for binding creditors to an international reorganisation plan.

The EU JudgeCo Guidelines facilitate communications in individual cross-border cases. The documents were developed by the Leiden and Nottingham Law Schools with input from practitioners and some 25 European judges, and funded by the European Union and the International Insolvency Institute (III). For further background and the full texts of the EU JudgeCo Principles and Guidelines see www.universiteitleiden.nl.

Principle 14 in the EU JudgeCo Principles tackles language: PRINCIPLE 14 LANGUAGE 14.1. Where there is more than one insolvency case pending with respect to a debtor, the insolvency practitioners and the courts involved should determine the language in which communications should take place with due regard to convenience and the reduction of costs. Notices should indicate their nature and significance in the languages that are likely to be understood by the recipients. 14.2.

With due regard to local law and available resources, courts:

(i) Should permit the use of languages other than those regularly used in local proceedings in all or part of the proceedings, if no undue prejudice to a party will result;

(ii) Should accept documents in the language designated by the insolvency practitioners without translation into the local language provided that (a) any such document is accompanied by a short description, written in the local language and signed by or on behalf of the insolvency practitioners, confirming in generic terms the nature of the document being filed and provided also that (b) if having considered such description the court concludes that a translation of part or all of such document is required in order to ensure that the local proceedings are conducted effectively and without undue prejudice to interested parties, it may require the insolvency practitioners to provide the same on such terms as the court may think fit;

(iii) Should promote the availability of orders, decisions and judgments in languages other than those regularly used in local proceedings, if no undue prejudice to a party will result.

The JudgeCo Principles build on European and global best practices. Principle 14 has been designed to accommodate the choice of an agreed language for the purposes of communication, which is based on international practice, convenience and agreement.

In practice, languages may result in a Babel-like confusion. To prevent confusion of tongues, some general advice, not limited to the EU and applicable out-of-court too, is that where a choice of a language is made, a native speaker of that language should be sensitive to the fact that the persons he or she is speaking to may be communicating in what is for them a second or third language. Acting fairly in rescue and insolvency matters also means the use of simple and clear words spoken with careful articulation, and the avoidance of dialect words, over-sophisticated language, linguistic puns, euphemisms, topical references or nationally-derived cultural allusions, which may be incomprehensible to those from outside the state in question.

This is a slightly adapted version of a regular column Bob Wessels is writing for Global Restructuring Review (GRR) on the topic of cross-border restructuring and insolvency in a European context. GRR is a subscription-only publication, but here is a link to the full piece, which appeared in March 2016, on GRR’s website at globalrestructuringreview.com