Arendt Case Review #8 - February 2020

COMPANY LAW

Application for provision of security rights

Luxembourg Court of Appeal Decision No. 142/19 - VII - CIV of 13 November 2019, Docket No. CAL-2018-00485

This decision recalls the conditions for the application of Article 1865bis of the Civil Code, which provides that "the event of dissolution results in the universal transmission of the company's assets to the sole shareholder, without the need for liquidation. The creditors may, within 30 days from the publication of the dissolution, apply to the President of the District Court, ruling as in summary proceedings, for provision of security rights."

The Court recalls that "the protection provided by law to the company's creditors pursuant to Article 1865bis-4 of the Civil Code has no impact on the act of dissolution of the company." Concerning the application for provision of security rights, the court may dismiss the application "only if the creditor has adequate safeguards or if these are not necessary in light of the shareholder's assets." Under the law, assets are considered to be "all external property, movable or immovable, which belongs to a natural or legal person."

Moreover, "it follows from Article 1865bis-4 of the Civil Code that both the ability to make provision of security rights and the state of the assets are to be assessed in relation to the shareholder to whom the assets of the dissolved company have been transferred."

Standing to bring an action for annulment of the decision to dissolve a company

Luxembourg Court of Appeal Decision No. 150/19 - VII - REF of 27 November 2019, Docket No. CAL-2018-00489

This decision recalls that "the creditor of a company that is subject to dissolution in the context of Article 1865bis of the Civil Code may not oppose the dissolution of that company, but may only demand safeguards from the sole shareholder."

The Court turned to the parliamentary proceedings relating to the law of 10 August 2016, which introduced Article 1865bis of the Civil Code, to explain that the text of this Article is inspired by Article 1844-5, paragraph 3, of the French Civil Code, but that it did not include the last sentence of the French article "because this rule seems to derive directly from the ability of creditors in France to oppose the operation. However, while French law retains, where applicable, opposition as one of the possible creditor protection techniques, this is not the case under Luxembourg law. Consequently, the creditor protection mechanism retained here is inspired by those implemented in the context of merger-demerger operations" (cf. parliamentary proceedings, Draft Law no. 5730, comments on the articles).

For this reason, the Court noted that the appellant, who opposed the dissolution of a company in the context of Article 1865bis of the Civil Code on the grounds that the appellant was a creditor of the dissolved company, did not have standing to bring an action for annulment of the decision to dissolve.

CIVIL LAW

Release of an attachment

District Court of Luxembourg Civil Judgment No. 2019TALCH01/00402 of 18 December 2019, Docket No. 187187

This judgment states that an attachment that has been released by order of a judge, sitting as in summary proceedings, has no legal existence and no basis, with the result that the application for validation of the attachment, now non-existent, before the Tribunal sitting in civil matters has become devoid of purpose.

The Tribunal also found that there was no need to rule either on the validation of the attachment or on the plea put forward by the applicant that there may have been a breach of Article 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms, explaining that "a possible finding of a breach of that provision of the Convention will not have the effect of reviving the attachment, the release of which was ordered by a provisionally enforceable decision confirmed on appeal."

Res judicata, suspension of an insurance contract

District Court of Luxembourg Civil Judgment No. 2019TALCH17/00285 of 27 November 2019, Docket No. TAL-2018-00048

This judgment recalls that "the civil court judge is not permitted to disregard what has necessarily and certainly been adjudicated by the criminal court judge."

In the present case, the plaintiff had been convicted by the criminal courts for having put into circulation a vehicle not covered by valid insurance. The criminal court judge ruled on the issue of the suspension of the insurance contract and the lack of insurance coverage of the vehicle at the time of the accident, but not on the issue of the insurer's coverage of the victims' damages after the accident. Consequently, the...