Jurisdiction and choice of law in bankruptcy proceedings

Surpeme Court judgment of 28 June 2017, HR-2017-1297-A, (case no. 2017/445), civil case, appeal against judgment and (case no. 2017/474), civil case, appeal against order.

ING Bank N.V. (Counsel Henning Harborg and Counsel Peder Alvik Sanengen) v. The Bankruptcy estate of Bergen Bunkers AS (Counsel Kristoffer Larsen Rognvik) (Assisting counsel: Egil Horstad)

Justices: Kaasen, Bergh, Webster, Arntzen, Øie

A Norwegian bankruptcy debtor, which was a subsidiary of a Danish group, had granted a security interest in its existing and future accounts receivable as security for the group’s debt to a Dutch bank. Existing supply contracts were subject to English law. The Supreme Court concluded that the bankruptcy estate’s claim that the bank had no security interest in the accounts receivable at the commencement of the bankruptcy proceedings was covered by the bankruptcy exemption in the Lugano Convention Article 1 no. 2, letter b), and that policy considerations strongly suggested that disputes covered by this exemption were subject to the jurisdiction of the law of the country where the bankruptcy was declared. There were therefore no grounds for dismissing the bankruptcy estate’s action against the bank brought before a Norwegian court. As regards the choice of law, the Supreme Court concluded that the question of validity and perfection of the security interest should be decided according to the law of the debtor’s home country. This meant that the case in its entirety should be decided under Norwegian law.

Read the whole judgment