Lecture IV

Video 4 (out of 8)
Applicable Law: One Law, Many Exceptions – Summary
Presenters: Defne Taşman & Bob Wessels

This fourth video explains which law applies once a court has international jurisdiction under the European Insolvency Regulation. The central rule is found in Article 7: insolvency proceedings and their effects are governed by the law of the Member State where the proceedings are opened. This is known as the ‘lex fori concursus’. The rule creates clarity and legal certainty. This fits the Regulation’s system of mutual trust: Member States recognise each other’s insolvency proceedings and accept that the law of the opening court will usually govern.

The lex fori concursus has a broad scope. It covers the conditions for opening proceedings, the insolvency test, the administration of the case, the powers and duties of the debtor and insolvency practitioner, the lodging and ranking of creditor claims, the distribution of proceeds, the treatment of assets, the effects on contracts, avoidance actions, and the closure of proceedings. Case law confirms that it can cover both procedural and substantive rights of creditors.

This rule has limits. The second half of the video focuses on important exceptions to the lex fori concursus.

One major exception concerns rights in rem, or secured rights. Under Article 8, insolvency proceedings do not affect secured rights over assets located in another Member State at the time proceedings are opened. This protects secured creditors, such as banks, who rely on collateral located outside the opening State. The location of assets is therefore crucial. The Regulation contains detailed rules for determining where assets are situated.

Another exception concerns reservation of title under Article 10. Reservation of title allows a seller to retain ownership until the buyer fulfils its obligations, usually payment. The video explains this through a cross-border case example. The key point is that the protection depends on who becomes insolvent, where the goods are located when proceedings open, and whether the clause is valid under the law governing the contract.

Employment contracts are also treated separately. Under Article 13, the effects of insolvency proceedings on employment contracts are governed only by the law applicable to the employment contract. This protects employees’ expectations and reflects the strong role of national labor law.

The video also addresses detrimental acts under Article 16. Normally, the lex fori concursus governs avoidance actions against transactions harmful to creditors. However, a beneficiary may defend the transaction if it is governed by another Member State’s law and that law does not allow the act to be challenged.

Finally from the examples presented in the video, Article 18 deals with pending lawsuits and arbitration. If a lawsuit or arbitration concerning an asset or right of the debtor is already pending when insolvency proceedings open, the law of that court or arbitral seat governs the pending case. However, enforcement of any resulting judgment must still take place within the insolvency framework.

Overall, the video shows that Article 7 provides the main rule, but Articles 8 to 18 create important exceptions. The lex fori concursus is the starting point, but cross-border insolvency often requires careful attention to secured rights, contracts, employees, avoidance actions and pending proceedings.

Further Reading

• Bob Wessels and Defne Taşman, The European Insolvency Regulation: An Essential Guide (Edward Elgar Publishing forthcoming 2026) (Elgar Practical Guides)
• Reinhard Bork and Kristin van Zwieten (eds.), Commentary on The European Insolvency Regulation, Oxford University Press, 2nd ed. (2022)
• Insolvency Regulation 1346/2000: Council Regulation (EC) No 1346/2000 of 29 May 2000 on Insolvency Proceedings [2000] OJ L160/1
• Insolvency Regulation 2015/848: Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on Insolvency Proceedings (Recast) [2015] OJ L141/19, consolidated version (6 November 2025)
• Brussels I bis Regulation 1215/2012: Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast), [2012] OJ L 351/1, consolidated version (26 February 2015)
• Virgos-Schmit Report 1996: Virgos, Miguel and Schmit, Etienne. (1996) Report on the Convention on Insolvency Proceedings. [EU Council of the EU Document]
• Case C-212/15, ENEFI Energiahatékonysági Nyrt v. DGRFP (ECLI:EU:C:2016:841)
• Joined Cases C-765/22 and C-772/22, Luis Carlos and Others v Air Berlín Luftverkehrs KG, Sucursal en España and Others (ECLI:EU:C:2024:331)
• Case C-444/07, MG Probud Gdynia sp. z o.o. (ECLI:EU:C:2010:24)
• Case C-594/14, Simona Kornhaas v. Thomas Dithmar (ECLI:EU:C:2015:806)
• Case C-557/13, Hermann Lutz v. Elke Bäuerle (ECLI:EU:C:2015:227)
• Case C-195/15, SCI Senior Home v Gemeinde Wedemark and Hannoversche Volksbank eG (ECLI:EU:C:2016:804)
• Case 66/85, Lawrie-Blum v Land Baden-Württemberg (ECLI:EU:C:1986:284)
• Case C-310/14, Nike European Operations Netherlands BV v Sportland Oy (ECLI:EU:C:2015:690)