Documents considered by the Committee on 7 September 2016 Contents

9Cross-border insolvency proceedings

Committee’s assessment

Legally important

Committee’s decision

Cleared from scrutiny; further information requested

Document details

(a) Proposal for a Regulation replacing lists of insolvency proceedings and insolvency practitioners in Annexes A and B to Regulation (EU) 2015/848 on insolvency proceedings; (b) Proposal for a Council Implementing Regulation replacing the lists of insolvency proceedings, winding-up proceedings and liquidators in Annexes A, B and C to Regulation (EC) No. 1346/2000 on insolvency proceedings

Legal base

(a) Article 81(2)(a), (c) and (f); ordinary legislative procedure; QMV; (b) Article 45 of Regulation (EC) 2000/1346; —; QMV

Department

Business, Energy and Industrial Strategy

Document Numbers

(a) (37822), 9710/16 + ADD 1, COM(16) 317; (b) (37860), 10142/16 + ADD 1, COM(16) 366

Summary and Committee’s conclusions

9.1Regulation (EC) No. 1346/2000 on insolvency proceedings (the original Regulation) came into force in 2002 to provide for the efficient administration of insolvencies where the debtor’s centre of main interest (COMI) is in the EU. It provides a hierarchy of judicial competence, determining one “main” set of proceedings in a single Member State (where the debtor’s COMI is situated), with the possibility of other “secondary” or “territorial” proceedings in any other Member States where the debtor has an establishment. On 20 May 2015, the Regulation was recast to Regulation (EU) 2015/848 (the recast Regulation) which came into force on 26 June 2015 and will apply mostly from 26 June 2017.

9.2The annexes of the original Regulation set out different national insolvency procedures and practitioners governed by it. Since 2002 amendments have been made to that Regulation to reflect changes to Member States’ domestic insolvency laws. Proposal (a) would amend the Annexes in the recast Regulation and (b) those in the original Regulation to reflect recent reforms to Poland’s restructuring laws.

9.3The Government told us that neither proposal gave rise to any policy implications. As the suggested amendments are only technical and do not have any particular relevance to the UK’s withdrawal from the EU we only raised legal issues with the Government in our Report of 6 July. We asked the Government to notify us of its opt-in decision in relation to document (a) in view of its existing participation in the original Regulation and its recast,54 though confirmed that we did not consider the matter significant enough to warrant an opt-in debate. We also shared the Government’s concerns about the implied exclusive competence claimed by the Commission in relation to the Regulation (a) and the implications of this for the application of the subsidiarity protocol which only applies to proposals in areas of shared competence.

9.4The Government now writes to confirm that it is opting into proposal (a) and wants to vote in support of proposal (b) which is due to be considered at the JHA Council meeting in October (though now expected to be taken at the Competition Council on 29 September). It also agrees with us that the EU does not have implied exclusive competence in relation to proposal (a).

9.5We note the Government’s decision to opt into proposal (a) and the somewhat general reasons given for that decision: that it reflects the UK’s existing participation in the original and recast Regulations and is in the UK’s interests.

9.6We welcome the Government’s position that the Commission does not have implied exclusive competence in respect of proposal (a). While we agree with the Government that the proposal satisfies the subsidiarity test, the point we made in our last report was rather that the Commission should accept that the subsidiarity protocol applies to proposal (a) on the basis that it concerns an area of shared competence and not implied exclusive competence. We would be reassured to learn from the Minister that this important message has been conveyed to the Commission to avoid any unhelpful precedent being set for future legislative proposals.

9.7In anticipation of the impending vote in Council on proposal (b) and recognising the technical nature of the amendments to be made by both of these proposals, we now clear them both from scrutiny.

Full details of the documents

(a) Proposal for a Regulation of the European Parliament and Council replacing the lists of insolvency proceedings and insolvency practitioners in Annexes A and B to Regulation (EU) 2015/848 on insolvency proceedings: (37822), 9710/16 + ADD 1, COM(16) 317; (b) Proposal for a Council Implementing Regulation replacing the lists of insolvency proceedings, winding up proceedings and liquidators in Annexes A, B and C to Regulation (EC) 1346/2000 on insolvency proceedings: (37860), 10142/16 + ADD 1, COM(16) 366.

The Minister’s letter of 1 September 2016

9.8The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Margot James) responds to our questions as follows.

9.9First, she informs us that it is in the UK’s interests to opt into the amendments to the 2015 Regulation (proposal (a)) and to vote in support of the amendments to the 2000 Regulations given the UK’s participation in the underlying Regulation.55 The Council has been notified accordingly. The Government has also informed the Chairs of the Business, Innovation and Skills Committee and Energy and Climate Change Committee and the Shadow Business Ministers.

9.10The Government agrees with the Committee that there is no legal basis for the Commission to have acquired implied exclusive competence in relation to proposal (a). Its view remains that: “although the EU has exercised competence in this area by adopting the Regulation, the proposal still falls within an area of shared competence under Article 4(2)(j) of the Treaty on the Functioning of the European Union”. She then adds “Therefore the Regulation satisfies the principle of subsidiarity”.

9.11Finally she tells us that proposal (b) is due to be tabled at the next Justice and Home Affairs Council in October. We have subsequently been informed by officials that the proposal is now likely to be tabled for agreement at a Council meeting on 29 September.

Previous Committee Reports

Seventh Report HC 71-v (2016–17), chapter 6 (6 July 2016).


54 Regulation (EC) 2000/1346 and Regulation (EU) 2015/848.

55 We understand this to refer both to the original Regulation and the recast Regulation.




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12 September 2016