Citigate Dewe Rogerson Ltd v Artaban Public Affairs SPRL

An application to restrain presentation of a winding-up petition should be granted only where the petition is bound to fail. The relevant question is whether there is no real prospect that the winding-up court will conclude that the company has no properly arguable defence to the alleged debt.

Proceedings to invoke the English insolvency jurisdiction fall within the exclusion in Article 1.2(b) of Council Regulation 44 of 2001. The exclusion is not avoided merely because the alleged debt is also the subject of contractual proceedings in another Member State. The application therefore turns on whether the debt is bona fide disputed on substantial grounds.

Citigate Dewe Rogerson Limited applied to restrain Artaban Public Affairs Sprl from presenting a winding-up petition based on a statutory demand for approximately €94,000.

The underlying consultancy agreement was governed by Belgian law and contained a Belgian jurisdiction clause. Related proceedings concerning the invoices were pending in Belgium. The applicant argued that Council Regulation 44 of 2001 applied, that presentation of the petition would be an abuse of process, and that the invoices were bona fide disputed on substantial grounds.

The central issues were whether the Regulation applied to the proposed winding-up proceedings and whether the alleged debt was sufficiently disputed to justify injunctive relief.

1. Application dismissed. The applicant was ordered to pay the respondent’s costs, subject to detailed assessment if not agreed.
2. The court adopted the approach in Re Company (No 0160 of 2004) [2004] EWHC 380 (Ch). The question was whether the respondent had no real prospect of persuading the winding-up court that the company had no properly arguable defence. An application should not determine the substantive issue that would arise on the petition.
3. The proposed petition fell clearly within Article 1.2(b) of Council Regulation 44 of 2001, which excludes proceedings relating to the winding-up of insolvent companies. Gourdain v Nadler [1979] ECR 733 and UBS AG v Omni Holdings AG (In Liquidation) [2000] 1 WLR 916 concerned post-liquidation processes and did not govern a petition seeking to invoke the insolvency jurisdiction in the first place.
4. Article 27 did not apply in any event. The Belgian proceedings were a private contractual dispute, whereas the proposed English proceedings would invoke a class remedy for the benefit of creditors. They therefore did not involve the same cause of action. This conclusion was unnecessary to the result because the Regulation was held inapplicable.
5. The Belgian jurisdiction clause and Belgian law were relevant only to whether there was a bona fide and substantial dispute about entitlement to the invoices. The exercise of the English winding-up jurisdiction remained governed by the Insolvency Act 1986. On the evidence, there was a real prospect that the winding-up court would find some invoices properly payable. The petition was consequently not bound to fail.

First-instance application. The judgment records earlier interlocutory hearings before Mr Justice Morgan and Mrs Justice Proudman, but no appellate decision.