LUXEMBOURG Trends and Developments Contributed by: Ana Nicoleta Andreiana, Madeleine Dos Santos Marques, Patrick Ries and Sofia Polykandrioti, Loyens & Loeff
In this case, the applicants sought to, inter alia, pre - vent the implementation in Luxembourg of any part of the UK restructuring judgment, and specifically, any actions that would amount to material execution of the plan on Luxembourg territory (amongst other actions, the transfer of shares, the release or waiver of claims, the discharge of guarantees and security interests granted by Luxembourg companies and the effects of the power of attorney granted for the purpose of executing the UK restructuring judgment) without prior exequatur. The Luxembourg court recalled that Luxembourg law requires that, in the absence of an international con - vention or European regulation, judgments rendered by foreign courts, as well as acts executed by foreign public officers, be declared enforceable by a Luxem - bourg court before they can be enforced in Luxem - bourg, pursuant to Article 678 of the new Code of Civil Procedure ( Nouveau Code de procédure civile ). However, the decision also contained an important clarification: a foreign judgment (in the absence of an international convention or European regulation) requires exequatur only when it is used to carry out acts of material execution on Luxembourg territory involving public force – that is, when the judgment is invoked to directly modify patrimonial rights through coercive measures, such as asset seizures, forced transfers, or other actions requiring the intervention of public authorities. The court distinguishes such coercive measures from private acts which do not require prior exequatur and can be performed directly without judicial validation of the foreign decision – for example, the transcription of the release of a pledge or the transfer of shares in a company’s shareholders’ register. In its reasoning, the court also emphasised that the legal consequences of the UK restructuring judgment – notably the extinguishment of the subordinated notes, were primarily situated in Germany, where the relevant claims and guarantees were governed by German law. While certain pledges over shares and receivables were governed by Luxembourg law, the court clarified that these pledges were accessory in nature and could not survive the elimination of the underlying debt. On this basis, and after stressing
that any potential action related to the enforcement of such pledges would not involve the use of public authority or coercive measures, the court concluded that the UK judgment did not produce enforceable effects on Luxembourg territory, and that the plaintiffs’ request for exequatur lacked sufficient territorial and procedural justification. The court drew a parallel with a decision of 30 April 2021 where the Luxembourg District Court had ruled that the risk of “contempt of court” in the United States meant that a Luxembourg entity could be pressured into executing foreign judgments under threat of sanc - tions, effectively substituting foreign judicial coercion for Luxembourg’s own authority. In that earlier case, exequatur was required precisely because such coer - cive measures would have led to material execution on Luxembourg territory. By contrast, in the present case, the court found that only private, non-coercive acts were at issue, with no risk of contempt or forced execution. The territorial and legal distinction drawn by the court was central to its reasoning – since no act of execu - tion had occurred or was planned on Luxembourg soil, and the legal effects of the judgment were confined to jurisdictions outside Luxembourg, no exequatur was required. This distinction is practically significant. It means that foreign restructuring plans may in practice extend to Luxembourg entities without judicial formalities, pro - vided their effect in Luxembourg remains contrac - tual or voluntary in nature. The Luxembourg court thus reaffirmed its cautious but business-oriented approach: open to recognising foreign restructurings where appropriate, but insistent on procedural safe - guards where Luxembourg legal rights or assets are directly impacted. Frankfurt’s Provisional Refusal to Recognise UK Restructuring Plan: Luxembourg’s Legal Crossroads The Frankfurt Regional Court’s provisional refusal to recognise a UK Part 26A restructuring plan has been the subject of attention across European legal and restructuring circles. In particular, the Frankfurt Court declined recognition of the UK plan under both Sec -
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