4. REGULATORY J U R I S D I C T I ON

Community law requires a sufficiently close connection between the Member State

wishing to take a measure and the interest to be protected by that measure. As

discussed earlier, Member States cannot claim regulatory jurisdiction where the interest

is wholly foreign to their territory and located entirely within the jurisdiction of

another Member State.1 m Accordingly, the question is under what circumstances a

Member State has a sufficient connection with the interests which the law of insolvency

aims to protect in order to claim universal appl ication of its lex fori conairms. It should

be noted that in this context a Member State's claim of regulatory jurisdiction runs

parallel with its rules on international jurisdiction to open insolvency proceedings

(adjudicative jurisdiction). Where a Member State allows for international insolvency

jurisdiction, it also claims regulatory jurisdiction in the matter. Conversely, where t he

law of a Member State does not allow for the opening of proceedings, it does not desireto

regulate the insolvency through its proceedings and law either.

Generally, the jurisdictional bases currently employed by the Member States -domicile

establishment, or assets - will imply the presence of a genuine link with the interest

ot deployment. Exceptionally, however, the debtor's domicile mav raise some doubts

in this respect. Depending on the national law of a Member State the domicile of a

corporate debtor may either be the d e b t o r ' s centre of main interests or the statutory

seat. Although the former raises no problems in respect of sufficiently close connection,

the latter has the inherent potential that the domicile is no more than a purely

formal connection with the State of incorporation. For instance, the mere fact of a

company being registered in England or Wales gives the English court jurisdiction to

wind up that company. No other contacts, such as doing business, are required.'

Under C'ommunity law this is more than an academic possibility. In fact, the

judgments in Ccntros and Inspire A rt would appear to encourage exactly these situations.

'' T h e freedoms guarantee the right of companies, lawfully incorporated under

the laws of o n e Member State but not doing any business in that state, to establish

themselves in other Member States. Arguably, the sole fact that a debtor has been

incorporated under the laws o f a Member State does not in itself constitute a s u f f i ciently

close connection to establish (regulatory) jurisdiction.1