I had recently commented on OGX bankruptcy. Specially about the possible inclusion of its foreign subsidiaries in the Brazilian bankruptcy.
At the end of the first post, I said:
Brazilian general procedural rules are very cautious when dealing with extraterritorial competence. In general terms, only companies with a permanent place of business in Brazil (or, at leas, a fixed representative here) can be included in litigation procedures as if they were nationals.
Third, the judge has claimed that including foreign subsidiaries in the Brazilian bankruptcy would amount to piercing the corporate veil. He didn't elaborate much, but I think his reasoning was that doing so would be unfair to other foreign partners who might participate in the OGX Austria, for example. Also, the arbitrary inclusion of foreign controlled companies could pave the way for the inclusion of foreign investors in the bankruptcy. This would generate and absurd jurisprudence, that could upset markets and make Brazil an undesired place for the world's money.
I think the Judge was right. Let's see what the court of appeal will say about it.
The Court of Appeal has had its say, and declared that: OGX'S international unit in Austria, OGX Austria GmbH, must be added to its bankruptcy filing in Brazil. (check the Reuter's report here)
This is singular and extraordinary.
I think this is the most audacious decision on transational jurisdiction ever made in Brazil. It will certainly be the leading case for similar situations.
Is there any Austrian lawyer among the readers that may iluminate how is Austria going to handle this?
