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Rulings: Saik, Parmalat and Cadbury

5 May 2006

Parmalat insolvency: the Irish courts have jurisdiction over the insolvency proceedings in respect of the Irish subsidiary of Italian group Parmalat, ruled the European Court of Justice. The ECJ said jurisdiction should be determined by reference to the debtor’s registered office as indication of the company's prima facie centre of “main interests”. The company’s creditors were located in Ireland, which supported the assumption that it was the correct forum for the proceedings. Exceptions to the rule would only be justified if there were objective factors to the contrary (C-341/04).

Cadbury-Schweppes: the ECJ’s Advocate General suggested that UK legislation preventing companies from setting up ‘controlled foreign companies’ in low tax jurisdictions was lawful inasmuch as it aimed to catch those companies whose sole purpose was to circumvent national tax laws. Although the rule was a hindrance to the EU rule on freedom of establishment, the purpose of counteracting tax avoidance was an acceptable justification (C-196/04).

Saik: former bureau de change worker Abdulrahman Saik has been cleared of a charge of conspiracy to launder money by the House of Lords. At his initial trial, Saik pleaded guilty, subject to the qualification that he did not know the money was the proceeds of crime, but only suspected this was so. However, s 1(2) of the Criminal Law Act 1977 requires a conspirator to ‘intend or know’ of an intention to launder money. “A distinction is drawn between suspicion and knowledge. The former is not to be equated with the latter,” the Lords ruled ([2006] UKHL 18).


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