Actio Pauliana — from Roman Law to Application by the European Court of Justice

Actio Pauliana (Paulian action) is a civil-law remedy allowing a creditor to attack transactions by a debtor that defraud creditors by disposing of assets to place them beyond reach. Originating in Roman law (Lex Julia and later praetorian practice), it prevents debtors (and sometimes third parties) from defeating creditors’ rights through fraudulent transfers. Actio Pauliana aims at protecting creditors’ legitimate expectations by undoing transfers that diminish the debtor’s estate with knowledge of, and intent to prejudice, creditors. It balances creditor protection with commercial certainty by often preserving the rights of bona fide third parties. The typical remedies include avoidance (annulment) of the impugned transaction insofar as needed to satisfy creditors, recovery of transferred assets or their value (restitution) as well as attachment or ranking of the previously transferred asset for the creditor’s claim. 

1. Legal Elements of Actio Pauliana

1. Creditor status: a valid existing or future creditor (depending on jurisdiction) bringing the claim;
2. Disposition by debtor: a legal act (sale, gift, mortgage, etc.) that reduces the debtor’s assets;
3. Fraud or intent to prejudice creditors: the transferor acted with intent to defraud existing or foreseeable creditors (subjective element) or in some systems with presumptions of fraud in certain circumstances;
4. Causal link: the disposition must have prejudiced the creditor’s ability to recover, i.e., it made collection materially more difficult or impossible;
5. Timeliness (prescription/limitation): action must be brought within statutory time limits measured either from the act or from discovery of the fraud.

2. Variations across Jurisdictions

2.1. Civil-law Systems

Actio Pauliana is often codified (e.g., many European civil codes) with defined elements, time limits, and treatment of third parties. Some codes separate fraudulent conveyance rules from insolvency-specific clawbacks as insolvency law often contains such specialized powers (avoidance of preferences, undervalued transactions, or transactions at undervalue) with distinct standards and timeframes. Thus, actio pauliana-type claims coexist with insolvency remedies:

1. Belgium: Article 1167 of the old Belgian Civil Code makes a reference to fraus creditorum and constitutes a form of actio Pauliana. Article 5.243 of the Belgian Civil Code references the Actio Pauliana. 
2. Brazil: Section VI, Chapter IV, Title I of Book III the Brazilian Civil Code of 2002 is dedicated to fraud against creditors, and describes a form of Actio Pauliana related to insolvency. 
3. Bulgaria: Article 135 of the Obligations and Contracts Act provides for the classic Actio Pauliana (Павлов иск) plus the presumption of bad faith for transfers between persons in close relationships with one another, whereas Article 647 of the Commerce Act – for a claim for annulment of harmful transactions as one of the cancellation claims of the insolvency administrator.
4. France: Articles 1341, 1341-1 though 4 of the French Civil Code contain elements reminiscent of the Actio Pauliana, including the consideration of good faith on the part of receiving third parties. 
5. Italy: Article 2901 of the Italian Civil Code mirrors the Actio Pauliana, with considerations of good faith both on the debtors as well as the receiving third party. 
6. Netherlands: Dutch law distinguishes as many as three separate forms of Actio Pauliana: The “general Pauliana”, described in articles 45-48 of Book 3 of the Civil Code; the “bankruptcy Pauliana”, described in articles 42-51 of the Bankruptcy Act; and the “inheritance Pauliana”, described in article 205 of Book 4 of the Civil Code. 
7. Poland: Article 527 of the Civil Code of Poland is often considered by scholars to be a modern form of the Actio Pauliana, and it is commonly referred to as such in legal discourse. It serves the same purpose as the Roman institution but defines the circumstances in which it can be applied more clearly, including exactly when a transaction by a debtor is fraudulent and a presumption of bad faith for transfers between persons in close contact with one another. 
8. Portugal: Articles 610 through 618 of the Portuguese Civil Code are titled “Paulian Impugnation” (impugnação pauliana) and allow a creditor to attack transactions with third parties that jeopardise their debtor’s solvency. If the transaction is not for free (i.e. it is not a donation) and is undertaken when the debtor already owes debt to the creditor, the debtor and the third party must have been in bad faith with regard to hurting the former’s creditors. If the transaction was undertaken prior to the creditor’s credit, the transaction can only be challenged if there was intention or deceipt by both the debtor and the third party to hurt the creditor. 
9. Switzerland: Article 285ff of Swiss insolvency law (Art. 285 ff. SchKG) has been likened to Actio Pauliana, although it is tied strictly to insolvency rather to fraus creditorum on its own, and can only be invoked in case of bankruptcy. 
10. Canada: In the province of Quebec, where private law is based on civil law, the civil code refers explicitly in articles 1631-36 to a “Paulian action” where efforts by a debtor to make himself insolvent or to otherwise defraud a creditor are unenforceable vis-a-vis that creditor.

2.2. Common-law Equivalents

Civil- law concepts generally overlap with fraudulent conveyance/fraudulent transfer statutes (e.g., the U.S. Uniform Fraudulent Transfer Act / Uniform Voidable Transactions Act, and provisions in bankruptcy law like preference and fraudulent transfer avoidance), but procedural and substantive tests differ (e.g., “actual intent” versus constructive fraud, and statutory “insolvency” tests.

3. Action Pauliana and ECJ

Article 7(1)a of Regulation (EU) 1215/2012 has provided the foundation for interpreting jurisdictional questions associated with Actio Pauliana. Two landmark rulings of the European Court of Justice, namely Feniks (C-337/17) and Reitbauer (C-722/17) on the application of the Regulation’s jurisdictional provisions to the contextual framework of Actio Pauliana, have significance for creditors in the context of EU private international law. According to the ECJ Actio Pauliana is covered by jurisdiction rule of forum of contract meaning that the creditors of a contract partner may institute a Paulian action against third parties not in the member state where such parties are domiciled or doing business but in another member state as per the place of performance of the obligation in question.

In Feniks vs Azteca (C-337/17) Feniks, a Polish investor, entered into a contractual agreement with a debtor, who then failed to fulfil his obligations. Subsequently, the debtor transferred immovable property located in Spain to a Spanish entity named Azteca. Feniks, alleging that the transaction was made to defraud its interests by dissipating assets available for the enforcement of its claims, instituted an Actio Pauliana in Poland to annul the transfer. The jurisdiction matter was referred to the ECJ by the Polish court for a preliminary ruling as Azteca argued that the action being an action in civil law, was unrelated to the contractual claims and should be governed by the general rule on jurisdiction base on the defendant’s domicile (Article 4 of Regulation (EU) 1215/2012).  

In line with the aim of foreseeability of jurisdiction rules, the ECJ found that the creditor’s reliance on the Actio Pauliana was inseparable from the underlying contractual relationship. The ECJ concluded that once the Actio Pauliana instituted on the basis of the creditor’s rights emerging from the conclusion of a contract, such action constitutes a matter “relating to a contract”, in terms of Article 7(1)(a) of Regulation (EU) 1215/2012. Consequently, since Poland is the jurisdiction where the contractual obligation was to be performed, Polish courts had authority to hear the case.

In Reitbauer et al. vs Casamassima (C-722/17) creditors based in Austria, concluded a construction contract with the debtor for works on a property in Austria. Subsequently, the debtor undertook to have a mortgage registered on the Austrian property in favour of a third-party Mr Casamassima, an Italian resident. The creditors obtained a favourable judgement awarding damages against the debtor, which judgment however only became enforceable after the registration of the mortgage. The creditors proceeded to institute an “action for avoidance” (which is analogous to the actio pauliana) in Austria, seeking to annul the notarial deed and to protect their rights of recovery.

Differently to the Feniks case, the Austrian court’s request for a preliminary ruling concerned the interpretation of Articles 24(1) and 24(5) of Regulation (EU) 1215/2012. If Article 24(1) were to be applicable, it would confer exclusive jurisdiction on the Austrian Courts on the basis of rights in rem over immovable property. Alternatively, should it be determined that the proceedings in question fall within the realm of the enforcement of judgments, jurisdiction would be established on the basis of Article 24(5). Instead, the ECJ confirmed the precedent set in Feniks stating that the plaintiffs’ action sought to preserve their rights derived from the contract. Thus, the court of the place of performance of the contract enjoyed jurisdiction, namely Villach, Austria.