11/04/2014
GOOD AND BAD FORUM SHOPPING: is there a difference?
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The English Bankruptcy Court has handed down an important judgment concerning the scope of so-called forum shopping in bankruptcy cases.
The case was not in the usual run of Irish or German EC Regulation COMI disputes. Instead it concerned an insolvent Russian national who could not be made bankrupt in Russia (where he was held to be domiciled and resident) because of the limited scope of the personal bankruptcy regime there.
The debtor successfully petitioned for his own bankruptcy in October 2012 on the sole jurisdictional basis that he was present in England on the day his petition was presented (i.e. s 265(1)(b) IA86). His creditors then applied for an annulment claiming there was no utility in the bankruptcy and that the debtor had no sufficient connection with England but was simply forum shopping.
The Court dismissed the applications holding that the applicable principles from the authorities were “that there must be some purpose in making the order that is sought and that such purpose may arise in various ways, for example as a result of the presence of assets, or some contractual connection to the jurisdiction; it may arise where there is need to fill a lacuna in the law of other jurisdictions, or where there is some other benefit for the creditors and/or the debtor or some combination of the foregoing” and that there was in this case utility in the bankruptcy including because the debtor “has come to this jurisdiction to fill a lacuna in the laws of the country where he is domiciled and resides”.
The case thus rejects any idea that forum shopping is per se objectionable. The judgment applies principles developed in the company cases (see, for example, Banque des Marchands, Garuda and Magyar Telecoms BV) which the Chief Registrar regarded as demonstrating that the Courts here “are prepared to countenance what is in reality forum shopping, albeit of a positive, by which I mean a legitimate, kind”.
Blair Leahy appeared for the first respondent (instructed by Rubinstein Phillips Lewis LLP)
