Subject: Insolvency Other related subjects: Conflict of laws
Keywords: Avoidance; Cross-border insolvency; Enforcement; Foreign judgments; Insolvency proceedings; Recognition of judgments
Summary: In a long awaited judgment, the Supreme Court has reversed the controversial decision of the Court of Appeal in Rubin v Eurofinance  EWCA Civ 895. The Court of Appeal had held that judgments of foreign bankruptcy courts in proceedings to adjust or set aside transactions entered into prior to the commencement of the foreign bankruptcy were in a special category that could be enforced in England whether or not the defendant had submitted to the jurisdiction of the foreign court.
In conjoined appeals brought by the appellants against decisions of the Court of Appeal (Rubin v Eurofinance SA  EWCA Civ 895,  Ch. 133 and New Cap Reinsurance Corp Ltd (In Liquidation) v Grant  EWCA Civ 971,  2 W.L.R. 1095), the Supreme Court held that the approach in Rubin did not represent an incremental development of existing principles but was "a radical departure from substantially settled law" and that change to the law of this nature was more suitable for legislation than judicial innovation. The Supreme Court also rejected the argument that judgments in foreign (non UK) avoidance proceedings could be enforced in England pursuant to provisions of the Cross-border Insolvency Regulations 2006 or section 426 of the Insolvency Act 1986.
Although allowing the appeal in Rubin v Eurofinance, the Supreme Court dismissed the appeal in New Cap Reinsurance Corporation v. AE Grant. This was on the basis of a finding that the New Cap Appellants had submitted to the jurisdiction of the Australian Court because they had filed a proof of debt in the Australian bankruptcy, participated in creditors' meetings and voted on a scheme of arrangement, the Supreme Court holding that a party "should not be allowed to benefit from the insolvency proceeding without the burden of complying with the orders made in that proceeding".
Member of Chambers: Blair Leahy for the second appellant (instructed by Edwards Wildman Palmer LLP