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Clarity on Cross Border Insolvency Enforcement

January 2013 - Litigation & Dispute Resolution. Legal Developments by Ogier .

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The decision in these cases in the United Kingdom Supreme Court will be of enduring importance for off-shore insolvency jurisdictions.  The Court has affirmed that to be enforceable at common law, any judgment of a foreign court either for payment of money or the 'turnover' or vesting of assets outside its territorial jurisdiction must comply with the jurisdictional rules of English private international law.  There is no special rule for judgments in insolvency proceedings.

The Gist

In brief, unless the judgment debtor was a claimant or counterclaimant in the relevant proceedings:

  • A judgment in personam for money or delivery of assets is enforceable under English private international law only if the defendant was present, resident or domiciled in the state of the forum when the proceedings were commenced, or submitted to its jurisdiction by voluntarily appearing in the proceedings or by some other method, such as a jurisdiction clause in a contract or proving in a liquidation.
  • If the judgment is a judgment in rem affecting property outside that state, it is enforceable only if the defendant submitted to the jurisdiction of the forum.
  • There is no special rule relating to judgments in insolvency matters.
  • Neither the UNCITRAL Model Law on Insolvency nor the UK Cross Border Insolvency Regulation (CBIR) contain any provision enabling the enforcement of judgments given in a foreign state (although the EU Regulation on Insolvency does).

The majority judgment (given by Lord Collins of Mapesbury, the third author of Dicey, Morris and Collins, Conflicts of Laws 14th edition (Dicey)) affirms in stark terms that the criteria for enforcement of a judgment at common law are those set out in Dicey Rule 36 (in the 15th edition Rule 43).  This rule is a distillation of the English case law, which has appeared in that work since the first edition in 1896, and appeared with minor variations in each edition since.