Brexit: A deal that leaves recognition of UK insolvency procedures uncertain

Published January 2021
Authors
Mark Phillips KC
Mark Phillips KC
Paul Fradley
Paul Fradley
  1. The authors gratefully acknowledge the assistance and advice given by our colleague Riz Mokal.
  2. Insolvency Regulation, Article 3 (1).
  3. Insolvency Regulation, Art 3 (2).
  4. Insolvency Regulation, Art 3 (2).
  5. See the European Union (Withdrawal) Act 2018, section 6.
  6. The 2019 Regulations, para 7 of the Schedule.
  7. The 2019 Regulations, para 7 of the Schedule.
  8. The 2019 Regulations, para 2(3) of the Schedule.
  9. Retained Insolvency Regulation, Article 1.
  10. The 2019 Regulations, regulation 3.
  11. CBIR, Schedule 1, Article 20 (1).
  12. CBIR, Schedule 1, Article 21 (1).
  13. Rubin and another v Eurofinance SA and others [2012] UKSC 46; Re: Pan Ocean Ltd [2014] EWHC 2124 (Ch). Bakhshiyeva (Representative of the OJSC International Bank of Azerbaijan) v Sberbank of Russia & Ors [2018] EWHC 59 (Ch); [2018] 4 All E.R. 964; [2018] Bus. L.R. 1270; [2018] 1 WLUK 212; [2018] B.C.C. 267; [2018] 2 B.C.L.C. 396; [2018] B.P.I.R. 287; Bakhshiyeva (Foreign Representative of the Ojsc International Bank of Azerbaijan) v Sberbank of Russia & Ors [2018] EWCA Civ 2802 (18 December 2018) ([2018] EWCA Civ 2802, [2018] FCA 153, [2018] WLR(D) 784, [2018] 12 WLUK 286. This has arisen in particular in the context of the rule in Gibbs, Antony Gibbs & Sons v La Societe Industrielle et Commerciale des Metaux (1890) LR 25 QBD 399.
  14. https://uncitral. un.org/en/texts/ insolvency/modellaw/ cross-border_ insolvency/status
  15. It will be crucial to ensure that this civil order does not fall within the insolvency exception to the Judgments Regulation.
  16. The UK Insolvency Service have published a high-level guide to the approach in each EU Member State. Published on 15 January 2021, available at: https://www.gov. uk/government/ publications/cross- border-insolvencies- recognition-and- enforcement-in-eu- member-states-from-1- january-2021.
  17. Judgments (Amendment) (EU Exit) Regulations 2019/479, regulation 92.
  18. Civil Jurisdiction and Judgments (Amendment) (EU Exit) Regulations 2019/479, regulation 89.
  19. Switzerland, Norway and Iceland have done so.
  20. See the Lugano Convention, Article 72.
  21. Private International Law (Implementation of Agreements) Act 2020.
  22. https://www.hcch. net/en/instruments/ conventions/status- table/?cid=98.
  23. Hague Convention, Article 3. This may not extend to asymmetric jurisdiction clauses see Etihad Airways PJSC v Flother [2020] EWCA Civ 1707.
  24. Hague Convention, Article 8.
  25. Private International Law (Implementation of Agreements) Act 2020, Schedule 5, paragraph 7.
  26. EU Commission Notice to Stakeholders dated 27 August 2020 available at https:// ec.europa.eu/info/sites/ info/files/brexit_files/ info_site/civil_justice_ en.pdf.
  27. Hague Convention, Article 2(2).
  28. For the view that the Hague Convention will apply to schemes of arrangements see Matthews and Oehm, ‘The Hague Convention on Choice of Court Agreements: an unexpected game changer for English schemes of arrangement’ (2016) 11 JIBFL 641-647.
  29. Administration of Justice Act 1920 applies to treaties with some other states, principally Commonwealth ones.
  30. See Foreign Judgments (Reciprocal Enforcement) Act 1933, sections 1 (2) and 11 (1).
  31. Foreign Judgments (Reciprocal Enforcement) Act 1933, section 4. The fit with the common law is not exact, for example the common law unlike the 1933 Act regards presence as sufficient to found jurisdiction: see Adams v Cape Industries plc [1990] Ch 433, CA.
  32. See Dicey, Morris & Collins on the Conflict of Laws (15th Ed), 14-054-14-096.
  33. The Law Applicable to Contractual Obligations and Non- Contractual Obligations (Amendment) (EU Exit) Regulations 2019 (SI 2019/834).
  34. Articles 3(1) and 12(1) (d) of Rome I.
  35. (1890) LR 25 QBD 399, CA.
  36. See the salutary warning of Zacaroli J in Re Gategroup Guarantee Limited [2021] EWHC 304 (Ch), [172].
  37. The Wet Homologatie Onderhands Akkoord or ‘WHOA’.
  38. See the discussion of the point in the context of rule in Antony Gibbs & Sons above.
  39. Article 7(1) of the EU Insolvency Regulation. This includes the Member State’s law of applicable law (‘conflicts’). So if the Member State’s law of applicable law says that the lex situs governs rights in movable assets, and the assets are situate in England, then 7(1) requires (“shall be that…”) that English law governs.
  40. Pursuant to the EU Insolvency Regulation, Article 7. Of course, there is a practical aspect. To the extent that assets are situate in a UK jurisdiction, it may turn out that only such alterations in rights in rem in relation to such assets are effective as may be recognised by the courts of that UK jurisdiction.
  41. Whilst there may be conflicts between potentially applicable laws, if the assets are in the UK it is likely to be UK law that matters.
  42. The same practical question arises. There may be conflicts between potentially applicable laws but with the property situated in the UK it will be the law of the UK jurisdiction that matters.
  43. Rome I, Article 4(1) (c).
  44. (1890) LR 25 QBD 399, CA.
  45. Article 12 of the EU Insolvency Regulation.
  46. Article 12 (1) read with article 8 (3) of the EU Insolvency Regulation.
  47. The law of the contract would be recognised under Rome I Article 8 and would almost certainly be English law.
  48. Because of the rule in Antony Gibbs & Sons v La Societe Industrielle et Commerciale des Metaux (1890) LR 25 QBD 399, CA.
  49. Rome I would continue to apply to determining the law of the contract because Rome I is not limited to Member States.
  50. Rome I will continue to apply to determining the law of the purchase contract.
The content of the Digest is provided to you for information purposes only, and not for the purpose of providing legal advice. If you have a legal issue, you should consult a suitably-qualified lawyer. The content of the Digest represents the views of the authors, and may not represent the views of other Members of Chambers. Members of Chambers practice as individuals and are not in partnership with one another.
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