The Future of Modified Universalism and Cross Border Chair: The Honourable Kevin J. Carey

Speakers: Nick Herrod David Chivers QC Allen & Overy LLP Erskine Chambers

Tom Smith QC Martha Maher South Square St. John's Chambers

2 Rubin v Eurofinance SA (2013) - facts

• Receivers (“Rs”) appointed by HCt on Eurofinance’s (“E”) application to English trust operating in USA • Ch 11 protection obtained by Rs with E’s consent • Rs obtain judgment against E and others in NY for $10m USD in avoidance claims • No presence/appearance by E/Ds in NY • SC (Ld Clarke diss.) refuses to enforce NY Judgement

3 Rubin v Eurofinance SA (2013) - decision

• Presence/Appearance/Submission by D in foreign jurisdiction is precondition to Common recognition/enforcement of in personam orders of foreign courts (cf “Dicey Rule 43” ) • This is a settled rule which applies to foreign insolvency avoidance proceedings • Cambridge Gas (2007) has a narrower focus

4 Fibria Celulose S/A v Pan Ocean Co. Ltd (2014) – facts

• Pan Ocean – Korean incorporated shipping company • governed contract with a Brazilian company • Korean rehabilitation proceedings commenced in respect of Pan Ocean • Rehabilitation proceedings recognised in Great Britain under the CBIR • Insolvency termination clause was valid as a matter of English law • Insolvency termination clause was (probably) an invalid ipso facto clause under Korean insolvency law • Administrator viewed the continued performance of the contract as essential to the rehabilitation plan • Could an order that Fibria was not entitled to terminate the contract be granted by the English courts under the CBIR? • Effectively an application to apply a foreign insolvency law by way of discretionary relief • What trumps: the law of the contract or the law of the insolvency proceedings?

5 Fibria Celulose S/A v Pan Ocean Co. Ltd (2014) – decision

• “Any appropriate relief” is limited to relief that would be available to the English court when dealing with a domestic insolvency – Model law working group papers supported this interpretation (US interpretation erroneous) – CBIR specifically refers to any additional relief that may be available to a British officeholder under the law of Great Britain – Literal reading of “any appropriate relief” too wide - floodgates • Relief should be procedural not substantive

6 Singularis (2014) - facts

• Company in in Cayman • Auditor is a Bermuda registered partnership • Company has no connection with Bermuda (and cannot be wound up in Bermuda) • Cayman insolvency law only permits liquidators to obtain company documents • Bermuda insolvency law permits liquidators to obtain any relevant documents • Cayman liquidators seek assistance from the Bermuda court • Ask that the Auditor discloses non-company documents

7 Singularis (2014) - decision

• Bermuda insolvency law could not be applied • Assistance was in principle available at common law • However, the common law power to give assistance did not currently extend to the provision of documents • (Lords Sumption, Collins and Clarke) The common law power should now be extended to allow a court to order the provision of documents • (Lords Mance and Neuberger) The common law power should not be extended • But (unanimously) the power to give assistance does not extend beyond the powers available to the foreign court • Since the Cayman court could not order the provision of the documents, neither could the Bermuda court

8 Stichting Shell Pensioenfonds v Krys (2014) - facts

• Dutch Pension Fund invested large sums in Fairfield Sentry, a “feeder” fund to Madoff • Following collapse of Madoff, Fairfield went into liquidation in the BVI • Prior to winding up order, Pension Fund obtained a pre-judgment garnishing attachment from a Dutch court over approximately US$71m in Fairfield's account in the Dublin branch of a Dutch bank • Liquidators applied for an anti-suit injunction from the BVI Court to restrain the proceedings by the Pension Fund against Fairfield in the Netherlands • Grant of injunction upheld by the Privy Council

9 Stichting Shell Pensioenfonds v Krys (2014) - comment

• Basis for injunction is the need to uphold the effectiveness of insolvency proceedings, which applies to all the ’s assets worldwide • Law of the place of incorporation will determine the distribution of assets amongst and members • Equitable jurisdiction to restrain acts of persons contrary to the statutory scheme • Not necessary to show that the had acted vexatiously or oppressively by invoking the jurisdiction of the foreign court • Requirement for personal jurisdiction over the defendant – but sufficient that a proof has been submitted in the insolvency

10 HMS COLLINS

HMS MORGAN This House believes that insolvency is special

12 Is insolvency special?

13 Is the common law sufficient to deal with cross border insolvency needs?

14 Should the Model Law/CBIR be amended to allow enforcement of foreign insolvency judgments?

15 Should the Model Law/CBIR be amended to allow the application of foreign insolvency law?

16 Should the section 426 favoured nations be expanded?

Canada Republic of Ireland, , Channel Islands Gibraltar Bermuda

Hong Kong

Brunei

The Bahamas, Cayman Islands, Malaysia Turks and Caicos Islands, Anguilla, Montserrat, Virgin Islands St Helena Botswana Tuval u South Africa

New Zealand Falkland Islands

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