Rubin & Anor v Eurofinance SA & Ors

The Cross-Border Insolvency Regulations 2006 may apply to a foreign insolvency proceeding concerning an entity which lacks separate legal personality under English law, provided that it falls within the foreign court’s insolvency jurisdiction and satisfies the statutory conditions.

Recognition of the foreign proceeding does not, however, authorise direct enforcement in England of a foreign judgment in personam against third parties where the ordinary English rules of private international law would not recognise or enforce that judgment. Articles 21 and 25 provide practical co-operation within the framework of domestic law; they do not create a jurisdictional shortcut or replace the ordinary rules governing foreign judgments.

The joint receivers and managers of The Consumers Trust applied under the Cross-Border Insolvency Regulations 2006 for recognition of Chapter 11 proceedings in the United States Bankruptcy Court for the Southern District of New York as a foreign main proceeding.

They also sought enforcement in England of a US$160 million default judgment obtained in related adversary proceedings against the respondents. The respondents argued that the Trust was not a debtor for the purposes of the Regulations, that the adversary proceedings were outside the foreign insolvency proceeding, and that the judgment could not be enforced because the respondents had not submitted to the US court’s jurisdiction. The central issues were the scope of recognition and co-operation under the Model Law.

1. Recognition. The Chapter 11 proceedings were recognised as a foreign main proceeding. The word “debtor” in the Model Law had to be construed in the light of its international origin and purpose, rather than by reference to whether the entity had separate legal personality under English law. It was appropriate to treat The Consumers Trust as a debtor because it was recognised as such in the foreign insolvency proceedings and fell within the statutory scheme.
2. The adversary proceedings formed part of the original insolvency proceedings. The claims had been vested in the Trust, were to be pursued by the applicants for the benefit of the insolvent estate, and constituted the collection of assets for distribution to creditors. They were therefore within the concept of a collective proceeding pursuant to a law relating to insolvency. The fact that the adversary proceedings had a separate case number did not alter that conclusion.
3. Enforcement. Recognition did not permit direct enforcement of the US judgment in England. Cambridge Gas Transportation Corporation v Official Committee of Unsecured Creditors of Navigator Holdings plc [2007] 1 A.C. 508 concerned a collective insolvency mechanism for giving effect to a plan, not a judgment in personam establishing rights against third parties. The principle of modified universalism was directed to the fair and orderly distribution of an insolvent estate, not to bypassing the jurisdictional rules applicable to foreign judgments.
4. Article 21(1)(e) could not assist. The judgment was located in New York, and the provision could not be used to make it an English judgment. Article 25 likewise contemplated practical co-operation and communication within the framework of the law of both States. It did not authorise the English court to disregard fundamental rules of English private international law.
5. Even if the court possessed a discretion to grant the requested relief, it would be unfair to exercise it against respondents who had not submitted to the US jurisdiction. Recognition was therefore granted, but the orders seeking direct enforcement of the US judgment were refused. Costs were left subject to written submissions, with a provisional view that the applicants should pay one half of the respondents’ costs.