D/S Norden A/S v Samsun Logix Corporation

Relief under the UNCITRAL Model Law may be made subject to appropriate conditions. Where a foreign insolvency court is considering whether a creditor’s security should be avoided, the English court should ordinarily avoid deciding prematurely how a later foreign decision might be enforced in England. The court may instead preserve the stay while protecting the creditor from procedural prejudice arising from participation in the foreign proceedings. The discretion must balance cooperation with the foreign court against the creditor’s need to present its case and avoid an unseemly race between jurisdictions.

D/S Norden A/S sought permission to bring proceedings against Samsun Logix Corporation and enforce a lien against sub-hire freight held by Carbofer Global Transport SA, despite a stay imposed following recognition of Samsun’s Korean rehabilitation proceedings under the Cross-Border Insolvency Regulations 2006.

Samsun and its receiver sought further relief under article 21(1)(g) of the Model Law. A Korean application was pending to set aside Norden’s sub-hire notice. The central issues were whether Norden’s proof of debt and participation in Korea would bind it in England, whether enforcement should be permitted before the Korean court ruled, and whether the stay could be made conditional to protect Norden.

1. The court declined to permit immediate enforcement of Norden’s security. The possible effect in England of a future Korean decision should ordinarily be addressed if and when that decision was made. It would otherwise be premature and potentially academic to determine the extent of relief available under the Model Law or the common law. The approach was consistent with Perpetual Trustee Company Limited v BNY Corporate Trustee Services Limited [2009] EWHC 1912 (Ch).

2. The court had power to impose conditions on relief under article 22(2) of the Model Law and paragraph 17 of Schedule 2 to the Cross-Border Insolvency Regulations 2006. The continued stay on enforcement was therefore to be conditional on Samsun and its receiver being prevented from arguing that Norden had become estopped from denying that the Korean decision should be given effect in England merely because Norden participated in the Korean proceedings.

3. The court considered that this conditional stay struck the appropriate balance. Immediate permission to enforce might not resolve Norden’s concerns before the Korean rehabilitation plan was finalised and could create an unseemly race with the foreign court, a risk identified in Walker v Walker [1987] 1 FLR 31.

4. Carbofer was not ordered to pay the admitted sum into court. Although payment on agreed terms was encouraged, the court was uncertain of its jurisdiction to compel payment and considered it inappropriate to exercise any such jurisdiction at that stage.

The parties were directed to agree the form of the condition, with liberty to apply on or after 14 October 2009 or after the Korean court’s judgment, whichever was sooner.