Re Stanford International Bank Limited

This appeal concerned recognition under the UNCITRAL Model Law (as implemented by the Cross-Border Insolvency Regulations 2006) and the validity and consequences of a UK restraint order made under the Proceeds of Crime Act 2002 (External Requests and Orders) Order 2005 (the ERO). The court held that the Antiguan liquidation qualified as a "foreign proceeding" and, on the facts and rebuttable presumption in Article 16.3, its liquidation was the foreign main proceeding because SIB's centre of main interests (COMI) was Antigua. By contrast the US receivership, being an equitable receivership instituted to protect investors under US securities laws and not activated into a collective insolvency scheme, did not fall within Article 2(i) and was not a foreign proceeding or a foreign representative for the purposes of the Model Law.

The court further held that the SFO/DoJ had materially failed to disclose to HH Judge Kramer QC relevant facts when obtaining an ex parte restraint order on 7 April 2009, notably the Antiguan proceedings and related steps; for that reason the original restraint order should be set aside and re-made (if appropriate) from 29 July 2009. The court directed that the Antiguan liquidation and liquidators be recognised as foreign main proceeding and foreign representatives, ordered the original restraint discharge with costs against the SFO, and adjourned further argument as to the precise allocation of powers under Article 20 of UNCITRAL and the treatment of creditors not classed as victims.

Background and parties: Stanford International Bank Ltd (SIB), an Antiguan bank, is alleged to have been used in a large Ponzi-type fraud by Sir Allen Stanford and associates. Multiple competing public and court-appointed officeholders sought control of SIB's assets in the UK: the US Receiver appointed by the US District Court, the Antiguan receiver-managers (later liquidators) appointed in Antigua, and the UK Serious Fraud Office (SFO) acting on a US Letter of Request under the US/UK mutual assistance treaty seeking a restraint order under the ERO.

Procedural posture: The Antiguan liquidators applied to the English High Court under Article 15 UNCITRAL for recognition of the Antiguan liquidation as a foreign main proceeding. The US Receiver sought recognition of the US receivership. Lewison J recognised the Antiguan liquidation as the foreign main proceeding and dismissed recognition of the US receivership; HH Judge Kramer QC had earlier made a restraint order ex parte in April 2009 and refused to discharge or vary it in July 2009 following an inter partes application. The SFO, the US Receiver and the Antiguan liquidators appealed to the Court of Appeal; permission for fresh evidence was granted.

Relief sought: recognition of foreign proceedings (Antiguan liquidation and US receivership) and, separately, discharge or variation of the SFO restraint order on grounds of misrepresentation and non-disclosure; in the alternative, directions as to priority and administration of SIB's UK-situate assets.

Issues framed:

• Whether the Antiguan liquidation and/or the US receivership were "foreign proceedings" under Article 2(i) UNCITRAL and, if so, whether they were "foreign main proceedings" (centre of main interests / COMI).
• The proper test and evidence for rebutting the presumption in Article 16.3 that COMI is the company’s registered office.
• Whether the ex parte restraint order obtained under the ERO should be discharged or varied for material non-disclosure or misrepresentation and how Article 46 (the legislative steer) and related POCA/ERO provisions affect competing claims (liquidators, receivers, prosecutors).

Reasoning (concise): The court applied UNCITRAL and the interpretative materials (including the Uncitral Guide and relevant ECJ authority, notably Re Eurofood) and held that the definition of foreign proceeding requires a collective insolvency process "pursuant to a law relating to insolvency"; the US equitable receivership was a protective investor-focused remedy under securities/enforcement law and had not been activated into a collective statutory insolvency process and so was not a foreign proceeding or foreign representative. By contrast the Antiguan winding-up under the International Business Corporations Act met the definition: it was a collective judicial insolvency process, supervised by the Antiguan court, vesting assets in liquidators. On COMI, the court followed Eurofood: the presumption that COMI is the registered office stands unless rebutted by objective factors ascertainable by third parties; the evidence did not rebut the presumption that SIB's COMI was Antigua. On the restraint order the court found material non-disclosure to the ex parte judge of the Antiguan proceedings, of related UK civil freezing steps and of the factual basis for urgency; accordingly the original restraint order should be set aside (with costs against the SFO) but a new restraint order should be made from 29 July 2009 to preserve assets pending further argument about allocation of powers and the protection of creditors.

The Court of Appeal allowed the Antiguan liquidators’ recognition appeal and refused recognition of the US receivership: the Antiguan liquidation is a foreign proceeding and, on the evidence and the Article 16.3 presumption, is the foreign main proceeding because SIB's COMI was Antigua; the US receivership was not a "foreign proceeding" under Article 2(i) as it was an investor-protection equitable receivership and not a collective insolvency process pursuant to insolvency law. Separately, the court found material non-disclosure to the ex parte judge when the SFO/DoJ obtained a restraint order on 7 April 2009, ordered that original restraint be set aside with costs against the SFO, but re-granted a restraint order effective from 29 July 2009; the court recognised the Antiguan liquidators as foreign representatives and adjourned further argument as to the scope of the Antiguan liquidators' powers and protection of creditors under Article 20 and Article 22 of UNCITRAL.

Appeals to the Court of Appeal from Lewison J's recognition judgment (3 July 2009) and from HHJ Kramer QC's refusal to discharge or vary the restraint order (29 July 2009). Permission to appeal was given (SFO: Lloyd LJ 31 July 2009; Antiguan Liquidators: Court of Appeal 18 August 2009). The appeals were heard together in the Court of Appeal leading to this approved judgment [2010] EWCA Civ 137.