New Cap Reinsurance Corporation Ltd, Re

Orders made in foreign insolvency proceedings fall outside the Foreign Judgments (Reciprocal Enforcement) Act 1933 where the statutory scheme was not intended to replace the separate insolvency-assistance regime. An insolvency order is not a judgment in personam for the purposes of the Act or the common law. Section 426 of the Insolvency Act 1986 gives the English court authority to assist a designated foreign insolvency court and to apply either court’s insolvency law. Although the statutory duty is expressed in mandatory terms, the court retains a limited discretion. Assistance should generally be given, having regard to international comity and the foreign court’s request, unless assistance would be improper. The common-law power to assist foreign insolvency proceedings survives in parallel where section 426 applies.

New Cap Reinsurance Corporation Limited, an Australian reinsurer in liquidation, sought assistance from the English court in enforcing orders made by the Supreme Court of New South Wales against members of Lloyd’s syndicates. The Australian proceedings concerned payments alleged to be unfair preferences under the Corporations Act 2001. The Australian court declared the payments voidable and ordered repayment.

The Australian court’s letter of request invited the English court to act under section 426 of the Insolvency Act 1986, or alternatively to permit fresh English proceedings applying Australian law. The central issues were whether the Australian orders could be enforced under the Foreign Judgments (Reciprocal Enforcement) Act 1933, whether assistance was available under section 426 or at common law, and whether the court should exercise any resulting discretion.

1. The 1933 Act. The Australian orders did not fall within the Foreign Judgments (Reciprocal Enforcement) Act 1933. The history of the legislation showed that it was not intended to include insolvency matters, which remained subject to a separate statutory assistance regime. The expression “civil or commercial matter” in the 1994 Australian Order had its established international-law meaning and excluded insolvency proceedings.
2. An order determining an office-holder’s claim to set aside a pre-insolvency transaction is part of the insolvency proceedings. Such a claim arises only because of insolvency legislation and is not comparable to an ordinary contractual or proprietary claim.
3. Section 11(2) of the 1933 Act excludes winding-up proceedings from the expression “action in personam”. The order was therefore not a judgment in personam under the Act or at common law. Cambridge Gas Transportation Corp v Official Committee of Unsecured Creditors of Navigator Holdings plc [2007] 1 AC 508 and Rubin v Eurofinance SA [2011] 2 WLR 121 established that position.
4. Section 426. The letter of request, together with section 426(5), gave the English court authority to assist and to apply either English or Australian insolvency law. The discretion under section 426(4) was limited. Assistance should be given unless it would be improper. Relevant considerations included the mandatory statutory language, international comity, the weight of a foreign court’s request, the parties’ opportunity to participate, and the fact that differences between insolvency laws would rarely matter.
5. The respondents had been given a sufficient opportunity to participate in Australia, and their proposed English forum, merits defences and delay did not justify refusing assistance. The court therefore exercised its statutory power in favour of the liquidator.
6. It was unnecessary to decide the common-law issue, but the common-law power survived in parallel with section 426. The approach in Rubin v Eurofinance SA was followed. The same discretionary considerations justified assistance at common law.

Relief was granted in favour of the liquidator. The respondents were ordered to pay the applicants’ costs on the standard basis.

First-instance decision. The judgment records prior proceedings in New South Wales, including jurisdictional and substantive decisions by Barrett J and White J, but no appeal from the present decision.