Isis Investments Ltd v Oscatello Investments Ltd & Ors

Article 32 of the Directive 2001/24/EC on the Reorganisation and Winding Up of Credit Institutions refers to the entirety of existing proceedings, not merely individual claims concerning the insolvent institution’s assets. Where proceedings qualify as a pending lawsuit, the law of the forum governs the procedural effects of the winding-up, including whether additional claims may be introduced. Questions of enforcement remain distinct. A foreign insolvency and the possible difficulty of proving or enforcing a judgment abroad are relevant to the court’s procedural discretion, but are not necessarily decisive.

Isis Investments brought Action 599 concerning the distribution of sale proceeds and repayment of a loan. Kaupthing Bank, an Icelandic bank in winding-up proceedings, appealed against Mrs Justice Asplin’s decision permitting Mr Adalsteinsson, representing sub-participants, to bring new Part 20 claims against Kaupthing.

The appeal concerned the meaning of “pending lawsuit” in Article 32 of the Directive, the interaction with Icelandic insolvency provisions, and the exercise of the discretion to allow additional claims in existing English proceedings.

1. Appeal dismissed. Vos LJ delivered the leading judgment, with Jackson LJ and Longmore LJ agreeing.
2. Article 32 had to be given an autonomous and strict meaning. The reference to a “pending lawsuit” was to the existing proceedings as a whole, rather than to particular claims within them. Once Action 599 qualified as a pending lawsuit concerning an asset or right of which Kaupthing had been divested, English law governed the procedural effects of Kaupthing’s winding-up on the proceedings. That included whether additional claims could be brought. The provision concerned procedural matters, not enforcement or individual enforcement actions. The court relied on the analogous reasoning in Syska v Vivendi Universal SA [2009] 2 All ER (Comm) 891 and the distinction drawn in LBI hf v Kepler Capital Markets SA C-85/12.
3. Article 116 of the Icelandic Bankruptcy Act prevented new proceedings being brought against the bankruptcy estate in Iceland, but did not determine whether additional claims could be introduced into English proceedings commenced before the winding-up. Article 99 of the Icelandic Financial Undertakings Act implemented Article 32 and reinforced the conclusion that English law governed that procedural question. Under Part 20, an additional claim, once permitted, became part of the existing proceedings.
4. In exercising the Part 20 discretion, the court could consider the nature and connection of the proposed claims, Kaupthing’s Icelandic insolvency, the possibility of proving or enforcing any judgment there, the parties’ involvement in the existing action, and the practical consequences of parallel proceedings. These matters were relevant but not necessarily decisive. The claims were sufficiently connected, and it was appropriate for parties with the same serious economic interests to address them in one court. No error in the judge’s approach was shown.

1. Court of Appeal (Civil Division). On 27 November 2013, the court dismissed Kaupthing’s appeal and upheld permission for the new Part 20 claims to proceed in Action 599.
2. High Court of Justice, Chancery Division. On 30 January 2013, Mrs Justice Asplin permitted Mr Adalsteinsson to bring the new Part 20 claims against Kaupthing in the existing proceedings.