Kemsley v Barclays Bank Plc & Ors

An anti-suit injunction restraining foreign insolvency-related proceedings is an exceptional remedy. The court must consider comity and whether the foreign proceedings are vexatious, oppressive or otherwise improper. Protection of the English bankruptcy estate may justify relief where a creditor seeks a personal advantage or obstructs the office-holders’ statutory functions. It does not justify intervention where the creditor undertakes to transfer recovered estate assets for distribution among creditors, cooperates with the trustees, and leaves the foreign court to determine issues concerning enforcement and the effect of discharge. Where recognition under the Cross-Border Insolvency Regulations 2006 or equivalent foreign legislation may stay the proceedings, an English injunction is unnecessary. If recognition is refused because the debtor’s centre of main interests lies abroad, intervention by the English court is inappropriate.

The applicant was an undischarged bankrupt under the Insolvency Act 1986. Barclays had commenced proceedings in New York on an English-law loan debt and proceedings in Florida concerning alleged fraudulent transfers of property. The applicant sought an injunction under section 37 of the Senior Courts Act 1981, contending that the foreign proceedings would defeat the equal distribution of the bankruptcy estate and undermine his statutory release from bankruptcy debts.

Barclays undertook to transfer to the trustees assets recovered in the United States which formed part of the estate, subject to reasonable costs. The trustees had applied under Chapter 15 of the United States Bankruptcy Code for recognition of the English bankruptcy. The central issue was whether the English court should restrain the foreign proceedings pending determination of the recognition application and the effect of the applicant’s bankruptcy discharge.

1. Application dismissed. The jurisdiction to grant an anti-suit injunction had to be exercised with caution. The principles in Société Nationale Industrielle Aerospatiale v Lee Kui Jak [1987] AC 871 required consideration of comity, the natural forum, injustice to both parties, and whether the foreign proceedings were vexatious or oppressive. Under Turner v Grovit [2001] UKHL 65, [2002] 1 WLR 107, the power depended on wrongful conduct.

2. The equal-distribution rationale did not justify relief. Barclays had undertaken to transfer to the trustees any United States assets recovered which formed part of the bankruptcy estate, after reasonable costs. The undertaking removed the alleged advantage over other creditors. The Florida proceedings concerned property and transactions within the foreign court’s jurisdiction and did not encroach on after-discharge property.

3. The applicant’s principal complaint concerned the possible enforcement in the United States of a New York judgment after his English bankruptcy discharge. If his centre of main interests was in the United States, it was neither oppressive nor improper for the New York court to decide whether the English discharge affected the proceedings or enforcement. The English court should not pre-empt that decision.

4. The cross-border insolvency framework was material. Recognition of the English bankruptcy as foreign main proceedings would trigger a mandatory stay under article 20 of the Model Law; recognition as foreign non-main proceedings could permit the trustees to seek a stay under article 21. If recognition was refused because the applicant had no establishment in England, the trustees would have no equivalent remedy in the United States. In either event, an English injunction was unnecessary or inappropriate.

5. The case was materially different from Bloom v Harms Offshore GmbH & Co [2009] EWCA Civ 632, [2010] Ch 187, where creditors had acted improperly and created a trap obstructing administrators’ statutory functions. Barclays was cooperating with the trustees and its proposed enforcement would, pursuant to the undertaking, benefit the creditors generally.

Not stated in the judgment.