NORDIC TRUSTEE A.S.A. v OGX PETRÓLEO E GÁS S.A. (EM RECUPERAÇÃO JUDICIAL)

Recognition of a foreign insolvency proceeding under the Model Law and the Cross-Border Insolvency Regulations 2006 is ordinarily mandatory when the statutory requirements are met. The resulting stay is limited to the scope and effect of an equivalent English insolvency stay. It is intended to protect the collective insolvency process, not to obstruct claims which fall outside that process.

An applicant seeking recognition without notice must make full and frank disclosure of matters relevant to the effect of recognition on third parties, including matters bearing on the court’s power to modify or terminate the automatic stay. Recognition proceedings must not be used to obtain a stay for an illegitimate purpose.

OGX was subject to a Brazilian judicial reorganisation plan. After the plan had been approved, it entered into a new charter agreement with OSX 3 Leasing BV, whose rights were assigned to Nordic Trustee ASA. Claims under the new charter were not subject to the Brazilian plan.

OGX later obtained recognition of the Brazilian plan in England as a foreign main proceeding without notice. The recognition order triggered the automatic stay under article 20 of the Model Law and affected arbitration proceedings commenced by Nordic and Leasing under the new charter.

The parties subsequently agreed that the stay should be lifted and that OGX should pay the applicants’ costs. The court nevertheless considered whether the recognition application had been improperly pursued and whether material information had been withheld from the first judge.

1. Recognition under article 17 of the Model Law ordinarily follows once the requirements of articles 15 and 17 are satisfied. The public policy exception in article 6 is intended to be interpreted restrictively.

2. The automatic stay under article 20 applies only to the extent that an equivalent stay would apply following an English winding-up order. Section 130(2) of the Insolvency Act 1986 exists to preserve the pari passu distribution of assets and prevent individual creditors subject to the collective process from obtaining an illegitimate advantage.

3. Persons whose claims are outside the collective foreign proceeding should not ordinarily be prevented by article 20 from pursuing ordinary remedies. The New Charter claims were post-petition claims and were not subject to the Brazilian plan. Seeking recognition solely to halt arbitration concerning those claims was inconsistent with the structure and purpose of the Model Law and amounted to an abuse of process.

4. A foreign representative seeking recognition without notice must disclose material matters relevant to the court’s discretion under article 20(6). This includes known proceedings, threatened proceedings, enforcement of security, and facts relevant to whether the stay should be modified, limited or terminated. The duty extends to matters that an absent opposing party might reasonably raise, whether or not the applicant considers those arguments well-founded.

5. Had the first judge been informed that the arbitration claims were outside the Brazilian plan, the stay would at least have been modified from the outset to permit the arbitration to continue. The court considered that refusal of recognition might also have been justified, but did not determine that issue finally. The parties’ consent order was approved, the stay was lifted, and OGX was ordered to pay the applicants’ costs.

This was a first-instance application concerning recognition of a foreign insolvency proceeding and modification of the resulting stay. The recognition order had previously been made by Mann J., but the present court dealt with the agreed modification and gave further guidance on disclosure and abuse of process.