Foreign Representative of Samyung Enc Co Ltd v United Kingdom Hydrographic Office

When a foreign main proceeding is recognised and an automatic stay arises, the court has a broad discretion to modify or lift the stay. The central question is whether continuation of the domestic proceedings is right and fair in all the circumstances, having regard to the purpose of the insolvency process and the interests of creditors and other interested persons.

Although lifting a stay to permit an individual creditor to pursue litigation is exceptional, it may be appropriate where the domestic proceedings are advanced, provide the quickest effective resolution, concern complex questions of domestic law, and are unlikely to impede the foreign process. The court should consider the size of the insolvency, available resources, costs, timing, the alternative forum and the effect on the collective insolvency process.

Samyung Enc Co Ltd was subject to Korean rehabilitation proceedings. Its foreign representative sought continuation of a stay affecting damages and intellectual-property proceedings brought in England by the United Kingdom Hydrographic Office.

The English proceedings concerned alleged misuse of hydrographic data. Liability had already been determined, with a damages inquiry and a summary judgment application pending. The Korean rehabilitation process included claim allowance proceedings concerning the same claim, but those proceedings could be appealed through de novo hearings.

The issue was whether the stay should continue, or whether the English proceedings should be permitted to proceed to judgment.

1. Application dismissed. The stay was lifted so that the IP Claim could proceed to judgment.
2. Under Articles 20 and 21 of Schedule 1 to the Cross-Border Insolvency Regulations 2006, read with Article 22, the court has a free hand to do what is right and fair. The exercise is a balancing exercise involving the purpose of the stay machinery, the interests of creditors and other interested persons, and whether lifting the stay is likely to impede the foreign insolvency process.
3. Only exceptional circumstances justify allowing an individual creditor to override the statutory insolvency machinery. Relevant factors include the size of the insolvency, the funds and time available for litigation, the stage reached in the domestic proceedings, the cost and speed of alternative procedures, and the impact on unsecured creditors. The guidance in Cosco Bulk Carrier Co Ltd v Armada Shipping SA, STX Pan Ocean Co Ltd [2011] EWHC 216 (Ch), Re Atlantic Computer Systems Plc [1992] Ch 505 and AES Barry Ltd v TXU Europe Energy Trading [2004] EWHC 1757 was accepted.
4. The English proceedings were substantially more advanced than the Korean claim allowance proceedings. The latter were likely to involve lengthy de novo appeals, whereas the English summary judgment application or the listed damages trial could resolve the dispute sooner. The English proceedings were therefore the quickest means of determining quantum.
5. The dispute involved complicated and specialist questions of English law. It was preferable for those questions to be determined by a specialist English court rather than by a Korean court relying on expert evidence about English law. This was consistent with In Re Pan Ocean Co Ltd [2015] EWHC 1500 (Ch) and Ronelp Marine Ltd v STX Offshore & Shipbuilding Co Ltd [2016] EWHC 2228.
6. Lifting the stay would not materially impede the Korean rehabilitation process. That process and the proposed sale would continue, with separate provision for unconfirmed claims. There were good prospects that the Korean court would recognise an English judgment, including summary judgment, as final or treat it as prevailing evidence under Article 217 of the Korean Civil Procedure Act.
7. The court concluded that lifting the stay was right and fair in all the circumstances. The foreign representative’s application for continuation of the stay was dismissed.