In New Cap Reinsurance Corporation Ltd & Anr v AE Grant & Ors, the Court of Appeal has upheld a first instance decision that section 426 of the Insolvency Act (IA) can be used to enforce a foreign monetary judgment in insolvency proceedings. However, the Court acknowledged that where there exists a statutory framework for the enforcement of foreign judgments, in this case enforcement pursuant to the Foreign Judgments (Reciprocal Enforcement) Act 1933 (the 1933 Act), then enforcement under s.426 of the IA must follow the requirements of the 1933 Act.
In New Cap Re, the Court of Appeal was asked to consider whether an order of the Australian Court could be enforced in England even though the defendants to the Australian proceedings did not submit to the jurisdiction of the Australian Court.
In considering this dispute, the Court of Appeal recognised that it was bound by the earlier Court of Appeal decision in Rubin & Anr v. Eurofinance SA & Ors (Rubin). In Rubin, the court held that a foreign court's jurisdiction in preference proceedings will be recognised by the English Court notwithstanding the lack of in personam jurisdiction. As a result of Rubin the court held that the Australian judgment is enforceable in England and not liable to be set aside under the 1933 Act.
The Court of Appeal's decision in Rubin is under appeal and will be heard by the Supreme Court in March 2012.
This decision should be considered by the insurance industry when considering commutations with foreign reinsurers. In New Cap Re, both the reinsurance and commutation agreements were expressed to be subject to English law and jurisdiction. However the Australian Court was of the opinion that it had jurisdiction to determine the matter and give a judgment that was ultimately enforceable in England.