Further to our October 2011 update, the UK Supreme Court has released its decision in respect of the New Cap Reinsurance and Rubin appeals.

The issue was whether English courts would recognise and enforce decisions of a foreign court in proceedings to set aside transactions. In particular, the question was whether there should be a more liberal rule for judgments in avoidance proceedings, being central to insolvency proceedings, based on the principle of modified universalism expressed in Cambridge Gas Transport Corporation (i.e. in favour of a single and universal bankruptcy in the country of the principal liquidation).

Disagreeing with the Court of Appeal in Rubin, the majority held that the usual principles apply, not a more liberal rule. This means that a foreign judgment will only be enforced if the person who is the subject of the judgment is present when the proceedings are instituted or has otherwise submitted to the jurisdiction of the English courts (e.g. by claiming/counterclaiming in the proceedings).

The majority also took a narrow view of the powers provided under certain provisions of the UNCITRAL Model Law on Cross-Border Insolvency (as implemented in the UK) and section 426 of the Insolvency Act 1986 (UK), finding that neither could be used to enforce a judgment issued in foreign insolvency proceedings.

This decision makes it much less likely that the English courts will enforce judgments of a foreign court in the absence of a submission to the English courts' jurisdiction.

See Court decision here.