- Claims against Kaupthing could not be pursued in the English courts
- No implied restriction on jurisdictional effect under the Winding-up Directive
- Position analogous to Judgments Regulation and Insolvency Regulation
Kaupthing Bank HF (K), an Icelandic bank, was placed into winding up proceedings in Iceland. Mr Tchenguiz and three associated entities (T) commenced proceedings in England for unlawful means conspiracy against, amongst others, K.
Under the Lugano Convention, the English courts had jurisdiction to determine the claims. Under Article 10 of the Winding-up Directive (WUD), however, the insolvency law of the home Member State was applied across the EEA so far as it concerned the effect of winding up on proceedings brought by individual creditors. Under Icelandic bankruptcy law, claims could only be pursued against K by notification to the Winding Up Committee and, in the case of dispute, such matters would be dealt with in the liquidation by the Icelandic courts.
At first instance the court held that, given the provisions of Icelandic bankruptcy law, claims against K could not be pursued in the English courts. T argued that the provisions in the WUD as to applicable law should be subject to the implied limitation that insolvency law should have no jurisdictional effect upon civil and commercial proceedings within the scope of the Lugano Convention.
The Court of Appeal dismissed the appeal holding that reading any such implied restriction would have potentially disastrous consequences for the unity and universalism characteristics of the WUD (and the Insolvency Regulation) and would cut across the very clear and narrowly drawn exceptions to the application of the insolvency law of the home Member State set out within the WUD.
While this judgment dealt with the interaction between the Lugano Convention and the Winding-up Directive, the court noted that the position was analogous to the more commonly encountered Judgments Regulation and Insolvency Regulation and so the analysis will be of wider application.