The UK Supreme Court has handed down an important judgment in the conjoined cases of Rubin and another v Eurofinance SA and others and New Cap Reinsurance Corporation (in Liquidation) and another v AE Grant and others  UKSC 46, which provides vital clarification on the effect of foreign insolvency judgments on the UK courts. The judgment was handed down yesterday.
Background & Court of Appeal
The conjoined cases concerned a US Court judgment granted in favour of receivers (Rubin) and an Australian Court judgment granted in favour of a liquidator (New Cap). Both the receivers and the liquidator sought to enforce those judgments, which arose from antecedent transactions, in the UK.
The Court of Appeal had held in both cases that it had jurisdiction to enforce the judgment of a foreign court made as part of insolvency proceedings even where the judgment debtor did not fall within the common law rules on enforcement of foreign judgments.
In doing so the Court of Appeal in effect created a new category of foreign judgment, "judgments in and for the purposes of the collective enforcement regime of the bankruptcy proceedings" which would not be subject to the ordinary common law rules.
The Supreme Court
The question that came before the Supreme Court was whether, as a matter of policy, the court should, in the interests of universality of insolvency proceedings, devise a rule for the recognition and enforcement of judgments in foreign insolvency proceedings which is more expansive, and more favourable to liquidators, trustees in bankruptcy, receivers and other officeholders, than the traditional common law rule, or whether it should be left to legislation.
The Supreme Court overturned the Court of Appeal judgment by a majority of four to one. It held that judgments given in insolvency proceedings do not form a separate category of judgment outside the common law rules. So to enforce foreign insolvency orders in England, foreign officeholders will still have to comply with the common law rules by showing that the judgment debtor falls within the existing common law rules.
Unlike the preceding Court of Appeal judgment, the Supreme Court’s decision reflects a marked move away from universalism which requires a single set of proceedings rather than different proceedings in multiple jurisdictions. Whilst the decision is a potential road block to universalism and goes against recent trends in Canada, France and Germany, Lord Collins expressly acknowledged that it is for Parliament to legislate for universality as it is a matter of public policy: "a change in the settled law of the recognition and enforcement of judgments…has all the hallmarks of legislation, and is a matter for the legislature and not for judicial innovation".
The wider implications of the decision will divide opinion. Some will regard the move away from universalism as a blow to hopes of establishing a more efficient multi-jurisdictional system to deal with modern insolvencies which will often involve entities and creditors spread over multiple jurisdictions. On the other hand, the decision can be seen as a protection of the fundamental rights of defendants as it will require separate claims to be brought in each jurisdiction involved in the insolvency.
Please click here for the judgment on Rubin and another (Respondents) v Eurofinance SA and others (Appellants).