Determination of claim is within ‘insolvency exception’ to UK jurisdictional rules

By Amy Patterson

Proceedings determining a creditor’s entitlement to prove a liquidation did fall within the ‘insolvency exception’ to the Lugano Convention, the primary reason being because such proceedings ‘derived directly’ from the liquidation. Consequently, a stay on English proceedings was neither automatic (under the Lugano Convention) nor appropriate (under the court’s case management powers).

The claimant lodged a proof of debt in the Swiss liquidation of a Lehman entity relating to a termination payment due under an English-law-governed derivative agreement. The liquidators rejected the proof of debt and the claimant appealed to the Swiss courts. Subsequently, the claimant brought proceedings in England to establish liability under the derivative agreement.

The liquidators sought to stay proceedings in England, arguing that there should be an automatic stay under the Lugano Convention that determines jurisdiction between convention states and applies the ‘court first seized’ rule. The question was whether the Swiss proceedings fell within the insolvency exception to the convention…

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