Enforceability of foreign insolvency judgments in Guernsey in light of Rubin v Eurofinance

By Anthony Williams

In its recent judgment in Rubin v Eurofinance SA; New Cap Reinsurance Corp Ltd v Grant [2012] UKSC 46 (Rubin), the UK Supreme Court considered the extent to which the English courts would recognise and enforce a judgment made in non-EU foreign insolvency proceedings. The Supreme Court ruled that there is no separate rule at common law in England for foreign insolvency judgments and that the English courts will not enforce a foreign insolvency judgment where the English creditor was neither present in nor had submitted to the foreign court.

As a result of this decision (which will be persuasive in the Guernsey courts), Guernsey businesses with foreign counterparties may breathe a sigh of relief. Foreign insolvency judgments against Guernsey businesses, including funds and other investment companies that carry on investment activities in foreign jurisdictions, may only be recognised and enforced in Guernsey under the statutory regime relating to the reciprocal enforcement of foreign judgments or traditional common law principles.

The Supreme Court judgment dealt with two conjoined appeals, namely Rubin v Eurofinance SA and New Cap Reinsurance Corp Ltd v Grant [2012] UKSC 46. The main issue for consideration before the Supreme Court was whether, and to what extent, judgments from foreign insolvency courts (the US Bankruptcy Court for the Southern District of New York and the New South Wales Supreme Court) in relation to avoidance claims (claims to claw back unfair preferences or transactions at an undervalue) would be enforced in England where the defendant had not submitted to the jurisdiction of the foreign court. In particular the Supreme Court was asked to consider whether, following the decision of Lord Hoffman in the Privy Council in Cambridge Gas Transportation Corporation v Official Committee of Unsecured Creditors of Navigator Holdings plc [2006] UKPC (Cambridge Gas), such a judgment constituted a special category that fell outside of the scope of traditional English common law rules relating to the enforceability of foreign in personam judgments (i.e. judgments against the person, as opposed to an in rem judgment attaching to property)…

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