Legal Brief: Unsettling settlements

In examining New Cap Reinsurance Corp & Rubin & Lan v Eurofinance SA & Anor & AE Grant & Ors the Supreme Court will decide whether the liquidator of insolvent Australian reinsurance company New Cap Re can enforce in England an insolvency judgment for the payment of money obtained in an Australian Court.

Should the case be successful it would reinforce London’s objective of becoming the leading international dispute resolution centre and show a judicial willingness for international cooperation. It could, however, also expose UK businesses to the uncertainties of foreign court decisions.

The case revolves around a cost-efficient method of unwinding UK-domiciled trust company Eurofinance through the courts.

The novel method used US Chapter 11 bankruptcy proceedings whereby money from debtors could be recognised and enforced under the UN Commission on International Trade Law (Uncitral) Model Law on Cross-Border Insolvency. This would mean that cases could be brought in the US and enforced in England and Wales without a separate trial having to be heard.

Edwards Wildman Palmer partner David Kendall, instructed for AE Grant & Eurofinance, says the CoA ruling from July 2010 backing the method is simply wrong.

“I don’t think there’s any other case in which a liquidator got a judgment for money and the English courts recognised that, even though there is no jurisdiction over the defendant,” he says. “So the wider impact - if Rubin is held to be right - will be that if you’re an English company and you get involved in a process with overseas liquidators, you’re probably going to have to appear and contest in the jurisdiction of the liquidator.”

Supporters of the CoA ruling say it will be a leap forward for international insolvency cases in a global economy and is about recognising that once a company has gone insolvent it is sensible, fair and efficient to have one lot of proceedings in one jurisdiction, enforceable around the world.

While the long-term impact could be that more insolvency proceedings are launched in London because of its jurisdictional reach, it could have the opposite effect of encouraging non-UK based lawyers not to litigate in London because foreign proceedings would be enforceable here without the case being heard here.

What does this all mean? It means a great chance for an interviewee to show a bit of nouce.

For more on the case read here.