Vol 15 (2018) - Issue 5

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A Tale of Two Islands: Recognising and Assisting Foreign Officeholders in Guernsey and the Cayman Islands

Introduction

In the increasingly internationalised corporate world, complex cross-border structures which include an offshore entity at some level within the structure are an everyday occurrence. However, the territorial limits of a court’s powers can mean that such structures present difficulties for officeholders attempting to conduct an orderly and efficient winding up of a company’s affairs.
In seeking to manage cross-border insolvency, officeholders rely on both statutory and common law powers of assistance, the latter of which have been the subject of much judicial debate since Lord Hoffman’s articulation of the principle of 'modified universalism' in Cambridge Gas Transport Corporation v The Official Committee of Unsecured Creditors (of Navigator Holdings Plc and others).
The principle of modified universalism essentially provides that, within the constraints of public policy, courts should co-operate across jurisdictions. Thus, if a court-appointed officeholder operating in one jurisdiction (the 'home jurisdiction') requires assistance from the court of a different jurisdiction (the 'foreign jurisdiction'), the court in that foreign jurisdiction may, as a matter of common law, provide such assistance as that court properly can. Establishing what is proper in a given instance will depend both on the powers available to the court in the home jurisdiction, and also the powers available to the court in the foreign jurisdiction.
While important, the ‘golden thread’ of modified universalism is not a silver bullet to every jurisdictional difficulty faced by officeholders – each jurisdiction interfaces with the principle of modified universalism in its own way, as demonstrated by a comparison of the different approaches adopted in Guernsey and the Cayman Islands. Neither of these offshore jurisdictions is a party to the UNCITRAL Model Law on Cross-Border Insolvency 1997 (the 'Model Law') and statutory powers of assistance are only available in certain circumstances, with the result that the approach of each jurisdiction to the principle of modified universalism will often be determinative of assistance that can be provided to a foreign officeholder.