Vol 7 (2010) - Issue 1

Article preview

English Courts are not Obliged to Enforce Foreign Judgments under UNCITRAL Model Law on Cross-Border Insolvency: Rubin and Lan v Eurofinance SA and others [2009] EWHC 2129 (Ch)

Introduction

Cross-border matters within restructuring and insolvency situations are becoming increasingly important in determining the appropriate approach to dealing with financially distressed companies. In 1997 the United Nations Commission on International Trade Law (UNCITRAL) adopted the Model Law on Cross- Border Insolvency (the 'Model Law') and it was implemented in Great Britain by the Cross Border Insolvency Regulations 2006 (the '2006 Regulations'). The Model Law is designed to provide a uniform legislative framework to deal with the recognition of foreign insolvency proceedings and the coordination of simultaneous proceedings in different jurisdictions.

In the Eurofinance case, one of the principal issues to be considered concerned the recognition of foreign proceedings by the British courts. Under Article 15 of the 2006 Regulations, a foreign representative administering a foreign insolvency proceeding can apply to the British courts for recognition of such foreign proceeding, such recognition being given where those conditions outlined in Article 17 are met.

The applicants, who were the joint receivers and managers (the 'Applicants') of a trust fund in the US, The Consumer Trust ('TCT'), applied to the Chancery Division of the High Court under the 2006 Regulations for recognition of Chapter 11 insolvency proceedings in the United States as foreign main proceedings and recognition of the Applicants as foreign representatives of TCT. The Applicants further sought an order enforcing a decision of the US bankruptcy court holding the respondents, who were Eurofinance S.A., Adrian Roman and his sons Justin Roman and Nicholas Roman (the 'Respondents'), liable for the debts of TCT.

The High Court recognised the Chapter 11 proceedings as foreign main proceedings under the 2006 Regulations. However, on the application of common law principles, it could not consent to a request by a foreign insolvency court to enforce a US Court judgment in Great Britain where a defendant was not present within the foreign jurisdiction (or had not otherwise submitted itself to the jurisdiction of the foreign court) at the time that the US Court gave the judgment in question.

Background

TCT was a trust fund. The trustees were two solicitors, Mr. Caplan and Mr. Harrison, and two accountants, Mr. Davis and Mr. Bonley, all of whom practiced in Harrow, London (the 'Trustees'). The beneficiaries were predominantly consumers located in the US and Canada. TCT was controlled by Eurofinance S.A. which was owned by Adrian Roman who had assets located in the United Kingdom.

The constitution of TCT meant that it had no separate legal personality under English law, but under US law TCT was classified as a business trust and therefore, as a separate legal entity, it could be placed into Chapter 11 proceedings.

In October 2007, TCT was placed in liquidation in New York and a plan of liquidation was approved by the US Bankruptcy Court. On the same day, the court also appointed the present Applicants to serve as foreign representatives on behalf of TCT and to seek recognition of the US Bankruptcy Proceedings in Great Britain as a foreign main proceeding under Articles 15 and 17 of the 2006 Regulations. In particular, the Applicants were authorised to seek relief regarding service of process, discovery, and the enforcement of judgments of the US Court that may be obtained against persons and entities residing or owning property in Great Britain.