Vol 10 (2013) - Issue 6

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Après Rubin: le Déluge? Thoughts on the Future of Common Law Insolvency Cooperation

Introduction
In the common law world, courts do not simply recognise and enforce the judgments of other courts, out of concern for the sovereignty of states and the independence of their legal and judicial orders. Sometimes, it is also because they misapprehend the legal systems of and court processes in other states and do not wish to recognise or enforce judgments of which they might disapprove or over which there may be doubts. Hence, the process, if it is to occur, is usually hedged about with restrictions. First, there must be jurisdiction, in circumstances where courts will accept that judgments have been given by courts they would regard as competent to adjudicate those matters, because jurisdiction exists and because, if they had the same jurisdiction, they would regard themselves as competent. Thus, there are rules at common law governing the taking of in rem or in personam jurisdiction. Secondly, even if jurisdiction is found, that the way in which the case was heard has complied with accepted standards of procedural propriety and natural justice, including overall fairness, equality of arms and, more the case today than hitherto, canons of human rights. Thirdly, when the judgment is 'sent over' to be recognised and enforced, that there is nothing in the host court’s legal order that would impede the enforcement, here a reference to public policy or ordre public principles, which may also include an assessment of what has occurred at jurisdiction and hearing stages.

Even then, enforcement is not enforcement, unless this takes place in a civil law country, where the foreign judgment is sealed with the exéquatur of the host state’s court and thus becomes as if it were a judgment of that court. In the common law, the usual step taken is to issue an order replicating what the foreign order directs, thus ensuring it is an order of the host court that can be backed up with the mechanisms of the domestic enforcement process. To palliate some of the difficulties of the common law, particularly the wide discretion courts have as to whether or not to enforce, legislatures have intervened in the shape of recognition and enforcement statutes, which create pathway procedures for recognition and enforcement and usually limit the procedural challenges to this process. Membership of the European Union has exposed its members to frameworks, in which, once jurisdiction is found, automatic recognition and enforcement follow, subject to a limited public policy exception. The trend it seems is towards simplifying the conditions under which judgments may be enforced, thus aiding litigation and the recovery of debts or compensation for losses.

Bankruptcy, or insolvency, is different. It is not a discrete judgment, such as might be examined, recognised and enforced, but a whole process, by which a debtor is found (normally) to be insolvent and is taken under the protection of the court, whose property is then ascertained and put under the supervision of a practitioner and/or of the court itself, whose creditors are invited to submit claims against the estate, in return for which they will eventually receive distributions out of that estate. Along the way, property and documentary evidence of property and entitlements might need to be located and preserved, questions might need to be asked of delinquent debtors or third parties and litigation might need to be undertaken to establish rights. In the modern age, even if distribution is the end game for most insolvencies, being of the liquidation-type, the quest for rescue brings into play ever more complexity in this process. The rise of globalisation and the neverending global quest for profit also bring into play the phenomenon of cross-border insolvency.