Vol 11 (2014) - Issue 3

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A Singular Tide in Insolvency Cooperation in Bermuda

Introduction
In Cambridge Gas, the Privy Council heralded a more open and expansive attitude to cooperation based on the principle of 'active assistance', which, in the instant case, would allow for the recognition of a specific category of insolvency judgment (as opposed to the traditional classification of judgments in rem and in personam) and which subsequently would allow for the recognition and enforcement of such judgments subject only to two caveats, the existence of a domestic statutory rule to the contrary and the need to ensure the protection of creditors.
In appealing to the principles of unity and universality in promoting the efficient centralisation of decision-making in one set of proceedings, the court’s views found favour in a number of other jurisdictions, including in Australia, Bermuda, the Cayman Islands, Jersey and New Zealand. In 2012, however, two decisions, that of the Irish Supreme Court in Re Flightlease and that of the United Kingdom Supreme Court in Rubin, the latter also incidentally holding that Cambridge Gas was wrongly decided, marked a restoration in those jurisdictions of the more traditional common law approach to recognition and enforcement dependent on prior compliance with the rules developed for jurisdiction in personam and in rem. This has served to remind proponents of the modified universalism theory that some barriers may still exist to the recognition and enforcement of judgments given by courts that are exercising jurisdiction in insolvency over a debtor.
In the same year as Rubin, but prior to the decision of the Supreme Court, another English case, Re Phoenix, had adopted the Cambridge Gas principle of 'active assistance' in a slightly different context. It was dealing with the issue of whether the common law would allow assistance so as to permit the application of domestic provisions to come to the aid of an officeholder acting on the basis of an appointment made in a foreign proceeding, who wished to bring proceedings within the jurisdiction, but might otherwise lack the powers to do so, absent the opening of a local insolvency proceeding. The court in Re Phoenix held four things: (i) that the common law contains powers to recognise and assist foreign office-holders; (ii) that assistance means doing whatever the court could do in domestic proceedings; (iii) that insolvency proceedings are about collective enforcement for the benefit of all creditors and include, the issue in that case in particular, set aside proceedings directed at third parties; and (iv) that set aside proceedings are in fact central to the purpose of insolvency proceedings. As such, the office-holder would be permitted to bring the set aside action within the jurisdiction by the common law extending the benefit of the domestic statutory provision, which might otherwise be unavailable to the office-holder.