Vol 17 (2020) - Issue 6

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Cayman Communication: The Grand Court of the Cayman Islands Approves Direct Court-to-Court Communications Protocol for the First Time In Re LATAM Finance Limited (and others)

Synopsis
As a prominent offshore financial centre, the Cayman Islands continues to embrace its commitment to the cooperation and facilitation of cross-border insolvencies and restructurings. As the Cayman Islands is a traditional common law jurisdiction, with the foundation of its legal system based on a fusion of common law and legislation, it has the inherent flexibility to adapt to circumstances on a case-by-case basis. In the context of cross-border insolvency and restructuring, the rules of private international law and conflict of laws have not been codified and cannot be discerned in a single set of statutory rules.
Recently, as part of the on-going restructuring of the LATAM Airlines group, the Grand Court of the Cayman Islands (the 'Court') approved applications made by the joint provisional liquidators (the 'JPLs') of certain of its Cayman Islands group companies for the entry into a direct cross-border court-to-court communications protocol (the 'Protocol') with the courts of New York, Chile and Colombia.
While the importance of court-to-court communications has been a key feature of international insolvency and restructuring for some time, this is the first occasion where the Court has handed down a judgment approving a protocol to facilitate direct court-to-court communications. With the jurisdictional basis for doing so previously being unclear, the Honourable Justice Kawaley helpfully took the opportunity to clarify the basis upon which the Court's jurisdiction could be unlocked: (a) First, pursuant to the common law duty to assist foreign insolvency courts, as underpinned by the principles of comity and modified universalism (the principal basis); and (b) Second, pursuant to subsidiary sources of jurisdictional rules, in particular: (i) the Court's inherent jurisdiction to manage its own processes; and (ii) Practice Direction No. 1 of 2018 (the 'Practice Direction'), which confirmed the appropriateness of the American Law Institute / International Insolvency Institute Guidelines (the 'ALI / III Guidelines') and the Judicial Insolvency Network Guidelines (the 'JIN Guidelines', together with the ALI / III Guidelines, the 'Guidelines') for use in cross-border insolvency and restructuring matters.
The detailed decision of Kawaley J in this matter re-affirms the Court's willingness and flexibility to facilitate cross-border restructurings, maintaining the Cayman Islands' reputation as a sophisticated insolvency and restructuring jurisdiction. The decision also serves as a useful reminder of the Court's practice regarding its co-operation with foreign courts.