Vol 6 (2009) - Issue 6

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Insolvency Law and Human Rights: An Update

Introduction

Human rights have had, until recently, a minor role to play in the administration of insolvency. Early concerns at the time the Human Rights Act 1998 was enacted of their potential application to and undoubtedly far-reaching impact on insolvency have largely been unrealised, although human rights issues have been raised in many cases. An early instance of the European Convention on Human Rights (‘ECHR’) being engaged was the use of Article 6, often seen in the civil and criminal procedural context, but which in insolvency has had application to the privilege against self-incrimination, as in Saunders, where the use of compulsion in insolvency examinations was seen as potentially breaching the right to a fair trial and the privilege against self-incrimination. Arguments around Article 8 on the right to respect for private and family life as well as the home have been canvassed in relation to personal insolvency and the sale of the secured family home forming part of the bankrupt’s estate to be realised for the benefit of creditors. In Albany, where the proportionality between section 91 of the Law of Property Act 1925, which permitted an order for sale, and the right of an equitable co-owner to remain, that was adjudicated in the creditor’s favour, was held compatible with the human rights position. Cases such as Wood have shown that the European Court of Human Rights (‘ECtHR’) is aware that repossession claims do constitute a potential interference with Article 8 rights, the view of the court has been that such claims are necessary for the protection of others, not least the lender, and are thus proportionate. A recent application of Article 8 also arose in Warner, where disclosure of correspondence in the context of bankruptcy proceedings was objected to by third parties. In this case, the trial judge was of the view that the exception in Article 8(2), underlined by the ECtHR in Niemietz, would afford in many instances a defence to the claim of a breach of the right to privacy, given that the courts would, in all likelihood, acknowledge that the interests of the trustee in bankruptcy outweighed the collective interests of the other parties and that interference was thus justified.

Challenging insolvency systems

In many of the cases that have featured human rights arguments, these have largely been peripheral and directed mostly at the procedural underpinnings and administration of insolvency law, with occasional forays into substantive legal areas.