Vol 9 (2012) - Issue 3

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UK Cross-Border Assistance in Insolvency: An Update

Introduction
In 1986, the United Kingdom acquired a provision to deal with cross-border assistance in insolvency matters involving both individuals and corporate entities in section 426 of the Insolvency Act 1986 ('section 426'). The text that is section 426 can be traced back to 19th century provisions on enforcement of orders given by courts within the United Kingdom and a requirement of assistance to and by other British courts. Prior to 1986, the last enactment of the co-operation measure of these provisions occurred as part of the Bankruptcy Act 1914, but which applied uniquely to the insolvency of individuals and partnerships. The provisions were designed to co-ordinate proceedings and enabled the courts within the British Empire (later Commonwealth) to request other courts to assist in the management of bankruptcy proceedings within their own jurisdiction, the making of an order being deemed sufficient authority to enable the other court to exercise the jurisdiction it would if the matter were before it for consideration. The general remit and purpose of the section were considered in Re A Debtor, in which it was held that the definition of 'bankruptcy' referred to the judicial process dealing with insolvent persons and was to be construed in a wide sense as the section was designed to produce co-operation between courts acting under different systems of law. Once an English court was satisfied the request for aid fell within the ambit of the provision, there was no general duty to scrutinise anterior proceedings unless it could be shown that they were defective under the proper law of the court or that they offended against public policy.
Since the repeal of section 122 of the Bankruptcy Act 1914 and the introduction of section 426, a number of cases have fleshed out how assistance under section 426 is to be offered. The latest of these decisions, given by the Court of Appeal, occurred on 9 August 2011. The case has reinforced the utility of the co-operation provision by providing that a foreign practitioner seeking the assistance of the English courts may do so under section 426 even though another parallel framework may exist for the recognition and enforcement of judgments. The intention in this article is to outline the case and comment on its impact on the workings of section 426.

How section 426 works
Under section 426, the courts having jurisdiction in relation to insolvency law in any part of the United Kingdom shall assist the courts having the corresponding jurisdiction in any other part of the United Kingdom or any relevant country or territory.