Rubin & Lan v Eurofinance led us to say in August 2010 that the Court of Appeal had taken a novel approach founded on the principles of modified universalism, developing the common law and allowing enforcement of a foreign insolvency judgement when an ordinary foreign judgement could not have been enforced.

Permission to appeal the decision is currently being sought from the Supreme Court. In anticipation of that appeal a critical commentary on the Court of Appeal decision concludes that:

"The Supreme Court must not allow the basis for enforcing foreign insolvency judgments to be floated on a magic carpet of fiction."

The commentary's author opines that:

"The Court of Appeal's reasoning relies on pure legal fiction that bankruptcy proceedings are neither in rem nor in personam. The decision is in the final analysis a most unhelpful development of the common law."

 For more details, see L C Ho, 'Recognition Born of Fiction – Rubin v Eurofinance' [2010] J.I.B.L.R. 579.

It will be for the Supreme Court to determine whether the common law should have undergone such development.

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Rubin & Lan v Eurofinance involved a "novel, though we believe inevitable and desirable, development of the common law" (according to Lord Justice Ward). Founded on the principles of modified universalism (insolvency proceedings are collective, dealing with all assets for all stakeholders, but jurisdictional differences cannot be ignored), it builds on the relatively recent House of Lords cases of Cambridge Gas and HIH Insurance.

In essence a foreign insolvency representative can have the English courts enforce a foreign insolvency judgement (such as recovery of a transaction at an undervalue or a preference) in circumstances where they would not be able to enforce an ordinary foreign judgement.

What the Court of Appeal has said, in simple terms, is that there are some special features of insolvency law that are universal and should be recognised and assisted by the English courts, wherever the insolvency proceedings originated.

More foreign insolvency representatives can be expected to seek the assistance of English (and other Commonwealth) courts.
 

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