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No Universalism, please, We’re British

Rubin v Eurofinance SA and others [2012] UKSC 46

The Supreme Court has put an end to the somewhat adventurous approach of the lower courts in trying to develop a new category of foreign judgments for the purposes of a collective enforcement regime in insolvency proceedings.

Decision

The short, but by no means easy, question their Lordships had to grapple with was whether or not foreign judgments setting aside antecedent transactions in foreign insolvencies could be enforced in the UK even where they did not satisfy the criteria for enforcement under long-established common law rules (referred to by the Court as “The Dicey Rule”).

By a majority the Court decided that the common law rules applied; there was no special “carve out” for insolvency proceedings. Any such radical changes were a matter for Parliament. Further, various provisions of the Insolvency Act 1986 enabling assistance to be given in the case of foreign insolvencies did not give the courts statutory jurisdiction to achieve the same result.

The universalist approach is exemplified by Lord Hoffmann in Re HIH Casualty and General Insurance Ltd  [2008] UKHL 21, [2008]1 WLR 852, [30]:

“The primary rule of private international law which seems to me applicable to this case is the principle of (modified) universalism, which has been the golden thread running through English cross-border insolvency law since the 18th century. That principle requires that English courts should, so far as is consistent with justice and UK public policy, co-operate with the courts in the country of the principal liquidation to ensure that all the company’s assets are distributed to its creditors under a single system of distribution.”

Whilst none of their Lordships doubted the virtue of such an approach, giving the leading judgement Lord Collins said [128]: 

“In my judgment, the dicta in Cambridge Gas and HIH do not justify the result which the Court of Appeal reached. This would not be an incremental development of existing principles, but a radical departure from substantially settled law. There is a reason for the limited scope of the Dicey Rule and that is that there is no expectation of reciprocity on the part of foreign countries.Typically today the introduction of new rules for enforcement of judgments depends on a degree of reciprocity. The EC Insolvency Regulation and the Model Law were the product of lengthy negotiation and consultation.”

Conclusions

Whether this decision is seen as a reactionary one or a liberal one depends on your point of view. For insolvency practitioners it is a set-back, making it more difficult to deal with cross-border insolvencies and rendering more difficult the achievement of fair and cost-effective distribution of assets to creditors because separate proceedings may be required in the UK. For many others it is a welcome relief that the Supreme Court has not indulged in judge-made law, particularly where to do so would have carved out an exception from well-settled principles of law designed to protect defendants against exorbitant, “long-arm” jurisdiction.  Public policy is best left to Parliament.
  
Related link:  Profile of Richard Perkoff
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