UK court considers recognition of foreign insolvency proceedings

A recent decision of the British High Court of Justice Court of Appeal considered the recognition of foreign insolvency proceedings under the UNCITRAL Model Law on Cross-Border Insolvency.

In Rubin and Lan (Joint Receivers and Managers of The Consumers Trust) v Eurofinance SA and others [2010] EWCA Civ 895, the court held that a foreign proceeding to recover money from debtors could be recognised and enforced under the UNCITRAL Model Law. This was despite the fact that the foreign proceeding was technically distinct from the primary, collective insolvency proceedings in which the receivers were appointed.

This decision recognises that a separate court proceeding by receivers to recover money from third parties is considered to be an integral part of the collective insolvency proceedings. Such proceedings will be recognised under the UNCITRAL Model Law despite the ordinary international legal rule which precludes the enforcement of a foreign judgment where the defendant was not subject to the foreign court's jurisdiction. Accordingly, a defendant debtor cannot avoid recovery proceedings simply by refusing to submit to the foreign court's jurisdiction.

This decision highlights judicial concerns to apply international law in a manner that affords universal recognition of all insolvency proceedings.