Rubin & Anor v Eurofinance SA & Ors [2012] UKSC 46 (24 October 2012)

On 24 October 2012, the Supreme Court considered whether, and if so, in what circumstances, an order or judgment of a foreign court in proceedings to set aside prior transactions, will be recognised and enforced in England and Wales and whether the UNCITRAL Model Law has any bearing in this regard.

The Supreme Court Press Summary is available at http://www.bailii.org/uk/cases/UKSC/2012/46.(image1).pdf and the full judgment is at http://www.bailii.org/uk/cases/UKSC/2012/46.html.  I have yet to read the full judgment (and if I see anything further, I shall add a comment to this blog post), but here are some points from the Press Summary.

On a 4:1 majority, the Supreme Court allowed the Rubin appeal “holding that there should not be special rules for avoidance judgements”.

The background of the appeal is that the US Federal Bankruptcy Court for the Southern District of New York had decided, in default of appearance, in respect of fraudulent conveyances and transfer and the judgment was enforced in England at common law.  As the party against whom the judgment was made was neither present in the foreign country nor had it submitted to the jurisdiction, the question was “whether the Court should adopt separate rules for judgments in personam in avoidance proceedings where the judgments were central to the purposes of the insolvency proceedings or part of the mechanism of collective execution”.

The Court did not agree that there should be a more liberal rule for judgments given in foreign insolvency proceedings for the avoidance of transactions.  “Such a change would not be an incremental development of existing principles, but a radical departure from substantially settled law, and more suitable for legislature than judicial innovation.”  Lord Collins, with the agreement of two others, “held that the earlier Privy Council decision in Cambridge Gas Transportation Corporation v Official Committee of Unsecured Creditors of Navigator Holdings Plc [2007] 1 AC 508 was wrongly decided in that there was no basis for the recognition of the US Bankruptcy order in the Isle of Mann in that case”.

The Court also saw nothing in the Cross Border Insolvency Regulations 2006 or UNCITRAL that applied to the recognition or enforcement of foreign judgments against third parties.

The Press Summary also describes the reasons behind Lord Clarke’s dissent.

In addition, the Press Summary covers the Supreme Court’s consideration of the appeal of New Cap Reinsurance Corporation (In Liquidation) & Anor v A E Grant & Ors as Members of Lloyd’s Syndicate 991 for the 1997 Year of Account and Anor [2012] UKSC 46.  This is another foreign jurisdiction case regarding a voidable transaction (this time based on a judgment in Australia), but the circumstances were quite different.  The Court decided to dismiss the appeal, as the Syndicate had proven in the Australian insolvency of New Cap and thus had submitted to the jurisdiction of Australia.  In the circumstances, the Court decided that the Foreign Judgments (Reciprocal Enforcement) Act 1933 applied.

My thanks go to Maurice Moses, Ernst & Young LLP, for forewarning me of this matter, as newsflashed by Allen & Overy on 23 October.