ON APPEAL FROM THE HIGH COURT OF JUSTICE
MR JUSTICE LEWISON
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE LLOYD
LORD JUSTICE MCFARLANE
| IN THE MATTER OF NEW CAP REINSURANCE
CORPORATION LIMITED (IN LIQUIDATION) (1) NEW CAP REINSURANCE CORPORATION LTD (IN LIQUIDATION)
(2) JOHN RAYMOND GIBBONS
|- and -
|(1) A E GRANT AND OTHERS AS MEMBERS OF LLOYD'S SYNDICATE 991 FOR THE 1997 YEAR OF ACCOUNT
(2) A E GRANT AND OTHERS AS MEMBERS OF LLOYD'S SYNDICATE 991 FOR THE 1998 YEAR OF ACCOUNT
(Transcript of the Handed Down Judgment of
WordWave International Limited
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Edwards Angell Palmer & Dodge LLP) for the Appellants
Gabriel Moss Q.C. and Barry Isaacs Q.C. (instructed by
Mayer Brown International LLP) for the Respondents
Hearing date: 18th July 2011
Crown Copyright ©
Lord Justice Lloyd:
The three possible routes to enforcement
The 1933 Act
i) The judgment is not one to which Part I of the Act applies, or it was registered in contravention of the Act.
ii) The courts of the country of the original court had no jurisdiction in the circumstances of the case.
iii) The judgment debtor, being the defendant in the proceedings in the original court, did not receive notice of the proceedings in sufficient time to enable him to defend the proceedings and did not appear, even if process was duly served on him under the law of the country of the original court.
iv) The judgment was obtained by fraud.
v) The enforcement of the judgment would be contrary to public policy of the country of the registering court.
vi) The rights under the judgment are not vested in the person by whom the application for registration was made.
"in the case of a judgment given in an action other than any such action as is mentioned in paragraph (a) or paragraph (b) of this subsection, if the jurisdiction of the original court is recognised by the law of the registering court."
"No proceedings for the recovery of a sum payable under a foreign judgment, being a judgment to which this Part of this Act applies, other than proceedings by way of registration of the judgment, shall be entertained by any court in the United Kingdom."
"So far as the position in England is concerned, the change suggested by the Committee is one of procedure rather than of substance, and involves no radical alterations of the present position."
"It is not necessary for our present purpose to consider the effect in England of foreign judgments in bankruptcy proceedings or in proceedings connected with the administration of the estates of deceased persons or other similar classes of judgments."
"Minor limitations in the scope of the conventions, introduced on account of the requirements of the particular foreign country, need not be regarded as excluding substantial reciprocity, especially if these limitations do not concern judgments in commercial actions but other classes of judgments of such a kind that the need for their recognition or enforcement abroad is unlikely to arise frequently in practice, and if they are unlikely to affect judgments in commercial proceedings."
"Nevertheless the provisions of the present convention do not apply … to judgments in bankruptcy proceedings or proceedings relating to the winding-up of companies or other bodies corporate."
"It is seldom however that any necessity of enforcing such judgments abroad arises except perhaps as regards the costs payable under them, and this limitation does not affect at all the classes of actions which are in the present connexion most important from the practical point of view (i.e. commercial actions)."
The 1994 Order
"any judgment, decree, rule, order or other final decree for the payment of money [except for taxes etc and maintenance] given by a recognised court in respect of a civil or commercial matter".
"This Convention shall apply in civil and commercial matters whatever the nature of the court or tribunal. It shall not extend, in particular, to revenue, customs or administrative matters.
The Convention shall not apply to
1. The status or legal capacity of natural persons, rights in property arising out of a matrimonial relationship, wills and succession.
2. Bankruptcy, proceedings relating to the winding-up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings.
3. Social security.
"Here we find the first mention in an Act of Parliament, at least in this context, of the expression "civil or commercial matter." It is plain that here the word "matter" is used as referring to the relevant proceedings; because in section 1 the "matter" is required (consistently with the long title and section 2 of the Act) to be pending before the foreign court or tribunal. This reinforces the natural inference that, in section 1 of the Act, the expression "civil matter" is being given no restricted meaning, and would be understood in this country as referring to civil, as opposed to criminal, proceedings. It is true that this gives no weight to the words "or commercial" so far as the law of this country is concerned: but it is not surprising to find these words added in relation to a jurisdiction which will be invoked by courts or tribunals in foreign countries, many of which differentiate between civil and commercial matters."
"In these circumstances, it must in any event be very difficult to identify, by reference to civil law systems, any "internationally acceptable definition" of the expression "civil or commercial matters." Even if it were appropriate to define the expression in the Act of 1975 with reference to the text of the 1970 Hague Convention, no internationally acceptable definition could be derived from that source."
"Let me take, as an example, a request by a court in a Commonwealth country. The court of the requesting state would (like any court in this country) never think that it was required to delve into a distinction founded only upon the substance of the relevant proceedings. It would simply say to itself: in our country, unlike some other countries, we do not draw any distinction between civil and commercial matters, and so we can ignore that; these are plainly civil proceedings, because they are not criminal proceedings; therefore we can apply for assistance from the English court under section 1 of the Act of 1975. I have no doubt that the English court would find such an approach entirely acceptable; and if it is acceptable in relation to a court in a Commonwealth country, I cannot see why any different approach should be adopted in relation to a request for assistance from a Norwegian court."
"In the 'grey area' between private and public law, the historical evolution would suggest the possibility of a more liberal interpretation of these words [i.e. civil or commercial matters]. In particular, it was accepted that matters such as bankruptcy, insurance and employment might fall within the scope of this concept."
See F.A. Mann, (1990) 106 LQR 354, and Dicey, Morris & Collins, The Conflict of Laws, 14th ed, at paragraph 8-081.
The insolvency legislation
"(4) 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.
(5) For the purposes of subsection (4) a request made to a court in any part of the United Kingdom by a court in any other part of the United Kingdom or in a relevant country or territory is authority for the court to which the request is made to apply, in relation to any matters specified in the request, the insolvency law which is applicable by either court in relation to comparable matters falling within its jurisdiction."
Enforcement of foreign judgments at common law
Rubin v Eurofinance SA
"61. Having regard to all of the above matters and having given long consideration to everything urged upon us by Mr Staff, I am driven to conclude that:
(1) The ordinary rules for enforcing, or more precisely not enforcing, foreign judgments in personam do not apply to bankruptcy proceedings.
(2) Bankruptcy proceedings include the mechanisms provided by sections 238 and 239 of the Insolvency Act 1986, and the equivalent provisions in the United States which allow for the office holder/legal representative to bring actions against third parties for the collective benefit of all creditors. These mechanisms are integral to and are central to the collective nature of bankruptcy and are not merely incidental procedural matters.
(3) I am reinforced in my view that the orders with which we are concerned are part of the bankruptcy proceedings because in In re HIH Insurance Lord Hoffmann himself said in paragraph :
"Furthermore, the process of collection of assets will include, for example, the use of powers to set aside voidable dispositions, which may differ very considerably from those in the English statutory scheme."
(4) Albeit that they have the indicia of judgments in personam, the judgments of the New York court made in the Adversary Proceedings, are nonetheless judgments in and for the purposes of the collective enforcement regime of the bankruptcy proceedings and as such are governed by the sui generis private international law rules relating to bankruptcy and are not subject to the ordinary private international law rules preventing enforcement of judgments because the defendants were not subject to the jurisdiction of the foreign court. This is a desirable development of the common law founded on the principles of modified universalism. It does not require the court to enforce anything that it could not do, mutatis mutandis, in a domestic context.
(5) Whether viewed from an analysis of the United States Code and/or the Insolvency Act or as part of the matter of common law, the Adversary Proceedings must be recognised as a foreign main proceeding. Having been duly authorised in the foreign proceedings, the appellants must be recognised as foreign representatives. I would dismiss the cross-appeal accordingly.
62. There remains the question of enforcement of the judgments against the respondents. I accept the general principle of private international law that bankruptcy, whether personal or corporate, should be unitary and universal. There should be a unitary bankruptcy proceeding in the court of the bankrupt's domicile which receives world-wide recognition and it should apply universally to all the bankrupt's assets. That is the law stated in Cambridge Gas and HIH Insurance and I would follow it. Add to that the further principle that recognition carries with it the active assistance of the court which should include assistance by doing whatever this Court could have done in the case of domestic insolvency. As Lord Hoffmann said in Cambridge Gas at :
"The purpose of recognition is to enable the foreign office holder or the creditors to avoid having to start parallel insolvency proceedings and to give them the remedies to which they would have been entitled if the equivalent proceedings had taken place in the domestic forum."
In my judgment that assistance extends to enforcing against the respondents the orders made by the New York court. Applying the common law, I would therefore allow the appeal. "
Could a registration under the 1933 Act be set aside?
The exercise of the discretion under section 426
"34. In the present case, the respondents had ample opportunity to participate in the Australian proceedings. They chose not to do so formally but tried to secure the best of both worlds by arguing their case in correspondence which was then placed before the Australian court. The Australian court considered the liquidator's application in painstaking detail. The respondents have also participated out of court in the insolvency by voting on various matters and by submitting proofs of debts.
35. Mr. Knowles says that his clients are willing to be sued in England and have a good defence on the merits; but the seat of the insolvency is Australia and I do not accept that Lloyd's syndicates are hampered in conducting proceedings in Australia. Moreover, even if Mr. Knowles is right about the 1933 Act, his clients are still bound by the declaration with the result that these defences could not be run. Like Ward LJ in Rubin, I have little sympathy for the respondents' position. They took their chance and the law has moved against them."
i) The 1933 Act does apply to judgments under which a sum of money is payable made in insolvency proceedings by a recognised court, subject to the terms of the order by which the court is recognised.
ii) The 1994 Order recognised the relevant Australian courts in terms such that any judgment of such a court which falls within the definition in section 11(1) of the 1933 Act is a judgment to which Part I of the Act applies. The use of the phrase "civil or commercial matter" in the Order does not limit the class so as to exclude money judgments issued in insolvency proceedings.
iii) If the New South Wales order had been registered, or were to be registered, it could not now be set aside under section 4(1)(a)(ii) because of the effect of the Court of Appeal's decision in Rubin.
iv) Section 426 of the Insolvency Act 1986 can also be used to seek assistance with a view to the enforcement of a money judgment issued in foreign insolvency proceedings. That is not excluded by section 6 of the 1933 Act.
v) The judge's exercise of his discretion under section 426 was not at fault, and the position in that respect is not altered by my conclusion as to the application of the 1933 Act.
vi) Because the judgment is registrable under the 1933 Act, section 6 of that Act would prevent the liquidator from enforcing it by bringing an action on it at common law.
vii) It is unnecessary to consider or decide whether the court's common law power to assist a foreign liquidator is exercisable where the statutory power is available.
viii) It is also unnecessary to consider the effect of the declaration in paragraph 1 of the New South Wales order taken together with section 8 of the 1933 Act.
ix) I would uphold the judge's order as made under section 426.
Lord Justice McFarlane
Lord Justice Mummery