Posts Tagged Colouroz Investment
The Colouroz Investment et all Scheme of arrangement. Change to asymmetric choice of court issue left to sanction hearing.
In Colouroz Investment et al  EWHC 1864 (Ch.), Snowden J at 59 ff considers the classic issues (see ia Lecta Paper) on the jurisdictional consideration: no cover under the Insolvency Regulation; cover under Brussels Ia (future Brexit alert: ditto under Lugano) left hanging and assumed arguendo. At 62 Snowden J summarises the position excellently:
‘(T)he court has usually adopted the practice of assuming that Chapter II of the Recast Judgments Regulation applies to schemes of arrangement on the basis that the scheme proposal is to be regarded as a “dispute” concerning the variation of the existing relationship between the company and its creditors under which the company “sues” the scheme creditors as “defendants” seeking an order binding them to the scheme. If, on the basis of that underlying assumption, the court has jurisdiction over the scheme creditors pursuant to Chapter II of the Recast Judgment Regulation, then there is no need for the Court to determine whether that assumption is correct.
At 64: ‘Credit Agreements and the ICA (Intercreditor Agreement, GAVC) were originally governed by New York law and were subject to the exclusive jurisdiction of the New York Court. However, as a result of the amendments made on 2 June 2020 with the consent of the requisite majority of the lenders under the contractual amendment regime, the governing law and jurisdiction provisions have now been changed to English governing law and English exclusive jurisdiction.’ At 65: expert evidence on NY law suggests amendments made on 2 June 2020 are valid and binding as a matter of New York law.
This to my mind continues to be a fuzzy proposition under the Rome I Regulation: change of lex contractus by majority must beg the question on the relevant provisions under Rome I. As far as I am are, this hitherto has not been driven home by anyone at a sanction hearing however it is bound to turn up at some point.
At 66 Snowden J, who gives consent for the sanction hearing, announces that one issue that will have to be discussed there is that if the Schemes are sanctioned, the intention is to have the jurisdiction clauses then changed to asymmetric jurisdiction clauses, detailed in 21-23: lenders will be entitled to bring proceedings against the obligors in any jurisdiction although any proceedings brought by the obligors must be brought in England. At 66 in fine: ‘that question is not for decision at this convening hearing, but should be considered at the sanction hearing.’
That’s a discussion I shall look forward to with interest.
(Handbook of) EU Private International Law, 2nd edition 2016, Chapter 2, Chapter 5.