Posts Tagged Ponzi scheme
In Vizcaya v Picard, the Privy Council considered the issue of consent to a choice of court clause in the event no such choice has been made verbatim. It was alleged that choice of court had been made implicitly but clearly by reference to an applicable law agreement in the underlying contract. RPC have a review of the case on their blog and I am grateful to them for bringing it to my attention.
The case is a fall-out of the Bernard Madoff Ponzi scheme, carried out through Mr Madoff’s company Bernard L Madoff Investment Securities LLC (“BLMIS”), a New York corporation. After Madoff’s fraud came to light in 2008, Irving Picard (“the trustee”) was appointed as trustee in BLMIS’s liquidation in the US Bankruptcy Court for the Southern District of New York (“the New York BankruptcyCourt”). The trustee commenced proceedings under the anti-avoidance provisions of the US Bankruptcy Code against investors who had been repaid before the fraud was discovered, including the appellant, Vizcaya Partners Limited (“Vizcaya”), a BVI (British Virgin Islands) company which carried on business as an investment fund, and which invested about US$328m with BLMIS between January 2002 and December 2008, but was repaid US$180m before the fraud was discovered.
The Appeal before the Privy Council concerns primarily the content and scope of the rule in common law that a foreign default judgment is enforceable against a judgment debtor who has made a prior submission to the jurisdiction of the foreign court (as distinct from a submission by appearance in the proceedings). Brussels I or the Recast was not applicable to the case. In that Regulation (Article 25), the expression of consent with choice of court must take one of thee forms: essentially: written (or oral but confirmed by written agreement); in accordance with lex mercatoria; or in accordance with established business practice simply between the parties.
The question in the case at issue is whether the agreement to submit must be express, or can also be implied or inferred. The Privy Council settled the uncertainty which would seem to have existed for some time in the common law, in favour of an answer in the affirmative. Consent to jurisdiction can be implied. What needs to be shown though is real ‘agreement’, or ‘consent’ (in European private international law with respect to the similar discussion re choice of law (Rome I) I would say the test is one of ‘clearly established’), quod non in casu. Choice of law (here: in favour of New York law) can be a factor but not a solely determinant one. Moreover, choice of court viz one’s business transactions does not imply automatic extension to insolvency proceedings.
Crucial precedent, it would seem. Geert.
European private international law, second ed. 2016, Chapter 2, Heading 2.2.9
Actio Pauliana, applicable law, Article 25, Brussels I recast, Choice of court, Choice of forum, Choice of law, common law, Conflict of laws, Consent, default judgment, Faillissementspauliana, Forum, geert van calster, http://www.bailii.org/uk/cases/UKPC/2016/5.pdf, implied consent, Insolvency, Jurisdiction, Madoff, PIL, Ponzi scheme, Pozi scheme, Private international law, Privy Council, Recognition and enforcement, Regulation 1215/2015, Vizcaya v Picard,  UKPC 5
- Your regular waste law teaser. Upper Tribunal finds in Devon Waste Management that ‘Fluff’ is not being discarded. 25/02/2020
- Declaration as to marital status: The High Court in MM v NA. 24/02/2020
- Spin Master Ltd. CJEU supports speed and efficiency over specialisation in provisional measures re the Community design. 22/02/2020
- Oakfield Foods: Writ of control granted in enforcement of EU order of payment; otherwise enforcement stayed pending challenge to jurisdiction in Poland. 21/02/2020
- Gray v Hurley. Court of Appeal refers to Luxembourg on anti-suit to support EU jurisdiction against ex-EU action. 19/02/2020
Also of noteMy Tweets