Posts Tagged Universality
Hooley [Hooley v The Victoria Jute Company Ltd and others  CSOH 14] has been sitting in my in-box for a few months. It concerns the liquidation (particularly: selling of companies’ assets by liquidators under Scots law) of companies incorporated in Scotland but with COMI (centre of main interests) outside the EU. In particular, India.
Given the presence of COMI outside the EU, the Insolvency Regulation does not apply. Indeed the Court of Session (Lord Tyre) does not refer to it at all.Findings would have been very different were the Regulation to apply: place of incorporation has to give way to COMI, where these two do not coincide, in which circumstance the place of incorporation at best may open secondary proceedings.
At issue was among others (and for the first time in a Scots court, I understand) the consideration of ‘modified universalism’: ie what is the practical impact of there being a company incorporated in Scotland, given Scots courts and administrators jurisdiction over the insolvencies, when the companies’ business is mainly carried out abroad and when proceedings are also pending abroad.
Per Rubin v Eurofinance, Universalism” means the “administration of multinational insolvencies by a leading court applying a single bankruptcy law.” The principle of modified universalism was stated by Lord Sumption in Singularis Holdings Ltd v Pricewaterhouse Coopers  AC 1675 (PC) at para 15 as being that “the court has a common law power to assist foreign winding up proceedings so far as it properly can” (see also Lord Collins at paragraph 33 and Lord Clarke of Stone‑cum‑Ebony at paragraph 112).
Essentially Lord Tyre had to decide whether the Scottish administrators’ powers were only exercisable to the extent that their exercise was recognised as legally valid by the law of the relevant non-UK jurisdiction. He held (at 36) that the proceedings taking place in India were ancillary to the administration proceedings in Scotland. The powers of a validly appointed administrator to a Scottish company were therefore not limited by the Indian winding up.
As often of course this judgment is but one side of the coin. Indian courts are at liberty to disregard the Scots findings. Any purchasers of Hooley assets therefore will have a compromised title. One assumes this has an impact on price.
(Handbook of) EU private international law, 2nd ed. 2016, Chapter 5, Heading 5.1, Heading 5.5.
Insolvency, universality and forum non conveniens. Manx Court in Interdevelco seeing ‘”the challenges of our time through the world’s eye”.
I have only just now bumped into it [the judgment, not the Island; bumping into the latter would require one to be sailing, a delightful proposition however not one for which it is the right season]: in Interdevelco Limited v Waste2energy Group Holdings Plc (October 10 2012), the Isle of Man High Court declined to accept jurisdiction in insolvency proceedings against a company incorporated in the Isle of Man. Waste2Energy may be incorporated in the Isle of Man – it has however considerable commercial connections in the US, where other companies within the group are located, and is subject to insolvency proceedings there.
The Manx court had jurisdiction in principle, on the basis of the incorporation there. However Manx rules on civil procedure include a general forum non conveniens rule, and its insolvency laws express clear preference for universality. The combination of both with comity, led the high Court to relinquish jurisdiction in favour of the US.
Importantly, the EU’s Insolvency Regulation does not apply to the Isle of Man. Had it done so, this outcome would have been a lot more difficult, if not impossible to obtain: whence seeing ‘”the challenges of our time through the world’s eye” (the judgment quoting Justice Michael Kirby) would have been a lot more difficult.