Summary

The "Dicey rule", arising from the operation of common law and the Foreign Judgments (Reciprocal Enforcement) Act 1933, applied to foreign judgments in avoidance proceedings in insolvency.

Facts

In conjoined appeals brought by the appellants (E and G) against decisions of the Court of Appeal (Rubin v Eurofinance SA [2010] EWCA Civ 895, [2011] Ch. 133 and New Cap Reinsurance Corp Ltd (In Liquidation) v Grant [2011] EWCA Civ 971, [2012] 2 W.L.R. 1095) the court was required to determine whether and in what circumstances an order of a foreign court in avoidance proceedings in insolvency would be recognised and enforced in England.

In Rubin, a judgment of a United States court in respect of fraudulent conveyances and transfers had been enforced against E in England at common law. In New Cap, an Australian judgment in respect of unfair preferences had been enforced against G under the Foreign Judgments (Reciprocal Enforcement) Act 1933, and the Insolvency Act 1986 s.426. At common law and under the 1933 Act a foreign court had jurisdiction to give a judgment in personam capable of enforcement if the person against whom it was given was present in that country when the proceedings were instituted; claimed or counterclaimed in the proceedings; submitted to the jurisdiction of the court by voluntarily appearing in the proceedings; or had agreed to submit to the jurisdiction of the court. Those principles were known as the "Dicey rule". Neither E nor G had been present or resident in the US or Australia, though there was an issue as to whether G had submitted to the jurisdiction of the US court. Relying on Cambridge Gas Transport Corp v Official Committee of Unsecured Creditors of Navigator Holdings Plc [2006] UKPC 26, [2007] 1 A.C. 508 and HIH Casualty & General Insurance Ltd, Re [2008] UKHL 21, [2008] 1 W.L.R. 852, the Court of Appeal decided in Rubin that the Dicey rule did not apply to foreign judgments in avoidance proceedings, and that the US judgment was enforceable at common law. That decision was followed in New Cap, where it was decided that the judgment was enforceable under the 1986 Act and at common law. The issues were whether (i) the Dicey rule applied to foreign judgments in avoidance proceedings; (ii) in Rubin, enforcement could be effected through the assistance provisions in the Cross-Border Insolvency Regulations 2006, which implemented UNCITRAL's Model Law on cross-border insolvency; (iii) the judgments were enforceable by reason of E or G's submission to the jurisdiction of the foreign courts (iv) in New Cap, enforcement could be effected through s.426 of the 1986 Act, the common law or under the 1933 Act.

Held

(Lord Clarke dissenting on E's appeal in Rubin) (1) The judgments were in personam and the Dicey rule applied. There was no reason why, as a matter of policy, there should be a more liberal rule for avoidance judgments in insolvency proceedings. Such a rule would represent a radical departure from substantially settled law, and a change of that nature was a matter for the legislature. The limited scope of the Dicey Rule was because there was no expectation of reciprocity on the part of foreign countries. The dicta in Cambridge Gas and HIH did not justify the result reached by the Court of Appeal in Rubin. Moreover, Cambridge Gas was wrongly decided, Cambridge Gas and HIH considered (paras 106, 115-117, 128-132). (2) The Model Law was not designed to provide for the reciprocal enforcement of judgments. Neither it nor the Regulations said anything about the enforcement of foreign judgments against third parties, and it would be surprising if it was intended to deal with insolvency judgments by implication. There was nothing to suggest that it applied to the recognition and enforcement of foreign judgments against third parties (paras 142-144). (3) G had submitted to New Cap's Australian insolvency proceedings and was thus to be regarded as having submitted to the jurisdiction of the Australian court responsible for supervising those proceedings. It could not to be allowed to benefit from the proceedings without taking the burden of complying with orders made therein. The position was different in Rubin. While it would have been arguable that E had submitted to the jurisdiction of the US court, they had not appeared in the adversary proceedings. Since it had not been argued that they had submitted to the jurisdiction of the US court in any other way, it was not necessary to explore the matter further (paras 166-169). (4) In view of the conclusion that G had submitted to the Australian court's jurisdiction, the issues on s.426 of the 1986 Act did not arise. However, since the matter had been fully argued a view would be expressed: s.426(4) and s.426(5) were not concerned with the enforcement of judgments. Section 426(1)dealt with the intra-UK enforcement of orders, and s.426(4) dealt with intra-UK assistance, and assistance for foreign designated countries. Ifs.426(4) applied to intra-UK enforcement, then s.426(1) would be largely redundant. The history of the 1933 Act showed that insolvency proceedings were included in the definition of "civil and commercial matters". The Act therefore applied to the New Cap judgment and enforcement should be by way of registration under it (paras 145, 152, 170-176). (5) E's appeal in Rubin would be allowed, but G's appeal in New Cap would be dismissed on the ground that G had submitted to the jurisdiction of the Australian court (para.177). (6) (Per Lord Mance) While Cambridge Gas was distinguishable, it had not necessarily been wrongly decided (para.178).

Appeals allowed in part