CBInsolvency LLC

Thought Leadership

Part 2: UNCITRAL, not BREXIT, may entice The UK to be more ACCOMMODATING

Brexit Essays United States of America
Views from Other Jurisdictions

United States of America*

Hon. Leif Clark (Ret.)**

Daniel M. Glosband***



Brexit is also unlikely to have much of an impact, from the US perspective, on how foreign judgments are recognized on either side of the pond.  The recast Jurisdiction and Judgments Regulation (Brussels 1) of course has no impact on the recognition of judgments as between Britain and the US (or between the EU and the US for that matter).

The history of recognition of foreign judgments on the part of the UK relative to the US has been less than felicitous, after the Supreme Court’s ruling in Rubin v Eurofinance SA.[1] There, a lower court decision that had followed Lord Hoffman’s decision in Cambridge Gas was reversed, the court holding that a judgment is a judgment from an English perspective, regardless whether it issued from a foreign bankruptcy proceeding.  For such a judgment to be enforced in the UK, it must be established that the judgment debtor was present in the foreign jurisdiction at the time the action was initiated, was either a claimant or counterclaimant in that proceeding and voluntarily submitted to the foreign court’s jurisdiction by appearing voluntarily or by agreement.

The fact that the UK also subscribes to the principle of cooperation with foreign insolvency proceedings – both by virtue of its enactment of the Model Law in its Cross-Border Insolvency Regulations and by its continued use of Section 426 of the Insolvency Act of 1986 – did not seem to matter much in the court’s analysis, perhaps because the court viewed the insolvency process itself as distinct from the discrete nature of an adversary proceeding resulting in a discrete judgment against a third party.  Nonetheless, the decision in Rubin leaves open a number of unanswered questions, including whether the discharge or injunctive features of a confirmation order issued by a US court would also run afoul of its rule.

In point of fact, we already have some indication that the UK courts might be less than receptive toward a discharge or release injunction.  In Singularis Holdings Ltd. v. Pricewaterhouse-Coopers,[2] the Privy Council found that a court could not via ancillary relief afford a remedy not available under its own law – at least not under the common law.  While assistance at common law is generally recognized, such as in granting stays or the enforcement of judgments (when otherwise permissible under the common law), and statutory assistance for foreign insolvency proceedings is also appropriate, an English court can only apply its own law, and not the law of another jurisdiction, when it is functioning in an ancillary capacity.  The court is particularly critical of the reasoning in Cambridge Gas that the US bankruptcy court’s order be given effect in the Isle of Man, even though no proceeding for winding up, nor any Scheme under Manx law had been initiated and the US court had neither personal jurisdiction over the shareholders nor in rem jurisdiction over the shares.  While the facts in Singularis render its holding reasonable, the sharp criticism of Cambridge Gas and its purported attempt at judicial legislation suggests an unwillingness on the part of the UK courts currently to stray far outside the lines already drawn by the common law over the last century or so.


Of course, the UK adopted the Model Law on Cross-Border Insolvency, promulgated by UNCITRAL in 1997; so has the US.[49] However, the UK courts are not as expansive as the US courts in applying its provisions.  Article 21 of the Model Law, for example, affords a court broad authority to enter such relief as may be appropriate to assist the foreign representative.  In the US, the courts have been expansive in granting such relief (though not without limitation).[50] In the UK, however, the courts have taken a somewhat more restrained approach to the relief that ought to be accorded under Article 21.  In re Pan Ocean Co Ltd,[51] the court ruled that relief could not exceed what would otherwise be available under  domestic law, a decidedly more restricted approach than US courts would take.  The court held that the contract in question was governed by English law, so English law, rather than the insolvency law of Korea, had to control the question whether the contract could be terminated.  Not only does this ruling contrast with the US approach to the Model Law, it contrasts even with the approach counseled under UNCITRAL’s Guide to Enactment.[52]

What is more, the ruling does not augur well for the unanswered question posed earlier, regarding how an English court might respond to a request under the CBIR to enforce terms of a US court order authorizing the assumption and assignment of an executory contract governed by English law (assuming, for the sake of discussion, that in personam jurisdiction were otherwise not an issue).  Gibbs may thus control, even in the face of statutory authority to the contrary, undermining the nod to the legislature stated in Singularis.

The English Parliament may yet have more to say on the subject of recognition of foreign judgments originating in an insolvency proceeding if UNCITRAL’s latest project ultimately reaches fruition and the UK opts to adopt it.  UNCITRAL Working Group V is nearing completion of its work on a model law for the cross-border recognition and enforcement of insolvency-related judgments.[53] A draft of the Model Law was prepared at its 51st session and was attached as an annex to the Report.  It will be taken up at its 52nd session in December.  The draft is designed to be compatible with existing regimes for the recognition of foreign judgments (such as those adopted by The Hague Convention) and with general principles of private international law relating to conflicts of law and the enforcement of judgments.  However, it seeks as well to complement the Model Law, encouraging broad enforcement along lines consistent with the Model Law if the judgment in question is “insolvency-related.” Currently, that definition provides as follows:

“(d)       ‘Insolvency-related foreign judgment’ means a judgment that:

(i)            [Is related to] [Derives directly from or is closely connected to] [Stems intrinsically from or is materially associated with] an insolvency proceeding;

(ii)           Was issued on or after the commencement of the insolvency proceeding to which it is related; and

(iii)          Affects the insolvency estate;

and subparagraphs (i), (ii) and (iii) shall apply irrespective of whether or not the proceeding to which the judgment is related has been concluded.

For the purposes of this definition:

  1. An ‘insolvency-related foreign judgment’ includes a judgment issued in a proceeding in which the cause of action was pursued by:

(a)           A creditor with approval of the court, based upon the insolvency representative’s decision not to pursue that cause of action; or

(b)           The party to whom it has been assigned by the insolvency representative in accordance with the applicable law;

and the judgment on that cause of action would otherwise be enforceable under this Law;


  1. An ‘insolvency-related foreign judgment’ does not include a judgment commencing an insolvency proceeding.”[54]

The definition is sufficiently expansive to include not only an order authorizing the assumption and assignment of an executory contract of the type posited in the earlier question, but also the judgment rendered by the bankruptcy court that became the subject of Rubin.

The draft model law is intended to be broadly applied to the limits of an enacting state’s treaty obligations and contains the same “manifestly contrary” public policy limitation as is found in the Model Law.  Not surprisingly, the lengthiest article sets out the circumstances under which the enacting state may decline to grant recognition and enforcement of an insolvency-related judgment.[55] Of particular interest in the context of this paper is subparagraph (g):

“(g)       The originating court did not satisfy one of the following conditions:

(i)         The court exercised jurisdiction on the basis of the explicit consent of the party against whom the judgment was issued;

(ii)         The court exercised jurisdiction on the basis of the submission of the party against whom the judgment was issued, namely that the defendant argued on the merits before the court without contesting jurisdiction within the time frame provided in the law of the originating State unless it was evident that an objection to jurisdiction or to the exercise of jurisdiction would not have succeeded under that law;

(iii)        The court exercised jurisdiction on a basis on which a court in this State could have exercised jurisdiction; or

(iv)        The court exercised jurisdiction on a basis that was not inconsistent with the law of this State.”[56]

This last proviso thus would still leave the door open for UK courts to conclude that the originating court exercised jurisdiction on a basis that the common law as espoused by the UK courts would not recognize.  However, it is helpful to note that the entirety of sub – paragraph (g) relates to an improper exercise of jurisdiction (from the point of view of the enacting state, i.e., the receiving court), not to the nature of the remedy afforded by the judgment.  Thus, the model law, if enacted, might be viewed to overrule both Singularis and Gibbs.  Of course, these are ruminations upon ruminations regarding events that may never take place and so are at this point only an academic exercise.


While it is morbidly fascinating to watch the UK struggle with the consequences of its Brexit vote, it does not appear to make any difference from the perspective of US cross-border insolvency.  The US is also coping with the aftereffects of surprising election results – empathy all around.


[49] See 11 U.S.C. s.1501 et seq.

[50] See In re Metcalfe & Mansfield Alternative Investments, 421 B.R. 685, 697 (Bankr.S.D.N.Y. 2010) (“The relief granted in the foreign proceeding and the relief available in a US proceeding need not be identical.”); but see In re Vitro SAB de CV, 701 F3d 1031 (5th Cir. 2012) (declining to extend third party release granted in Mexican concurso proceedings because the relief exceeds relief otherwise appropriate under s. 1521, due to the restrictions of s. 1522, and relief under s. 1507 ought to be tested under a more rigorous standard).

[51] [2014] EWHC 2124 (Ch).

[52] 1997 Model Law on Cross-Border Insolvency Law and Guide to Enactment and Interpretation (United Nations 2013). “The types of relief listed in art. 21, para. 1, are typical of the relief most frequently granted in insolvency proceedings; however, the list is not exhaustive and the court is not restricted unnecessarily in its ability to grant any type of relief that is available under the law of the enacting State and needed in the circumstances of the case. Idem., at 87-88, para. 189.

[53] See Report of Working Group V (Insolvency Law) on the work of its fifty-first session (New York, 10-19 May 2017), Doc. A/CN.9/903 (United Nations May 26, 2017) (hereinafter “Report”). “The Working Group completed its work by considering a revised text of the draft model law on the cross-border recognition and enforcement of insolvency-related judgments ….” Idem. at 3 (bracketed language indicates phraseology with regard to which either the Working Group has not reached consensus or which the Working Group intends to be left available as options for the enacting state).

[54] See Report, at Annex, Draft model law on cross-border recognition of insolvency-related judgments:  revised text, at Art. 2.

[55] See Report, at Annex, at Art. 13.

[56] See Report, at Annex, at Art. 13(g) (emphasis added for clarity).


By Dan Glosband