Isle of Man: Where Does Rubin Leave Isle Of Man Insolvency Practitioners?

Last Updated: 16 April 2013
Article by Gillian Duffy

The recent decision of Rubin v Euro Finance SA & Others [2012] UK SC 46 ("Rubin") has been welcomed in England and Wales as clarifying the English common law applying to the recognition and enforcement of foreign judgments made in relation to foreign insolvency proceedings.

In contrast to the case of Cambridge Gas Transportation Corpn v Official Committee of Unsecured Creditors of Navigator Holdings PLC [2006] 2 All ER (Comm) 695, PC ("Cambridge Gas") the Supreme Court determined in Rubin that the recognition and enforcement of foreign insolvency judgments is subject to the same common law restrictions which apply to the enforcement of any other type of foreign judgment in England and Wales. Rubin has rejected Lord Hoffman's finding in Cambridge Gas that a foreign judgment in insolvency proceedings can be automatically enforced under common law without applying the normal common law restrictions, which would apply to the enforcement of a foreign judgment in rem or in personam not made in insolvency proceedings. Lord Hoffman found that insolvency proceedings are merely a mechanism for enforcing creditors' rights rather than establishing them. In rejecting this approach the Supreme Court has restored the restrictions upon the circumstances in which a foreign insolvency judgment can be enforced in England and Wales under the common law. However, this narrowing of the common law may not necessarily be followed by the Court in the Isle of Man.

Plan of Reorganisation

In Cambridge Gas the Privy Council held that a plan of reorganisation under Chapter 11 of the US Bankruptcy Code could be automatically enforced in the Isle of Man without implementation of domestic insolvency proceedings. In its judgment delivered by Lord Hoffman, the Privy Council held that the US Court's Order in respect of the transfer of shares in an Isle of Man Company did not fall to be treated as either an in personam or in rem judgment. Instead, the Privy Council found that the Order could be carried into effect in the Isle of Man on the basis that the Order was made as part of bankruptcy proceedings and the "the purpose of bankruptcy proceedings is not to establish the existence of rights but to provide a mechanism of collective execution against the property of the debtor by creditors whose rights are admitted or established" [Cambridge Gas para 14].

Landmark Decision

Cambridge Gas was hailed as a landmark decision in cross-border insolvency law. The decision was interpreted as effectively creating a new category for foreign judgments which were made in foreign insolvency proceedings. Foreign insolvency judgments could now avoid the common law restrictions which applied to the recognition of in personam or in rem foreign judgments on the basis that they were not establishing rights but merely providing a mechanism of collection for the creditors and so developing the principle of universalism.

However, the Supreme Court in Rubin has poured cold water on this development by finding that the common law does require classification of foreign judgments made in respect of insolvency proceedings and that a bankruptcy order is an in personam judgment because it seeks to establish rights not just enforce them. Lord Clarke stated in Rubin that:

"In my judgment Cambridge Gas... was wrongly decided. The Privy Council accepted (in view of the conclusion that there had been no submission to the jurisdiction of the Court in New York) that Cambridge Gas was not subject to the personal jurisdiction of the US Bankruptcy Court. The property in question, namely the shares in Navigator, were situate in the Isle of Man, and therefore also not subject to the in rem jurisdiction of the US Bankruptcy Court. There was therefore no basis for the recognition of the Order of the US Bankruptcy Court in the Isle of Man" [Rubin para 132].

The Supreme Court found that Cambridge Gas was too far a departure from established common law and that such a departure could only be sanctioned by statute.

The Rubin decision has generally been welcomed by insolvency practitioners in England and Wales as clarification of the law in respect of the enforcement of foreign insolvency judgments. However, in light of the fact that Supreme Court judgments are not binding on the Isle of Man, Manx insolvency practitioners do not have such a luxury. Rubin has left Isle of Man insolvency practitioners asking "where does this leave us?"

Binding Persuasiveness

The Judicial Committee of the Privy Council is the highest Court for the Isle of Man. Decisions of the Privy Council are of binding persuasiveness in the Isle of Man as Deemster Doyle explained in the case of Bitel v Kyrgyz Mobil & Others [Chancery Division] CA 2006/7 (unreported) that "if a point of law is covered by local Isle of Man authority then if that authority is from the Appeal Division or the Privy Council dealing with an appeal from the Isle of Man, then it is to that authority which the Court should turn to in the first instance" [Bitel para 530].

In circumstances where there is no local binding authority, then it is appropriate for the Isle of Man Court to seek assistance from the English Courts, Deemster Doyle stated in Bitel that "in addition to applying our own local precedents, Manx Courts will also continue to benefit from the learning and reasoning of judgments of the English Courts" [Bitel para 541]. The Supreme Court does not have the authority to overturn a Privy Council decision, so whilst the Supreme Court has stated in Rubin that Cambridge Gas is wrong, and has cast aside the Privy Council's attempt to develop the common law in respect of the recognition and enforcement of foreign insolvency judgments, Cambridge Gas has not been overturned and therefore in line with the strict law of precedent it still applies as good law in the Isle of Man.

If Cambridge Gas remains good law in the Isle of Man, then it must be said that the application of universalism to foreign insolvency proceedings in the Isle of Man is now far broader than that applied in England and Wales.

Comity and Modified Universalism

Ideals of comity and modified universalism between jurisdictions have generally been embraced by the Isle of Man's judicial system and Cambridge Gas certainly helped to promote this trend. However, generally speaking, insolvency practitioners in England and Wales have welcomed the Supreme Court's decision in Rubin as it had been felt that Cambridge Gas left English defendants potentially too exposed to the hands of the foreign Court and that in order to defend themselves, English defendants would have to appear in all overseas proceedings, thereby incurring significant costs and exposing themselves to the foreign Court for any claims brought against them in that jurisdiction. If in accordance with the law of precedent, Cambridge Gas is still good law in the Isle of Man, then these risks are still very real for Isle of Man residents (individual or company).

Until a case seeking to enforce a foreign judgment in relation to foreign insolvency proceedings comes before the Isle of Man Court, it is difficult to advise with confidence how the common law in the Isle of Man now stands. One is left asking, despite the law of precedent, can the Isle of Man Court really ignore Rubin when it has so strongly rejected Cambridge Gas?

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.