There were two proceedings: New Cap Reinsurance Corp (in liq) v
A E Grant and Rubin v Eurofinance SA. In New Cap, the liquidator of
an Australian company obtained a default money judgment from the
New South Wales Supreme Court against the members of a Lloyd's
Syndicate. The liquidator sought to enforce the judgment in
As the requirement of international jurisdiction was reinstated
by the UK Supreme Court, the foreign judgment would only be
enforceable if the defendant had submitted to the foreign court.
Submission occurs where a defendant has taken a step in proceedings
before the foreign court that is inconsistent with objecting to its
jurisdiction. It is inferred from the facts by the court
considering enforcement. It is relevant, but not conclusive, that
the foreign court, under its legal system, would consider
submission to be present or absent. It is likewise relevant, but
not conclusive, that the court considering enforcement would have
found submission under its own rules if it had heard the case for
the first time.
In New Cap, the UK Supreme Court reached the momentous
conclusion that the defendants had submitted to the jurisdiction of
the NSW Supreme Court despite the defendants not having taken any
steps in the litigation brought against them by the liquidator in
the NSW Supreme Court. What proved to be critical was that the
defendants had participated in the liquidation of the Australian
company by lodging a proof of debt and attending and voting at
For the UK Supreme Court, this was enough (and it took only
three paragraphs to reach this conclusion) to amount to submission
to the jurisdiction of the NSW Supreme Court.
What does this mean for a creditor with assets in
The practical result is that a creditor with assets in England
should refrain from involvement in a foreign insolvency proceeding
if it is at risk of being sued in the foreign court. If a creditor
makes a claim in the foreign liquidation, and the liquidator
obtains a (default) judgment from the foreign court against the
creditor, submission may be found and the judgment enforced in
If a creditor must make a claim, the proof of debt should
expressly indicate that there is no submission to the foreign court
for claims against the creditor. Such a disclaimer could, but may
not necessarily, provide protection against submission.
What will Australian courts do?
The obvious question that arises is: will the Australian courts
take the same approach? Should a creditor with assets in Australia
refrain from making an unqualified claim in a foreign liquidation
for fear of submitting to an adverse foreign judgment? Like the
Supreme Court in New Cap, the Australian court is likely to look to
the law of the foreign insolvency and its own law of insolvency to
decide whether there has been submission to the foreign insolvency
As a result, much may depend on the nature, and law, of the
foreign insolvency proceeding. An Australian court may be
influenced by the fact that an Australian company need not be wound
up by a court. It can instead be subject to a voluntary winding up
(where no Australian court is necessarily involved). In such a
case, the lodgement of a proof of debt, including by a foreign
creditor, is several steps removed from court action by the
While the way in which these issues will play out in Australia
is unclear, what can be said with certainty is that there remain
features of international jurisdiction which appear to be unique to
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
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