Automatic stays on proceedings are imposed by Article 20 of the
UNCITRAL Model Law (and mirrored in s.130(2) IA 1986)
The case reinforces the principle that automatic stays are
designed to avoid the unnecessary expenditure of assets otherwise
available for distribution amongst creditors
The liquidation of a Gibraltar company, Lemma, had been
recognised in the UK and consequently, pursuant to Article 20 of
the UNCITRAL Model Law, an automatic stay on English proceedings
had been imposed. At first instance, the Appellant had applied to
lift the automatic stay on proceedings so that he might bring a
claim against Lemma for an indemnity under an insurance policy
which resulted in costs having been incurred during resultant
disciplinary proceedings. The insurance policy had designated
England as the jurisdiction for arbitration.
The judge at first instance dismissed his application, holding
that the claim was not covered by the terms of the insurance policy
and, even if he had been convinced that his claim was seriously
arguable, declined to exercise his discretion to lift the automatic
The appeal was dismissed.
Justice Patten found that there was no 'claim' as
defined by the policy during the relevant period. Further, the
appellant could not demonstrate that the disciplinary proceedings
had arisen out of any such claim. Justice Patten confirmed that the
judge at first instance had been right to refuse to exercise his
discretion in lifting the automatic stay on proceedings.
In the absence of any challenge to the competence of the courts
of that jurisdiction to determine the dispute in the liquidation,
the need to preserve the estate for the benefit of the creditors
outweighs the contractual right of the appellant to have his case
determined in England.
Witnesses can, in various circumstances, be subpoenaed by the Courts of overseas jurisdictions to attend to give evidence by way of depositions within that jurisdiction. So why not take that one step further and ask a foreign court to subpoena the witness to give evidence by live satellite video link to a Court in London? This would be the next best thing to having the witness present in Court. Indeed, the Commercial Court is increasingly amenable to evidence being given in this way (albeit on a
Gratuitous alienation is one of the most familiar parts of our law and yet relatively rarely seems to come to court. That may be because the law is so well understood that there is little left to debate...
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