In the recent case of HSBC Bank plc v Tambrook Jersey
Limited  EWCA Civ 576, the English Court of Appeal
issued guidance in respect of when an English Court will assist a
foreign Court in insolvency matters. The judgment handed down at
the end of May 2013 is of particular interest on the Isle of Man in
light of the developing local jurisprudence in this area of
Tambrook (the "Company") was incorporated in Jersey but conducted the majority of its business in England. The Company ran into financial difficulties and was unable to repay a loan which it had obtained from HSBC (the "Bank"). The Company and the Bank mutually agreed that the Company would enter into a formal insolvency procedure, but there was no appropriate form of insolvency proceedings available in Jersey. As a result the Bank obtained a letter of request from the Royal Court of Jersey to the English High Court (requesting assistance pursuant to section 426 of the Insolvency Act 1986) in which the Royal Court of Jersey sought the appointment of English administrators to deal with the Company's affairs. Pursuant to the letter of request, the Bank applied to the High Court for an administration order.
The first-instance judge (Mann J) refused the Bank's application, holding that the High Court did not have jurisdiction to grant the order sought. Mann J construed section 426 Insolvency Act 1986 as only being applicable in situations where both the requesting Court (i.e. the Royal Court of Jersey) and the receiving Court (i.e. the English High Court) were exercising insolvency jurisdiction. Mann J held that because no insolvency proceedings had been commenced in Jersey, the Insolvency Act 1986 did not apply to the Bank's application.
The Court of Appeal reversed Mann J's decision, holding that the Insolvency Act could be invoked in these circumstances. Davis LJ (with whom McFarlane LJ and Longmore LJ agreed) held that Mann J had misconstrued section 426 Insolvency Act 1986 and that it was not necessary for the foreign Court to be exercising insolvency jurisdiction. It was sufficient for the foreign Court to 'have' jurisdiction rather than to 'exercise' it, and the Courts should not insist upon the existence of formal insolvency proceedings in the requesting state.
This judgment is a clear indication of the English Courts' willingness to assist foreign Courts with insolvency matters and to avoid multiple insolvency proceedings being commenced in separate jurisdictions. This issue has been considered by the Isle of Man Courts on numerous occasions, in particular in the judgments of His Honour Deemster Doyle (the Island's Chief Justice) in the cases of Re Impex Services (2004); Tomlinson v Yerrill (2006); Wine v Wine (2007) and the judgment of the Staff of Government Division (the Isle of Man's Appeal Court) in Hafner (2006).
The key principles emerging from these decisions are that the Isle of Man Courts will assist parties, foreign Courts, foreign regulatory authorities and foreign insolvency officers, where appropriate and subject to any suitable safeguards, in the provision of full information and documentation to enable a proper, just and fair determination of any issue or dispute in the principal jurisdiction of such issue or dispute.
The Isle of Man Courts will take a global and outward-looking approach in relation to cross-border insolvency issues.
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.