“[20] As a matter of Azeri law, all of the Designated Financial Indebtedness was cancelled on1 September 2017 (being the Restructuring Date), in return for which creditors affected by the Restructuring Plan became entitled to receive the Entitlements set out therein. [21] As a matter of Azeri law, the Restructuring Plan is binding on all Designated Financial Indebtedness and the creditors in respect thereof, whether or not any such creditors participated in the Creditors’ Meeting and whether or not they voted for or against the Plan.”
“According to English law a foreign liquidation—or other species of insolvency procedure whose purpose is to bring about the extinction or cancellation of a debtor’s obligations—is considered to effect the discharge only of such of a company’s liabilities as are properly governed by the law of the country in which the liquidation takes place or, alternatively, of such as are governed by some other foreign law under which the liquidation is accorded the same effect. Consequently, whatever may be the purported effect of the liquidation according to the law of the country in which it has been conducted, the position at English law is that a debt owed to or by a dissolved company is not considered to be extinguished unless that is the effect according to the law which, in the eyes of English private international law, constitutes the proper law of the debt in question.”
“In the case of a contractual obligation which happens to be governed by English law, a further rule should be developed whereby, if one of the parties to the contract is the subject of insolvency proceedings in a jurisdiction with which he has an established connection based on residence or ties of business, it should be recognised that the possibility of such proceedings must enter into the parties’ reasonable expectations in entering their relationship, and as such may furnish a ground for the discharge to take effect under the applicable law.”
“So far as this court is concerned, there can be no doubt that the Indonesian Judgment would not be regarded as discharging the Notes or the security in respect of the Notes, which are governed by New York law”; (7) obiter dicta by the High Court in Re Agrokor DD[2017] EWHC 2791 (Ch) at [113] per HHJ Paul Matthews, sitting as a Judge of the High Court, who observed (at [115]) that: “… it is necessary to find something in English law to take away creditors' rights. In modern times, provisions in the Companies Act and in the Insolvency Act may have this effect, but it is always a matter of construction whether in fact they do so.”
“There is no basis for this line of reasoning. There is no necessary connection between the exercise of jurisdiction by the English court and its recognition of the jurisdiction of foreign courts, or its expectation of the recognition of its judgments abroad.”
“In situations where a restructuring is on foot in the foreign jurisdiction, the foreign representative can seek recognition in England pursuant to Article 15 of the [Model Law]. (One is obviously dealing with a situation where the foreign representative does not wish to proceed with a parallel scheme of arrangement in England and creditors have not sought to invoke the English court’s insolvency jurisdiction.) Provided the foreign representative was appointed in foreign main proceedings, i.e. where the debtor has the centre of its main interests, the mandatory consequences of recognition include, under Article 20(1), the staying of both creditor actions and executions against the debtor’s assets … Hence the foreign representative can stymie a hold-out creditor who might be minded to ignore the foreign restructuring and proceed instead to bring an action or to seek to execute in England, relying upon a debt that arose under an English contract. By applying for a stay the foreign representative may not have to deal, at least not immediately, with the substantive question of whether the English debt will ultimately be discharged by the foreign proceedings. However, the application of Article 20 in respect of a foreign restructuring is not wholly free from complexity. The reference in Article 20(2)(a) to ‘as if’ a winding-up order had been made raises some uncertainty. For there is, of course, no discharge in a winding up. Thus one may ask: what will happen in England in respect of the stay once the foreign restructuring plan has been approved, the corporation resumes trading outside bankruptcy protection and the foreign proceedings are formally closed by the foreign court?”
“Chapter 15 of the Bankruptcy Code, which adopted the substance and most of the text of the United Nations Commission on International Trade Law's (‘UNCITRAL’) Model Law on Cross-Border Insolvency, provides a framework for recognizing and giving effect to foreign insolvency proceedings ... A central tenet of chapter 15 is the importance of comity in cross-border insolvency proceedings.”
“[2.1] ... In 1995 a working group was established and in 1997, as a result of their work, UNCITRAL adopted the text of a model law designed to assist States to equip their insolvency laws with a modern, harmonised and fair framework to address more effectively instances of cross-border insolvency. The model law is intended to cover cases, for example, where the debtor has assets in more than one State or where some of the creditors of the debtor are not from the State where the insolvency proceeding is taking place ... [7.1] National insolvency laws are often not designed to cope with cross-border insolvencies and any problems that arise whether jurisdictional or practical. This makes it difficult to administer such insolvencies both quickly and effectively and any conflict in respective national laws can result in the dissipation of assets and the loss of a potential opportunity to rescue a viable business. Such uncertainties can be a barrier to trade and can have a negative impact on the flow of investment between countries. The UNCITRAL Model Law on cross-border insolvency is that body’s attempt to promote modern and fair legislation for cases where the insolvent debtor has assets in more than one State. The Model Law is, however, designed to respect the differences amongst national procedural laws and does not attempt a substantive unification of insolvency laws. [7.2] The British Government has a commitment to the promotion of a rescue culture and supports the Model Law as an appropriate legislative tool to support this objective and the wider international stage. In addition, implementation of the Model Law will be beneficial in serving the cause of fairness towards creditors who may be located anywhere in the world. We hope that it may also provide an example to other countries of our readiness to engage in a genuine process of cooperation in international insolvency matters and that our actions will encourage other countries to implement the Model Law. In this way, insolvency officeholders in Great Britain should be able to enjoy, progressively, the same benefits abroad as their international counterparts, and be able to reduce administrative costs incurred in recovering assets from overseas. As a result funds available for distribution to creditors, wherever they are located, should increase. [7.3] Limitations on cooperation and coordination between different national jurisdictions can be the result of lack of a legislative framework or from uncertainty regarding the scope of the existing legislative authority, for pursuing cooperation with foreign courts. The passage of a specific legislative framework is useful for promoting international cooperation in cross border cases. The Model Law fills the gap found in many national laws by expressly empowering courts to extend cooperation in the areas covered by the Model Law. [7.4] In May 2002, the European Union adopted its own Regulation on insolvency proceedings. There is a significant element of overlap between the UNCITRAL Model Law and the EC Insolvency Regulation and although the latter governs only the coordination of insolvency proceedings within the European Union, its underlying principles and approaches have been extremely influential in the international community. However, the Regulation does not deal with cross-border insolvency matters extending beyond Member States of the European Union. Thus, the Model Law will provide a complementary regime of considerable practical value that will be capable of addressing instances of cross-border insolvency and cooperation outside the European Union. This will place Great Britain, by virtue of the operation ofs426 of the Insolvency Act 1986 , in the unique position of having a suite of statutory procedures available in cross-border insolvency cases, as well as the flexibility of common law. [7.18] The Model Law is a legislative text that is recommended to countries for incorporation into their national law. In Great Britain, we have tried [to] follow UNCITRAL’s exhortation to stay as close as possible to the original drafting in order to ensure consistency, certainty and harmonisation with other countries enacting the Model Law. [7.19] The language of the Model Law is similar to that used in international treaties and conventions and will almost certainly be approached by the courts in that way, i.e. it will be interpreted purposively. Accordingly, the UNCITRAL Guide to Enactment will be a useful tool in interpreting the text.”
“In the Board’s opinion, the principle of modified universalism is part of the common law, but it is necessary to bear in mind, first, that it is subject to local law and local public policy and, secondly, that the court can only ever act within the limit of its own statutory and common law powers.”
“The Model Law is, however, designed to respect the differences amongst national procedural laws and does not attempt a substantive unification of insolvency laws.”
“3. The Model Law respects the differences among national procedural laws and does not attempt a substantive unification of insolvency law. Rather, it provides a framework for cooperation between jurisdictions, offering solutions that help in several modest but significant ways and facilitate and promote a uniform approach to cross-border insolvency. Those solutions include the following: (a) Providing the person administering a foreign insolvency proceeding … with access to the courts of the enacting State, thereby permitting the foreign representative to seek a temporary ‘breathing space’, and allowing the courts of the enacting State to determine what coordination among the jurisdictions or other relief is warranted for optimal disposition of the insolvency …. ” 21. With its scope limited to some procedural aspects of cross-border insolvency cases, the Model Law is intended to operate as an integral part of the existing insolvency law in the enacting State. This is manifested in several ways: … (a)The Model Law presents to enacting States the possibility of aligning the relief resulting from recognition of a foreign proceeding with the relief available in a comparable proceeding under the national law (Article 20). …”
“... a collective judicial or administrative proceeding in a foreign State, including an interim proceeding, pursuant to a law relating to insolvency in which proceeding the assets and affairs of the debtor are subject to control or supervision by a foreign court, for the purpose of reorganisation or liquidation.”
“… a person or body, including one appointed on an interim basis, authorised in a foreign proceeding to administer the reorganisation or the liquidation of the debtor’s assets or affairs or to act as a representative of the foreign proceeding.”
“The purpose of article 17 is to establish that, if recognition is not contrary to the public policy of the enacting State (see article 6) and if the application meets the requirements set out in the article, recognition will be granted as a matter of course … The Model Law makes no provision for the receiving court to embark on a consideration of whether the foreign proceeding was correctly commenced under applicable law; provided the proceeding satisfies the requirements of article 15 and article 6 is not relevant, recognition should follow in accordance with article 17.”
“Upon recognition of a foreign proceeding, whether main or non-main, where necessary to protect the assets of the debtor or the interests of the creditors, the court may, at the request of the foreign representative, grant any appropriate relief, including— (a) staying the commencement or continuation of individual actions or individual proceedings concerning the debtor’s assets, rights, obligations or liabilities, to the extent they have not been stayed under paragraph 1(a) of article 20; (b) staying execution against the debtor’s assets to the extent it has not been stayed under paragraph 1(b) of article 20; (c) suspending the right to transfer, encumber or otherwise dispose of any assets of the debtor to the extent this right has not been suspended under paragraph 1(c) of article 20; (d) providing for the examination of witnesses, the taking of evidence or the delivery of information concerning the debtor’s assets, affairs, rights, obligations or liabilities; (e) entrusting the administration or realisation of all or part of the debtor’s assets located in Great Britain to the foreign representative or another person designated by the court; (f) extending relief granted under paragraph 1 of article 19; and (g) granting any additional relief that may be available to a British insolvency officeholder under the law of Great Britain, including any relief provided underparagraph 43 of Schedule B1 to the Insolvency Act 1986 .”
“The relief that we seek, a stay of proceedings under 1(a) and 1(b), is precisely the relief which is catered for under Article 21.1. We rely on a specific statutory power…”
“[5] … The effect of [the] recognition order was to bring into place an automatic stay of proceedings under article 20 of the UNCITRAL Model Law which applies by virtue of theCross-Border Insolvency Regulations 2006 . Accordingly, those with English law claims could neither commence nor continue individual actions or proceedings concerning the bank’s assets, rights, obligations or liabilities. [6] The progress of the plan, following its approval by the Financial Court of Almaty City, is that, on the restructuring date identified in the plan, the entitlements to which individual categories of holders of designated financial indebtedness are entitled will be paid … the dissentient holders of designated financial indebtedness will also become bound, their claims against the bank discharged, cancelled and released. [7] All this takes effect under Kazakh law. But the question arises: what of claims which are governed by English law? For it is established that those whose claims are governed by English law will not, as a matter of English law, be bound by the terms of the plan. At present their claims are stayed under the automatic stay. But a question might arise, once the Kazakh restructuring proceedings are terminated on31st December 2012 , what force remains in the recognition order. It is in anticipation of that lack of clarity arising that the foreign representative makes an application for the current automatic stay to be rendered permanent. [8] It is important to note that the stay that is proposed is one akin to that arising undersection 130 of the Insolvency Act 1986 , being one that is capable of being lifted on an application to the court. The propos[ed] stay accordingly, whilst perpetual in length, is by no means entirely prohibitory in action. [9] The real risk which arises, as from31st December 2012 , is that holders of obligations governed by English law will seek to commence proceedings in England and enforce against the bank’s assets in England. It is right that those claimants who participated in the Kazakh restructuring plan but were on the losing side in the various votes, may face some difficulty in launching proceedings since, by their participation in the foreign insolvency process, they may be taken to have recognised its effectiveness in binding them. (See the observations of Lord Collins in Rubin v. Eurofinance SA[2013] 1 AC 236 , at paragraph [167]). But there is a real risk in relation to those who did not vote in the Kazakh insolvency process. So by the present application the foreign representative seeks to impose upon them a stay which they must apply to the court to lift before they can commence proceedings which might disrupt the carefully negotiated restructuring plan approved by so large a majority of the bank’s claimants.”
“[11] In the alternative, the foreign representative relies on article 21, paragraphs (1)(a) and (b). These provisions declare that the court may, at the request of the foreign representative, ‘grant any appropriate relief’, including, under paragraph (a), ‘staying the commencement or continuation of individual actions or individual proceedings concerning the debtor's assets, rights, obligations or liabilities’. “[12] Of the two routes said to be available to the foreign representative, I prefer that provided for under article 21, I am really staying the commencement of individual actions that fall within a particular class.”
“[13] I propose to grant the stay for two principal reasons. First, the relief is appropriate because it enables the English court to cooperate with the financial court in Almaty City in subjecting the bank’s assets and claims to a single regime for the benefit of the general body of claimants. Secondly, I consider the relief appropriate because there plainly should not be an unseemly scramble for English assets by English claimants to the possible prejudice of the general body of claimants, but there should be an ordered approach to such English claims as might survive the Kazakh insolvency process. [14] The relief which is sought, although of unending duration, is, as I have indicated, capable of being modified on the application of an individual creditor who can show that his claims are governed by English law and that his claims have not been discharged by the Kazakh insolvency process. It might be thought that, having regard to my summary of the English common law, there could be no question of any discharge having been effected, but there is an argument, which the steering committee of those holding designated financial indebtedness would wish to promote, that, following the implementation of the Model Law by the Cross-Border Insolvency Regulations, there is in fact a true discharge. It is unnecessary to express any view about whether that argument is right or wrong because all I am doing is putting in place a regime to ‘hold the ring’ until such an argument can be addressed in an orderly way.”
“I am satisfied that it is necessary for the protection of the assets of the debtor and in the interests of the general body of creditors as a whole that I should declare that Navios may not, by way of defence in the Commercial Court action, rely on set-offs arising under either the non-mutual set-off argument or the post-insolvency assignment argument. Set-off operates contrary to the general principle of pari passu distribution which applies upon insolvency. Navios contracted with a Danish entity. The Danish bankruptcy law recognises the principle of equal distribution and strikes a balance between the interests of the person having a claim capable of amounting to a set-off and the interests of the general body of creditors. Those who contract with a Danish entity might expect that balance to govern their relationships inter se when insolvency supervenes. The only reason it does not do so automatically in the present case is that the fortuitous circumstance that the FFAs happen to be governed by English law and justiciable in England. But English law in fact strikes the same balance. The public policy of Denmark and England both say that non-mutual set-offs and post-insolvency assignment set-offs do not hold good against the general body of creditors, and the assets of the debtor and the interests of the general body of unsecured creditors are to be protected accordingly. There is no reason why the recognising court in England should not regard as ‘necessary’ the protection which both Danish and English law afford to the general body of creditors.”
“It is nothing to do with recognising foreign law, foreign judgments, and it is nothing to do with getting rid of rights which you have under British law in the sense that the respondent may have said, “Well, I have a British law right to settle,” but it was not actually a British law right to settle in an insolvency context. In terms of British insolvency law, there was no right of settlement. What the judge said was that… it was something that you actually could not do under British law. In the present case, the Gibbs rule says that what we want to do we can do under British law and there is nothing that says that we cannot do it. In that case, and this is, in our respectful submission, fundamental to the whole process of reasoning in Atlas, that is, that the Danish law and the British coincided so that unless one said they fell between two stools, then one could rationalise the result by saying whether you look down at the foreign law order or the British order you get the same result, therefore I will achieve that result. In our respectful submission, one can leave open whether it is rightly decided or not, it does not in any way control or govern the facts or principles of the present case.”
“the court looking to the benefit to the creditors as a whole of a co-ordinated, global solution (which is the way that the Judge puts it).”
“It was said that these words deliberately gave the court very wide powers to do what it thought fit. If the court thought it was appropriate to order relief which would be available to the [applicant] administrator in the Korean court applying Korean insolvency law, then the English court could grant that relief. In so doing, the English court was not applying Korean law. Article 21 was part of English law and it was English law which was being applied when the English court granted the same sort of relief as would be available in the Korean court under Korean insolvency law.”
“Rubin…supports the view that the relief available under Article 21 is of a procedural nature and that the article should be given a wide interpretation in relation to matters of procedure. There is considerable scope for argument as to whether the relief sought in a particular case is of a procedural or substantive nature. I will not attempt to define which matters are procedural and which are substantive. However, having explained the difference between [the Applicant] being entitled to terminate the contract and not being so entitled, it seems to me that this difference goes well beyond matters of procedure and affects the substance of the parties’ rights and obligations under the contract.”
“… it is possible that, after the application for recognition or after recognition, changes occur in the foreign proceeding that would have affected the decision on recognition or the relief granted on the basis of recognition, such as termination of the foreign proceeding or conversion from one type of proceeding to another.”
“In some cases, it can be argued that anyone who does business with a foreign company which might thereafter enter a process of insolvency, governed by the law of its country of registration, should expect that the insolvency will be governed by that law. Indeed, statements to that effect have been made in [Atlas Bulk] para. 26 and AWB (Geneva) SA v North America Steamships Ltd [2007] 1 CLC 749, para. 31. However, in the present case, the parties had deliberately chosen English law as the law of the contract. Whereas the parties might have expected that an [Azeri] court would apply [Azeri] insolvency law to the insolvency of the company, they might have been very surprised to find that an English court would [in effect] apply [Azeri] insolvency law to the substantive rights of the parties under a contract which they had agreed should be governed by English law.” (4) My conclusion as to the jurisdictional scope of Article 21 leaves no scope for its application at that stage; but it is relevant also at the discretionary stage, to consider Article 22 of the Model Law/CBIR, which in relevant part provides: “In granting or denying relief under Article 19 or 21…the court must be satisfied that the interests of the creditors…and other interested parties, including if appropriate the debtor, are adequately protected.”
“[50] The obvious assumption that underlies the operation of section 130(2) is that the party against whom a stay should operate is a creditor whose claims against the debtor company are subject to the collective insolvency proceeding. So, for example, if the party is a secured creditor, he will be regarded as standing outside the collective process, and the automatic stay under section 130(2) will invariably be lifted to enable him to enforce his security” … “[53]…I do not think that the stay which is intended to operate upon recognition of a collective foreign proceeding under the Model Law is intended to prevent persons whose claims are not subject to that collective proceeding from being able to pursue their claims against the company. Such persons stand outside the collective process, and it would not be appropriate to utilise the stay under Article 20(1) to prevent them from pursuing their ordinary remedies against the company.”