Procedural Issues in Cross-Border Insolvency Recognition Applications

14.09.2020

When should permission to serve abroad be obtained in an application to recognise foreign officeholders under the Cross-Border Insolvency Regulations 2006 (‘CBIR’)?

Mr Justice Fancourt has handed down judgment in Re Lau Yu [2020] EWHC 2429 (Ch). This was an application issued in England to recognise trustees in bankruptcy appointed in Hong Kong over a debtor whose centre of main interests was in Hong Kong, in order that the trustees could realise certain English properties. The trustees had not sought the leave of the English court prior to serving the application on the debtor in Hong Kong; instead, at the first-instance hearing, they sought and obtained an order for retrospective validation of the service abroad.

The Judge rejected the trustees’ suggestion that, under the CBIR, applicants were free in the first instance to decide on what means of service to employ outside of the jurisdiction. The Judge nevertheless accepted that the court did have a power to retrospective validate earlier attempts to serve the application, in appropriate circumstances. In that regard, the Judge distinguished Ardawa v Uppal concerning domestic bankruptcy petitions (in which Oberon Kwok successfully appeared for the petitioning creditor).

The practical implication of this case is that, generally, the permission of the English court should be obtained prior to service of a recognition application out of the jurisdiction under the CBIR, but a failure to do so may not necessarily be fatal if the failure can be adequately explained.

A copy of the judgment is here.

Ian Clarke QC and Oberon Kwok appeared for the debtor in the appeal.

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