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Lloyd's Maritime and Commercial Law Quarterly

RECOGNITION: FOREIGN JUDGMENTS OR INSOLVENCY PROCEEDINGS?

Rubin v. Eurofinance
In the course of an insolvency administration, a court may be asked to make an order against an individual requiring him to pay damages for wrongs done to the company, or to make restitution of sums wrongly received from the company. The individuals may be former officers of the insolvent corporation, or persons granted unfair preferences, and so forth. When the writ or demand is made, a defendant who is outside the territory of the court administering the insolvency may be tempted or advised to ignore the demand. English private international law holds that a foreign judgment in personam will be recognised if the defendant was present within the foreign jurisdiction when proceedings were begun, or submitted to the jurisdiction of the foreign court; and that a foreign judgment in rem will be recognised if the res was within the territorial jurisdiction of the foreign court. The significance of the judgment of the Court of Appeal in Rubin v. Eurofinance SA 1 is that we may now need to add a third category of foreign judgment to the list: a foreign judgment in insolvency, which will be recognised and enforced if made by a foreign court in a foreign main proceeding. If this is right, it will add to the sense that insolvency is different, and that the usual assumptions of private international lawyers do not apply to it. It is therefore a judgment of the greatest significance.
The facts, though, were mundane. Eurofinance, established in the British Virgin Islands, set up “The Consumers Trust” (“TCT”) as a trust governed by English law, to carry on a “sales promotion scheme” in the United States. This scheme parted consumers from their money2 so unfairly that the Attorney-General for Missouri brought proceedings against TCT, which were settled for a substantial sum. The threat that this would trigger copycat proceedings in other states spelt imminent disaster for TCT. When it was clear that it was about to fail, the claimants were appointed as receivers by Lewison J. They wasted no time in placing TCT under the protection of Chapter 11 of the US Bankruptcy Code.3 In due course, a plan of liquidation was approved by the New York court. Among other things, this authorised the claimants to act generally as foreign representatives of TCT, and specifically to bring claims against the defendants, who had, as it was alleged, bled TCT to the point of insolvency. The New York court further directed the receivers to


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