UK Mannequin Regulation session: Gibbs preserved, Rubin overruled

In a session commenced on 7 July 2022, the UK Insolvency Service is proposing to implement two “mannequin legal guidelines” adopted by the United Nations Fee on Worldwide Commerce Regulation (UNCITRAL). These are (i) a partial implementation of the Mannequin Regulation on Recognition and Enforcement of Insolvency-Associated Judgments (the International Judgments Mannequin Regulation) via the adoption of “Article X” and (ii) the Mannequin Regulation on Enterprise Group Insolvency (the Group Mannequin Regulation and, along with the International Judgments Mannequin Regulation, the New Mannequin Legal guidelines). The New Mannequin Legal guidelines could be applied via secondary laws below the Personal Worldwide Regulation (Implementation of Agreements) Act 2020 that means no Act of Parliament is required. The UK is among the first international locations contemplating the implementation of the New Mannequin Legal guidelines, which the Insolvency Service states is indicative of its ongoing dedication to cooperation and worldwide finest follow.

On this put up we’ll have a look at the 2 proposals in flip.


The present framework

The UK has applied the UNCITRAL Mannequin Regulation on Cross-Border Insolvency (the Cross-Border Mannequin Regulation) via the Cross-Border Insolvency Rules 2006 (the CBIR), with out modifications. The aim of the Cross-Border Mannequin Regulation was to enhance effectivity for cross-border insolvency by making the method of dealing with property throughout jurisdictions extra predictable for insolvency practitioners. Within the context of insolvency, larger predictability and effectivity throughout jurisdictions results in preservation of financial worth.

The Cross-Border Mannequin Regulation doesn’t explicitly regulate how overseas judgments referring to insolvency proceedings are to be recognised and enforced, giving international locations scope for interpretation in the way in which the Cross-Border Mannequin Regulation is applied on this regard. This has meant that, usually, recognition of overseas insolvency judgments has remained a query of personal worldwide legislation.

While in some international locations – just like the US – the Cross-Border Mannequin Regulation is seen as offering a framework for the popularity and enforcement of overseas insolvency judgments, this isn’t true in England. In England, the Cross-Border Mannequin Regulation was interpreted, in Pan Ocean Co Ltd, Re [2014] EWHC 2124 (Pan Ocean), as giving the courts, at their discretion, the power to grant the aid that will be accessible below UK legislation in home insolvency proceedings. In Rubin and one other (Respondents) v Eurofinance SA and others [2012] UKSC 46 (Rubin), it was held that the popularity of overseas insolvency judgments is exterior the scope of the Cross-Border Mannequin Regulation. Insolvency judgments aren’t thought of a separate class of judgments (sui generis) below English legislation and recognition is ruled by the widespread legislation or relevant common statutory framework.

The International Judgments Mannequin Regulation

The International Judgements Mannequin Regulation offers with cross-border recognition of judgments which can be related to insolvency proceedings and goals to harmonise the totally different approaches taken by international locations when implementing the Cross-Border Mannequin Regulation.

The total International Judgements Mannequin Regulation, as adopted by UNCITRAL in 2018, presents a free-standing framework for the popularity of overseas judgments. Nonetheless, the Insolvency Service is barely proposing to implement a bit of it, known as ‘Article X’.

Article X states “However any prior interpretation on the contrary, the aid accessible below [the CBIR], consists of recognition and enforcement of a judgment”. Article X subsequently removes any ambiguity within the Cross-Border Mannequin Regulation on this regard and would successfully overturn the ruling in Rubin, insofar because it decided that the Cross-Border Mannequin Regulation as applied within the UK excludes recognition of a judgment.

The implementation of Article X is meant to complement the Cross-Border Mannequin Regulation by including an extra aid (the popularity and enforcement of the overseas insolvency judgement) to the present current record of discretionary reliefs accessible to UK courts within the context of overseas insolvency proceedings which were recognised within the UK. Due to this fact, solely overseas judgments referring to overseas proceedings that are already recognised within the UK would fall throughout the scope of Article X, and the appliance of Article X could be on the discretion of the court docket.

If the UK as a substitute adopted the total International Judgments Mannequin Regulation, the place could be fairly totally different. The International Judgments Mannequin Regulation would stand alongside (however independently from) the Cross-Border Mannequin Regulation and would require necessary recognition of overseas primary insolvency judgments except particular grounds for refusal are met. On the one hand, by eradicating the UK court docket’s discretion, this would offer extra substantive aid to insolvency practitioners seeking to implement overseas judgments within the UK. Nonetheless, however, this could undermine a key idea of English legislation developed in Anthony Gibbs & Sons v La Societe Industrielle et Commerciale des Metaux, the so known as ‘rule in Gibbs’. The rule in Gibbs offers that obligations ruled by English legislation can’t be discharged by overseas legislation proceedings. Somewhat, they will solely be discharged below English legislation or the place the creditor agrees to the overseas legislation discharge of the obligations owed to them. The rule in Gibbs offers events contracting below English legislation larger certainty of outcomes, which helps English legislation ruled contracts preserve their widespread worldwide use.

Due to this fact, the session proposes the implementation of Article X solely as a result of this strategy permits the UK to introduce a mechanism for recognising overseas insolvency-related judgments below UK legislation with out uprooting a key idea in our current authorized framework. As talked about above, recognition of overseas judgements below Article X will likely be on the courts’ discretion, that means that the courts will be capable of proceed to have regard to different UK legal guidelines and the rule in Gibbs particularly.


Implementing Article X would offer a mechanism for the courts to recognise overseas insolvency judgments in circumstances the place such recognition could not have been achievable beforehand (for instance, Rubin could have been determined otherwise if Article X had been in place then). It’s subsequently a doubtlessly important step in the direction of larger recognition of overseas insolvency judgments.

Nonetheless, the courts can have discretion of their selections to use Article X. The Insolvency Service offers examples of potential grounds for the UK courts to refuse recognition and enforcement of a overseas judgment spanning public coverage, lack of ample safety of collectors’ rights, and train of jurisdiction by the overseas court docket which is incompatible with UK legislation. The record shouldn’t be exhaustive, and the UK courts would retain a broad discretion to refuse recognition.

By preserving the courts’ discretion to guard the rule in Gibbs, the scope of Article X is considerably lowered as a result of the UK courts, in exercising their discretion, could have regard to current UK legal guidelines, together with these referring to the popularity of overseas judgments usually. At current, recognition of overseas insolvency judgments within the UK is a fancy space of legislation and, in current instances, the courts have confirmed reluctance to take action (see Pan Ocean and Rubin, for instance).


The place insolvency proceedings have an effect on worldwide teams comprising a number of corporations working in a number of jurisdictions, finishing up parallel insolvency proceedings is an advanced course of that may hinder the power of collectors to successfully get better worth.

The Group Mannequin Regulation goals to facilitate a coordinated plan throughout the group by introducing provisions addressing co-operation, communication and environment friendly administration. This will embrace avoiding parallel insolvency proceedings the place practicable and managing the relationships between group entities to keep away from worth decay throughout the group.

The Group Mannequin Regulation champions the idea of a ‘group insolvency resolution’ in a single discussion board by permitting for a voluntary starting stage and procedural coordination. This isn’t a novel idea, and the European Insolvency Regulation (recast) (EIR) had already launched an identical thought, known as ‘group insolvency proceedings’ that are ‘geared toward discovering an answer that will leverage synergies throughout the group’ (Recital 52).

Below the Group Mannequin Regulation, teams can voluntarily take part in a ‘planning continuing’, which is to be thought of a ‘primary continuing’, led by a ‘group consultant’ who’s authorised to signify insolvency proceedings in respect of at the least a bunch entity. A gaggle insolvency resolution is a versatile idea which permits for each solvent and bancrupt group corporations to voluntarily partake. The intention is to implement a unified group course of whereas sustaining every entity’s independency of their property and liabilities to respect the prevailing rights of collectors, who would be capable of vote on a coordinated group plan on an entity-by-entity foundation. The Group Mannequin Regulation’s ‘planning proceedings’ mirror the ‘coordination proceedings’ supplied for within the EIR, however are extra complete and much reaching, as they don’t impose limits to the group insolvency resolution or the kind of aid that could be accessible below native legislation, not like the EIR.

A planning continuing originating within the UK would require an utility to the UK court docket to provoke the continuing alongside a qualifying UK insolvency continuing. Within the publication asserting the session, the Insolvency Service states that the definition of a qualifying ‘insolvency continuing’ could not embrace proceedings which may very well be the group’s preferable route for a restructuring, resembling a scheme of association or perhaps a restructuring plan. Nonetheless, as a result of versatile nature of a bunch insolvency resolution, it’s doable to implement a variety of options to attain a helpful end result, and subsequently a scheme or plan may very well be undertaken as a part of the group insolvency resolution.

The Group Mannequin Regulation, just like the EIR, goals keep away from the initiation of non-main insolvency proceedings by offering for mechanisms aiding cooperation of courts throughout totally different jurisdictions. One instance is that courts of the nation the place the principle proceedings are carried out can grant claims of a overseas creditor of a secondary jurisdiction the identical therapy which might have been granted to that creditor below home legislation in that secondary jurisdiction – additionally known as a ‘artificial’ continuing. On this regard, the Group Mannequin Regulation expands on the EIR and UK widespread legislation circumstances resembling Re Collins & Aikman Europe SA [2006] EWHC 1343 (Re Collins & Aikman). Nonetheless, the Group Mannequin Regulation takes a step additional, because it additionally offers a mechanism for primary artificial proceedings which might hopefully minimise primary parallel proceedings as effectively.

The mechanism of artificial proceedings implies that overseas collectors are allowed the advantages of parallel secondary or primary proceedings with out having to undertake such parallel proceedings in one other state. This, nonetheless, raises potential points the place collectors in several jurisdictions have conflicting pursuits, and necessitates additional evaluation as to how you can adequately be sure that claims of collectors in several jurisdictions are protected. The EIR, for instance, tackle this difficulty by stating that cross-border cooperation is barely inspired the place it doesn’t entail any battle of curiosity (Article 56-58).


The Group Mannequin Regulation may show a useful gizmo in advanced cross-border insolvencies. Virtually, nonetheless, as a way to work effectively, the Group Mannequin Regulation must have been applied by the opposite jurisdictions involved by the group insolvency proceedings. No nation has but applied the Group Mannequin Regulation, and, subsequently, its fast affect is prone to be somewhat restricted. Nonetheless, over 40 international locations have applied the Cross-Border Mannequin Regulation, which means that a number of international locations could comply with the UK’s lead if it decides to implement the Group Mannequin Regulation. The Group Mannequin Regulation is extra wide-reaching and versatile than the group insolvency provisions below the EIR, which haven’t been broadly used, and it subsequently appears extra promising in its utility.

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