For more than a century, a creditor holding English law governed debt relied on the principle (known as the “rule in Gibbs”) that a debt governed by English law cannot be discharged by a foreign insolvency proceeding, provided that the creditor does not submit to that proceeding.

Despite criticism that the rule undermines co-operation between jurisdictions in cross-border insolvency proceedings, in Re OJSC International Bank of Azerbaijan the Court of Appeal confirmed that the rule continues to apply and that the Cross-Border Insolvency Regulations 2006 (the "CBIR") (which implement the UNCITRAL Model Law on Cross-Border Insolvency Proceedings (the "Model Law")) cannot be used to subvert it. Thus, creditors holding debt governed by English law can take comfort that the protections afforded by the rule remain intact, at least for the time being.

Downloads –