Mayer Brown wins landmark cross-border insolvency case at Supreme Court for New Cap Reinsurance
24 October 2012
London - Leading global law firm Mayer Brown has won a landmark case at the Supreme Court for the liquidators of New Cap Reinsurance Corporation (New Cap Re) on a complex cross border application for enforcement of an Australian preference judgment. The Court has decided that the liquidator of insolvent Australian reinsurance company New Cap Re can enforce in England an insolvency judgment obtained in an Australian Court against a Lloyd’s Syndicate to reclaim payments before the company went into insolvency. The Court found that the Syndicate had submitted to the jurisdiction of the Australian Court by submitting a claim in the liquidation.
However, the Court did not take the opportunity to expand upon the trend towards universalism in insolvency proceedings, instead ruling that insolvency litigation should be treated the same way as any other litigation. The ruling will have far-reaching consequences for the way in which insolvencies of multinational groups with dealings with the UK are run.
Devi Shah, joint head of Restructuring, Bankruptcy and Insolvency, said: "This brings to a close litigation that our client has pursued for many years across the world and so we’re delighted with the outcome for our client and New Cap Re’s creditors. However, the grounds on which the Supreme Court reached its decision is a blow to the development of a ‘universalist’ approach to cross-border insolvency proceedings in the UK. Rather than enabling a liquidator of an insolvent multinational group to start one set of proceedings in one jurisdiction, enforceable around the world, the Court’s decision has left liquidators needing to bring a number of proceedings in different jurisdictions, with the local courts potentially reaching different decisions on the same facts.”
She also noted that: "This decision has the benefit of certainty for international defendants, but at the expense of increased international cooperation in multinational insolvencies.”
The Mayer Brown team was lead by Devi Shah, joint head of Restructuring, Bankruptcy and Insolvency with partner Kristy Zander. They were assisted by Insurance & Reinsurance partner Jim Oulton and Restructuring, Bankruptcy and Insolvency associate Salem Feeney. Australian legal advice was provided by the firm Henry Davis York, led by John Martin.
Mayer Brown also won another significant case in the Supreme Court today for BASF, the world's biggest chemicals producer. This is the first antitrust case to be heard by the Supreme Court. The court's judgment clarifies the deadline for bringing follow-on claims for antitrust damages.