Key Facts
- •A Russian court declared the Respondent bankrupt and appointed the Appellant as trustee.
- •The Respondent owns a property in London.
- •The Appellant sought recognition of the Russian bankruptcy order and assistance from the English court to realize the London property.
- •The English court's assistance to foreign bankruptcy trustees is governed by statutory provisions (sections 426 IA 1986 and the Cross-Border Insolvency Regulations 2006) and common law.
- •Neither statutory provision applied in this case because the Respondent's centre of main interests was not in Russia.
Legal Principles
Immovables Rule: Questions regarding rights to immovable property are governed by the lex situs (law of the place where the property is situated).
Established principle in many national legal systems, including English common law.
Territorial Sovereignty: A country's courts have exclusive jurisdiction over land within its territory.
Dicey, Morris and Collins, The Conflict of Laws; Freke v Lord Carbery; In re Hoyles.
Modified Universalism: Courts have a common law power to assist foreign insolvency proceedings, subject to local law and public policy.
Cambridge Gas Transportation Corporation v Official Committee of Unsecured Creditors of Navigator Holdings Plc; Singularis Holdings Ltd v PricewaterhouseCoopers.
Section 426 IA 1986: UK courts can assist courts in designated countries with insolvency proceedings, applying relevant insolvency law and considering private international law rules.
Insolvency Act 1986, section 426.
Cross-Border Insolvency Regulations 2006 (CBIR): Wider scope than section 426, incorporating the UNCITRAL Model Law, to recognize and assist foreign insolvency proceedings, irrespective of reciprocity, subject to certain conditions and a public policy exception.
Cross-Border Insolvency Regulations 2006.
Outcomes
Appeal dismissed.
The immovables rule prevents the English court from recognizing the Russian bankruptcy order's effect on English land. Common law does not provide a basis to assist a foreign trustee in realizing interests in English land, and it would be inappropriate for the court to develop the common law in this way; it is a matter for Parliament.
Rejection of Appellant's claim for assistance at common law.
The Appellant's arguments based on the recognition of the trustee's duties under Russian law are incompatible with the immovables rule, which is a substantive rule of English law. The court cannot grant relief that contradicts this rule.
In re Kooperman deemed wrongly decided.
The case lacked reasoned judgment and relied on irrelevant precedent; it does not support the court's common law power to assist a foreign trustee regarding immovable property.