Kerry Underwood

UNLAWFUL EXECUTION OF FOREIGN JUDGMENT SET ASIDE AND INCURABLE

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In

Islandsbanki Hf and others v Stanford [2020] EWCA Civ 480

the Court of Appeal held that a creditor’s bankruptcy petition had been correctly dismissed following premature and unsatisfied execution of an unlawful writ of control, contrary to the Lugano Convention which governs jurisdiction and the enforcement of judgments in civil and commercial matters between European Union member states and Norway, Iceland and Switzerland.

The appellant creditor, one of three who had separately petitioned for the debtor’s bankruptcy, had obtained judgment in Iceland and a registration order in England, pursuant to the Lugano Convention and then attempted to enforce the order in England by obtaining a writ of control.

A writ of control was subsequently issued prematurely by the High Court, during the appeal period prescribed by the Lugano Convention and the registration order and after several failed enforcement attempts, High Court Enforcement Officers certified the writ of control as unsatisfied in whole.

The appellant used this as evidence of the debtor’s inability to pay its debts, pursuant to section 268(1)(b) of the Insolvency Act 1986, in their bankruptcy petition.

The petition was dismissed by the High Court and the writ of control set aside as unlawful.

The creditor appealed, partly to recover their own significant petition costs, as an expense of the bankruptcy, but also to extend the relevant time for challenging the debtor’s antecedent transactions – a bankruptcy order having already been made on another creditor’s later petition.

The  Court of Appeal, considered that an overarching purpose of the Lugano Convention was to strike a fair and proportionate balance between a creditor who applied for an order and a debtor’s right of appeal and it should not, therefore, be undermined by allowing irreversible measures of enforcement.

On the facts, the debtor had a right to set aside the writ of control as a matter of justice, without having to advance a substantive case on its merits.

As such, its purported execution was incapable of establishing a debtor’s insolvency.

The Court of Appeal held that such a fundamental defect in the enforcement and execution procedure could not be remedied or cured under the Lugano Convention, the Civil Jurisdiction and Judgments Act 1982, the Civil Procedure Rules or the Insolvency (England and Wales) Rules 2016: a procedurally irregular writ of control, issued in derogation of the Lugano Convention, was incapable of validation.

Written by kerryunderwood

April 9, 2020 at 2:44 pm

Posted in Uncategorized

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