Rubin & Anor v Eurofinance SA & Ors, United Kingdom Supreme Court, Judgment, Law, casemine.com

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Attorney(S)

Appellant Marcus Staff (Instructed by Brown Rudnick LLP)
Respondent Robin Dicker QC Tom Smith (Instructed by Chadbourne & Parke LLP)
Appellant Robin Knowles QC Blair Leahy (Instructed by Edwards Wildman Palmer UK LLP)
Respondent Gabriel Moss QC Barry Isaacs QC (Instructed by Mayer Brown International LLP)
Intervener Pushpinder Saini QC Adrian Briggs Shaheed Fatima Ian Fletcher Stephen Robins (Instructed by Taylor Wessing)
Intervener Michael Driscoll QC Rosanna Foskett (Instructed by Wilsons Solicitors LLP & Wedlake Bell LLP)

Judges

LORD CLARKE
LORD SUMPTION
LORD MANCE
LORD WALKER
LORD COLLINS

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Rubin & Anor v. Eurofinance SA & Ors

Smart Summary

Factual and Procedural Background

Rubin Appeal. “Company A,” incorporated in The British Virgin Islands, created “The Consumers Trust” (“TCT”) to operate a voucher-based sales-promotion scheme across North America. When insolvency loomed, “Company A” asked the High Court in London to appoint two receivers (later recognised as “foreign representatives”) so that TCT could petition for Chapter 11 relief before the United States Bankruptcy Court for the Southern District of New York. In the course of those Chapter 11 proceedings the US court, in default of appearance, entered judgment for approximately US $10 million against several defendants (the present Appellants) under federal and state avoidance provisions. The receivers then asked the High Court to recognise and enforce that judgment in England.

New Cap Appeal. “Company B,” an Australian reinsurer, paid almost US $6 million to members of a Lloyd’s syndicate under commutation agreements shortly before entering external administration. The Australian liquidator successfully sued the syndicate before the Supreme Court of New South Wales for repayment of those sums as unfair preferences. A letter of request under section 426 of the Insolvency Act 1986 followed, seeking enforcement of the Australian judgment (roughly US $8 million) in England.

Both cases reached the Court of Appeal, which enforced the judgments, albeit on different bases. The present appeals to the United Kingdom Supreme Court therefore concerned: (1) whether either judgment could be enforced at common law despite the defendants’ absence from, and non-submission to, the foreign courts; and (2) whether alternative statutory routes (the Cross-Border Insolvency Regulations 2006 in Rubin; section 426 in New Cap) were available.

Legal Issues Presented

Does the traditional common-law jurisdictional test for enforcing foreign judgments (as restated in the Dicey Rule) apply to avoidance judgments delivered in foreign insolvency proceedings?
If not, should the common law recognise a special, more liberal rule grounded in “modified universalism” for such insolvency judgments?
In Rubin, can the Cross-Border Insolvency Regulations 2006 (implementing the UNCITRAL Model Law) furnish power to enforce the US default judgment?
In New Cap, can section 426 of the Insolvency Act 1986 be used to enforce a foreign preference judgment, and does the Foreign Judgments (Reciprocal Enforcement) Act 1933 apply?
Did either set of defendants submit to the jurisdiction of the foreign court so as to satisfy the Dicey Rule?

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Solomons v Ross (1764)	Early recognition of foreign bankruptcies	Illustrates long-standing cross-border cooperation in insolvency.
Galbraith v Grimshaw [1910] AC 508	Single universal process for distribution	Quoted to support “modified universalism.”
Adams v Cape Industries plc [1990] Ch 433	Dicey Rule on presence/submission	Baseline common-law test the Court was asked either to follow or to relax.
Williams v Jones (1845) 13 M & W 628	Theory that a foreign judgment creates a debt	Historical context for enforcement at common law.
Godard v Gray (1870) LR 6 QB 139	Same as above	Cited as historic authority.
Owens Bank Ltd v Bracco [1992] 2 AC 443	Limits of reform by judiciary vs legislature	Used to argue that major changes need legislation.
Cambridge Gas v Official Committee [2007] 1 AC 508	Common-law assistance; bankruptcy orders distinct from in personam/in rem	Court distinguished but analysed to ascertain its reach.
Pattni v Ali [2007] 2 AC 85	Clarifies scope of Cambridge Gas	Re-stated that Cambridge dealt with collective execution.
In re HIH Casualty [2008] 1 WLR 852	“Modified universalism” principle	Key support for cooperative insolvency approach.
Re Maxwell Communication Corp 170 BR 800 (1994)	US adoption of modified universalism	Cited as comparative authority.
Re African Farms Ltd [1906] TS 373	Active assistance concept	Historical example of stays in aid of foreign insolvency.
Banque Indosuez SA v Ferromet Resources Inc [1993] BCLC 112	Discharge of injunction in deference to foreign proceedings	Illustrative assistance case.
Credit Suisse Fides Trust v Cuoghi [1998] QB 818	Judicial cooperation without treaty	Supports flexibility at common law.
Re Impex Services Worldwide Ltd [2004] BPIR 564	Orders for examination supporting foreign liquidation	Example of assistance.
Re BCCI SA (No 10) [1997] Ch 213	Remittal of assets abroad	Illustrates court’s willingness to aid foreign liquidations.
Re Swissair [2010] BCC 667	Same principle	Modern illustration.
Gourdain v Nadler (ECJ 1979)	Distinction between insolvency and civil matters in EU law	Used analogically to show separateness of insolvency orders.
Seagon v Deko Marty NV (ECJ 2009)	Actions “deriving directly” from insolvency	Model for categorising avoidance claims.
German Graphics v van der Schee (ECJ 2009)	Claims outside insolvency exception	Supports workable classification test.
Byers v Yacht Bull Corp [2010] EWHC 133	Ownership dispute outside insolvency exclusion	Further illustration.
Oakley v Ultra Vehicle Design Ltd [2006] BCC 57	Test for claims deriving from winding-up	English application of ECJ approach.
Gavin Gibson v Gibson [1913] 3 KB 379	Enforcement of foreign judgment for company debt	Shows ordinary Dicey Rule operation.
Berliner Industriebank v Jost [1971] 2 QB 463	Bankruptcy-ascertained debt enforced under Dicey	Same point.
Gourmet Resources v Paramount Capital (1993)	Enforcement after submission	Contrasts with present non-submission facts.
Morguard v De Savoye [1990] 3 SCR 1077	Canadian “real & substantial connection” test	Considered but not adopted.
Beals v Saldanha [2003] 3 SCR 416	Extension of Morguard to foreign judgments	Same as above.
In re Flightlease (Ireland) Ltd [2012] IESC 12	Irish rejection of Cambridge Gas reasoning	Used to test competing approaches.
Williams & Glyn’s Bank v Astro Dinamico [1984] 1 WLR 438	What amounts to submission	Guided analysis in New Cap.
Rein v Stein (1892) 66 LT 469	Submission principles	Historical underpinning.
Akai Pty Ltd v People’s Insurance Co [1998] 1 Lloyd’s Rep 90	Submission in foreign-judgment context	Applied when assessing syndicate’s conduct.
Desert Sun Loan Corp v Hill [1996] 2 All ER 847	Same topic	Referenced for completeness.
Industrial Maritime Carriers (The Eastern Trader) [1996] 2 Lloyd’s Rep 585	Effect of taking steps abroad	Cited on waiver/submission.
Ex p Robertson, In re Morton (1875) LR 20 Eq 733	Proof of debt equals submission	Crucial to conclusion that syndicate submitted.
In re Lines Bros Ltd [1983] Ch 1	Bankruptcy may incidentally decide rights	Quoted in submission analysis.
In re Paramount Airways Ltd [1993] Ch 223	Territorial reach of avoidance remedies	Discussed when considering sufficient connection.
The Siskina [1979] AC 210	“Exorbitant” service out jurisdiction	Used to rebut reciprocity argument.
Amin Rasheed Shipping v Kuwait Insurance Co [1984] AC 50	Same	See above.
Spiliada Maritime v Cansulex [1987] AC 460	Forum conveniens	Cited peripherally.
In re Trepca Mines Ltd [1960] 1 WLR 1273	Jurisdiction not conceded for reciprocity	Supports majority view.
Société Eram Shipping v HSBC [2004] AC 260	Limits of freezing orders	Mentioned in Lord Mance’s concurrence.
F-Tex SIA v Jadecloud-Vilma (Case C-213/10)	ECJ on insolvency exclusion	Supports analysis of 1933 Act scope.
New Cap v Renaissance Reinsurance [2002] NSWSC 856	Character of preference actions	Used in New Cap reasoning.
New Cap v Grant [2009] NSWSC 662	Same	Detailed procedural history.

Court's Reasoning and Analysis

(1) Applicability of the Dicey Rule. The majority held that avoidance judgments are ordinary in personam orders. Accordingly, they are enforceable only if the judgment debtor was present in, resident in, or had submitted to, the foreign court—conditions not met in Rubin.

(2) Modified Universalism. While acknowledging Lord Hoffmann’s dicta on universalism, the Court ruled that creating a new, insolvency-specific enforcement rule would be a policy change better left to legislation. Extending recognition without reciprocity would expose UK defendants to default judgments without adequate safeguards.

(3) Cross-Border Insolvency Regulations (CBIR). Articles 21, 25 and 27 empower English courts to grant procedural relief (e.g., stays, information gathering) but do not implicitly authorise enforcement of money judgments against third parties. Therefore the US judgment could not be enforced via the CBIR.

(4) Section 426, Insolvency Act 1986. Section 426(4) enables English courts to provide “aid and assistance” (for example, ordering oral examination or asset realisation) but not to register or enforce foreign money judgments. Hence it did not assist the Australian liquidator unless the syndicate had submitted.

(5) Submission Analysis. The Lloyd’s syndicate had lodged proofs of debt, attended creditors’ meetings and voted under the Australian liquidation, thereby “taking the benefit” of the process. Following Ex p Robertson, those acts constituted submission, rendering the Australian judgment enforceable at common law (and registrable under the 1933 Act). The Rubin defendants, by contrast, neither appeared nor participated, so no submission occurred.

Holding and Implications

Rubin: the appeal was ALLOWED. The US default judgment is not enforceable in England either at common law or under the CBIR.

New Cap: the appeal was DISMISSED. Because the Lloyd’s syndicate had submitted to the Australian court, the preference judgment is enforceable in England; registration should proceed under the 1933 Act.

Implications. The decision reins in the expansive approach adopted by the Court of Appeal. Unless and until Parliament legislates, foreign avoidance judgments will only be enforced where the traditional Dicey jurisdictional gateways are satisfied or the defendant has clearly submitted. The ruling preserves predictability for UK-based defendants but may complicate recovery strategies for foreign office-holders.