Effect of foreign insolvency proceedings on English law security document

The lender issued an application against the borrower seeking declarations from the court in relation to the borrower’s obligations under an English law facilities agreement to provide certain information, which the borrower had refused to do.

The borrower was in Sauvegarde insolvency proceedings in France and contended that the effect of those proceedings was that it had no obligation to provide that information, notwithstanding that it did not dispute that it had the obligation, rather that the French law of the insolvency proceedings governed the issue, not the English law jurisdiction granted by the facilities agreement.

The judge considered the jurisdictional position and the interaction of the Recast Brussels Convention, the Recast EC Regulations on Insolvency Proceedings (the “Regulations”), which applied as the French insolvency proceedings were opened pre 31 December 2020 and the jurisdiction created by the facilities agreement.

However, the judge decided that the legal basis for the application for a declaration arose from the facility agreement, governed by English law, not the Regulations and “has its source in the general civil law, and not specific rules relating to insolvency” and, whilst the court would have had jurisdiction under the Regulations pre Brexit, it had jurisdiction by reason of the exclusive jurisdiction clause in the SFA, pursuant to common law principles. The obligations in the facilities agreement therefore prevailed, regardless of the Regulations.

Emerald Pasture Designated Activity Company and others v Cassini SAS and others [2021] EWHC 2010 (Ch)

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