Interaction between Judgments Regulation and Insolvency Regulation considered by Court of Appeal

Judgment (the German Judgment) was awarded in a creditor’s favour on proceedings brought against a debtor in Germany in 2003. In 2005 a German insolvency plan (the German Insolvency Plan) was agreed under which the debtor’s creditors, including the creditor, waived their claims.

The creditor subsequently notified the debtor of their intention to enforce the German Judgment in England on the ground that the waiver in the German Insolvency Plan had been rescinded by virtue of the debtor’s making subsequent payments to the creditor.

The debtor applied in Germany for a declaration that the German Judgment was unenforceable in light of the German Insolvency Plan. The German court made an interim order suspending enforcement of the German Judgment pending determination of this application subject to the debtor providing security. No security was provided by the debtor.

In the interim, the creditor applied for and obtained a without notice English order registering the German Judgment in England pursuant to the original Judgments Regulation (No 44/2001). The debtor applied for the registration to be set aside, alternatively applied for enforcement to be stayed under CPR rule 83.7.

Given the antiquity of the German proceedings, the Court of Appeal stated that it was common ground that it was the original, not recast versions of the Judgments and Insolvency Regulations that applied and that the case was unaffected by Brexit.

The Court of Appeal refused to set aside the registration, holding that, while, pursuant to the Insolvency Regulation, the English courts had to recognise the German Insolvency Plan, it did not require the English court to give the German Insolvency Plan any greater effect than it had under German law. It was common ground that under German law the German Insolvency Plan did not render the German Judgment unenforceable until a declaration to that effect had been obtained, which it had not.

However, the Court of Appeal overturned the first instance judge on the stay point reasoning that the first instance court had failed to recognise that refusing a stay would put the creditor in a better position than he was in in Germany.  Instead, the court held that the creditor should be in the same position, ie a stay would be ordered but conditional upon the provision of security in the same amount as ordered by the German court. 

Windhorst v Levy [2021] EWCA Civ 1802

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