Cross-Border Insolvency: Privy Council Slam The Door On Bermuda’s Modified Universalism Approach

The Judicial Committee of the Privy Council (Lords Neuberger, Mance, Clarke, Collins and Sumption) has delivered an important judgment (1) about the jurisdiction of the Bermuda court to assist foreign liquidators by ordering the production of documents and information by persons in Bermuda and (2) defining the common law powers of assistance to foreign liquidators.

The interplay (or conflict) between the decisions of the Privy Council and the UK Supreme Court in the following cases has been a source of great debate and litigation in the world of cross-border insolvency: Cambridge Gas v Navigator [2007] 1 AC 508, Rubin v Eurofinance [2012] UKSC 46 and Al Sabah v Grupo Torras [2005] 2 AC 333. The Privy Council has now provided some clarity to this area of the law.

In summary:

1. The Bermuda court has no general jurisdiction under the Companies Act or at common law to wind up foreign companies that do not conduct business in Bermuda. To this end, holding shares in Bermuda is not "conducting business";

2. "Modified Universalism" is part of the common law and there is a common law power to assist foreign liquidators, inter alia, by ordering the production of documents and information. However, this power has the following limits:

1. Firstly, it is available only to assist the officers of a foreign court of the...