English High Court Assists Australian Court To Effect Clawback From Lloyd's Syndicate

Originally published March 30, 2011

Article by Devi Shah , Kristy Zander , Ian McDonald and Ashely Katz

Keywords: New Cap Re, Lloyd's Syndicate, English Court

On 15 March 2011, the High Court of Justice (the "English Court") used its statutory powers under s.426 of the Insolvency Act 1986 (the "Act") to order a Lloyd's syndicate to pay the amount due under a judgment of the Supreme Court of New South Wales in Australia (the "Australian Court") relating to unfair preference payments. It did so pursuant to a letter of request issued by the Australian Court requesting the English Court's assistance. The English Court also ruled that it had the power to and would assist under common law in the same manner1.

The Facts

The respondents, members of a Lloyd's syndicate for two years of account (the "Syndicate") had entered into certain reinsurance contracts with New Cap Reinsurance Corporation Limited ("New Cap Re"), an Australian reinsurance company. The Syndicate and New Cap Re subsequently entered into a commutation agreement, pursuant to which New Cap Re made lump sum payments to the Syndicate just over three months before New Cap Re went into administration (and subsequently liquidation) in Australia. New Cap Re's...