Recognition Of Liquidator Not Appointed In Place Of Incorporation

Originally published 16 August 2016.

A key factor contributing to the vitality and development of the common law is that judges can have the benefit of authorities from other jurisdictions with a comparable legal framework. This has proved and will be increasingly important in areas such as cross-border insolvency, where modified universalism has been the catchword in recent years.

As noted in our Legal Update of 4 February 2016 (" Cross-border Insolvency: Guidance from the Companies Judge"), there have been a number of decisions by the Honourable Mr. Justice Harris (the Companies Judge of the Hong Kong High Court) establishing and clarifying the principles on recognition of foreign liquidators. In Joint Administrators of African Minerals Ltd v. Madison Pacific Trust Ltd [2015] 4 HKC 215 (paragraph 9), his Lordship commented in these terms on one issue that arose:

"The first issue that the application gives rise to is whether or not the Hong Kong Companies Court should provide assistance at all to the administration as it is not an insolvency proceeding in its place of incorporation. The only authority in Hong Kong of which I am aware in which recognition of foreign insolvency proceedings is considered in a relevant way is my own decision [in] Joint Official Liquidators of A Co v. B [2014] 5 HKC 152, [2014] 4 HKLRD 374. In that decision I recognise that the Courts of Hong Kong will recognise a liquidator appointed in the place of a company's incorporation. I do not address whether or not the Courts of Hong Kong will recognise liquidators, or some person exercising similar powers, appointed in a jurisdiction other than the place of incorporation. This is open to argument... I shall assume, without deciding, that the Hong Kong courts can, in principle, recognise liquidators appointed in a jurisdiction other than the place of incorporation or administrators appointed by the High Court of England."

If the Companies Court is faced with another case involving similar facts, assistance may be derived from the decision of the High Court of Singapore in Re Opti-Medix Ltd [2016] SGHC 108. In brief, two companies were incorporated in the British Virgin Islands but carried on business primarily in Japan. In 2015, the Tokyo District Court made bankruptcy orders against them and appointed a Bankruptcy Trustee. The companies have several creditors in Singapore and appear to have held some monies in bank accounts there.

The Bankruptcy Trustee sought to...