CHP12/0056 Judgment Summary

News Publication Date: 10 October 2012

IN THE HIGH COURT OF JUSTICE OF THE ISLE OF MAN
CIVIL DIVISION
CHANCERY PROCEDURE

BETWEEN:
INTERDEVELCO LIMITED Claimant
And
WASTE2ENERGY GROUP HOLDINGS PLC Defendant
And
IN THE MATTER of the Claim Form dated the 2 May 2012
and
IN THE MATTER of the Defendant’s Application filed on the 12 June 2012

Judgment Summary issued by the High Court of Justice of the Isle of Man

This summary is provided to assist in understanding the judgment of the court. It does not form part of the judgment. The judgment itself is the only
authoritative document. The full judgment is available at www.judgments.im.

On 10 October 2012 His Honour Deemster Doyle First Deemster and Clerk of the Rolls sitting in the High Court of Justice of the Isle of Man Civil Division Chancery Procedure delivered a judgment which concerned Rule 4.16(1)(b) of the Rules of the High Court of Justice 2009, forum non conveniens and the principle of universalism.

The Defendant, a company incorporated under the laws of the Isle of Man, was part of a group of companies whose centre of main interests was in America and over which an American Chapter 11 trustee had been appointed by the United States Bankruptcy Court for the District of Delaware.

The Claimant, a potential creditor of the Defendant, applied in the Isle of Man for the Defendant to be wound up in the Isle of Man according to the laws of the Isle of Man. 

The Defendant applied for a declaration that the court should not exercise any jurisdiction it may have to try the claim for the winding up of the Defendant in the Isle of Man.

The court considered the developing worldwide jurisprudence in the area of insolvency law including Cambridge Gas Transportation v Navigator Holdings plc 2005-06 MLR 295 a decision of the Judicial Committee of the Privy Council on appeal from the Isle of Man’s Appeal Division. Reference was also made to the decision of the Commercial Court of Bermuda in Liquidation of Founding Partners Global Fund Ltd [2009] SC (Bda) 36 Com (29 July 2009) where Kawaley J, now Chief Justice of Bermuda, incorporated Manx common law and practice as laid down by Deemster Doyle in Re Impex Services Worldwide 2003-05 MLR 115 into the law and practice of Bermuda in cross-border insolvency cases. Manx law and procedure in international insolvency cases is now being followed in Bermuda.

In the particular circumstances of the Waste2Energy Group Holdings plc case Deemster Doyle held that the seat of the principal insolvency proceedings should be in the United States of America. Deemster Doyle could see no sense in having separate substantive winding up proceedings in the Isle of Man. Indeed he felt that such duplication with additional and unnecessary expense, delay and inconvenience would make no sense at all
(paragraph 100 of the judgment).

The Deemster accordingly made a declaration that the court should not exercise the jurisdiction it had to try the claim seeking the winding up of the Defendant in the Isle of Man.

At paragraphs 101 and 102 of his judgment Deemster Doyle concluded as follows:


'101. There should in the circumstances of this case be one unitary and universal insolvency based in the US, the jurisdiction with which the group of companies including the Defendant have close connections or to put it in other words “the centre of their main interests” or their “nerve centre”. The Defendant and the other companies do not have any real substantive connection with the Isle of Man. They are simply incorporated here. That simple formal fact should not prevent the well advanced insolvency proceedings in the US from proceeding to their conclusion without additional substantive insolvency proceedings being commenced in the Isle of
Man. There is nothing in Manx law or Manx public policy that requires this court to disregard the proceedings before the US Bankruptcy Court. This court should not seek to unravel or duplicate all the good work done by the US Bankruptcy Court. Substantial justice is not best served by starting fresh substantive insolvency proceedings in the Isle of Man. Substantial justice is best served by permitting the proceedings before the US Bankruptcy Court, involving companies and creditors with substantial connections with the US, to progress to their conclusion.

102. If the Claimant, which is a company registered in Guernsey, is a genuine creditor of the Defendant then it should have nothing to fear from the proceedings before the US Bankruptcy Court which like insolvency proceedings in all sophisticated jurisdictions are designed to assist genuine creditors to obtain a fair share of the assets. The insolvency proceedings in this case should be permitted to proceed in the US. There is no need for additional substantive winding up proceedings to take place in the Isle of Man. The Claimant will, of course, be at liberty to seek whatever relief it considers appropriate in the proceedings before the US Bankruptcy Court. If the Trustee requires the recognition and assistance of the High Court in the Isle of Man he can, no doubt, make whatever applications he considers appropriate and any interested parties may be given an opportunity to make any relevant representations and such applications can be considered on their merits.”

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