HSBC Bank v Tambrook Jersey Ltd [2013] (1 May 2013) (CA)    
 
The Court of Appeal has overturned the High Court's decision not to assist a foreign court under section 426 of the Insolvency Act 1986.    
 
We reported in the April Cross Border Bulletin that, in a decision that surprised some practitioners, the High Court declined assistance to a foreign court under section 426 of the Insolvency Act 1986 where there were no foreign proceedings in progress. That decision was overturned on Wednesday, 1st May on appeal.

HSBC wanted to put Tambrook, a Jersey-registered company, into Administration in England, where Tambrook's assets were situated, because there was no suitable procedure available in Jersey. It applied to the Royal Court of Jersey, which issued a letter of request to the English High Court of Justice. The letter requested that the English court assist the Jersey court by appointing Administrators for Tambrook under section 426.

The High Court refused the request, on the grounds that the jurisdiction given by section 426, to assist a foreign court "in its functions as an insolvency court", presupposed that the foreign court was doing something that the English court could assist. Since insolvency proceedings in Jersey were neither in progress nor contemplated, there was nothing to assist, and the English court lacked jurisdiction to grant the request.

HSBC appealed, and the Court of Appeal has now decided that the Jersey court's request should be granted. It held that the Jersey court, by hearing HSBC's application and issuing the letter of request, was exercising its insolvency jurisdiction. That was sufficient to fulfil the requirements of section 426: nothing more by way of formal insolvency proceedings was needed.

The Court of Appeal's decision will relieve observers who had feared that the High Court's decision would have left some creditors without a remedy where the debtor is based in a territory falling within section 426. It will also avoid the need in such cases for parallel insolvency proceedings in the various jurisdictions in the British Islands – an outcome consistent with the apparent intention behind section 426 that, where possible, there should be proceedings in one such territory only.
   
If you would like further information please contact:

Alan Bennett
Partner
a.bennett@ashfords.co.uk

David Pomeroy
Partner
d.pomeroy@ashfords.co.uk