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Lord Neuberger casts doubt on the Gibbs principle

Speaking extra-judicially at the International Insolvency Institute Annual Conference in London on 19 June 2017, Lord Neuberger, President of the Supreme Court, gave the keynote speech entitled “The Supreme Court, the Privy Council and International Insolvency”.  See the full speech here. In a pithy few sentences Lord Neuberger summarised the monumental changes in common law recognition since Cambridge Gas: “So, having started with relatively broad common law universalism in Cambridge Gas and flirted with no common law universalism through the minority in Singularis, we seem to have ended up with modified universalism as exemplified by the majority view in Singularis . . . Ironically, the only one of the four decisions in this field which was unanimous was Cambridge Gas, and it was the only decision which appears to have been wrong”. Casting doubt on the Gibbs principle, Lord Neuberger said:  “Any discussion of the tension between universalism and territorialism must also face up to the long-embedded principle of English law established by the Court of Appeal 125 years ago in the Anthony Gibbs case (Anthony Gibbs & Sons v La Societe Industrielle et Commerciale des Metaux (1890) 25 QBD 399) that the discharge of a debt under the laws of a particular foreign country will be recognised only if the debt is governed by the law of that foreign country. There are powerful arguments for revisiting this common law principle in any event, as Mr Justice Teare said in a 2011 English Commercial Court case (Global Distressed Alpha Fund 1 LP v PT Bakrie Investindo [2011] EWHC 256 (Comm)), and as is demonstrated by a more recent rejection of the principle by the Singapore High Court (Pacific Andes Resources Development Ltd [2016] SGHC 210), although the Hong Kong courts applied it in 2004 (Hong Kong Institute of Education v Aoki [2004] 2 HKLRD 760)”. We anticipate that Gibbs may well face some difficulty when it next comes to be scrutinized by other common law courts, but what the precise consequences of this will be for parallel schemes of arrangements between offshore courts and, say, Hong Kong, is difficult to predict. For any more information, please contact Ian Mann or Nick Hoffman.

Lord Neuberger casts doubt on the Gibbs principle

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