CANDEY Privy Council win in Sian Participation Corp (in Liquidation) v Halimeda International Ltd [2024]
CANDEY Privy Council win in Sian Participation Corp (in Liquidation) v Halimeda International Ltd [2024] UKPC 16 - https://caselaw.nationalarchives.gov.uk/ukpc/2024/16
Privy Council changes English insolvency law to follow BVI: Salford Estates is yesterday’s news regarding arbitration/winding up petition interplay, and exclusive jurisdiction clauses are no longer “exclusive” as against winding up petitions
The key take aways are:
The English Court of Appeal in Salford Estates (No 2) Ltd v Altomart Ltd (No 2) [2014] EWCA Civ 1575 was wrong that the existence of an arbitration clause related to a debt would lead to the dismissal of a winding up petition even if the debtor could not show that the debt was disputed on genuine or substantial grounds, and directed the English courts no longer to follow it;
Similarly, exclusive jurisdiction clauses can no longer be invoked as a bar to winding up petitions; the question that needs to be determined is whether the debt is genuinely disputed on substantial grounds; and
In jurisdictions where there are statutory value thresholds, such as the BVI, there is no automatic right of appeal. That is so irrespective of the size of the underlying debt.
The Privy Council differentiated the public class remedy of insolvency from the private contractual agreements of arbitration and/or exclusive jurisdiction in such contractual instruments.
When facing a matter where potential insolvency proceedings are intermingled with arbitration or exclusive jurisdiction clauses, the issues for the court to determine are as follows:
Is the debt disputed on genuine and substantial grounds?
If so, the winding up petition will not proceed and the creditor will need to follow the contractually agreed mechanism (arbitration and/or exclusive jurisdiction) to prove its debt;
If not, the winding up petition may proceed irrespective of any arbitration/ exclusive jurisdiction clauses.
CANDEY’s team in this matter was led by James Collins (Partner), Yuri Botiuk (Partner) and Serene Allen (Senior Associate), with further assistance from Dainyah Mason (BVI Legal Practitioner), Adem Arif (Solicitor), Yana Chekavska (Solicitor) and Andrew Cookson (Paralegal).
CANDEY acted for the Respondent in conjunction with Appleby BVI and instructed Paul Lowenstein KC of 20 Essex, Rupert Hamilton and Michael Hain in the Privy Council. Paul Lowenstein KC led Tony Beswetherick (now KC) of 20 Essex in first Instance success in the BVI, and led Rupert Hamilton in successfully defending an appeal before the Eastern Caribbean Court of Appeal.
For more information please do not hesitate to contact James Collins, Yuri Botiuk, Serene Allen or Lisa Walmisley of CANDEY – BVI.
