A judgment in the Supreme Court in the case of New Cap Reinsurance will have serious ramifications for accountants and insolvency practitioners facing global insolvency cases across multiple jurisdictions.

The case basically looks at 'universalism in insolvency', ie the extent to which courts in different jurisdictions can/should collaborate to enforce insolvency rulings across borders.

Devi Shah, partner and joint head of law firm Mayer Brown's restructuring, banking and insolvency group in London, acted for New Cap Reinsurance Corporation in the case. She says: 'The judgment brings to a close litigation that our client has pursued for many years across the world and so we're delighted with the outcome for our client and NewCap Re's creditors.

'However, the grounds on which the Supreme Court reached its decision is a blow to the development of a "universalist" approach to cross-border insolvency proceedings in the UK.

'Rather than enabling a liquidator of an insolvent multinational group to start one set of proceedings in one jurisdiction, enforceable around the world, the Court's decision has left liquidators needing to bring a number of proceedings in different jurisdictions, with the local courts potentially reaching different decisions on the same facts.'

The two appeals concerned whether, and if so, in what circumstances, an order or judgment of a foreign court in proceedings to set aside prior transactions, such as preferences or transactions at an undervalue (avoidance proceedings), will be recognised and enforced in England and Wales. The appeals also raised the question of whether enforcement may be effected through the international assistance provision of the UNCITRAL Model Law implemented by the Cross-Border Insolvency Regulations 2006, which apply generally, or the assistance provisions of s426 of the Insolvency Act 1986 (the Insolvency Act), which applies to a limited number of countries, including Australia.

'As a result of the Supreme Court's decision, liquidators conducting insolvencies of multinational groups may need to issue clawback proceedings in a number of different jurisdictions, rather than being able to litigate the claims together in the insolvent's home jurisdiction against international defendants,' adds Shah. 'This could lead to the liquidator needing to prove the same elements (such as insolvency) over and over again and give rise to the very real possibility that local courts could reach different positions on similar facts.

'This decision has the benefit of certainty for international defendants, but at the expense of increased international cooperation in multi-national insolvencies.'

New Cap Reinsurance Corporation (In Liquidation) and another (respondents/cross Appellants) v A E Grant and others as members of Lloyd's Syndicate 991 for the 1997 Year of Account and another (appellants/cross respondents).