Submission of claim in foreign insolvency proceedings torpedos exclusive English jurisdiction agreement
The decision of the English High Court in Erste Group Bank AG v JSC "VMZ Red October" means that it is now clear that filing a claim in any jurisdiction's insolvency proceedings: (i) will result in submission to the jurisdiction in relation to the enforcement of claims that the creditor may have against the assets of the insolvent party; and (ii) that this will cover claims in respect of which the creditor did not prove. Furthermore, by filing a claim in the insolvency proceedings and then participating fully in insolvency proceedings, the creditor may be taken to have submitted to the jurisdiction of those courts in relation to all issues arising in the insolvency proceedings.
Importantly, this submission to the jurisdiction of the foreign insolvency court may limit the ability of creditors to pursue certain claims in England. Clients should therefore seek legal advice before taking any step in respect of foreign insolvency proceedings, as by taking such a step, a client could waive its rights to have a wide range of connected issues determined by the English courts.
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For further information on the decision and its impact please see our client bulletin.1