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The Companies Court has dismissed an application by the OJSC International Bank of Azerbaijan for what was considered, in effect, to be a permanent moratorium against English law-based creditor claims against the bank. Justin Michaelson, partner, and Simon Camilleri, associate, Fried, Frank, Harris, Shriver & Jacobson (London) assess the implications of the decision.
The rule in Gibbs & Sons v Société Industrielle et Commerciale des Métaux  25 QBD 399, 59 LJQB 510, [1886-90] All ER Rep 804, which stated that a debt governed by English law could not be discharged by a foreign insolvency proceeding, remained good law. The Companies Court so held in dismissing an application by the foreign representative of the OJSC International Bank of Azerbaijan for what was considered, in effect, to be a permanent moratorium against English law-based creditor claims against the bank, in circumstances where the foreign restructuring proceeding concerning the bank had been recognised as a foreign main proceeding, under the Cross-Border Insolvency Regulations 2006, SI 2006/1030, but was due to terminate on 30 January 2018.
What are the practical implications of this case?
This case is of significance to financial institutions, creditors or any commercial party with contracts governed by English law. As a result of this case, creditors with English law governed debts can receive comfort that a foreign insolvency process cannot be used to modify or compromise English law governed liabilities. Like a great number of other international parties, Sberbank selects English law as the governing law for cross-border transactions because of its reputation for neutrality and the certainty it provides, as well as the predictability of the English judicial system. This case confirms the reputation, predic
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