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Luke Pearce, barrister at 20 Essex Street Chambers, discusses the practical implications of the judgment in Orexim Trading Ltd, which concerns the circumstances in which claims under section 423 of the Insolvency Act 1986 (IA 1986) can be served out of the jurisdiction.
Orexim Trading Ltd v Mahavir Port And Terminal Private Ltd (formerly known as Fourcee Port and Terminal Private Ltd)  EWCA Civ 1660,  All ER (D) 101 (Jul)
The decision of the Court of Appeal is significant in confirming that claims under IA 1986, s 423 of can be served out of the jurisdiction under the gateway in Civil Procedure Rules, CPR PD 6B, para 3.1(20), which applies to ‘claims under an enactment which allows proceedings to be brought’, even if the facts of the case do not allow the claim to be served out under any other gateways. Following the decision of HHJ Waksman QC at first instance, there were conflicting first instance decisions on this point—and differing views expressed in the leading textbooks—and so the Court of Appeal’s ruling provides welcome clarity.
The court’s decision is also interesting for the approach taken to the construction of gateway. According to Dicey & Morris on the Conflict of Laws (para 11—142), it is a ‘cardinal rule’ that ‘if there is any doubt in the construction of any of the heads of jurisdiction, that doubt ought to be resolved in favour of the defendant’. However, the Court of Appeal indicated—following dicta from Lord Sumption in two recent Supreme Court cases—that such an approach may be out of date, and that the courts should nowadays approach the construction of heads of jurisdiction ‘neutrally’ (paras –). It follows that Dicey’s ‘cardinal rule’ may no longer be applicable.
Finally, the decision is also important for illustrating the caution that courts will exercise before allowing claims under IA 1986, s 423 to be served out
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Stephen qualified as a solicitor in 2005 and joined the Restructuring and Insolvency team at Lexis®PSL in September 2014 from Shoosmiths LLP, where he was a senior associate in the restructuring and insolvency team.
Primarily focused on contentious and advisory corporate and personal insolvency work, Stephen’s experience includes acting for office-holders on a wide range of issues, including appointments, investigations and the recovery and realisation of assets (including antecedent transaction claims), and for creditors in respect of the impact on them of the insolvency of debtors and counterparties.
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