Territoriality following MF Global (Re MF Global UK Ltd)

Territoriality following MF Global (Re MF Global UK Ltd)

Does section 236 of the Insolvency Act 1986 (IA 1986) have extra-territorial effect? Marc Brown, a barrister at St Philips Chambers, discusses the court’s decision in Re MF Global UK Ltd and its implications for practitioners.

Original news

Re MF Global UK Ltd [2015] EWHC 2319 (Ch), [2015] All ER (D) 22 (Aug)

The joint special administrators of a financial markets broker-dealer sought orders under IA 1986, ss 236 and 237(3) seeking the production of documents from the respondent clearing houses. Alternatively, an order seeking similar information was sought against one of the respondents, a French company, under Council Regulation (EC) 1206/2001 (the Evidence Regulation).

The Chancery Division, in dismissing the applications, held that IA 1986, s 236 did not have extra-territorial effect, the order sought was outside the scope of the Evidence Regulation and there was no cause to exercise its discretion under IA 1986, s 236 in respect of the English company respondent.

Briefly, what was the background to the application?

The Joint Special Administrators of MF Global UK Ltd (MF Global) sought an order under IA 1986, s 236 against LCH.Clearnet Limited (LCH UK) and LCH.Clearnet SA (LCH France).

The information sought comprised production of documents and a full description by way of witness statement of the process by which LCH UK and LCH France closed out on MF Global’s open positions very shortly after the appointment of the administrators.

What were the legal issues the judge had to decide in this application?

The application was opposed by LCH France on the grounds that the court had no jurisdiction to make any order under IA 1986, s 236 against it.

Both LCH UK and LCH France argued that in any event the court should not exercise its discretion to make the orders sought.

The court therefore had to consider:

  • whether IA 1986, s 236 has extra-territorial effect,

Subscription Form

Related Articles:
Latest Articles:

Already a subscriber? Login
RELX (UK) Limited, trading as LexisNexis, and our LexisNexis Legal & Professional group companies will contact you to confirm your email address. You can manage your communication preferences via our Preference Centre. You can learn more about how we handle your personal data and your rights by reviewing our  Privacy Policy.

Access this article and thousands of others like it free by subscribing to our blog.

Read full article

Already a subscriber? Login

About the author:

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.