The proper law doctrine for R&I lawyers
Produced in partnership with Skadden Arps Slate Meagher & Flom (UK) LLP
The proper law doctrine for R&I lawyers

The following Restructuring & Insolvency guidance note Produced in partnership with Skadden Arps Slate Meagher & Flom (UK) LLP provides comprehensive and up to date legal information covering:

  • The proper law doctrine for R&I lawyers
  • Brexit impact
  • The development of the proper law doctrine
  • Relevance in restructurings
  • Criticism of the doctrine
  • Impact of cross-border restructuring legal instruments on the doctrine
  • Impact of common law universalism on the doctrine
  • Relying on the proper law doctrine as an investor—factors to consider

The proper law doctrine provides that the discharge of a debt may only properly be determined by the governing law of the debt. As such, and subject to the modifying effect of legal instruments in the area of cross-border insolvency, an English court may apply this common law doctrine to hold that a foreign restructuring, which purports to discharge an English law governed debt (or a debt governed by a law other than the law of the foreign restructuring), does not in fact do so in England, and consequently the court may allow a dissenting creditor to enforce the debt in England. The nature and extent of the proper law doctrine will therefore be of interest to distressed debt investors and their advisers and this note sets out some of the important issues to be considered.

Brexit impact

As of exit day (31 January 2020) the UK is no longer an EU Member State. However, in accordance with the Withdrawal Agreement, the UK has entered an implementation period, during which it continues to be subject to EU law. References to exit day in many Brexit SIs are to be read as reference to IP completion day (Implementation Period completion day, defined in clause 39 as 31 December 2020 at 11.00 pm) (unless that provision is expressly disapplied by the SI