Flightlease (Ireland) Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Clarke
• Judgment Date: 15 June 2006
• Neutral Citation: [2006] IEHC 193
• Court: High Court
• Date: 15 June 2006

[2006] IEHC 193

THE HIGH COURT

[No. 62 COS/2006]

FLIGHTLEASE (IRELAND) LTD, IN RE

IN THE MATTER OF FLIGHTLEASE (IRELAND) LIMITED (IN VOLUNTARY LIQUIDATION)

AND

IN THE MATTER OF THE COMPANIES ACTS 1963– 2005

AND

IN THE MATTER OF AN APPLICATION PURSUANT TO SECTION 280 OF THE COMPANIES ACT 1963 PAUL McCANN AND STEPHEN AKRES, JOINT LIQUIDATORS

APPLICANTS

COMPANIES ACT 1963 S280

DICEY & MORRIS CONFLICT OF LAWS 4 ED

DICEY & MORRIS CONFLICT OF LAWS 13 ED PAR 11-002

DYER v DOLAN UNREP KEANE 10.6.1993 1993/7/1971

UNITED STATES FEDERAL BANKRUPTCY CODE S523

DICEY & MORRIS CONFLICT OF LAWS RULE 36O

KIRA & CO LTD v FORSBARKA JERNVERKS AIB 1914 1 KB 715

ADAMS v CAPE INDUSTRIES PLC 1990 CH 433

RAINFORD v NEWELL-ROBERTS 1962 IR 95

CHESHIRE & NORTH PRIVATE INTERNATIONAL LAW 1945

DICEY & MORRIS CONFLICT OF LAWS RULE 36(ii)

DICEY & MORRIS CONFLICT OF LAWS RULE 36(iii)

DICEY & MORRIS CONFLICT OF LAWS RULE 36(iv)

DE SAVOYE v MORGUARD INVESTMENTS LTD 1990 3 SCR 1077

SALNDAHNA v BEALS 2003 3 SCR 416

INDYKA v INDYKA 1969 1 AC 33

D (K) v C (M) 1985 IR 697

CONFLICT OF LAWS

Jurisdiction

Recognition of foreign judgment - Requirements at common law - Right in personam - Presence of debtor in jurisdiction at time of institution of proceedings giving rise to judgment - Whether judgment secured in another jurisdiction by or against third party in course of bankruptcy proceedings created right in personam - Whether appropriate to modify the criteria at common law for recognition of foreign judgments - Dyer v Dolan (Unrep, Keane J, 10/6/1993), Okura & Co Ltd v Forsbarka Jernverks AIB [1914] 1 KB 715 and Adams v Cape Industries Plc [1990] Ch 433 considered; Rainford v Newell-Roberts [1962] IR 95f ollowed - Swiss judgment not recognised (2006/72COS - Clarke J - 15/6/2006) [2006] IEHC 193 In re Flightlease (Ireland) Ltd

Facts: The applicants, who were the joint liquidators of Flightlease Limited sought the determination of a preliminary issue, namely whether, in the event that an order sought by a Swiss Company against Flightlease for the return of certain monies in Swiss proceedings pending before the Swiss Courts was granted, that order would be enforceable in this State.

Held by Clarke. J. in deciding the issue in the negative: That Dicey Rule 36 represented the common law in this jurisdiction for the recognition of foreign in personam judgments and on the basis of the application of that test, recognition would not be afforded to any judgment obtained in the Swiss proceedings in circumstances where at the time of commencement of the proceedings in Switzerland, Flightlease was in liquidation and its affairs were therefore in accordance with Irish law, conducted by the joint liquidators and it did not have a sufficient presence in Switzerland.

Reporter: L.O'S.

1 JUDGMENT of Mr. Justice Clarke delivered 15th June, 2006 .

1. Introduction

2 2 1.1 The applicants ("the joint liquidators of Flightlease") have sought a number of orders under s. 280 of the Companies Act 1963 which would have the effect of permitting them to distribute the assets of Flightlease (Ireland) Limited ("Flightlease") without reference to a claim submitted by Swissair Schweizerifche Luftverkehr-Aktiengesellschast in Nachlassliquidation ("Swissair") or alternatively an order which would have the effect of expediting any challenge to, or appeal from, the rejection by the joint liquidators of Flightlease of proof in respect of a claim of Swissair which rejection occurred on the 18th October, 2005.

3 3 1.2 The background to that application stems from the fact that most of the creditors of Flightlease (being all creditors to whom Flightlease acknowledges indebtedness through the joint liquidators) have entered into a wind-down agreement on 22nd December, 2003 for the purposes of providing for the orderly winding down of Flightlease and the distribution of the realised assets in accordance with the terms of that agreement. In the events that have happened the only outstanding potential claim in respect of Flightlease, not covered by the agreement, comes from Swissair, all other issues having being disposed off. Therefore all that remains standing in the way of the distribution of the assets of Flightlease in accordance with the terms of the wind-down agreement is the Swissair claim. It is in that context that the joint liquidators of Flightlease have sought the substantive orders to which I have referred.

4 4 1.3 Both Flightlease and Swissair are ultimately subsidiaries of SAirGroup. Swissair itself is in a form of debt restructuring liquidation in Switzerland. The liquidator of SAirGroup is also the liquidator of Swissair and an intermediary company in the chain of ownership of Flightlease viz Flightlease AG.

5 5 1.4 In the context of the liquidation of Swissair, an application is currently before the Swiss courts seeking the return of certain moneys paid by Swissair to Flightlease. Questions have arisen between the respective liquidators of Flightlease and of Swissair as to the recognition that would be afforded by the courts in this jurisdiction (including having regard to the fact that Flightlease is in liquidation) to any judgment that might be obtained by Swissair against Flightlease in the Swiss courts. An early resolution of that recognition question appeared to be in the interests of all parties. From the perspective of the joint liquidators of Flightlease an early decision has to be taken as to whether to participate in the proceedings currently before the Swiss courts. If it were to be clear that the courts in Ireland would not recognise the judgment of the Swiss court as being binding upon the joint liquidators of Flightlease, then it might well be appropriate for the joint liquidators to take the view that they should not participate in the Swiss proceedings. Furthermore, for reasons which will become clear in the course of the judgment, the very participation by the joint liquidators of Flightlease in the Swiss proceedings has the potential (on one view of the law) to confer a jurisdiction on the Swiss court which would be recognised by the courts in this jurisdiction and which would not otherwise arise.

6 6 1.5 Similarly from the perspective of the liquidator of Swissair, the pursuit of the claim in the Swiss courts as against Flightlease may well be perceived to be of little value unless it is clear that a successful resolution of those proceedings in favour of Swissair would be recognised in this jurisdiction so as to bind the joint liquidators of Flightlease to take account of the judgment and order of the Swiss court in the distribution of the assets of Flightlease.

7 7 1.6 Given that there was perceived to be a significant urgency (having regard to the stage which the relevant proceedings had reached in Switzerland) to the parties being in a position to deal with this matter on an informed basis, I accepted an application on behalf of the joint liquidators of Flightlease to the trial of a preliminary issue in the following terms:-

"Whether, in the event that the order sought by Swissair Schweizerifche Luftverkehr-Aktiengesellschast in Nachlassliquidation (in debt restructuring liquidation) the "claimant" against Flightlease (Ireland) Limited (in voluntary liquidation) (the "company") in the Swiss proceedings was granted, that order would be enforceable in the State".

8 8 1.7 The parties agreed to a highly accelerated exchange of pleadings by way of points of claim and points of defence, so that the issues arising on those pleadings could be heard within a short number of days of the direction that a preliminary issue be tried. Both parties and their advisors are to be commended on the manner in which this matter has been dealt with.

2. The Issues

9 2 2.1 On foot of the exchange of those pleadings it became clear that the following individual issues arose:-

10 (i) Whether the order sought would be excluded from enforcement under common law as arising from a proceeding in bankruptcy or insolvency. It was contended by the joint liquidators of Flightlease that such an exclusion arose and that, therefore, the order of the Swiss court would not, on that ground alone, be enforced in this jurisdiction.

11 (ii) In the event that the answer to (i) is no, a second question arose on the pleadings as to whether, under Irish rules of conflicts of laws, the order of the Swiss court would be recognised on the basis of a "real and substantial connection" test (as contended for by the liquidator of Swissair) rather than the narrower test summarised in Dicey (to which I will refer in due course).

12 (iii) In the light of the proper test different questions as to whether the test found to be appropriate was met on the facts of the case would also arise.

13 (iv) Arising from a rejoinder to the points of defence, which was filed on behalf of the joint liquidators of Flightlease, a further issue arose as to whether the order sought by Swissair in the Swiss proceedings would be unenforceable in the State having regard to the fact that there had been no appeal against the notice of rejection of the claimant's proof of debt in the liquidation under Irish proof of debt procedure.

14 3 2.2 The early trial of the preliminary issue was facilitated by the absence, at least for the purposes of the preliminary issue, of any dispute on the facts. Insofar as material to the issues to which I have to decide the following factual matters (including matters of Swiss law) were accepted by the parties for the purposes of the preliminary issue.

15 4 2.3 Under the federal statute on Swiss debt enforcement and bankruptcy a claim of the nature brought by Swissair against Flightlease in the Swiss proceedings can only arise where:-

16 (i) the transaction in question was carried out during the...