Eastern Caribbean Supreme Court adopts Judicial Insolvency Network’s Guidelines for Communication and Cooperation between Courts in Cross-Border Insolvency Matters
The Eastern Caribbean Supreme Court in the Territory of the Virgin Islands has adopted the Judicial Insolvency Network’s Guidelines for Communication and Cooperation between Courts in Cross-Border Insolvency Matters (“the Guidelines”). The Guidelines were adopted by Practice Direction 8, No. 2 of 2017 made pursuant to Rule 8(2) of the Insolvency Rules, 2005 and became effective on 18th May 2017.
Objective of the Guidelines
The overarching objective of the Guidelines is to improve the efficiency and effectiveness of cross-border proceedings relating to insolvency or adjustment of debt matters opened in more than one jurisdiction (“Parallel Proceedings”) by enhancing coordination and cooperation amongst courts under whose supervision such proceedings are being conducted.
The Judicial Insolvency Network held its inaugural meeting in Singapore in October 2016. The meeting was attended by judges from ten jurisdictions including the British Virgin Islands. During the meeting the judges discussed the need for greater cooperation between courts in cross-border insolvency matters and produced draft Guidelines. The Guidelines have been adopted by the following jurisdictions:
- Bermuda 9 March
- Delaware 1 February
- England and Wales 5 May
- Singapore 1 February
- Southern District of New York 17 February
- British Virgin Islands 18 May
Description of the Guidelines
The guidelines consist of an introduction, 14 guidelines, and an Annex that sets out procedural issues relating to joint hearings between courts.
The introduction outlines the basic aims and objectives of the Guidelines and encourages parties in Parallel Proceedings to consider the Guidelines at the
earliest practicable opportunity with a view to enhancing coordination and cooperation among courts under whose supervision the debtor’s estate is being administered. The sharing of information and the avoidance or minimization of costs and inconvenience are encouraged. Where there is agreement among the parties they can make an application to the court to establish protocols or orders for dealing with the debtor’s estate.
The numbered guidelines set out detailed requirements and procedures for entering into and implementing the protocols or orders. The process is voluntary but once the parties enter into a protocol which is approved by the court they will be required to conduct themselves in the continuing litigation in accordance with the terms of the protocol.
The Guidelines also deal with communication between courts for the purpose of making orderly arrangements for hearings. Where there are joint hearings the courts can communicate directly on procedural, administrative and preliminary matters relating to the joint hearing. Communication between courts can take place by telephone, video conference call or other electronic means. Parties are entitled to be present or be represented during such joint communications and the communications shall be recorded. A written transcript may be prepared and treated as the official transcript of the communication. Copies of the transcript may be filed in court as part of the record of the joint proceedings. Subject to local laws and procedures a court may permit a foreign party or his representative to be heard in the joint proceedings.
The Guidelines make provision for the recognition and acceptance of orders made by foreign courts, and of the laws, regulations and practices of general application relating to proceedings in other jurisdictions, unless there is a proper objection on valid grounds.
The annex sets out in greater detail the procedures in the numbered Guidelines relating to joint hearings in those cases in which it is decided to hold a joint hearing.
The Guidelines were implemented following wide consultation in BVI. They are a bold and welcome attempt at minimizing the costs, inconvenience and expense of acrimonious litigation between parties vying for a greater share of a debtor’s estate where the estate is located in more than one country. They represent another step in the processes started by the courts of ensuring that as far as practicable and as permitted by law a debtor’s estate is distributed among the creditors in the most equitable manner and with the greatest benefit to the general body of creditors. Use of the Guidelines is a voluntary process. When they are adopted there is a real likelihood that all interested parties will reap greater benefits from the estate.
If implementation of the Guidelines in the Territory of the Virgin Islands is successful, it is anticipated that consideration will be given to adopting them in other States and Territories of the Eastern Caribbean.