Opinion ID: 724999
Heading Depth: 2
Heading Rank: 3

Heading: British Denial of Anti-Suit Injunction

Text: 17 In July 1992 Barclays faced the possibility that the administrators would institute litigation in the bankruptcy court to recover the $30 million it had received from Maxwell on November 26, 1991. Barclays therefore obtained an ex parte order in the High Court (not from Justice Hoffman) barring the commencement of such an action. In seeking to prevent litigation in the bankruptcy court, Barclays was apparently motivated by a difference in the American and British avoidance rules. Rules governing avoidance generally allow the estate to recover certain pre-petition transfers of property to creditors occurring within a defined period of time. Such rules are sometimes referred to as the law of preferences because such transfers, left unchecked, may put transferees in a better position than other creditors if the debtor becomes insolvent. 18 Thus, under 11 U.S.C. § 547(b), a trustee may avoid certain transfers to outside creditors made within 90 days before the filing of the petition. The corresponding provision in English law is § 239 of the Insolvency Act 1986. That section is in many respects similar to the American law, but the British law imposes an additional condition--it limits avoidance to those situations where placing the transferee in a better position was something the debtor intended. See Insolvency Act 1986 § 239(5). This seemingly innocuous subjective intent requirement in English law apparently would be a significant or insurmountable obstacle for the administrators were they to litigate the preferences question in London under English law. For obvious reasons, they opposed the anti-suit injunction sought by Barclays, that is, they wanted this issue litigated in the Southern District bankruptcy court. 19 Following a hearing, Justice Hoffman vacated the ex parte order Barclays had obtained. Re Maxwell Communications Corp. (Barclays Bank plc v. Homan), [1992] BCC 757 (Ch.) (Homan ), aff'd, [1992] BCC 767 (C.A.). The British judge declined to interfere with the American court's determination of the reach of our avoidance law. He cited the British presumption that in such a situation the foreign judge is normally in the best position to decide whether proceedings are to go forward in the foreign court, and the rule that anti-suit injunctions will issue only where an assertion of jurisdiction in the foreign court would be unconscionable. Id. at 761-63. 20 In so doing, Justice Hoffman noted the cooperative course of the parallel insolvency proceedings. Id. at 760. He distinguished recent cases involving the extraterritorial application of American antitrust law, reasoning that injunctive relief is available only if it appears that a foreign court is likely to assert jurisdiction in a manner contrary to accepted principles of international law. Id. at 762. The High Court's decision did not pass judgment on the merits of whether the application of American law would violate such norms. Id. at 767. It did assume, however, that the bankruptcy court would dismiss the anticipated suit if it found that there was an insufficient connection with the United States. Id. This ruling was affirmed by the Court of Appeal, and leave for further review by the House of Lords was denied. 21