In Stichting Shell Pensioenfonds v Krys  UKPC 41, the Privy Council has held that where a company was being wound up in a jurisdiction where it was incorporated, and where a foreign creditor had submitted a proof of debt to the liquidators, that creditor had submitted to the jurisdiction of the administering court, and could not bring proceedings in its own jurisdiction with the aim of obtaining priority over other creditors.
The creditor was a Dutch pension fund who had invested in a BVI investment fund but was insolvent, having participated in Bernard Madoff’s Ponzi Scheme. The creditor had submitted a proof of debt to the liquidators in the BVI before proceeding in the Netherlands with a view to enforcing against cash held in Ireland by an intermediate company. The BVI Court of Appeal issued an injunction restraining the Dutch proceedings on the basis that BVI statutory rules of distribution prevented a creditor from gaining priority through a different jurisdiction.
The Privy Council agreed. Whilst submission to the BVI had not in itself precluded the creditor from taking proceedings outside the liquidation, it could not do so if the effect was to get priority over other creditors.
Paul Howcroft, Partner, Fladgate LLP (firstname.lastname@example.org)