Insolvency case risks ‘fundamentally changing’ English legal landscape

Author: Olly Jackson | Published: 26 Oct 2018

The future of a 128-year-old UK insolvency law could be at stake in the ongoing case involving the International Bank of Azerbaijan (IBA). Depending on the outcome, finance could become more expensive in other jurisdictions and deter people away from English law and to New York law instead.

The case challenges IBA’s restructuring of their $500 million eurobonds due in 2019. Those challenging argue that the Gibbs rule – under which an English law governed debt cannot be amended or extinguished in anything other than English law – should be upheld, and the cross-border solvency regulations do not trump it, which is contended by IBA.

The Court of Appeals has accepted that the Gibbs rule is binding and could only be challenged if the case goes to the Supreme Court. In the event that it does, the century-old rule could be under threat.

"Any repeal would fundamentally alter the English legal landscape,"...