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