Gibbs rule court decision welcomed

Author: Olly Jackson | Published: 14 Jan 2019

The 128-year-old Gibbs rule’s future is secure despite a challenge in the Court of Appeal attempting to reverse it, reducing the risk that market participants are shifting away from English to New York law, according to market sources.

"The million dollar question is whether market participants would begin to choose New York law over English law if the Gibbs rule was repealed," James Brady, partner at Cleary Gottlieb said. "That would mean there is no framework under English law for adequate protections of creditors, at least equivalent to that under the US rules."

The case could still be appealed to the Supreme Court, where the future of the Gibbs rule would be on trial once again. In the event it does, the judgement of US-based Judge Glen, who criticised the rule but said the US will continue to give recognition to foreign proceedings in a case involving Croatian retailer Agrokor, could be brought...