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English law if the Gibbs rule was repealed," James Brady,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...