South African Creditors May Wield the Gibbs Rule to Confront an Italian Pre-Insolvency Statutory Restructuring Composition
DOI:
https://doi.org/10.25159/2522-3062/9617Keywords:
private international law (conflict of laws), discharge of contract by liquidaiton, statutory novation in pre-insolvency composition/restructuring, recognition of final order as foreign judgment, the Gibbs ruleAbstract
This article summarises the judgment in Cooperativa Muratori & Cementisti & others v Companies and Intellectual Property Commission & others, in which the Supreme Court of Appeal confirmed the statutory denial of business rescue to external companies and refused to recognise and apply the Italian restructuring process in South Africa. The article then discusses the private international law (conflict of laws) on the discharge of a contract by a foreign sequestration or liquidation, and the statutory novation of the contract by a foreign pre-insolvency composition or restructuring. Central to the debate over characterisation and choice of law (between contract or insolvency) is the effect of the Gibbs rule, a long-standing feature of the law of the United Kingdom, South Africa, and several other countries, but increasingly controversial because of contemporary ideas of cross-border insolvency law. The article argues for an approach based on contract and company law rather than insolvency law, because pre-insolvency proceedings, by definition, do not involve a winding-up order or a liquidation process, and, if timely and successful, prevent both. The South African private international law on the recognition of a foreign pre-insolvency statutory composition or restructuring as a foreign judgment may thus need to be reconsidered.
Metrics
References
Anton AE and Beaumont PR, Private International Law: A Treatise from the Standpoint of Scots Law (2nd edn, W Green 1990).
Bailey E and Groves H, Bailey & Groves: Corporate Insolvency - Law & Practice (5th edn, LexisNexis Butterworths 2017).
Baker McKenzie, ‘Global Restructuring & Insolvency Guide: Italy’ <http://restructuring.bakermckenzie.com/wp-content/uploads/sites/23/2017/01/Global-Restructuring-Insolvency-Guide-12-2016New-Logo-Italy.pdf> accessed 26 February 2022.
Barron C, ‘SA Loses Crown as Gateway to Africa’ Sunday Times (7 March 2021) page 6. <https://www.proquest.com/newspapers/sa-loses-crown-as-gateway-africa/docview/2497913020/se-2?accountid=14648> accessed 28 February 2022.
Barsotti E, ‘Concordato Preventivo’ (Studio Cataldi) <https://www.studiocataldi.it/guide_legali/fallimento/concordato-preventivo.asp.> accessed 26 February 2022.
Battistella M, ‘Restructuring and Insolvency Law in Italy’ (CMS Expert Guides CMS, 1 September 2020)
<https://cms.law/en/int/expert-guides/cms-expert-guide-to-restructuring-and-insolvency-law/italy> accessed 26 February 2022.
Beale S and Keddie P, Insolvency and Restructuring Manual (3rd edn, Bloomsbury Publishing Plc 2018).
Bertelsmann E and others, Mars: The Law of Insolvency in South Africa (10th edn, Juta 2018).
Boggenpoel ZT, ‘Revisiting the Tswelopele Remedy: A Critical Analysis of Ngomane v City of Johannesburg Metropolitan Municipality’ (2020) 137(3) South African Law Journal 424.
<https://0-hdl-handle-net.oasis.unisa.ac.za/10520/EJC-1fd9da3be1> accessed 26 February 2022).
Boraine A, ‘Formal Debt-Relief, Rescue and Liquidation Options for External Companies in South Africa’ (2020) 7(4) BRICS Law Journal 85. <https://www.bricslawjournal.com/jour/article/view/410> accessed 26 February 2022 <https://doi.org/10.21684/2412-2343-2020-7-4-85-126>
Burge W, Commentaries on Colonial and Foreign Laws: Generally, and in Their Conflict with Each Other, and with the Law of England Volume 3 (Saunders and Benning 1838).
Cattaneo M and Meoli M, ‘Chapter 7: Investor Protection and IPO Survival in the Italian Stock Market’ in Levis M and Vismara S, Handbook of Research on IPOs (Edward Elgar, 2013).
<https://doi.org/10.4337/9781781955376.00015>
Cantarelli A and Squerzoni F, ‘The Italian Insolvency Code—A Work in Progress: Timing and News’ JD Supra (22 September 2021)
<https://www.jdsupra.com/legalnews/the-italian-insolvency-code-a-work-in-3010353/ accessed 26 February 2022.
Currie I and De Waal J, The Bill of Rights Handbook (6th edn, Juta 2013).
De Beer RE, ‘Notes on Private International Law’ (1911) 28(2) South African Law Journal 188.
<https://0-heinonline-org.oasis.unisa.ac.za/HOL/P?h=hein.journals/soaf28&i=208> accessed 26 February 2022.
Delport P, Henochsberg on the Companies Act 71 of 2008 (LexisNexis, October 2020 electronic version).
Dendy M, ‘Conflict of Laws’ in Joubert WA (founding editor), The Law of South Africa Volume 7(1) (3rd edn, LexisNexis 2019).
Draper P and Scholvin S, ‘The Economic Gateway to Africa?: Geography, Strategy and South Africa’s Regional Economic Relations’ (Occasional Paper No 121 Economic Diplomacy Programme, South African Institute of International Affairs, September 2012) <https://www.researchgate.net/publication/341215129_The_economic_gateway_to_Africa_geography_strategy_and_South_Africa's_regional_economic_relations> accessed 27 February 2022.
Eklund J, Levratto N and Ramello GB, ‘Entrepreneurship and Failure: Two Sides of the Same Coin?’ (2020) 54(2) Small Business Economics 373. DOI: https://doi.org/10.1007/s11187-018-0039-z
<https://doi.org/10.1007/s11187-018-0039-z>
Ferriell G and Janger EJ, Understanding Bankruptcy (4th edn, Carolina Academic Press, 2019).
Fletcher IF, Insolvency in Private International Law: National and International Approaches (2nd edn, Oxford University Press 2005).
Fletcher IF, The Law of Insolvency (5th edn, Sweet & Maxwell 2017).
Forsyth C, Private International Law: The Modern Roman-Dutch Law Including the Jurisdiction of the High Courts (5th edn, Juta 2012).
‘Four Quartets 4: Little Gidding - Poem by T.S. Eliot’ (PoetryVerse)
<https://www.poetryverse.com/ts-eliot-poems/four-quartets-little-gidding> accessed 26 February 2022.
Garrido JM, Out-of-Court Debt Restructuring (World Bank Publications 2012).
<https://documents1.worldbank.org/curated/en/417551468159322109/pdf/662320PUB0EPI00turing09780821389836.pdf> accessed 27 February 2022.
Ghia L, The Italian Bankruptcy Law (Studio legale Ghia, 2013).
<https://www.iiiglobal.org/sites/default/files/the_italian_bankruptcy_law.pdf> accessed 26 February 2022.
Gopaldas R, ‘The Race to Become Africa’s Preferred Gateway is Heating up’ (Observer Research Foundation (ORF), 28 June 2018) <https://www.orfonline.org/expert-speak/41964-race-become-africa-preferred-gateway-heating/> accessed 28 February 2022.
Govindaraj VC, The Conflict of Laws in India, Inter-Territorial and Inter-Personal Conflict (2nd edn, Oxford University Press 2019) <https://doi.org/10.1093/oso/9780199495603.001.0001> DOI: https://doi.org/10.1093/oso/9780199495603.001.0001
Grossman A, ‘Conflict of Laws in the Discharge of Debts in Bankruptcy’ (1996) 5(1) International Insolvency Review. DOI: https://doi.org/10.1002/iir.3940050102
<https://0-heinonline-org.oasis.unisa.ac.za/HOL/P?h=hein.journals/intvcy5&i=3> accessed 27 February 2022
<https://doi.org/10.1002/iir.3940050102>
Guidotti R, ‘National Report for Italy’ in Chuah J and Vaccari E (eds), Executory Contracts in Insolvency Law: A Global Guide (Edward Elgar Publishing 2019) <https://doi.org/10.4337/9781788115520.00021> DOI: https://doi.org/10.4337/9781788115520.00021
‘History’ (CMC - Cooperativa Muratori Cementisti Ravenna) <https://cmcgruppo.com/en/history> accessed 27 February 2022.
‘HKSAR and Mainland Sign Record of Meeting Concerning Mutual Recognition of and Assistance to Insolvency Proceedings (with Photos)’ (The Government of the Hong Kong Special Administrative Region: Press Releases, 14 May 2021) <https://www.info.gov.hk/gia/general/202105/14/P2021051400219.htm>
Ho LC, ‘Gibbs is No Bar to Hong Kong Schemes Compromising Debts Governed by Mainland and Foreign Laws’ (2020) 8 Butterworths Journal of International Banking and Financial Law 557.
Houlden LW and Morawetz GB, Bankruptcy and Insolvency Law of Canada (4th edn, Carswell 2021).
Khan S and Thorn M, ‘Re OJSC International Bank of Azerbaijan [2018] EWCA Civ 2802’ (International Restructuring Newswire | Knowledge | Global Law Firm | Norton Rose Fulbright, April 2019)
<https://www.nortonrosefulbright.com/en-za/knowledge/publications/b933d9a7/re-ojsc-international-bank-of-azerbaijan> accessed 27 February 2022.
Kunst JA, Boraine A and Burdette DA, Meskin: Insolvency Law and Its Operation in Winding-Up (LexisNexis November 2020 electronic version).
Levenstein E, South African Business Rescue Procedure (LexisNexis November 2020 electronic version).
Lord Collins of Mapesbury and others, Dicey, Morris and Collins on the Conflict of Laws Volume 2 (15th edn, Sweet & Maxwell 2012).
MacQueen HL, ‘Mixed Jurisdictions and Convergence: Scotland’ (2001) 29(2) International Journal of Legal Information 309. DOI: https://doi.org/10.1017/S0731126500009446
<https://0-heinonline-org.oasis.unisa.ac.za/HOL/P?h=hein.journals/ijli29&i=349> accessed 27 February 2022 <https://doi.org/10.1017/S0731126500009446>
Madaus S, Der Insolvenzplan: Von seiner dogmatischen Deutung als Vertrag und seiner Fortentwicklung in eine Bestätigungsinsolvenz (Mohr Siebeck 2011). (Translation: The Insolvency Plan. Its Dogmatic Interpretation as a Contract and the Development of a Pre-voted Insolvency Procedure.)
Madaus S, ‘Leaving the Shadows of US Bankruptcy Law: A Proposal to Divide the Realms of Insolvency and Restructuring Law’ (2018) 19(3) European Business Organization Law Review 309. <https://link.springer.com/article/10.1007/s40804-018-0113-7> accessed 27 February 2022 <https://doi.org/10.1007/s40804-018-0113-7>
Magri V, ‘Bondholders of CMC Distressed Building Company Say OK to Debt Restructuring Plan’ BeBeez (10 March 2020) <https://bebeez.it/en/crisis-relaunch/bondholders-of-cmc-distressed-building-company-say-ok-to-debt-restructuring-plan/> accessed 27 February 2022.
Manganelli P, ‘The Evolution of the Italian and U.S. Bankruptcy Systems: A Comparative Analysis’ (2010) 5(2) Journal of Business & Technology Law 237.
<https://0-heinonline-org.oasis.unisa.ac.za/HOL/P?h=hein.journals/jobtela5&i=241> accessed 27 February 2022.
Mevorach I and Walters A, ‘The Characterization of Pre-Insolvency Proceedings in Private International Law’ (2020) 21(4) European Business Organization Law Review 855. DOI: https://doi.org/10.1007/s40804-020-00176-x
<https://link.springer.com/article/10.1007/s40804-020-00176-x> accessed 27 February 2022 <https://doi.org/10.1007/s40804-020-00176-x>
Nadelmann KH ‘Recognition of American Arrangements Abroad’ (1942) 90(7) University of Pennsylvania Law Review and American Law Register 780. DOI: https://doi.org/10.2307/3309249
<https://0-heinonline-org.oasis.unisa.ac.za/HOL/P?h=hein.journals/pnlr90&i=802.> accessed 27 February 2022 <https://doi.org/10.2307/3309249>
Nagel CJ and Kuschke B (eds), Commercial Law (6th edn, LexisNexis 2019).
O’Brien P, ‘Transnational Aspects in South African Insolvency Law’ in RH Zulman (chairman), Reform of South African Insolvency Law (Conference Rand Afrikaans University, Johannesburg 28 August 1995).
Omar PJ, ‘Corporate Rescue through the Ages’ in Omar PJ and Gant JLL (eds), Research Handbook on Corporate Restructuring (Edward Elgar Publishing 2021). DOI: https://doi.org/10.4337/9781786437471
<https://doi.org/10.4337/9781786437471>
Pozzo B, ‘Italy’ in Smits JM (ed), Elgar Encyclopedia of Comparative Law, Second Edition (Edward Elgar, 2012) <https://doi.org/10.4337/9781847200204.00038>
Sachdev V, ‘Choice of Law in Insolvency Proceedings: How English Courts’ Continued Reliance on the Gibbs Principle Threatens Universalism’ (2019) 93(2) American Bankruptcy Law Journal 343.
<https://0-heinonline-org.oasis.unisa.ac.za/HOL/P?h=hein.journals/ambank93&i=355> accessed 27 February 2022.
Sandretto MM, ‘South Africa: Still the Gateway to Africa?’ (How we made it in Africa, 8 November 2016) <https://www.howwemadeitinafrica.com/south-africa-still-gateway-africa/56591/> accessed 27 February 2022.
Schoeman E, Roodt C and Wethmar-Lemmer M, Private International Law in South Africa (Wolters Kluwer 2014).
Schulze C, On Jurisdiction and the Recognition and Enforcement of Foreign Money Judgments (University of South Africa Press 2005).
Serra L, ‘Concordato Preventivo’ Altalex (16 April 2019) <https://www.altalex.com/documents/altalexpedia/2019/04/16/concordato-preventivo> accessed 10 October 2021.
Sharrock R, Van der Linde K and Smith A, Hockly’s Insolvency Law (9th edn, Juta 2012).
Sheldon R (ed), Cross-Border Insolvency (4th edn, Bloomsbury Professional 2015).
Smith A, ‘Assisting Foreign Insolvency Practitioners in Cross-Border Insolvency: Some Foreign Insights into South African Law Singularis Holdings Ltd v PricewaterhouseCoopers (Bermuda) [2014] UKPC 36 (10 November 2014), [2015] 2 WLR 971’ (2016) 37(1) Obiter DOI: https://doi.org/10.17159/obiter.v37i1.11572
<https://doi.org/10.17159/obiter.v37i1.11572>
Smith A, ‘Some Aspects of South African Cross-Border Insolvency Relief: The Lehane Matter’ (2016) 19(1) Potchefstroom Electronic Law Journal <https://perjournal.co.za/article/view/1221> accessed 27 February 2022 <https://doi.org/10.17159/1727-3781/2016/v19i0a1221>
‘South Africa is Open for Business’ Mail & Guardian (13 November 2020) <https://mg.co.za/special-reports/2020-11-13-south-africa-is-open-for-business> accessed 27 February 2022.
Staff Writer, ‘SA is Losing Its Shine as the Gateway into Africa’ BusinessTech (26 September 2017) <https://businesstech.co.za/news/business/200960/sa-is-losing-its-shine-as-the-gateway-into-africa/> accessed 27 February 2022.
Story J, Commentaries on the Conflict of Laws, Foreign and Domestic: In regard to Contracts, Rights, and Remedies, and Especially in Regard to Marriages, Divorces, Wills, Successions, and Judgments (1st edn, Hilliard Gray 1834); Melville Madison Bigelow (ed) (8th and last edn, Little, Brown 1883).
The Supreme Court, ‘Permission to Appeal results – June, July and August 2019’ <https://www.supremecourt.uk/docs/permission-to-appeal-2019-060708.pdf> accessed 27 February 2022. Bakhshiyeva (in her capacity as the Foreign Representative of the OJSC International Bank of Azerbaijan) (Appellant) v Sberbank of Russia and others (Respondents) UKSC 2019/0012, Neutral Citation No [2018] EWCA Civ 2802 (Lord Reed, Lord Briggs, Lady Arden), Refused 26 June 2019.
Van Loggerenberg DE and Bertelsmann E, Erasmus Superior Court Practice (2nd edn, Juta 2015 online version).
Van Rooyen JCW, Die Kontrak in die Suid-Afrikaanse Internationale Privaatreg (Juta 1972).
Venter I, ‘South Africa Not the Gateway to Africa, Warns Research House’ Creamer Media’s Engineering News (18 June 2019) <https://www.engineeringnews.co.za/article/south-africa-not-the-gateway-to-africa-warns-research-house-2019-06-18/rep_id:4136> accessed 27 February 2022.
Violato M, ‘Il Concordato Preventivo’ Filodiritto (28 January 2021) <https://www.filodiritto.com/il-concordato-preventivo> accessed 27 February 2022.
Wells P and Aconley L, ‘How to Get Recognised: Cross-Border Recognition of Insolvency and Restructuring Proceedings post-Brexit’ (2021) 3 Butterworths Journal of International Banking and Financial Law <https://www.allenovery.com/global/-/media/allenovery/2_documents/news_and_insights/publications/2021/04/cross_border_recognition_of_insolvency_and_restructuring_proceedings_post_brexit.pdf> accessed 27 February 2022.
Wessels B, ‘Insolvency Law’ in Smits JM (ed), Elgar Encyclopedia of Comparative Law, Second Edition (Edward Elgar 2012)
<https://0-doi-org.oasis.unisa.ac.za/10.4337/9781781006108.00038>
Wessels B and Madaus S (eds), Rescue of Business in Insolvency Law (European Law Institute Vienna 2017) <https://www.europeanlawinstitute.eu/fileadmin/user_upload/p_eli/Publications/Instrument_INSOLVENCY.pdf> accessed 27 February 2022 <https://doi.org/10.1002/iir.1306> DOI: https://doi.org/10.1002/iir.1306
Westbrook JL, ‘Comity and Choice of Law in Global Insolvencies’ (2018) 54(2) Texas International Law Journal 259. <https://0-heinonline-org.oasis.unisa.ac.za/HOL/P?h=hein.journals/tilj54&i=281> accessed 27 February 2022.
Williams IG and Walters AJ, ‘Modified Universalism in Our Time? A Look at Two Recent Cases in the U.S. and U.K.’ (2018) 37(7) American Bankruptcy Institute Journal.
Downloads
Published
How to Cite
Issue
Section
License
© Published by the Department of Public, Constitutional and International Law, University of South Africa and Unisa Press.
Accepted 2021-11-17
Published 2022-04-05
