In a recent decision in the Chapter 15 case In re Agrokor d.d., Case No. 18-12104 (Bankr. S.D.N.Y. Oct. 24, 2018), Judge Martin Glenn held that the U.S. Bankruptcy Court for the Southern District of New York, in the exercise of comity,1 would grant recognition to and enforce a Croatian settlement agreement (akin to a Chapter 11 plan of reorganization) approved by a Croatian court following creditor approval, notwithstanding that the settlement contained provisions that modified English law governed debt, in apparent contravention of English law.
Such modifications, Judge Glenn explained, could be in violation of “an antiquated rule” called the “Gibbs” rule, based on an 1890 decision of the Court of Appeal in Antony Gibbs & Sons v. La Societe Industrielle et Commerciale des Metaux (1890) 25 QBD 399. The Gibbs rule (despite its age) remains the governing law in England, and refuses to recognize a discharge or modification of English law debt approved by a court outside of England.
After discussing the principles of comity and cooperation with foreign courts, Judge Glenn concluded that the fact that England applies the Gibbs rule and refuses to recognize the modification of English law debt approved by a court outside of England is not a basis for the Bankruptcy Court to decline to recognize and enforce the settlement agreement within the territorial jurisdiction of the United States.
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