A Rational Basis of Jurisdiction Over EEA Insurers' Solvent Schemes that the WFUM Decision Could Be, But Isn't

Abstract

The decision in Re Sovereign Marine & General Insurance ('WFUM') [2006] EWHC 1335 (Ch) is the latest installment of the debate on whether the English court has jurisdiction to sanction a solvent scheme of arrangement proposed by an EEA insurer. Charting a completely different course of reasoning to that in Re La Mutuelles du Mans Assurances IARD ('MMA') and Re DAP Holding NV ('DAP'), the court in WFUM held that the English court has jurisdiction to sanction two solvent schemes proposed by two insurers incorporated and regulated in France and Ireland respectively.

Although the WFUM decision also contains widespread implications for the constitution of classes for a scheme of arrangement, this commentary only deals with the jurisdictional debate. While WFUM is testimony to what many have already known, that the reasoning in MMA and DAP is simplistic in the extreme (to put it mildly), the reasoning in WFUM itself leaves much to be desired.

Keywords: English scheme of arrangement, solvent scheme, insurer's scheme, insurance insolvency, insurance run-off, EEA insurer, EEA insurance company, jurisdiction to wind up foreign insurance company, Council Directive 2001/17 on the reorganisation and winding-up of insurance undertakings

JEL Classification: K12, K23, K33, K39, K41