A recent decision as handed down by the Irish Supreme Court in RE Flightlease (Ireland) Ltd (In Voluntary Liquidation) [2012] IESC 12 saw little development of the Irish Common law position in the enforcement of judgments within the insolvency realm. Finnegan J of the Supremen Court felt it inappropriate to extend the Irish position through Common law without necessary legislative action. O’Donnell J took a slightly more liberal stance in that and felt that it may be time to follow the Cambridge Gas decision of the Isle of Man. However he stopped short of allowing such change to be developed through the courts in this instance.

Flightlease is a wholly owned subsidiary of Flightlease AG which in turn is a subsidiary of SAir Group. Swissair was the operational aviation company of the SAir Group. S Air Group and Flightlease AG are also in debt restructuring liquidation in Switzerland.

This particular judgment arose out of a claim by Swissair for repayment of CHF8,000,000 which had been transferred to Flightlease in September 2001. Swissair submitted a claim in the liquidation in May 2005, however this claim was rejected in October of the same year. Swissair had the opportunity to apply to the courts pursuant to s280 of the Companies Acts 1963 however it chose to instigate proceedings in Switzerland instead.

Accordingly, it arose whether a Swiss judgment, if obtained, could be enforced in Ireland. The Irish High Court was asked to pronounce on this preliminary issue. The liquidators of Flightlease needed an early decision on this question to enable them to decide whether or not to participate in the Swiss proceedings. They did not want to submit to the Swiss jurisdiction, and grant it jurisdiction which it would not otherwise have if it were not necessary. Swissair also required a decision on this point, as if a Swiss judgment were not enforceable in Ireland there would be little point in continuing proceedings there.

Out of this preliminary issue, four points arose, the most pertinent of these being –

1. Whether the order sought would be excluded from enforcement under the common law as arising from a proceeding in bankruptcy or insolvency.

2. In the event that the answer to 1 is no, a second question arose on the pleadings as to whether, under Irish rules of conflict of laws, the order of the Swiss court would be recognised on the basis of a “real and substantial connection” test (as contended for by the liquidator of Swissair), rather than the narrower test summarised in Dicey.

The High Court ruled that the order sought would not be excluded from enforcement under the common law as arising from a proceeding in insolvency. On point two they felt that the Irish position was with Dicey’s Rule and ultimately decided that none of the limbs of the rule applied and that the Swiss judgment could not be enforced in Ireland should it be obtained.

This was appealed to the Supreme Court and they handed down their decision on 23rd February 2012. The Supreme Court ultimately agreed with the High Court decision and did not allow the appeal. It was felt that the Courts would be overstepping their authority to develop the Common law position so far as to align with the Cambridge Gas position without the existence of a legislative framework and necessary guidance. O’Donnell J was prepared to take a more liberal perspective to such insolvency co-operation however. He did not want to rule out the development of an insolvency principle at Common law that drew from that outlined in Cambridge Gas.

It remains to be seen how long it will take for the Irish law to come into line with its closest neighbours if it must be left to the legislature to develop the required framework. This case highlights that there is an absence of statutory guidance for such cross-border co-operation in insolvency proceedings. However, because there is little change to the Irish position, it also illustrates the limits of the common law and its development through the courts.

Until such legislative direction that will afford the courts the clarity it requires is provided it appears that the Irish position will remain largely stagnant and will not develop to the same level as other jurisdictions.