In this episode of our Take 10 podcast, Andrew Johnstone and Ian Mann discuss the decision in CEFC Shanghai: the first PRC office holder to be recognised under the common law in Hong Kong.

Key Takeaways:

CEFC Shanghai

• CEFC Shanghai was a PRC company in Administration. The Administrators sought common law recognition in Hong Kong in order to stop a garnishee order nisi from being made final.
• The House of Lords decision of Galbraith v Grimshaw [1910] AC 508 not followed, but obiter dicta in Privy Council decision of Grupo Torras SA v Al-Sabah [2014] 2 CLC 636 followed.
• The decision in CEFC Shanghai was consistent with established principles of common law recognition.

Cross border recognition: BVI vs Cayman Islands

• In the BVI, Part XIX of the BVI Insolvency Act permits orders in aid of foreign insolvency proceedings at the request of a foreign liquidator, but only to representatives appointed in 9 specific jurisdictions, of which the PRC is not included.
• Could the common law power of recognition be relied upon by PRC Administrators instead? The answer is: “maybe”, but the BVI Court of Appeal will have to clarify some conflicting first instance decisions.
• The Cayman Islands does have a statutory provision for recognition of foreign companies under Part XVII of the Cayman Islands Companies Law.