Extra-territoriality and the UK Insolvency Act 1986

This paper considers whether UK corporate insolvency law and the UK Insolvency Act 1986 have extra-territorial effect post-Brexit, and whether – and to what extent – it is for the courts or the legislature to extend any extra-territorial effect. It does not deal with ‘inward recognition’, ie the recognition of foreign judgments and orders in the UK.

Brexit has left something of a vacuum and provisions which might otherwise have applied extra-territorially, at least within the EU, may now have been deprived completely of extra-territorial effect. But all is not lost and Brexit here presents opportunities. There is room for clarifying that particular provisions which might otherwise have discriminated between EU application and application vis-à-vis the rest of the world can now be given a uniform global interpretation. Courts should, however, proceed incrementally in extending the extra-territorial scope of UK corporate insolvency law.

A bolder reform would be to enact legislation that specifies the exact extent to which the UK Insolvency Act applies extra-territorially. Legislation obviously depends on parliamentary time and requires detailed drafting but also provides the opportunity for the UK to showcase that it remains at the forefront of international insolvency developments.