30/01/2024

Extra-territoriality in offshore proceedings: Abu Dhabi General Markets court decides that it can compel production from foreign persons

In a recent decision that asserts its power to compel persons and documents from outside its jurisdiction, the Abu Dhabi General Markets (ADGM) court has clearly signalled its intention to serve as a global centre for cross-border insolvencies. In doing so, the ADGM is following the prevailing modern approach to international insolvency law, and has deliberately diverged from the approach of the Courts of England and Wales, which on this point are hidebound by historic considerations.

Through a detailed and wide-ranging judgment in Re NMC Healthcare Ltd & ors [2023] ADGMCFI 0022, the ADGM court confirmed that its jurisdiction under section 256 of the ADGM Insolvency Regulations 2022 – which is the approximate equivalent to s 236 of the UK Insolvency Act 1986 – is not territorially limited and allows the court to make orders for the production of documents and for the examination of persons who are outside its territorial jurisdiction, both in the wider United Arab Emirates and likely beyond.

To further illustrate the underlying trend, the bulletin also incorporates the findings and rationale in the recently released BVI judgment of Justice Small Davis in Re Three Arrows Capital Ltd BVIHC (COM) 2022/0119.

Key takeaways

• Jurisdictions around the world are recognising the importance of insolvency being considered on a supra-national basis. If courts are limited to acting within their own jurisdictions, they are behind the curve in the way that modern business operates.
• The ADGM, as a relatively new insolvency jurisdiction, has made the bold but welcome step of confirming that its powers are not limited to the ADGM or even the UAE. The ADGM court is prepared to grant the fullest assistance to office-holders in order to assist them to perform their duties.
• The ADGM court is willing to do this notwithstanding the limitations on the equivalent English insolvency power, which limitations have been upheld by various English judges only on the strict basis that those judges were bound to do so. If the matter were to be considered at the level of the Supreme Court, one might expect that English law would take the opportunity to move in the same direction as other jurisdictions (and, indeed, the English courts in other insolvency contexts).

Read the full briefing, authored by Tony Beswetherick KC and Matthew McGhee.