The High Court has ruled that Irish courts would not recognise a judgment obtained by Swissair against Flightlease (Ireland) Limited in pending Swiss proceedings. The ruling resolves a preliminary issue about enforceability; it does not decide Swissair’s claim or determine the amount, if any, Flightlease would have to repay.
Joint liquidators Paul McCann and Stephen Akres brought the application under section 280 of the Companies Act 1963. They sought orders that would allow Flightlease’s assets to be distributed under a wind-down agreement without waiting for Swissair’s claim, or that would expedite a challenge to the liquidators’ rejection of Swissair’s proof of debt. The rejection was made on 18 October 2005.
The court agreed to hear first whether an order sought by Swissair in Switzerland, if granted, would be enforceable in Ireland. The parties agreed the relevant facts for that preliminary issue.
Swissair’s Swiss proceedings seek the return of money paid to Flightlease. Under the Swiss law described in the judgment, a claim of this kind required a transaction within five years before a debt restructuring moratorium, an intention to disadvantage or favour creditors, and the other party’s awareness of that intention.
The liquidators argued that the claim arose from insolvency proceedings and fell within the exclusion for bankruptcy or insolvency proceedings. Mr Justice Clarke rejected that argument. He said the substance of any order would be a personal order requiring Flightlease to repay a sum, and its enforceability therefore depended on the common-law rules for recognising foreign judgments in personam.
Swissair argued for a “real and substantial connection” test, pointing to Flightlease’s business activity in Switzerland when the relevant transaction occurred. The judge said that test would be met on the agreed facts. But he declined to adopt it as Irish common law, citing the risk that a major change could retrospectively affect parties who had decided whether to take part in foreign proceedings based on the existing law.
Instead, the court applied Dicey Rule 36: absent submission to the foreign court, the defendant had to be present in that country when proceedings began. By then Flightlease was in liquidation, and its affairs were being conducted by its Irish joint liquidators. The Swiss activity relied on concerned an agent collecting and distributing payments, which the judge found did not amount to Flightlease conducting business in Switzerland at the relevant time.
The court therefore answered the preliminary issue by holding that Irish courts would not recognise any judgment against Flightlease obtained in the Swiss proceedings. It did not decide a separate question about the effect of the unappealed rejection of Swissair’s proof of debt, saying that issue did not arise on the ruling and should be left for a case where it would be decisive.