The High Court recognised the winding-up of Fairfield Sentry Limited and the appointment of Kenneth Krys as its liquidator, but rejected the liquidator’s challenge to Dutch orders affecting money in Fairfield’s Dublin bank account.
In a judgment delivered on 28 February 2012, Ms Justice Finlay Geoghegan ruled after a full hearing that Fairfield and Krys had not established that the Dutch conservatory garnishment orders were ineligible for recognition in Ireland under EU rules. The court therefore refused the requested declarations that those orders were not entitled to recognition and that Citco Bank Nederland held the account money for the liquidator free of them.
Fairfield, a British Virgin Islands investment fund, was wound up by the High Court of Justice of the Eastern Caribbean Supreme Court in July 2009. Krys was appointed one of its joint liquidators. The fund had maintained a US-dollar account at Citco’s Dublin branch since 2003. The judgment recorded a balance of about $71.6 million in December 2011, with interest accruing.
Shell Pensioenfonds and Atlanta Business Inc., both investors in Fairfield, obtained Dutch conservatory garnishment orders over funds in the account. The orders were made without notice to Fairfield. Under the Dutch procedure described to the court, they prevented Citco from paying the debt to Fairfield while the investors pursued claims on the merits. The orders could also give successful claimants priority to funds in a later enforcement stage.
The judge found that Irish law governed the bank-account relationship between Fairfield and Citco. She concluded that the account’s operation was covered by Citco’s General Conditions, rather than the separate 2006 Custodian Agreement. Under those conditions, payment was subject to an attachment that barred payment under Irish law, including a foreign order recognised in Ireland.
The court considered whether the Dutch orders counted as “judgments” under Council Regulation 44/2001 despite having initially been made ex parte. Fairfield could apply in separate Dutch proceedings to have them lifted. The judge held that this opportunity to challenge the orders in contested proceedings before recognition was decided meant the orders fell within the Regulation’s definition of a judgment. She also rejected the argument that recognising them would be manifestly contrary to Irish public policy: the evidence did not establish that equal distribution among unsecured creditors was a fundamental principle of Irish law for this purpose.
The ruling addressed the orders’ current, pre-judgment effect only. It did not determine recognition of any later Dutch enforcement orders or finally resolve the parties’ competing entitlements to the account funds. The judge did not make a declaration enforcing the BVI liquidation order; she said the relief established was recognition, allowing the liquidator to maintain the Irish proceedings.