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Guest article: Turning back the clock: Post-Brexit UK and Cyprus cross border insolvency recognition

Chris Iacovides
Andri Antoniou

Our thanks to Chris Iacovides and Andri Antoniou, Directors at CRI Group, for this contribution to Insolvency Practitioner. Please note that guest articles do not necessarily represent the views of the IPA.


The loss of the relatively streamlined and automatic recognition regimes which applied between the UK and EU member states by virtue of the EU Regulation on Insolvency Proceedings 2015 (848/2015) (EUIR), has been described as a “great tragedy”1.

What was a clear and smooth route to recognition between member states, facilitating more efficient and swift cross border insolvency proceedings with obvious benefits to creditors and other stakeholders, no longer applies for UK office holders who will need to seek recognition in EU member states and vice versa, leaving office holders to navigate through a fragmented and less predictable landscape of common law, domestic legislation and international treaties to identify the most appropriate route.

For insolvency proceedings which commenced prior to 31st December 2020, the position was clarified by the Withdrawal Agreement (2019/C 384 I/01); the EUIR continues to apply to those cases. The pathway, however, to recognition for insolvency proceedings commenced post 31st December 2020 will undoubtedly be more complex, and the increase of cross border structures involving Cyprus means it is necessary to identify the legislative framework which will be applicable for recognition to be achieved.

Recognition of UK insolvency proceedings in Cyprus

The process for recognising UK insolvencies in Cyprus, in the absence of the EUIR, is largely untested.

There are a limited number of reported cases where the Foreign Judgments (Reciprocal Enforcement) Law 1935, Chapter 10 (“Cap 10”) has been relied upon as the basis for the recognition of receivers in other common law jurisdictions2.

As per section 3 of Cap 10, any judgment (by virtue of the amendments introduced by Law 130 (1)/2000, the definition of a judgement was extended to include judgements or orders regardless of whether a monetary sum is awarded) of a Superior Court3 will be recognised by the Cypriot court, inter alia, provided it is final between the parties4.

Common law may be another route to recognition; in the first instance case of Eitan Erez v Dr Borris Bannai (Appl no. 1535/2011)5, although the court refused to recognise the foreign insolvency proceedings because the respondents were not Cypriot residents and the applicant failed to sufficiently prove that they held assets within the jurisdiction, nonetheless the Cypriot court was willing to follow common law principles as a route to recognition.  

As guidance as to the necessary requirements to be met for the recognition of foreign insolvency proceedings, the Cypriot court may use the UK Supreme Court decision of 24th October 2012 in Rubin v Eurofinance6, pursuant to which, upon enforcing foreign insolvency orders at common law, it is necessary to meet the test set out in Rule 3 of Dicey & Morris, namely that the judgment debtor: (i) was present in the foreign jurisdiction at the time proceedings were commenced; (ii) that he claimed or counterclaimed in the foreign proceedings; (iii) that he had submitted to the foreign proceedings by voluntarily appearing; or (v) had agreed to submit to the jurisdiction of the foreign court.  

Another route to the recognition of, inter alia, UK insolvency proceedings, could be achieved if Cyprus were to decide to adopt, via domestic legislation, the UNCITRAL Model Law on Cross Border Insolvency (“the Model Law”). Although this would not be a replacement per se of the EUIR in the sense that the recognition would not be automatic, it would at the very least create a procedure to be followed for recognition through court, and the scope of that recognition would be defined in the domestic legislation through which the Model Law would be adopted.

Nevertheless, adoption of the Model Law is not currently under consideration in Cyprus and, in any event, any court route to recognition will mean unavoidable and possibly protracted delays with further risks of loss and asset dissipation to creditors and other stakeholders.

Recognition of Cypriot insolvency proceedings in the UK

The UK already has domestic legislation in place through which it can continue to recognise Cypriot (or other member state) insolvencies; the UK implemented the UNCITRAL Model Law on Cross Border Insolvency (“Model Law”) via the Cross Border Insolvency Regulations 2006 (SI2006/1030) (“CBIR”), pursuant to which a foreign representative appointed in foreign insolvency proceedings may make an application to a court in Great Britain for recognition of those proceedings.

The impact of the recognition is, inter alia, that the foreign representative will have standing to make an application to the English Court under the claw back provisions under the Insolvency Act 1986. Also, for foreign main proceedings only (commenced where the debtor has its centre of main interests), recognition results in an automatic stay on certain enforcement actions against the debtor, equivalent to the stay which applies in English liquidation proceedings.

Furthermore, section 426 of the Insolvency Act 1986 enables the UK courts to assist in relation to insolvencies commenced in the courts of “a relevant country or territory”, upon request, and the scope of the assistance which may be provided via this route can be much wider that CBIR. Unfortunately, however, s426 does not apply to Cyprus as it is not a relevant country for these purposes7. It remains to be seen whether, in light of Brexit, s426 will be extended to apply to Cyprus or even all EU Member States.

Thus, whilst there are routes available for recognition, the position is not anywhere near as clear and predictable as it was under the EUIR; the procedures will now be more costly and time consuming, and automatic recognition between Cyprus and the UK, at least for now, is a thing of the past.

Furthermore, where a UK debtor has a nexus to several EU Member States, this analysis will need to be repeated for each one separately with clear adverse implications for stakeholders. For practitioners who need to act expeditiously to protect and safeguard assets, even a 3 to 6 month delay in their recognition may mean it is too late!   

Chris Iacovides is a Certified Public Accountant and a Licensed Insolvency Practitioner. Andri Antoniou is a Solicitor, Member of the Law Society of England and Wales and a Licensed Insolvency Practitioner – both Directors of CRI Group.


1 The UK and the EU Cross Border Insolvency Recognition: from Empire to Europe to “Going it alone” Susan Block Leib Fordham International Law Journal Vol 40, Issue 5 2017

2 Application no 449/19 of the D.C. of Nicosia, judgment dated 13/7/2020 and Application no 7/15 dated 18/7/2017 of the D.C of Limassol

3 Section 3 (1) (b) provides that such Courts of that foreign country shall be deemed superior Courts of that country for the purposes of Cap 10 and section 9 (1) provides that Cap 10 applies to inter alia, judgments obtained in Courts of the United Kingdom.

4 Section 3 (3) Cap 10 provides that a judgment is deemed to be final irrespective of whether an appeal is pending or the judgment is subject to an appeal.

5 A.G. Erotocritou LLC, Cross Border recognition of insolvency proceedings 13/05/2009

6 [2010] EWCA Civ 895

7 Relevant countries as per section 426 are the Channel Islands, the Isle of Man, as per the Co-operation of Insolvency Courts (Designation of Relevant Countries and Territories) Order 1986, Anguilla, Australia, the Bahamas, Bermuda, Botswana, Canada, Cayman Islands, Falkland Islands, Gibraltar, Hong Kong, Republic of Ireland, Montserrat, New Zealand, St. Helena, Turks and Caicos Islands, Tuvalu, Virgin Islands. In addition, and as per the Co-operation of Insolvency Courts (Designation of Relevant Countries and Territories) Order 1996, Malaysia and Republic of South Africa.