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v. Proceedings in Canada to Assist Non‐Canadian Insolvency Officers
Where There is No Canadian Branch
Note: The Canadian Bankruptcy and Insolvency Act and Companies’ Creditors Arrangement Act each contain
provisions to enable a Canadian court to recognize and assist non‐Canadian insolvency officers in their duties.
However, these statutes may not apply in the case of an insolvency officer of a non‐Canadian insurance
company. Where a non‐Canadian insolvency officer of an insurance company without a Canadian branch seeks
recognition of non‐Canadian proceedings and the assistance of a Canadian court, Canadian common law
comity principles will apply.
Holt Cargo Systems Inc. v. ABC Containerline N.V. (Trustees of), [2001] 3 S.C.R.
907 (Supreme Court of Canada). Where a non‐Canadian jurisdiction is the
primary insolvency jurisdiction, the Canadian court may, but need not, defer to
the primary insolvency jurisdiction. The “plurality” approach governs over the
universalist approach, and the Canadian court exercises a discretion whether to
defer to and assist the non‐Canadian jurisdiction. A security interest or lien
recognized under Canadian law may prevail over the insolvency law of the
primary jurisdiction.
Pro‐Swing Inc. v. Elta Golf Inc., [2006] 2 S.C.R. 612 (Supreme Court of Canada).
To be recognized in Canada, a foreign order must have been rendered by a
court of competent jurisdiction and must be final (but see Re Cavell, below, as
to the finality requirement). Recognition in Canada is subject to judicial
discretion to ensure that the order does not disturb the structure and integrity
of the Canadian judicial system.
Re Cavell, 2006 CanLII 16529 (Ontario Court of Appeal). The fundamental
considerations for a Canadian court to determine whether to recognize and
enforce a foreign order pursuant to private international law are the principles
of ‘real and substantial connection’ and ‘order and fairness’. The foreign order
must be clear and certain, but not necessarily a final order, provided there is
little risk of injustice or public confidence being undermined if it is subsequently
changed or voided.
b. Solvent Schemes of Arrangement – Canada
Note: There have been no Canadian‐initiated solvent schemes of arrangement to date. It is an open question
whether a solvent scheme of arrangement could be initiated for an insurance company under Canadian law.
However, Canadian courts have ruled on the recognition and enforceability of a solvent scheme of
arrangement for a non‐Canadian reinsurer with a branch in Canada.
Re Cavell, 2006 CanLII 16529 (Ontario Court of Appeal). Where a U.K. reinsurer
sought recognition, enforcement and a supporting stay of proceedings from a
Canadian court in support of a solvent scheme of arrangement to be
implemented under s. 425 of the Companies Act 1985, the Ontario Court of
Appeal held that there was no Canadian statutory basis to recognize the order
of the U.K. court made under the U.K. legislation. (Specifically, the Canada‐U.K.
Convention providing for the Reciprocal Recognition and Enforcement of
Judgments in Civil and Commercial Matters was held not to apply.) However, the
proceedings of the U.K. court could be recognized on the basis of private
international law and comity, since the U.K. court order was “undoubtedly clear
and certain”, it presented “little if any risk of injustice” to the Canadian branch
reinsureds, there was “little risk of undermining public confidence” if the initial
order and procedure set by the U.K. court were changed subsequent to the
recognition order, there was a real and substantial connection between the U.K.
proceeding and the subject‐matter ‐ a scheme of arrangement proposed by a