Case Details
- Citation: [2024] SGCA 43
- Title: British Steamship Protection And Indemnity Association Limited & Anor v Charles Thresh & Anor
- Court: Court of Appeal (Singapore)
- Case type: Civil Appeal No 2 of 2024
- Date of decision: 1 July 2024
- Date of grounds: 24 October 2024
- Judges: Sundaresh Menon CJ, Belinda Ang JCA, Kannan Ramesh JAD
- Appellants/Applicants: (1) British Steamship Protection And Indemnity Association Limited (2) British Steamship Management Ltd
- Respondents: (1) Charles Thresh (2) Michael Morrison
- Procedural history: Appeal against the High Court decision recognising Bermuda liquidation proceedings as a foreign main proceeding under the UNCITRAL Model Law on Cross-Border Insolvency as adopted in Singapore
- Lower court decision: Re Thresh, Charles and another (British Steamship Protection and Indemnity Association Ltd and another, non-parties) [2023] SGHC 337
- Key legal area(s): Insolvency Law; Cross-border insolvency; Recognition of foreign insolvency proceedings; Centre of main interests (COMI)
- Core issue: Whether insurance activities conducted outside Bermuda in breach of Bermuda licence terms were relevant to determining the company’s COMI for recognition under the Singapore Model Law
- Judgment length: 40 pages; 11,663 words
Summary
This Court of Appeal decision concerns the recognition in Singapore of foreign insolvency proceedings under the UNCITRAL Model Law on Cross-Border Insolvency (“Model Law”), as adopted in Singapore (the “SG Model Law”). The respondents were joint provisional liquidators appointed in Bermuda to wind up a Bermuda-incorporated insurance company. The High Court had recognised the Bermuda liquidation as a “foreign main proceeding” under Art 17(2)(a) of the SG Model Law. The appellants appealed, contending that the Bermuda proceeding should not qualify for recognition as a foreign proceeding and, in any event, that Bermuda was not the company’s centre of main interests (“COMI”).
The Court of Appeal dismissed the appeal. It held that the Bermuda winding-up proceeding was a “foreign proceeding” within Art 2(h) because it was brought under a law relating to insolvency or adjustment of debt and was collective in nature. On COMI, the Court emphasised that the company’s regulated insurance business and licensing framework were central to the COMI analysis. Crucially, the Court answered the appeal’s central question in the negative: the company’s insurance activities conducted outside Bermuda in breach of its Bermuda licence terms were not a relevant factor for determining COMI. The Court also found no basis to invoke the public policy exception under Art 6 of the SG Model Law.
What Were the Facts of This Case?
The company at the centre of the dispute, British Steamship Protection and Indemnity Association (Bermuda) Limited (“the Company”), was incorporated in Bermuda on 18 June 2010. It obtained a licence from the Bermuda Monetary Authority (“BMA”) to carry on insurance business “in and from within Bermuda” under the Bermuda Insurance Act 1978 (“Bermuda IA”). The licence was conditional and designed to centralise underwriting in Bermuda and to enable regulatory oversight by the BMA. The Company commenced insurance business in compliance with these licence terms.
As a Class 2 insurer under its licence, the Company was authorised to underwrite insurance business for only its shareholders, and all such business had to be 100% ceded to reinsurers unless the BMA granted prior written approval. To comply with the licence, policyholders were required to purchase a share in the Company’s parent for the term of their policy. This structure reflected the regulatory design of the Bermuda licensing regime and the Company’s intended operational footprint.
Later, the Company failed to comply with key licence and statutory requirements. The BMA brought winding-up proceedings on 12 September 2022 under the Bermuda Companies Act 1981 and the Bermuda IA. The grounds relied upon were principally breaches of the Bermuda IA and related regulatory obligations, including: failure to appoint an approved auditor since 2019; failure to file statutory financial returns from 2019 to 2021; failure to maintain adequate accounting and record-keeping systems and meet reporting requirements under the Insurance Code of Conduct 2015; failure to appoint and maintain a principal representative; and failure to maintain a registered office as required by Bermuda company law. Notably, the Company was not wound up on the basis of insolvency.
In Singapore, the joint provisional liquidators (“JPLs”) sought recognition of the Bermuda proceeding and the winding-up order as a foreign main proceeding under Art 17(2)(a) of the SG Model Law. The application was supported by a letter from the Supreme Court of Bermuda requesting assistance. The appellants opposed recognition. They were effectively controlled by Mr Li Yu, who had been an executive director of the Company prior to winding-up and who was resident in Singapore. The JPLs alleged that Mr Li Yu failed to cooperate and provide information, which impeded an orderly run-off of existing policies and dissolution of the Company, potentially prejudicing policyholders.
What Were the Key Legal Issues?
The Court of Appeal identified and addressed several legal questions under the SG Model Law. First, it had to determine whether the Bermuda winding-up proceeding was a “foreign proceeding” within the meaning of Art 2(h). This required consideration of whether the proceeding was brought under a law relating to insolvency or adjustment of debt and whether it was collective in nature.
Second, the Court had to decide whether the proceeding should be recognised as a “foreign main proceeding” under Art 17(2)(a). This turned on the company’s COMI at the relevant time. The Court also had to consider the general principles related to COMI, including what factors are relevant and how regulated activities affect the COMI inquiry.
Third, the Court addressed whether recognition would be contrary to Singapore’s public policy under Art 6 of the SG Model Law. The appellants argued, in substance, that there had been a lack of due process and that the JPLs had acted improperly, including by making dishonest arguments and incurring exorbitant costs. The Court of Appeal assessed whether these contentions engaged the public policy exception.
How Did the Court Analyse the Issues?
The Court began with the threshold requirement of whether the Bermuda proceeding was a “foreign proceeding” under Art 2(h). It applied the framework articulated in Ascentra Holdings, Inc (in official liquidation) and others v SPGK Pte Ltd [2023] 2 SLR 421 (“Ascentra Holdings”). Under that approach, a proceeding qualifies if it is (i) a proceeding in a foreign state; (ii) under a law relating to insolvency or adjustment of debt; and (iii) collective in nature. The Court of Appeal agreed with the Judge that the Bermuda proceeding met these requirements.
Although the Company was not wound up on the basis of insolvency, the Court held that the relevant inquiry was whether the proceeding was brought under a law relating to insolvency or adjustment of debt. The Court accepted that provisions in s 35 of the Bermuda IA permitted winding-up petitions on insolvency grounds, and that the statutory architecture of the Bermuda IA and winding-up regime fell within the “insolvency or adjustment of debt” concept for Art 2(h). The Court also endorsed the Judge’s conclusion that the proceeding was collective: the JPLs had powers akin to liquidators, and the winding-up involved distribution of assets among creditors on a pari passu basis, followed by treatment of contributories.
On the COMI question, the Court of Appeal focused on the central appeal issue: whether the Company’s insurance activities conducted outside Bermuda, allegedly in breach of its licence terms, were relevant to determining COMI. The Court answered this question in the negative. It reasoned that the COMI analysis should not be distorted by illegitimate or non-compliant activities that the company was not entitled to conduct under its regulatory framework. In other words, the Court treated the licence-based regulatory structure as a legitimate anchor for identifying where the company’s “centre” of commercial activity lay.
In reaching this conclusion, the Court emphasised the relevance of activities of a regulated company. The Company’s insurance business was licensed by Bermuda and regulated by the BMA. The licensing regime required centralisation of underwriting in Bermuda and imposed regulatory oversight mechanisms. The Court considered that these features were objectively ascertainable and reflected the company’s lawful operational base. The Court also addressed the appellants’ argument that the Company lacked a physical presence in Bermuda at the time the application was brought. It agreed with the Judge that absence of presence alone did not displace COMI where there were no objectively ascertainable, permanent factors pointing to another jurisdiction.
The Court further considered the appellants’ attempt to reframe COMI by reference to the Company’s alleged out-of-Bermuda underwriting. The Court treated those activities as “illegitimate” in the sense that they were undertaken in breach of the licence terms. As a result, they were not appropriate for COMI determination. This approach reflects a broader principle: COMI is assessed by reference to objective, stable factors that reflect the company’s real operational centre, rather than by opportunistic or unlawful conduct that does not represent the company’s authorised business model.
In addition, the Court addressed the relevance of the activities of the foreign representative in the COMI analysis. It held that the COMI inquiry is primarily about the debtor company’s location of main interests, not the actions of the insolvency office-holder. While the representative’s conduct may be relevant to other aspects of recognition (such as cooperation and the effectiveness of relief), it should not be used to shift COMI away from the objectively ascertainable factors tied to the company’s operations and regulatory environment.
Finally, the Court dealt with the public policy exception under Art 6. It agreed with the Judge that the exception was not engaged. The Court rejected the appellants’ due process arguments and did not accept that the JPLs’ conduct warranted refusal of recognition. It also declined to treat allegations of dishonesty and excessive costs as sufficient to trigger public policy, particularly where the recognition framework under the SG Model Law is designed to support cross-border cooperation and where the foreign proceeding had been properly constituted and recognised in the first instance.
What Was the Outcome?
The Court of Appeal dismissed the appeal and affirmed the High Court’s decision recognising the Bermuda liquidation proceedings as a foreign main proceeding under Art 17(2)(a) of the SG Model Law. The practical effect is that Singapore courts would grant consequential relief to support the Bermuda insolvency process, subject to the statutory framework governing recognition and assistance.
By confirming Bermuda as the Company’s COMI and rejecting the relevance of out-of-Bermuda, licence-breaching underwriting activities, the Court provided guidance on how regulated entities’ licensing and regulatory oversight should inform COMI determinations. The decision therefore strengthens the predictability of cross-border recognition outcomes for regulated companies whose lawful operations are anchored in a particular jurisdiction.
Why Does This Case Matter?
This decision is significant for practitioners because it clarifies the COMI analysis in the context of regulated companies. Many cross-border insolvency disputes turn on COMI, and parties often attempt to argue that the debtor’s actual conduct—sometimes inconsistent with regulatory permissions—should shift COMI. The Court of Appeal’s holding that illegitimate activities are excluded from consideration provides a principled boundary: COMI should be determined by reference to objective, lawful and stable factors, particularly where regulation structures the company’s operations.
The case also reinforces the importance of the “foreign proceeding” threshold under Art 2(h). Even where the foreign winding-up is not based on insolvency, recognition may still be available if the proceeding is brought under a law relating to insolvency or adjustment of debt and is collective in nature. This is useful for counsel advising on recognition strategies where the foreign jurisdiction uses regulatory or administrative grounds to trigger winding-up.
From a litigation perspective, the decision demonstrates that public policy objections under Art 6 are unlikely to succeed absent compelling evidence of fundamental procedural unfairness or other exceptional circumstances. Allegations of due process failures, dishonesty, or cost-related grievances will not automatically defeat recognition where the Model Law framework is otherwise satisfied.
Legislation Referenced
- UNCITRAL Model Law on Cross-Border Insolvency (as adopted in Singapore) — in particular Arts 2(h), 2(i), 6, 17(2)(a)
- Bermuda Insurance Act 1978
- Bermuda Companies Act 1981
- Bermuda Insurance Code of Conduct 2015 (as referenced in the Bermuda IA framework)
Cases Cited
- Ascentra Holdings, Inc (in official liquidation) and others v SPGK Pte Ltd [2023] 2 SLR 421
- Re Thresh, Charles and another (British Steamship Protection and Indemnity Association Ltd and another, non-parties) [2023] SGHC 337
Source Documents
This article analyses [2024] SGCA 43 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.