Briefing

Demonstrating enforceability of UK insurance business transfers in foreign jurisdictions: Clarifying the test

On 23 December 2025, the High Court sanctioned an insurance business transfer scheme under Part VII of the Financial Services and Markets Act 2000 (the Scheme), transferring the entire (re)insurance portfolios of Mercantile Indemnity Company Limited (Mercantile) and Rombalds Run-Off Limited (Rombalds) into River Thames Insurance Company Limited (River Thames). Each of these entities is a member of the Enstar group.¹

In addition to offering a forensic account of the approach that the Court will take when considering whether to sanction a proposed Part VII transfer, the judgment provides a useful clarification of the High Court’s position on the recognition and enforcement of UK insurance business transfer schemes in foreign jurisdictions.

Background

Each of Mercantile, Rombalds and River Thames were long‑standing run‑off insurers within the Enstar group. The commercial objective of the Scheme was to consolidate all of Enstar group’s UK non-life run-off business into a single entity. The expectation was that this would bring administrative, regulatory and capital efficiencies, as well as providing greater diversification amongst policies and, in turn, reducing Enstar group’s overall risk exposure.

A substantial amount of Rombalds’ and River Thames’ books related to US Asbestos, Pollution and Health claims. Given the geographical breadth of the portfolios, the governing law of the underlying policies was not uniform. The Court accepted witness evidence that the location of the policyholder is a close proxy for the governing law. Although Mercantile’s most prevalent governing law by number and reserves was English law, this was followed by US law at 3.46% (by number) and 5.74% (by reserves). For Rombalds, the figures for US law were 21.1% (by number) and 79.3% (by reserves).

Recognition and enforcement in the USA

A significant feature of the case was the proportion of policies governed by US law and the need for recognition and enforcement in the US courts of any order made by the High Court sanctioning the Scheme. The Court reiterated that it is well established that a Court would not sanction a transfer if the transfer would have little or no significant effect, which would be the case if a foreign jurisdiction governing polices subject to the transfer refuses to recognise the legal effect of that transfer. In other words, the Court would not act in vain. That said, Hildyard J noted that the Court should not refuse to sanction a scheme simply on the basis that it has a “foreign element“, and he cited Re Sompo Japan Insurance Inc [2007] EWHC 146 (Ch) as the well-known test for assessing the likelihood of recognition and enforcement in a foreign jurisdiction.

The Sompo test was whether the Court was convinced that a scheme, “once sanctioned will definitely be effective as regards proceedings in foreign jurisdictions to enforce claims under policies which are governed by foreign law” (our emphasis added).

Hildyard J clarified that the test has evolved since Sompo, and that the Court no longer needs certainty or to be “convinced” as to the position under the relevant foreign law. Instead, the Court is ordinarily satisfied that it has been provided with and can rely on “credible evidence” that the scheme will be recognised and given effect, citing Re Van Gansewinkel Groep BV & Ors [2015] EWHC 2151 (Ch).

In the circumstances the Court was satisfied that the evidence was clear, conventional and convincing in its conclusion that a US court would likely recognise a High Court order sanctioning the scheme. Therefore, it felt comfortable in sanctioning the Scheme. However, notwithstanding the Scheme’s sanction, Hildyard J expressed his preference that “evidence of foreign law should really be provided by an independent expert”. In the case, Hildyard J did not require such evidence on the basis that the likely co-operation of US courts is “almost to be conventionally assumed”. However, he stressed that this should not be taken as a given, especially as regards jurisdictions in which the point arises less frequently and there is much greater uncertainty than in the USA.

Other points of interest

Alongside the application to the Court to sanction the Scheme, the parties also sought an order from the Court to dissolve without winding up each of Mercantile and Rombalds.² This is a common post-transfer step in circumstances where the transferor is left without any remaining assets or liabilities as a result of the transfer, therefore becoming effectively a dormant entity.

In our experience, parties typically seek dissolution without winding up of the transferring entity some months after the transfer takes effect. This provides a valuable time gap in which parties can ensure that all regulatory authorisations are cancelled and all residual assets are transferred out of the entity. An additional benefit, not frequently mentioned, of splitting up the applications is that it encourages the Court to focus solely on considerations that are exclusive to each individual application, and not to conflate issues that may only be relevant to one application but have the potential to scupper both.

Footnotes