New York Bankruptcy Court Rejects Comity Based on Public Policy Exception to the Grant of Comity to Non-U.S. Orders

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In re Dr. Jurgen Toft, Case No. 11-1049 (ALG) (S.D.N.Y. Bank. Ct. 2011), a typically sound and erudite decision by the Bankruptcy Court in the Southern District of New York, is something of a close-to-must read for the practioner or reader interested in international practice. The Court addressed a case where the foreign representative, or the insolvency administrator, in a proceeding in an insolvency proceeding in Germany sought to enforce orders from Germany and the U.K. The orders permitted access to the debtor Toft’s email accounts stored on the servers of two internet service providers. The courts in Germany and the U.K. issued ex parte orders permitting access. The foreign representative came to the U.S. to enforce those orders, seeking to do so ex parte as well.

The noteworthy rulings in the case include:

First, the Court got the U.S. trustee involved in the proceeding. The U.S. Trustee opposed the motion.

Second, the Court determined that the access being sought would violate federal law, specifically the Electronic Communications Privacy Act, 18 U.S. C. secs. 2701, et seq. The Court also believed that granting the access might also constitute an unlawful interception of electronic communications under the Wiretap Act, 18 U.S.C. sec. 2511, et seq.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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