Q&As

Serving Statutory Demands with Foreign Choice of Law in the UK

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Produced in partnership with David Sawtell of 39 Essex Chambers
Published on: 31 October 2016

Can a statutory demand be served on a UK corporate person where the debt arises under a contract that has a foreign choice of law and forum clause?

STOP PRESS: From 6 April 2017, the insolvency rules 1986, SI 1986/1925 were revoked and replaced by the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024. The content in this Q&A may have been affected by this change.

A statutory demand is a formal demand for payment of a debt served by a creditor on its debtor in a standard, prescribed form. It is not issued by the court and has been described as an ‘extra-judicial’ document and a non-legal process (see Re a Debtor (No 88 of 1991)). It is an important method of proving the insolvency of a debtor ahead of issuing

David Sawtell
David Sawtell

39 Essex Chambers

David is a barrister specialising in property, commercial and chancery fields. He was called to the Bar in 2005. He is regularly instructed in complicated property, company and commercial litigation, as well as cases involving professional liability. He has particular expertise in cases involving a cross over between different areas of law or where there are allegations of dishonesty or fraud. He appears regularly in the Chancery Division and has been reported in the Court of Appeal. He is regularly published across a number of leading practitioner’s periodicals, including the Commercial Litigation Journal and the Procurement and Outsourcing Journal. He speaks regularly at seminars and conferences on commercial and civil litigation topics. He was the author of the two commercial litigation units for the Level 4 higher apprenticeships in legal services. He is a tenant at Lamb Chambers.

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Jurisdiction(s):
United Kingdom
Key definition:
Insolvency definition
What does Insolvency mean?

This can be defined by two alternative tests (Insolvency Act 1986, s 123):

• cash flow test: a company is solvent if it can pay its debts as they fall due, no matter what the state of its balance sheet (Re Patrick & Lyon Ltd [1933] Ch 786);

• balance sheet test: a company which can pay its debts as they fall due may be insolvent if, according to its balance sheet, liabilities (including contingent liabilities) exceed assets.

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