NEW ZEALAND Law and Practice Contributed by: David Weavers, Alex MacDuff, Matt Consedine and Verniel Virtucio, Russell McVeagh
6.4 A Foreign Private Credit Lender’s Ability to Enforce Its Rights Overseas Investment Regime New Zealand’s overseas investment regime requires certain foreign investors to obtain consent for certain transactions. This may impact a foreign private credit lender’s ability to enforce its rights under a loan or security agreement in two key ways: • the approval of the Overseas Investment Office (OIO) may be required for a third-party purchaser to acquire certain assets if they fall within the regime; and • consideration should be given to the permitted security enforcement exemption if the foreign pri - vate credit lender proposes to acquire assets that would otherwise require OIO approval. Farm Debt Mediation The Farm Debt Mediation Act 2019 (FDMA), which is not possible to contract out of, requires a creditor in relation to “farm debt” to engage in mediation prior to taking enforcement action. This creates a statutory moratorium on enforcement of farm debt for up to 60 working days. The exceptions that permit enforce - ment sooner include: • the commencement of a formal insolvency process in respect of the debtor; • the creditor obtaining an enforcement certificate; and • the appointment of a receiver by the court in an “event of urgency”. Other typical considerations for foreign private credit lenders include: • navigating inter-creditor arrangements (including stand-down periods on enforcement, senior and junior release provisions and applying non-cash consideration via disposal waterfalls); and • choice of jurisdiction to commence any restructur - ing or enforcement process (including recognition). 6.5 Timing and Cost of Enforcement The length and cost of an enforcement process will depend on a variety of factors, including the business’ complexity and capital structure, co-operation of the
Choice of law clauses will not preclude New Zealand legislation that would still apply to the applicable secured property located in New Zealand (eg, the PLA and the PPSA), and will not typically prevent the commencement of an insolvency proceeding in New Zealand. New Zealand has adopted the UNCITRAL Model Law, which facilitates the recognition in New Zealand of insolvency proceedings commenced in foreign juris - dictions. The entitlement and extent of recognition will depend on whether the insolvency proceedings are foreign main or non-main proceedings. This is a common way of ensuring that foreign restructurings or insolvencies can be implemented in respect of assets or counterparties located in New Zealand. Proceedings cannot be commenced against a foreign state except in certain prescribed limited circum - stances. 6.3 Foreign Court Judgments Enforceability of foreign judgments will depend on the country in which the foreign judgment was obtained and the nature of the relief granted in the judgment. A party which has obtained judgment overseas may be able to enforce the judgment in New Zealand: • if the judgment was given in Australia and is “regis - terable”, by registration of the judgment under the Trans-Tasman Proceedings Act 2010; • if the judgment was given in a country which New Zealand has a reciprocal agreement, by registration of the judgment under the Reciprocal Enforcement of Judgments Act 1934; and • under common law principles of comity. Foreign arbitral awards are generally recognised and can be enforced by entry as a judgment in New Zea - land. There are a limited number of grounds on which the New Zealand courts may refuse enforcement of an award (eg, invalidity of the arbitration agreement under its governing law).
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