Model Law on cross-border insolvency comes of age: New times or new paradigms

Open Access

Abstract

This year (2018) the Model Law on Cross-BorderInsolvency comes of age and celebrates its 21st birthday. It has been something of a successinternationally. The major common lawjurisdictions including the United Kingdom (UK), the United States (US), Canadaand Australia have changed their domestic laws on cross-border insolvencycooperation based on the model law provisions and so too has Japan and Korea. But theemerging global super powers of China and India have remained resistant and sotoo have most of the European Union (EU) member states including the economicpower houses of France and Germany. Nevertheless, the number of international acceptances is growing slowlyincluding most recently Singapore. India is also in the process of consideringwhether to join the Model Law, with the Government of India having recentlyissued a draft chapter to be included in the Insolvency and Bankruptcy Code2016. This papercritically assesses the basic paradigm of cross-border insolvency cooperationas reflected in the Model Law, its potential as a vehicle for harmonisation andits limits of facilitating such cross-border cooperation. Afterthis first introductory part, the paper is divided as follows. Part 2 asks what is meant by cross-bordercooperation in respect of insolvency matters; in other words, what forms maycooperation take and what is the role of the Model law in suchcooperation? Part 3 considers whycertain economically significant States have, or have not, adopted the ModelLaw. Particular reference is made toSingapore as it is a major financial centre in Asia that has recently adoptedthe Model Law, and to China given its economic significance and the fact thatit has not yet adopted the Model Law. References are also made to the US andthe UK as they are early Model Law adopters. Part 4 addresses key variances inthe context of implementation of the Model Law and which are major factors forStates to consider in the process of adoption; namely (a) reciprocity; (b)relevant proceedings for the purpose of providing cooperation; (c) avenues forextending cooperation; (d) treatment of foreign creditors and (e) applicationof foreign law. Part 5 considers futureprospects for the Model Law regime and Part 6 concludes.