The Myth (and Realities) of Forum Shopping in Transnational Insolvency

Abstract:     
The perceived scourge of forum shopping has been hotly debated of late in international bankruptcy circles in both scholarly articles and judicial opinions. Proponents of the "territorialist" school have especially seized upon forum shopping as a specific problem with the ascending paradigm of "universalism" and have used it to breathe new life into their critiques. This Article fights back, arguing not only that the forum-shopping temptations of universalism are overstated - a myth - but that the latent possibilities for shopping under territorialism have hitherto skated by unnoticed in academic analysis (but not, it would appear, by savvy market participants). This Article further explores what it contends is the "real" forum shopping in today's international bankruptcy environment: inter-system arbitrage between territorialist and universalist courts in an interregnum, hybrid world. It ultimately remains agnostic on the normative question lurking beneath the surface and taken for granted (that "forum shopping," however we define it, is unwelcome), which has been well probed elsewhere. Rather, it contends that if policymakers are indeed worried about forum shopping, they should not fall for the bugbear that universalism's ascent will markedly increase its incidence.

Number of Pages in PDF File: 34

Keywords: forum shopping, transnational insolvency, territorialist, universalism

JEL Classification: G33, K33

Accepted Paper Series