Cross-Border Insolvency: Cooperation or Conflict?

Abstract

In the contemporary global economy, corporations engage in transnational investments and contracts to an extent that is unprecedented in human history. The way in which such companies organise their affairs, including the manner in which they are wound up and liquidated, is of profound social and economic significance. In this respect, legal systems have an obligation to minimise the risks and transaction costs associated with insolvency proceedings so that transnational trade and investment is not unduly burdened. This paper surveys the various international models for cross-border cooperation in insolvency cases, including the UNICITRAL Model Law on Cross-Border Insolvency, the statutory schemes for cooperation modelled on the English Insolvency Act 1986, cooperation on the basis of comity, and the scope for direct communication between courts, in place of the inadequate procedures under the Hague Conventions. The paper concludes by suggesting that, where multilateral negotiations are stalled, it may be practicable to negotiate cross-border insolvency arrangements on a bilateral or regional basis.