Securities & Futures Commission V China Metal Recycling (Holdings) Limited: Regional Conflict of Laws, Judicial Recognition and Hong Kong-China Cross-Border Insolvencies
2014 Annual Review of Insolvency Law, ed. Janis P Sarra & Justice Barbara Romaine (Toronto: Carswell), pp 599-623
16 Pages Posted: 11 Feb 2015 Last revised: 19 Mar 2015
Date Written: December 10, 2014
Using the recently adjudicated landmark case in Hong Kong of Securities and Futures Commission v China Metal Recycling (Holdings) Limited as a launching board this article discusses and analyzes the complexities surrounding cross-border (corporate) insolvencies (“CBIs”) between Hong Kong and mainland China (HK-China CBI). Going forward, HK-China CBI will have a direct bearing on decisions made by Hong Kong and Chinese courts; since they are already increasingly requested to adjudicate on the same issues during a corporate insolvency, a new mechanism is called for in order to provide a practical and economically viable resolution to the regional conflict of laws issue arising from Hong Kong and mainland China having different insolvency laws in spite of Hong Kong being a part of mainland China, although a special administrative region within it. A new mechanism should focus on the judicial recognition of judgments and court orders concerning insolvencies of companies with establishments in both Hong Kong and mainland China; and if a new mechanism is properly implemented, it can more effectively and holistically facilitate resolution of the regional conflict of laws issue that typically arise during the insolvency procedure of a Hong Kong-listed company with subsidiary companies located in mainland China. Without such a mechanism in place, the provisional liquidators appointed in Hong Kong will need to devise a more convoluted resolution method in order for them to be approved by the Chinese court before they can take control of the Chinese subsidiary companies. Moreover, without a new mechanism, there will be duplication of insolvency procedures and costs and there may be incentives for forum shopping.
Keywords: HK-China Cross-Border Insolvencies, Regional Conflict of Laws, Judicial Recognition and Enforcement
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