Beyond Carve-Outs and Toward Reliance: A Normative Framework for Cross-Border Insolvency Choice of Law

U of Michigan Public Law Research Paper No. 451

25 Pages Posted: 11 Apr 2015 Last revised: 21 May 2015

Date Written: April 8, 2015

Abstract

Choice of law in cross-border insolvency is gaining increased attention, not just by lowly academics but by policymakers who actually matter. I argue it is time to bring some normative guidance to the burgeoning reform efforts. At the highest level of theoretical purity, universalism seems to have (rightly) captured the biggest following. But it has been scaled back by what I call “second-order” considerations of pragmatics to its lesser, modified form. I take that retrenchment as necessary and note how it has been deployed through a carveout-based regime of subject-specific exceptions from lex fori concursus. Given that lay of the land, I suggest a “third-order” normative framework for moving beyond discrete subject matter carveouts and instead propose a reorientation toward a normative principle to justify the necessary carveouts of modified universalism: actual, defensive litigant reliance should be what warrants departure from COMI insolvency law. I contend that this new framework will serve a desirable cabining effect on territorialism by reserving the application of non-COMI law for circumstances when it is truly “required.”

Suggested Citation

Pottow, John A. E., Beyond Carve-Outs and Toward Reliance: A Normative Framework for Cross-Border Insolvency Choice of Law (April 8, 2015). U of Michigan Public Law Research Paper No. 451, Available at SSRN: https://ssrn.com/abstract=2591985 or http://dx.doi.org/10.2139/ssrn.2591985

John A. E. Pottow (Contact Author)

University of Michigan Law School ( email )

625 South State Street
Ann Arbor, MI 48109-1215
United States
734-647-3736 (Phone)

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