Recognition and Enforcement in Cross-Border Insolvency Law: A Proposal for Judicial Gap-Filling

66 Pages Posted: 27 Oct 2015

See all articles by Sandeep Gopalan

Sandeep Gopalan

Deakin University, Geelong, Australia - Deakin Law School

Michael Guihot

Queensland University of Technology - Faculty of Law

Date Written: 2015

Abstract

The globalization of business activity necessarily entails contacts with a diverse array of national laws and legal systems. It is no accident then that when businesses become insolvent, such insolvencies often have transnational consequences and cross the boundaries of domestic jurisdictions. A recent illustration of the scale, complexity, and financial significance of the issues involved is provided by the insolvency of Lehman Brothers, a firm that conducted business in over forty countries through the instrumentality of about 650 legal entities outside the United States. In such situations, there is a clash of competing national laws on weighty questions including the recognition of security interests, processes related to the disbursal of assets, and different policy preferences underlying the protection of different kinds of creditors.

This Article is organized as follows: Part 2 provides an overview of cross-border insolvency law in Australia and outlines the key provisions following the enactment of the Model Law. It also discusses some issues presented by the implementation and interpretation of the Model Law by courts, and illustrates potential problems. Parts 3 and 4 discuss the position in the United States and United Kingdom, respectively, illustrating the confusion created by conflicting decisions on recognition and enforcement in cross-border settings. In Part 5, an argument is set forth for courts to harmonize the recognition and enforcement of cross-border insolvency judgments in order to effectuate the normative foundations of the Model Law and provide certainty for international business. Part 6 concludes.

Suggested Citation

Gopalan, Sandeep and Guihot, Michael, Recognition and Enforcement in Cross-Border Insolvency Law: A Proposal for Judicial Gap-Filling (2015). Vanderbilt Journal of Transnational Law, Forthcoming; Deakin Law School Research Paper No. 15-02. Available at SSRN: https://ssrn.com/abstract=2680447

Sandeep Gopalan (Contact Author)

Deakin University, Geelong, Australia - Deakin Law School ( email )

221 Burwood Highway
Burwood
Burwood, Victoria 3125, Victoria 3125
Australia

Michael Guihot

Queensland University of Technology - Faculty of Law ( email )

Level 4, C Block Gardens Point
2 George St
Brisbane, QLD 4000
Australia

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