Cross-border corporate insolvency : a modest proposal for an enhanced international approach
The ongoing process of globalisation has witnessed an increase in cross-border corporate insolvencies involving multinational enterprises (MNEs). Yet, national insolvency laws have proven themselves ill-equipped to handle such matters in an international setting. Responsible policy-makers and academics argue for the creation of a viable international insolvency approach. This debate has revolved around an "either-or" spectrum of (1) the theory of "Universality" that proposes a single court charged with implementing a single bankruptcy law to worldwide claimants, and (2) the theory of "Territoriality" that asserts each jurisdiction can only adjudicate the debtor's insolvency on a territorial basis and distribute local assets to local claimants. But, this debate yet has yielded no practical solution. This thesis suggests that these two theories are not mutually exclusive, and both may be utilized in developing a pragmatic and "better" international insolvency framework. To date, there has been one non-binding international instrument based on moderate choice of forum/law provisions: the UNCITRAL Model Law on Cross-Border Insolvency (the Model Law). Although the Model Law has significant merits, it falls short of the broader expectations minimally acceptable international insolvency system should fulfill. In addition, the regional European Union Council Regulation on Insolvency Proceedings (the Regulation) has recently been enacted. This thesis will argue that, while recognizing the special sui generic nature of the EU framework, important lessons can be learned from this Regulation, and when combined with certain elements from a revamped Model Law approach, a "better" international insolvency framework may be found. The concluding observations of this thesis will touch upon a range of existing international vehicles that may be complementary or alternative vehicles to channel interim reforms. Unless otherwise expressly indicated, this thesis speaks as of 1 January 2006.