Recognition and enforcement in cross-border insolvency law: A proposal for judicial gap-filling

• Published in: Vanderbilt journal of transnational law Vol. 48; no. 5; pp. 1225 - 1284
• Main Authors: Gopalan, Sandeep, Guihot, Michael
• Format: Journal Article
• Language: English
• Published: Vanderbilt University, School of Law 01.11.2015
• Subjects: Bankruptcy; Bankruptcy law; BUSINESS; CREDITORS; Evaluation; Foreign judgments; Foreign trade regulation; GLOBALISATION; Harmonization of laws; International relations; JUDGMENTS; Law and legislation; Laws, regulations and rules; LEGAL SYSTEM; Remedies; Risk assessment; Soft law; UNCITRAL; United Nations Commission on International Trade Law; Universalism; UNITED STATES; AUSTRALIA; GREAT BRITAIN
• ISSN: 0090-2594

The globalization of business activity necessarily entails contacts with a diverse array of national laws and legal systems, and insolvencies in this context often have transnational consequences. 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. These clashes pose difficulties because each country has framed its insolvency laws in response to particular political exigencies and the policy preferences of its citizens, reflecting different bargains between creditor and debtor protection. Despite its enormous financial importance and academic complexity, cross-border insolvency law remains in a state of confusion. This Article analyzes the recognition and enforcement of cross-border insolvency judgments from the United States, United Kingdom, and Australia to determine whether the UNCITRAL Model Law's goal of modified universalism is currently being practiced, and subjects the Model Law to analysis through the lens of international relations theories to elaborate a way forward. We posit that courts could use the express language of the Model Law text to confer recognition and enforcement of foreign insolvency judgments. The adoption of our proposal will reduce costs, maximize recovery for creditors, and ensure predictability for all parties.