The Arbitration of Cross-Border Insolvencies

• Published in: The American bankruptcy law journal Vol. 86; no. 2; p. 201
• Main Author: Gropper, Allan L
• Format: Journal Article
• Language: English
• Published: Ft. Wayne National Conference of Bankruptcy Judges 01.04.2012
• Subjects: Arbitration; Bankruptcy; Bankruptcy laws; Consent; Cooperation; Cross border transactions; Debt restructuring; Insolvency; International courts; International law; International trade; Jurisdiction; Multinational corporations; Studies
• ISSN: 0027-9048

The subject of cross-border insolvency - the recognition that a bankruptcy or insolvency proceeding brought in one jurisdiction is accorded in another - has received significant attention in recent years, commensurate with the growth of international trade. Efforts to meet the challenges created by cross-border business failure have included a Model Law on Cross-Border Insolvency, drafted by the United Rations Commission on International Trade Law ("UTv[C/TRAL") and adopted in many of the world's leading commercial nations, including the United States, where it is codified as chapter 15 of the Bankruptcy Code. This paper proposes international arbitration as a new approach to achieve the goals espoused by the Model Law in a world without an international court or another means to exercise authority over disparate national proceedings. Arbitration would be particularly useful in connection with two types of proceedings that have proven particularly difficult to resolve in cross-border insolvencies. The first involves disputes among estates of affiliated debtors in insolvency cases in different jurisdictions. In a world where proceedings are usually opened in multiple jurisdictions, there are few effective means to resolve disputes between affiliates, especially as the Model Law has very few provisions that apply to corporate groups.