Vol 1 (2004) - Issue 4

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World Standards - The Role of INSOL International

It is a measure of some achievement that INSOL International probably requires no introduction to any reader of this journal. INSOL’s genesis was very much an afterthought to the conference that the English Insolvency Practitioners Association held to mark its 21st birthday in Cape Cod, Massachusetts in 1982. At this conference we met IPs from Canada, the US and Australia. In a nutshell, the conference was deemed a success and it was decided to repeat the exercise, which duly happened in 1985 in Monte Carlo. But the history of professional bodies is of little interest except to those who were involved, and they already know the story.
The purpose of mentioning INSOL’s origin is to make the point that there were no lofty ideals of defining international best practice, helping to set standards or anything of the sort: no, we just wanted an excuse for another party with a different bunch of party animals. The fact that they purported to be the leaders of the profession in their countries (well they would say that, wouldn’t they) was immaterial. If truth was told, in those early days, as an organization, we did not always pick the most suitable partners, but as any parent would tell you, youngsters seldom do.
At some stage, the need for INSOL to do something vaguely technical crossed the minds of those running INSOL, because I was asked to set up a technical committee of INSOL which was charged with ‘keeping up to date with all legal changes around the world’. Even with today’s resources, you have to marvel at the impossibility of such a task, but that didn’t stop then directors from passing it out or me from taking it on. In many respects, the great debate was just getting under way: the early drafts of the European Bankruptcy Convention were being discussed, a couple of books had been written on international insolvency law (international in as much as they referred to more than one jurisdiction) and a limited number of practitioners were starting to think about the differences between insolvency laws. International Harvester was one of the first truly international cases but more large domestic cases had foreign elements to them.
By the late eighties, the UK, US and Australia had legislation that facilitated international co operation in ways that many nations still only dream about. The US led the way with Sections 304/306 by providing an open door to any foreign representative needing the assistance of the US court. The UK, not surprisingly, was a great deal more conservative. Although it provided a long list of jurisdictions which the English courts would recognize, closer examination would show that most of them were small, surrounded by water and had once been coloured red on the map. This recognition did not extend to the United States, irrespective of the fact that it had been our major trading partner for many years, probably because they refused to play cricket. We did not like to admit this and so the excuse of the insurance industry being unhappy with the US penal judgment regime was invented. Australia in its Section 581 had gone much further than either of the other two by making recognition mandatory for a specified list of jurisdictions and discretionary for virtually all others.
So as the eighties disappeared and we struggled into the depression of the early nineties, the problems of practitioners endeavoring to deal with assets outside their home jurisdiction rose inexorably. INSOL (in the persons of Richard Gitlin and Stephen Adamson) identified the opportunity to work with the United Nations Commission for International Trade Law (UNCITRAL), although no one appreciated what the involvement would entail.
We did a lot of groundwork, produced a report and convened a colloquium of interested parties in Vienna. Dr Gerold Hermann, then Secretary General of UNCITAL, asked us to specify what an insolvency practitioner needed when he went to another jurisdiction. Our best attempt was for access and recognition with an element of judicial co-operation thrown in for good measure. Clearer thought would have told us that recognition on its own, without a degree of relief, was rather pointless, but fortunately that point dawned on us somewhere along the way.
And so, with little vision of the potential end result, an UNCITRAL Working Group was established comprising representatives of most member nations, numerous other observer nations and a couple of NGOs. The technical expertise came from INSOL, in the form of Ron Harmer and I, and the International Bar Association, in the form of Dan Glosband. And so we started our lengthy and sometimes painful negotiations.