Vol 10 (2013) - Issue 1

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Fighting the Challenge of Cross-Border Insolvency at ‘Home’: A Global Approach to the Failure of Multinational Enterprise Groups

Introduction
Insolvency law has been defined as a form of 'metalaw' in the light of the inextricable knot of legal disciplines and policy considerations, which make their appearance when a company is on the verge of failing. The difficulties arising from the balancing exercise of multiple, often conflicting, interests are then exacerbated in cases of transnational insolvencies, where issues of jurisdiction, choice of law, recognition and enforcement are involved. It is commonly accepted that, in the context of a globalized market economy, domestic bankruptcy laws often proved ineffective in handling certain issues of private international law autonomously. It is more specifically in the scenario of a multinational enterprise group ('MEG') that the unsuitability of national laws is capable of revealing a proper 'jurisdictional nightmare', particularly in the light of the current financial crisis.
Following more than twenty years of debates surrounding the idea of a transnational insolvency regime, mainly characterized by an intellectual dispute between universalism and territorialism based theories, a small number of international tools have now been provided, each claiming to represent the best example of a 'modified universalism approach. In 1997, the United Nations Commission on International Trade Law adopted the Model Law on Cross-Border Insolvency, followed in 2000 by the European Union’s European Insolvency Regulation.13 While both texts 'acknowledge and expand on the ancient principle of comity', they both fail in considering the procedural and jurisdictional issues arising from the insolvency of MEGs. Ample literature is already available concerning the strengths and weaknesses of those regimes.