Vol 14 (2017) - Issue 6

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United Kingdom’s Approach to Cross-Border Insolvency: A Comparative and Critical Analysis

1. Introduction
The effect of globalisation is such that business and commerce are hardly bound by the limits of borders of particular countries. Over the past few decades businesses have grown globally so much that they barely limit their activities within the territory of a particular country. As Cunningham and Werlen puts it, 'from a business point of view national borders have become considerably less relevant in the last decade, from a legal standpoint national boundaries and territorial sovereignty remain important.' Insolvency law has two underlying objectives. First, fair and predictable treatment of creditors; and secondly, maximisation of the assets of the debtor in the creditors’ interests. In cross-border insolvency, the need to foster assistance, cooperation and coordination between courts and foreign representatives in different jurisdictions is paramount. Having recognised this, the international community as well as the European Community engaged in discussion during the 1990s which resulted in the UNCITRAL Model Law on Cross-Border Insolvency 1997 (the Model Law) by the former and the EC Regulation on Insolvency Proceedings 2000 (the Regulation) by the latter. The Model Law and the Regulation are intended to enhance and ensure minimum level of assistance, cooperation and coordination between Member States, to develop a more coherent approach to crossborder insolvencies. However, they are not intended to harmonise substantive insolvency laws of Member States. The Regulation is directly effective throughout
all EU Member States except Denmark. It contains mandatory uniform rules on jurisdiction and conflict of laws such that it invades the arena of Member Sates’ sovereignty. On the contrary, the Model Law is not mandatory but countries are encouraged to adopt it. The Model Law comes into force only if a country has adopted its provisions fully or partly. It does not displace the substantive insolvency laws of the state. Instead states are at liberty to implement whatever part of the Model Law it wishes to bring into force.