Vol 23 (2026) - Issue 2

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Internal Legal Conflict and Strategic Sovereign Reservation: Obstacles to Creditor Protection in Cross-Border Insolvency of UK and China

Synopsis
Cross-border insolvency presents a critical challenge to the global economic order, driven by the persistent tension between business integration and judicial territorialism. This article examines the institutional obstacles to creditor protection in the UK and China.
By employing a functionalist comparative analysis alongside insolvency statistics from 2019–2024 and case studies, this study investigates why these two integrated economies have developed distinct barriers.
The findings demonstrate that such obstacles are not merely technical deficiencies but systemic choices regarding the trade-off between 'global commercial efficiency' and 'national judicial sovereignty'. Specifically, UK obstacles originate in an 'internal legal conflict' between codified international cooperation and territorial common law traditions (the Gibbs Rule). By contrast, China's challenges are rooted in 'strategic sovereignty reservation' – prioritising domestic stability through strategically ambiguous legislation and 'governmentcourt coordination'. Theoretical contributions include the proposal of these two analytical concepts to explain divergent institutional paths. Ultimately, the article concludes that the primacy of national interest implies a future of 'multi-modal coexistence' rather than simple convergence.