Vol 3 (2006) - Issue 4

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Will UNCITRAL Bring Changes to Insolvency Proceedings Outside the USA and Great Britain? It Certainly Will!

1. General support for the Model Law
The UNCITRAL Model Law on Cross-Border Insolvency generally has been welcomed in literature written by authors from outside the ‘English language comfort zone’ (mainly USA, UK, Canada and Australia). Although some criticism has been expressed at certain aspects of the Model Law there is a general appreciation for its goals and structure. A vast majority of literature advocates the adoption of the Model Law.It is significant too that several large global institutions have recommended the adoption of the Model Law:
– G22. The Group of 22, comprising Finance Ministers
and Central Bank Governors of important economies, gathered in the wake of the international
financial crisis which began in 1997 in Asia. In its meeting of October 1998 the Working Group on International Financial Crisis endorsed eight key principles and features, formulated in consultation with INSOL International. One principle, though not a recommendation, is related to the establishment of a framework for cross-border insolvency,
highlighting the usefulness of the Model Law. The Working Group encouraged the wider use of the Model Law or the adoption of similar mechanisms;
– IMF. In the International Monetary Fund 1999 report Orderly & Effective Insolvency Procedures. Key Issues, produced by the Legal Department, International
Monetary Fund, the taking of appropriate steps to solve cross-border insolvency issues is encouraged.
The report concludes: ‘The adoption by countries of the Model Law on Cross-Border Insolvency
prepared by UNCITRAL would provide an effective means of achieving these objectives’;4
– ADB. In the Asian Development Bank’s RETA report 5795 (RETA: Regional Technical Assistance for Insolvency Law Reform), delivered by the Office of the General Counsel of the Asian Development Bank, entitled Law and Policy Reform at the Asian Development Bank (2000 edition, Vol. I), a project has been launched in several countries to structurally reform the system of insolvency law (amongst other areas of law). It is suggested that the insolvency reform is guided by sixteen so-called ‘Good Practice Standards for insolvency law.’ ADB’s Good Standard Practice 16 reads: ‘An insolvency law regime should include provisions relating to recognition, relief and cooperation in cases of cross-border insolvency, preferably by the adoption of the UNCITRAL model law on cross-border insolvency.’
– The World Bank. In April 2001 the World Bank approved the 35 ‘Principles and Guidelines for Effective
Insolvency and Creditor Rights Systems’, which will be used in its program of country assessment.
Principle 24, headed ‘International Considerations’, states: ‘Insolvency proceedings may have international aspects, and insolvency laws should provide for rules of jurisdiction, recognition of foreign judgments, cooperation and assistance among courts in different countries, and choice of law.’ In its explanation it reads: ‘The most effective and expeditious way to achieve these objectives is enacting the UNCITRAL Model Law on Cross Border Insolvency.’