Vol 6 (2009) - Issue 2

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Unilateral Regimes Concerning International Insolvency in Modern Europe

Introduction

In Europe it took over forty years to create a suitable instrument for the regulation of cross-border effects of insolvency within the member states of the EU, the EU Insolvency Regulation, which came into force May 2002 (Denmark excluded). The creation of a European legal instrument regulating cross-border effects of insolvency had been under consideration since 1960, but several efforts (draft treaties of 1970 and 1980; EU Convention 1995) failed for various reasons. In the meantime, discussions were opened and negotiations were held within the framework of the Council of Europe, ultimately leading to the acceptance of the European Convention on Certain International Aspects of Bankruptcy, signed in Istanbul on 5 June 1990. For relations between EU member states, the Insolvency Regulation has, in respect of the matters referred to therein, replaced the Istanbul Convention as of 31 May 2002 and for Cyprus as of 1 May 2004, see article 44 of the Insolvency regulation. In the shadow of these collective efforts to create an international instrument, individual states have been in the position to introduce provisions related to cross-border insolvency or amend existing legislation in this field. Below a few of the models used in continental Europe will be described. These are based on court cases, applying general rules of private international law (conflict-of-laws) or they find their source in specific legislation. It may be noted that for the countries on the European continent, much of the relevant literature is only available in the domestic language of such countries. When legislation is translated into English, these are private unauthorised translations.

The development of a system of international insolvency law could move in several directions under the domestic legislation of each individual member state. A member state may, for instance, establish a system of international insolvency law (a) in a purely unilateral manner by creating its own rules (an approach which would follow the US and the UK), (b) by creating rules which reflect the Insolvency Regulation, or (c) by (closely) adopting the UNCITRAL Model Law, either as an integral part of existing legislation or in a separate Act. In this article only unilateral regimes are described, which are not (officially) listed as countries enacting their version of the UNCITRAL Model Law.

Germany

Before the late 20th century, jurisprudence in (the Western part of) Germany consistently applied the principle of territoriality, based on the position that opening of insolvency proceedings by a court in another country is a sovereign act (Staatlicher Hoheitsakt), with the limited effect of interfering with private rights only within the territory in which the state exercises sovereignty. At this time in Germany, territoriality was regarded as absolute, without any exceptions.