Vol 6 (2009) - Issue 4

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Effective Handling of Cross-Border Insolvency: Is There an Effective Approach Already?

1. Introduction

A consequence of the current tendency towards globalisation is that more and more cross-border insolvencies occur. In view of this trend, there is a need for a solution on the issue of cross-border insolvency. This might explain why in the past decades there has not been such a large change in insolvency law in general, and cross-border insolvency in particular, as there has been recently. Two developments concerning that matter are the European Insolvency Regulation (‘the Regulation’) and the UNCITRAL Model Law on Cross-Border Insolvency (‘the Model Law’). The Model Law offers a way to adapt national insolvency law into one legal framework. The Regulation introduces a legal framework for EU Member States.

The Regulation can be seen as the accepted version of the European Convention on Insolvency Proceedings that was out for adoption in 1995 and is a product of EU cooperation. The Model Law is a product of UNCITRAL and INSOL International. UNCITRAL promulgated the Model Law on Cross-Border Insolvency in 1997; the Regulation is from 29 May 2000 and came into effect on 31 May 2002.

Interesting for this article is that both the Regulation and the Model Law have the same objective. They both try to provide a resolution for cross-border insolvencies and at the same time offer legal certainty for citizens. A certainty that is wanted by their States. In this article we will investigate the way the Regulation and the Model Law handle that objective to determine if the following statement is true: ‘In the goal of handling cross-border insolvency, the UNCITRAL Model Law is more effective than the European Insolvency Regulation.’