Law Relating to Cross Border Insolvencies: Perspectives & Challenges of the Current Legal Framework

Abstract

The law in relation to cross border insolvency is primarily identified in reference to the UNCITRAL Model Law on Cross Border Insolvency. It is considered the benchmark with reference to which other laws are analyzed and audited. The presence of the Model Law however does not sanction the efficacy of the laws relating to such area. The reason being that the various states would make a detour from the model law when enacting their own laws. This leads us to examining the various pitfalls that are witnessed in such jurisdictions. However, the examining of the pitfalls of the domestic laws enacted on the lines of the Model law is not enough. The Model law itself needs to be exantined as to whether it is adequate to meet the demands of the current times. There is a divergent theoretical approach to the concept of cross border insolvency. While a certain set of scholars believe that universalism should be adopted viz. the incorporation of a single court that handles all the insolvency related legal issues. While another school of though believes that the approach should be territorial. It are these opposing and purportedly conflicting viewpoints that inform much of the debate surrounding the cross border insolvency. The EU Regulations is a primary legislative instrument that apart from the UNCITRAL Model Law has made a significant attempt to regulate the cross border insolvency albeit in the EU jurisdiction. However, the Regulation itself is also not free from the drawbacks that accompany any new legal instrument. However, it does reflect a fair amount of contribution that has been made by the UNCITRAL Model Law in so far as it ensures that there is a legal mechanism that actually establishes the rights and obligations when a cross border insolvency does actually occur in the EU jurisdiction. It is in the backdrop of such legislative framework, existing and proposed, in the international arena that the current legal regime in India is exantined. Its pitfalls are highlighted and its deficiencies in so far as they relate to cross border insolvencies are projected. The various attempts to reform the system and the plethora of recommendations are also examined. In the end, a complete overhaul of the current legal regime of India in relation to cross border insolvency is proposed which is in line with the recommendations made by several committees prior in time to this work. Hence, it is concluded that the objective of having a competent and efficient law for cross border insolvencies in India now rests upon the enactment of a law that comprehensively deals with the contemporary problems and understands the current national, regional as well as global needs.