Gerard McCormack

This paper considers whether UK corporate insolvency law and the UK Insolvency Act 1986 have extra-territorial effect post-Brexit, and whether – and to what extent – it is for the courts or the legislature to extend any extra-territorial effect. It does not deal with ‘inward recognition’, ie the recognition of foreign judgments and orders in the UK. Brexit has left something of a vacuum and provisions which might otherwise have applied extra-territorially, at least within the EU, may now have been deprived completely of extra-territorial effect. But all is not lost and Brexit here presents opportunities. There is room for clarifying that particular provisions which might otherwise have discriminated between EU application and application vis-à-vis the rest of the world can now be given a uniform global interpretation. Courts should, however, proceed incrementally in extending the extra-territorial scope of UK corporate insolvency law. A bolder reform would be to enact legislation that specifies the exact extent to which the UK Insolvency Act applies extra-territorially. Legislation obviously depends on parliamentary time and requires detailed drafting but also provides the opportunity for the UK to showcase that it remains at the forefront of international insolvency developments.

This comprehensive book provides a clear analysis of the main features of the European Insolvency Regulation 2015/848, within the context of previous EU initiatives, as well as addressing the contrasting objectives of universalism and territorialism which underpin cross border insolvency law. It measures the EU regulations against the UNCITRAL Model Law on Cross Border Insolvency and compares this with how the Model Law has been implemented elsewhere, such as in the US and the UK.

This chapter explains that the general choice of law rule is that the law applicable to insolvency proceedings and their effects is that of the State where such proceedings are opened. The general rule applies in main, secondary and territorial proceedings. Article 7 states a general rule which is subject to exceptions set out in Articles 8 to 18. Where one of the exceptions applies, the applicable law will not necessarily be the law of the EU State in which the proceedings are opened.

This chapter addresses the public policy qualification on recognition and relief under the Model Law. It also addresses developments in the UNCITRAL Model Law regime. UNCITRAL has now adopted two new Model Law and taken three additional 'non-legislative' measures. On the non-legislative front, it has adopted a practice guide on cross border cooperation; secondly, a document setting out the judicial perspective on these matters and thirdly, in 2013 a revised guide to enactment of the Model Law. On the legislative front, UNCITRAL has completed two initiatives to further cross insolvency co-operation; firstly, a new Model Law on Recognition and Enforcement of Foreign Insolvency Related Judgments and secondly, an even newer Model Law on Enterprise Group Insolvency.

The UNCITRAL Model Law on Cross Border Insolvency aims to achieve greater efficiencies in the administration of international insolvency cases. It has attained a measure of international acceptance with the US and UK among the implementing States. Among EU countries, Greece, Poland, Romania and Slovenia have also adopted the Model Law.

This chapter explains how jurisdiction to open main insolvency proceedings is given to the courts of the EU Member State where a debtor has its 'centre of main interests' (COMI). It will focus on the 'COMI' concept which is at the heart of the jurisdiction to open 'main' insolvency proceedings. It critically examines how COMI is determined in the case of a group of companies and use of the 'head office functions' test in determining COMI. It also considers COMI and forum shopping i.e. the movement of persons or assets to take advantage of a more favourable legal position. It distinguishes between 'good' and 'bad' forum shopping. It also considers the determination of COMI in the case of individual debtors. The final part focuses on conflicts of jurisdiction and preservation measures.

"EU Insolvency Law" published on 21 Sep 2022 by Edward Elgar Publishing.

This chapter is concerned with the recognition of the opening of insolvency proceedings; of insolvency judgments and other insolvency related judgments. The Insolvency Regulation is based on a philosophy of European universalism. Within the EU as a whole, though not internally within individual Member States, the Regulation determines jurisdiction to open insolvency proceedings, sets out the applicable law in respect of proceedings and provides for the recognition of such proceedings and associated judgments across the EU as a whole. The chapter also addresses enforcement and the public policy qualification on recognition and enforcement.

This chapter focuses attention on exceptions to the generally applicable principle stated in Article 7 that the law of the State where insolvency proceedings have been opened is the governing law. It examines in particular, rights in rem/security rights, set off rights and the special principles applicable to avoidance of detrimental acts and transactions These exceptions are designed to protect the legitimate expectations of a party, which has entered into transactions with another entity that has since become insolvent. The former party should be able to rely on legitimate expectations as to its rights and obligations, which it forms when it enters into a transaction, and those expectations should not subsequently be defeated by the insolvency law of another State.