Cross-border insolvency law scholars have devoted much attention to theoretical questions of international system design. There is a general consensus in the literature that the ideal system would be a universalist system in which cross-border insolvencies would be administered in a single forum under a single governing law. But scholars have paid less systematic attention to how a universalist system can be implemented in the real world by institutional actors, such as legislatures and judges. My recent paper aims to redress the balance somewhat by discussing the comparative reception of the UNCITRAL Model Law on Cross-Border Insolvency (‘the Model Law’) in the Anglo-US common law world and exploring the role of local legislative and judicial implementation in the harmonization of cross-border insolvency law. The main themes of the paper can best summarized in two aphorisms: ‘all politics is local’ and ‘old habits die hard’.
As the Model Law is a ‘soft’ choice-of-law neutral instrument, domestic enactments that implement it typically contain no express choice-of-law rules. Leading universalists urge judges to take their cue from modified universalism and interpret Model Law enactments in a manner that approximates to universalism’s ideal ‘one court, one law’ approach. But my comparative analysis of Anglo-American judicial practice reveals that the contours of modified universalism are contested. ‘Modified universalism’, as it is understood in the United States, implies that judges should presumptively defer to the law of the foreign insolvency proceeding (lex concursus). American universalists and their supporters tend therefore to favor a strong, centralizing version of modified universalism. By contrast, British modified universalism has a forum law (lex fori) choice-of-law orientation. British modified universalism supports effective coordination of insolvency proceedings with one court having a primary coordinating role. But it lacks any commitment to a centralizing lex concursus rule in the absence of statutory mandate.
Framed by reference to this account of the Model Law’s Anglo-American reception, the paper argues that modified universalism offers no convincing theory of how a universalist system is to be institutionalized in practice in the absence of more and harder law, the province of legislatures. Competing versions of modified universalism that mirror the choice-of-law compromise baked into the Model Law cannot support an interpretive methodology capable of yielding global judge-made rules of private international law that would address the Model Law’s choice-of-law indeterminacy.
Adrian Walters is Ralph L. Brill Professor of Law and Director of the Program in Business Law at Chicago-Kent College of Law, Illinois Institute of Technology, and a member of the Centre for Business and Insolvency Law at Nottingham Law School, Nottingham Trent University.