The collapse or distress of international businesses can affect multiple stakeholders, including banks, trade creditors, employees, shareholders, and even entire economies. Conflict between laws, duplication of processes, lack of cooperation between courts or insolvency professionals and the disintegration of the failed business’s administration exacerbate the damage. The United Nations Commission on International Trade Law (UNCITRAL) has, over the years, developed mechanisms to promote greater harmonization and fair and efficient cross-border insolvencies. My recent article analyses the recent addition to the UNCITRAL texts on insolvency—the UNCITRAL Model Law on the Recognition and Enforcement of Insolvency-Related Judgments (2018) (MLIJ)—against the backdrop of the cross-border insolvency system’s underlying norm.
The norm of ‘modified universalism’ requires a global approach to multinational default, which can resolve conflicts and result in optimal insolvency solutions. The norm is reflected in the main global instrument for cross-border insolvencies—the UNCITRAL Model Law on Cross-Border Insolvency (MLCBI) of 1997. But the application of the MLCBI exposed a gap or uncertainty regarding its application to the enforcement of judgments, highlighted most impactfully by the UK Supreme Court in Rubin v Eurofinance  UKSC 46, in which the UK court refused to enforce a judgment emanating from the main insolvency process. At the same time, insolvency, including the enforcement of insolvency judgments, is excluded from general private international instruments for commercial matters.
UNCITRAL decided to step into the void and develop a new instrument, which was finally adopted by the organization in 2018 as a model law on the recognition and enforcement of insolvency-related judgments. The MLIJ has been quite well-received and considered by commentators a significant improvement of the current position. Now, countries need to consider whether to enact the MLIJ and if so how to embed it in local law. Adoption may take time, as it commonly takes several years before countries start enacting domestic laws on the basis of a model law. The global pandemic, and in the UK the Brexit process as well, may cause further delays.
When countries do, however, come to consider adopting the new instrument, it is anticipated that this will generate a policy and legislative discussion. The MLIJ project took place against a compound background of diverse interpretations of the existing framework and mixed aims informed it. Not all countries viewed the MLCBI as excluding judgments, and so the MLCBI and the MLIJ to some extent overlap. It may be questioned whether the MLIJ really adds to the regime and should be enacted. Where it is considered helpful, there are also questions about potential inconsistencies. Adoption of the MLIJ may also be an occasion to consider enacting the MLCBI by countries who have not already done so before. In that process, such countries might consider merging both instruments. Countries may also consider adopting the new model law for enterprise group insolvency (finalised a year after the MLIJ) and, again, this may raise questions of compatibility between the instruments. The anticipated work of UNCITRAL on choice of law may also impact the MLIJ. If the MLIJ is adopted, issues will likely arise concerning its application and interpretation in individual cases. The delays caused by external forces and political circumstances can provide a breathing space to reflect on the regime and analyse the MLIJ thoroughly and in context.
My article contributes to this awaited debate, adoption, and application process of the MLIJ. It provides an overview of the norm of modified universalism as the dominant approach for addressing cross-border insolvencies and, specifically, its application to the enforcement of insolvency judgments. Under modified universalism, deference demanded of ancillary courts follows more specifically from the designation of a main court within a body of law that seeks to centralize decision-making. These proceedings should encompass all of the business’s assets and all its stakeholders, depending on what is most efficient in the circumstances. Against this backdrop, the article provides a detailed analysis of the MLIJ and its key features, showing how it has been informed by general private international law instruments on the one hand, and by the cross-border insolvency dominant norm on the other. It also compares the MLIJ with the MLCBI, highlighting overlaps and inconsistencies. The purpose of this analysis is ultimately practical: to encourage wide adoption of uniform rules concerning the enforcement of insolvency judgments, and application in a way that can promote fair and efficient results in international insolvencies. The article explores alternative ways of implementation, considering the different ex ante positions of countries concerning the issue of enforcement of judgments in the context of international insolvency, also suggesting how the model law can work and can be used in different circumstances.
Irit Mevorach is a Professor of International Commercial Law at the School of Law of the University of Nottingham and the co-Director of the University of Nottingham Commercial Law Centre.