The Research On Recognition And Relief Regimes In Cross-Border Insolvency Law

The number of cross-border insolvency cases is dramatically increasing recently.Take American judicial practice as an example,the American courts have heard more than one thousand cross-border insolvency cases from the year of 2005 to 2016.Meanwhile,the international community has witnessed the golden period of the rule-building process in this field,and many international organizations and associations have made great contributions,such as European Union,United Nations Commission on International Trade Law(UNCITRAL)and INSOL International.Influenced by the international trend of the cross-border insolvencies,the number of international insolvency cases involving Chinese interests is also increasing during recent years.Typical cases like Topoint Case,Suntech Power of Wuxi Case and many insolvencies between mainland China and the Hong Kong Special Administrative Region(HKSAR).From the perspective of the national rules,Article 5 in Enterprise Bankruptcy Law of the PRC is the only provision dealing with cross-border insolvency issues.Obviously,such a general provision cannot satisfy the objective needs of Sino-foreign international insolvency cooperation and,even worse,such law-making deficiency has severely impacted on the fully participation of Chinese party in international insolvencies.That is the reason why close attention should be paid to the question of 'how to improve the legislative framework of cross-border insolvency law in China'.Given that the cross-border insolvency practice actually centers on recognition and relief practice,the research on recognition and relief regimes in cross-border insolvency law is the research on the core rules of cross-border insolvency law.According to the existing research achievements in this area,there is still a huge researching gap between China and foreign states.Although the issues being researched by Chinese scholars are becoming diverse today,such research achievements are not systematic enough.Also,the existing Chinese achievements in this field are over-emphasized on basic cross-border insolvency issues,without the follow up of newly-appeared issues.Therefore,this study is trying to do a deep enough exploration of the core issues in cross-border insolvency recognition and relief regimes,with the correct assessment of the international rule-making trend as well as the research on the new judicial practices.In a nutshell,this study attempts to give answers to the following questions:What are those new developments in both cross-border insolvency rule-making process and the judicial practices?What experience can be learned by China from those developments?How to make responses by China to those needs of international insolvency cooperation,based on Article 5 of the Enterprise Bankruptcy Law of the PRC?The discussion on these issues is helpful to facilitate the international insolvency cooperation between China and the foreign jurisdictions,and to the improvement of the Chinese legislative reform in this field.The main contents and the achievements of this study are as follows:Firstly,this study deeply analyzes the route of center of main interest determination.According to the study,it takes two steps to determine the center of main interest of the debtor.The first step is the timing issue,and it is the basis of the next step.Then,substantive determination should be made based on the clear timing requirement.Secondly,reading the Article 5 for reference,this study discusses the reviewing elements that the receiving court may be considered.To be specific,the elements of due process and public policy have been commonly accepted by the international community.So the research of these two reviewing elements is focused on their particularities in cross-border insolvency cases.For the element of due process,this study supposes that the receiving court should consider carefully about the local creditors' treatment in the foreign proceeding,and if they can genuinely engage with the foreign proceeding.For the element of public policy,this study explores the tendency of its judicial application in insolvencies from the point of inner structure in cross-border insolvency law,making its application return to the origin of 'restrictive application'.Different from the above two elements,the reviewing element of reciprocity has not gained the acceptance by all jurisdictions and only some countries like China,will take reciprocity into consideration in international insolvency cases.Considering the very limited judicial cooperation being achieved by reciprocity in insolvencies,this study has to delve into its judicial application from the perspective of common civil and commercial matters,in order to summarize the successful experience in practice.It is hopeful that such experience can be learned to reduce the adverse impacts by applying reciprocity on insolvency cases.Thirdly,this study compares the two traditional relief models within cross-border relief regimes,and follows up with their developments.It finds that the experience from Japan and South Korea is of great significance for guidance in reform of Chinese cross-border insolvency law.As an innovation of Main-Secondary Relief Model,'As If Relief' can make up the deficiency of the hysteresis in Main-Ancillary Relief Model and it should cause concern at present.In the meantime,since the cross-border insolvency practice usually keeps a very close relationship with the cooperative requirements,this study suggests that attention should be paid to the cooperation part in the Regulation(EU)2015/848 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 20 May 2015 on insolvency proceedings(recast).Fourthly,this study discusses enterprise group as a special issue in this field.Since the cross-border insolvency of enterprise group happens very frequently worldwide,this study tries to make comparison between the 'coordination proceeding' in Regulation(EU)2015/848 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 20 May 2015 on insolvency proceedings(recast)and the 'planning proceeding',which is under drafted by Working Group V of UNCITRAL.Considering the few judicial experience of both two enterprise group proceedings,it is not suggested that Chinese legislative reform should take this issue into consideration at this stage,this study recommends that China should wait and see the rule-making development as well as the practice of these two types of proceedings.Fifthly,this study puts forward Chinese approach to refine the legislative framework in this field.Based on the deep analysis of Article 5,the study proposes that Chinese legislation should be improved from both the macro aspect and the micro aspect.From a macro level,it is suggested that China should adopt the UNCITRAL Model Law on Cross-Border Insolvency,and keep an eye on the drafting work being done by Working Group V of UNCITRAL,like the drafting text of'UNCITRAL Model Law on Recognition and Enforcement of Insolvency-Related Judgments',with the aim to guarantee that Chinese legislative reform is forward-looking.Apart from the above suggestions,since mainland China and HKSAR are staying in close consultation on how to facilitate the cooperation in insolvencies,it is advocated that the two working processes,both the legislative reform based on Article 5 and the consultation between mainland China and HKSAR,should be coordinated and complemented from each other.From a micro level,it is advised that Chinese legislation should accept three basic terms in UNCITRAL Model Law on Cross-Border Insolvency:'foreign proceeding','foreign representative' and 'establishment'.And then,the recognition regimes are supposed to be refined in two parts:rules for the application of recognition and the rules for the recognition determination.As for the relief regimes,this study puts forward three pieces of advice for the further legislative improvement:wakening the relationship between the recognition regimes and the relief regimes;taking 'As If Relief' into consideration in the rule-making;disapproving the retrospective effect.Also,given that the European e-Justice Portal is under building and the ability of providing digital judicial service is being enhanced in China,this study suggests to improve the construction of inter-connection of Chinese online judicial platform,enabling it to provide most value in cross-border insolvencies between China and the international community.In brief,the research on cross-border insolvency recognition and relief regimes should be based on the existing rules globally,and should not be separated from the breakthroughs and the developments the international community has already gained.For the Chinese dimension,although the discussed reform should take into account the Chinese limited legal framework in this field as well as its limited practice,such reform should not be over-conservative.The rule-making process should refer to the basic framework of the UNCITRAL Model Law on Cross-Border Insolvency,and reserve the enough legal space for the further development of these regimes.