On Legal Issues Of Cross-Border Bank Insolvency

This paper can be divided into five parts except introduction and conclusion.Chapter 1 mainly introduces some concepts of cross-border bank insolvency. Cross-border bank is a commercial bank group which has branches in at least two countries. There are many differences between the insolvency of a corporation and the insolvency of a bank, including goal, initiator of proceeding, effects of insolvency, resolution procedure, law applied, and so on. So cross-border bank insolvency is great different from other cross-border corporation insolvency.Chapter 2 discusses two couples of international law principles governing cross-border insolvency, including universality versus territoriality principle and separate entity versus single entity principle, and introduces the legislations of main countries. Then we can conclude that universality and single entity principle pay more attention to fair protection of the global creditors, while territoriality and separate entity principle stress the paramountcy of sovereignty. Though universality and single entity principle are global trend, it is a long way to coordinate each country.Chapter 3 analyzes three cases of cross-border bank insolvency, including the insolvency cases of BCCI, Barings bank, and Lehman Brothers Holdings. Because of complicated international structure, it delayed recognition of BCCI and Barings insolvency and didn't achieve the whole goals of bank insolvency. They also have differences in reflecting the conflicts of cross-border bank insolvency. BCCI case reflects the conflicts in principles, the procedure of liquidation, the right of set-off, and the exception of criminal procedures, while Barings case reflects the difficulties of reorganization and that the conventional bankruptcy procedures are too slow for insolvency banks. Lehman Brothers Holdings is not a commercial bank, but it goes bankrupt in recent financial crisis and is contributed to research the cross-border bank insolvency.Chapter 4 introduces the international rules on cross-border bank insolvency, mainly the Model Law on Cross-Border Insolvency and recent development; regional rules, mainly the EU insolvency regime; bilateral rules and Memorandum of Understandings; and state rules of USA. So we can see every level of cross-border bank insolvency legislation. On the whole, there is no international convention on cross-border bank insolvency, but EU regional rules set models to other countries. MOUs are the main way to resolve the cases of cross-border bank insolvency. Meanwhile, USA gradually accepts the Model Law and other countries are amending their law to pursue the harmonization of cross-border bank insolvency legislation.Chapter 5 addresses the insufficiencies of cross-border bank insolvency legislation. Such as, the system of bank insolvency law hasn't been established; cross-border bankrupt law needs to be improved; cooperation with other countries is insufficient; and there are few judicature practices. So we have to endeavor in following aspects. First, we should legislate in bank insolvency and improve recent insolvency procedure; second, limited universality and single entity principle should be insisted; third, deposit insurance institution should be established; fourth, special bankrupt court needs to be founded to resolve bankrupt cases on purpose; fifth, effective information sharing system should be established to strength the international cooperation.Finally, the paper concludes the main standpoints, and then ends.