Research On Center Of Main Interests Rule In Cross-border Insolvency

The increasingly development of international investment and trade prompts the cross-border capital flows.Interaction between economic entities located in different countries facilitates the delocalization of business and gives birth to a large number of multinational enterprises.Once these multinational enterprises become insolvent,it comes with cross-border insolvency cases.In 1990 s,the wave of globalization experienced cyclical recession in a dramatic way,with a sharp decline in manufacturing capacity.Many countries were hit by the impact of the global economic depression,leading to tremendous cross-border cases.What this has meant for globalization,the expansion of business and the structure of domestic insolvency laws has been reconsidered by the scholars and practitioners.Their discussion concerned the core rule in cross-border insolvency – center of main interests(COMI),which is used to determine the nature of insolvency proceedings and plays an important role in assigning jurisdiction and recognizing and assisting insolvency proceedings.Influenced by the international insolvency practice,China has been gradually involved in cross-border insolvency cases in recent years,such as the Hanjin shipping case and the Suntech case.From the perspective of domestic rules,Article 5 of Enterprise Bankruptcy Law of the PRC is the only provision addressing cross-border insolvency issues.However,such a general rule may not be able to meet the needs of reality.Practice has shown that the absence of COMI has greatly impacted on Chinese parties in cross-border insolvency cases.Learning from the experience of international law-making process and judicial practice and the paths to introduce COMI into China are the topics that should be given enough importance now and in the future.This paper is trying to answer the following questions: First,to explore the international legislation and judicial practice and the developments of COMI,to analyze the prominent disputes concerning COMI,and to find the differences and integration of COMI under the laws of different countries and regions.Second,on the basis of re-examining domestic situation,this paper discusses what achievements China can learn from the foreign experience and how to absorb it to make up and perfect the existing legal system,so as to enhance China's participation in international insolvency cooperation and reasonably safeguard the legitimate rights and interests of Chinese creditors and debtors.Specifically,this paper involves four parts except for the Introduction and Conclusion:Part ? defines the concept of COMI.First,the history of COMI is introduced,pointing out that the birth of COMI is the result of the European legislators' exploration of uniform cross-border insolvency jurisdiction rules,which were then absorbed by the United Nations Commission on International Trade Law Model Law on Cross-Border Insolvency(UNCITRAL Model Law),the European Council Regulation on Insolvency Proceedings(EC Regulation)and some other countries that transplanted the UNCITRAL Model Law.However,these laws or regulations do not specify the meaning of COMI.Further,the COMI rule is clarified.The rule consists of a core concept,i.e.COMI,and a registered office presumption.The functions of COMI are different in the context of the UNCITRAL Model Law and the EC Regulation.Finally,it is summarized that COMI embodies the unity of flexibility and certainty.Part ? discusses the judicial practice and its developments of COMI.As to the timing issue,there are two main criteria in practice,with the differences between the attitudes of the United States and the European Union.As to the identification of COMI,the focus is on the scope,weight and changes of various factors used to determine COMI.As to the registered office presumption,special attention should be paid to how to establish or rebut the presumption and the effectiveness of it.As to the application of COMI in enterprise group insolvency cases,this paper starts with the theoretical disputes of addressing such cases and points out two theories: entity law theory and enterprise law theory.These two theories lead to two processing paths,namely headquarters function standards and registered office standards.Meanwhile,this paper compares the judicial practice of courts in the United States and Europe.Finally,it is discussed that although a group COMI may be established in theory,it is still difficult to implement in practice.Part ? is about the dilemma of the application of COMI,that is,COMI migration.The first step is to understand what COMI migration means,as well as the adverse consequences and the causes of this phenomenon.It can be seen that COMI migration brings uncertainty to the insolvency proceedings and the expectations of the parties,which is not only caused by the defects of COMI,but also driven by the subjective intention of the parties.What's more,attracted by the advantages of the insolvency system in the popular destination countries,migrating the COMI is just the choice of the parties.Considering the adverse consequences,the international community has put forward some corresponding measures,such as replacing COMI with registered office,establishing look-back period as a preventive measure,or exploring the bad-faith test as a post-examination standard to distinguish good and bad migrations.However,the above three measures have their own advantages and disadvantages.Part ? is the future of COMI and its enlightenment to China.Based on the aforementioned parts,this paper first analyses that the uncertainty of COMI and COMI migration will still exist in the future,which deserves sustained attention of the international community.Further,this paper returns to the enlightenment of COMI to China by re-examining the relevant rules at this stage.At last,the idea of introducing COMI into China is put forward.To be specific,at a macro level,the framework of the UNCITRAL Model Law could be adopted.In relation to the concrete paths,responses should be given to the composition,the timing issue and the identification of COMI,as well as COMI migration respectively.