Research On The Application Of Public Policy Exception In Transnational Insolvency

This article discusses the function,principles,characteristics of the public policy exception in the sphere of transnational insolvency via literature research,historical research,concept analysis,and case analysis.The article includes four parts:The first part introduces the role of the public policy exception in transnational insolvency.The public policy exception is not a separated system developed in the area of transnational insolvency,but a mechanism originated from private international law.Therefore,this part first discusses the public policy exception in private international law.As one of the oldest mechanism in private international law,public policy is a powerful weapon restricting the application of foreign law and refusing to recognize and enforce judgments of foreign courts.Secondly,the role of the public policy exception in transnational insolvency is discussed.Based on the role of the “safety valve” in private international law,the public policy exception clause in transnational insolvency focuses more on the protection of core interests under the insolvency law,such as equal protection of creditors 'interests.Finally,through the introduction of the status quo legislation,this part reveals the manifestation of the public policy exception clause in transnational insolvency.The second part explains the principle of restriction in the application of the public policy exception in transnational insolvency.First,this part illustrates the connotation of this principle.Both the United Nations Commission on InternationalTrade Law Model Law on Cross-Border Insolvency and the Regulations of the European Union on Bankruptcy Procedures make it clear that public policy exceptions can only be considered when involving the most basic principles and value pursuits in a country 's legal system.Secondly,it summarizes three ways for courts when employing the principle of restriction in the application of the public policy exception,i.e.directly applying this principle as a reason for refusal to apply,adopting fact and consequences analysis to achieve the purpose of refusal to apply,and applying other mechanisms in transnational insolvency with the public policy exception instead of applying it separately.Finally,this part exhibits the application of the principle of restriction regarding public policy exception in transnational insolvency in practice by case analysis.The third part discusses flexibility in the application of public policy exception in transnational insolvency cases.On the one hand,the courts adopt various grounds when applying public policy exceptions,from the determination of whether a country 's basic legal principles will be violated,to weighing the interests of the requested creditor will or will not be undermined.Politics matter may also affects the analysis on whether the public policy should be applied.On the other hand,the courts are also very flexible in adopting methods when applying the public policy exception.For example,the Singapore High Court has adopted a brand new approach called “division“ in recent a case.The fourth part is conclusion.When constructing and perfecting the transnational insolvency legal system in the future,China also needs to attach much importance with the public policy exception mechanism.It is necessary to clearly distinguish in the legislation the concept of public policy between that for domestic affairs and in international cases,to clarify the principle of restriction in the application of the public policy exception,and to encourage courts to explore flexible approaches to apply this mechanism in transnational insolvency practice.