The Study Of The Recognition Tests In Cross-border Insolvency Proceedings

Universalism and territorialism represent two opposite values in international cooperation and domestic interests protection respectively in cross-border insolvency.In practice,universalism is too idealistic to be realized,and territorialism has been gradually abandoned by many states due to it failed to adapt to the trend of economic globalization.Therefore,modified universalism,which is the compromises of such two values,becomes the mainstream in the international community.Even though there are different kinds of legislative models in the light of modified universalism,but all of them are trying to reconcile the contradiction between the two opposite values.In this regard,China has achieved international common practice and adopted modified universalism.Under the context of the modified universalism,the recognition of foreign proceedings would directly impact the successful of international cooperation,accordingly,the test plays an essential role in balancing the two values and thus it is an important indicator reflecting a state’s value orientation in its cross-border insolvency regime.When setting the recognition tests,China basically reproduced the provisions of foreign-related civil provisions from Civil Procedures Law.The tests reflecting the necessity of domestic interests protection,include the reciprocity requirement,in order to highlight the interests of the judiciary sovereignty;the requirement of public policy in order to protecting domestic public interests;and the requirement of the protection of domestic creditors’ interests(in order to protecting domestic individual interests.After a thorough review of China’s legislation and judicial practice,it is concluded that China’s bankruptcy law only stipulates general principals when setting the tests for the protection of domestic interests,leaving too much discretionary space,which has led to the difficulties in applying article 5 paragraph 2.As such,more attention needs to be paid to the interpretation of relevant clauses.Similar with China’s practice,in the history of U.S.cross-border insolvency law,Title 11 U.S.C §304 had resulted in a great number of contradictory judgments due to the judges had significant discretionary power in adjudicating cases.After the adoption of the Model Law,the Chapter 15 provisions,together with the caselaws,have brought greater certainty to the recognition of foreign proceedings,and have promoted international cooperation in such field tremendously.Therefore,when setting China’s recognition requirements of foreign proceedings,it is necessary to clarify the boundary of the value of the protection of domestic interests to achieve the goal of providing more predictable guidance and expectations to judges and other stakeholders.In the context of cross-border insolvency,despite the need of the protection of domestic interests,actively seeking international cooperation has become a mainstream trend in current international community.In order to adapt to China’s latest economic activities,and achieve the goals of maximizing the estate and providing predictable expectations for stakeholders,it is necessary for us to reconsider the priority of the value of the protection of domestic interests and impose with necessary limitation to it through proper approaches.