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

Nowadays,cross-border insolvency has attracted universal attention all over the world.When cross-border insolvency cases are brought to court,the first thing to be solved is the jurisdiction.Theoretically,the court that has jurisdiction over insolvency cases should be the court that has the closest relationship with the debtor in the economic sense.However,in practice,the application of the “closest relationship” is flexible and diverse,and driven by interests,certain connection with insolvency cases often become the reasons for a country’s courts to exercise jurisdiction,which leads to various bases for determining jurisdiction and forms a situation of parallel bankruptcy procedures.The Model Law on Cross-border Insolvency promulgated by UNCITRAL in 1997 clearly put forward the principle of “the center of main interests” to distinguish the main bankruptcy procedure from the auxiliary bankruptcy procedure.The EU Bankruptcy Procedure Regulations promulgated by the Council of the European Union in 2000 and 2015 also adopted the principle of “the center of main interests”,and on this basis,established a regional cross-border insolvency procedure.However,“the center of main interests” regulated on the Model Law on Cross-Border Insolvency are only framework provisions.Though the EU Bankruptcy Procedure Regulation has been revised several times,there are still some unclear provisions on the specific identification and application.Generally,there are four main issues in the application of “the center of main interests”: the determination of the identification time,the determination of the substantive elements,the phenomenon of “the center of main interests” transfer,and the application under the enterprise groups insolvency cases.First,in view of the determination of the identification time,“the time of petition”tends to be the criterion;Second,for the determination of the substantive elements,the European Court of Justice prefers the application of the presumption of registered office,while the American courts prefer the standard of place of business or nerve center.Third,in view of the application under the enterprise groups insolvency cases,around the two theories of “entity” and “company”,the courts have different judgments;Fourth,the shift of “the center of main interests” has also attracted the attention of the international community.At present,the retrospective mechanism stipulated in legislation and the standard of bad faith intent adopted in judicial practice are mainly used to distinguish the shift of “the center of main interests”.Although“the center of main interests” is still in dispute,generally speaking,when it comes to“the center of main interests”,the courts will be based on the presumption of registered office,comprehensively consider the substantive elements,emphasizing that it shall be identified by a third party,pay attention to protecting the expectation of creditors and the certainty of rule,and distinguish the intent for the shift of “the centre of main interests”.As China has become the world’s second largest economy,cross-border insolvency cases of enterprises have been increasing year by year.However,China has not adopted the Model Law,and only regulates cross-border insolvency issues in Article 5 of 2006 PRC Business Bankruptcy Law.Jurisdiction is the basic premise for cross-border insolvency.However,the 2006 PRC Business Bankruptcy Law does not explicitly stipulate China’s bankruptcy jurisdiction over cross-border insolvency cases.With the optimization of China’s business environment,the further promotion of The Belt and Road Initiative and the participation in RCEP,it is imperative to strengthen cross-border insolvency legislation.On May 14,2021,Opinions of Supreme People’s Court on the Pilot Program for Recognition and Assistance in Bankruptcy Proceedings of Hong Kong Special Administrative Region was officially promulgated,which set a precedent for the introduction of “the center of main interests” system and made it possible for China to introduce this principle in the field of cross-border insolvency.Thus,from the perspective of the jurisdiction of cross-border insolvency,this paper intends to summarize the prominent contradictions in practice by analyzing the development and shortcomings of “the center of main interests” principle so as to provide suggestions for China to introduce “the center of main interests” principle.