Cooperation with Foreign Courts & Representatives

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Cooperation
  1. Chapter IV of the Model Law contains provisions regarding cooperation and communication with foreign courts and foreign representatives. This chapter is a key element of the Model Law. It seeks to fill the gap found in many national laws by expressly empowering courts to extend cooperation in the areas covered by the Model Law. The UNCITRAL Guide to Enactment states that cooperation as described in Chapter IV is often the only realistic way to prevent dissipation of assets, to maximize the value of assets, to find the best solutions for the reorganization of the enterprise and so on. Moreover, cooperation is not limited to foreign proceedings within the meaning of Article 2(a) of the Model Law, that would qualify for recognition under Article 17 (i.e. that they are either main or non-main proceedings), and cooperation may thus be available with respect to proceedings commenced on the basis of presence of assets.
  2. Article 25 relates to cooperation and direct communication between courts in enacting countries and foreign courts and foreign representatives. Given the nascent stage of the insolvency infrastructure under the Code and lack of experience of Adjudicating Authorities in communicating with foreign courts, the Committee discussed that obligatory cooperation and direct communication of domestic Adjudicating Authorities with foreign courts may be premature. The Committee recommended that in the initial stages of introduction of the Model Law, cooperation and communication between Adjudicating Authorities and foreign courts in cross-border insolvency matters must be based on a framework to be notified by the Central Government in consultation with the Adjudicating Authority in the interest of all stakeholders. With respect to the form of the framework, the Committee noted that adoption of the Guidelines for Communication and Cooperation between Courts in Cross-Border Insolvency Matters framed by the Judicial Insolvency Network may be considered as these Guidelines have been adopted by courts in several jurisdictions such as Singapore, UK (England and Wales) and courts in certain states of the US.
  3. Further, in order to ease the burden of the overworked Adjudicating Authorities and in the interest of speed and efficiency, the Committee recommended that the Central Government may notify an appropriate authority to assist the Adjudicating Authority in facilitating transmission of notices and other communications between the Adjudicating Authority and foreign courts.
  4. In addition to the above, the Committee discussed that joint hearings in concurrent proceedings may be undertaken directly by Adjudicating Authorities and foreign courts. Moreover, Adjudicating Authorities may also be allowed to directly communicate and request assistance or information directly from foreign representatives.
  5. Article 26 of the Model Law that provides for cooperation and communication between insolvency professionals with foreign courts and foreign representatives under supervision of the domestic courts was recommended to be adopted in the draft Part Z without any substantial modifications.
  6. Article 27 of the Model Law that provides examples of various forms of cooperation between domestic and foreign courts and insolvency professionals was also recommended to be adopted without any substantial modifications.
 
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