Abstract The globalisation of trade and commerce has increasingly led to insolvency proceedings with cross-border implications, necessitating the development of effective legal frameworks to address such scenarios. In India, the Insolvency and Bankruptcy Code (IBC), 2016, provides a robust mechanism for domestic insolvency; however, its treatment of cross-border insolvency remains limited and fragmented. This study critically examines the current legal regime governing cross-border insolvency under the IBC, highlighting key challenges such as lack of a comprehensive legislative framework, coordination issues with foreign jurisdictions, and enforcement limitations. The paper analyses international best practices, including the UNCITRAL Model Law on Cross-Border Insolvency, and evaluates India’s proposed legislative changes aimed at incorporating these principles. It also explores opportunities for legal reform, enhanced cooperation, and institutional capacity-building to make the Indian insolvency regime more resilient in the face of global insolvency cases. The study concludes by recommending a harmonised legal approach that balances national interests with global insolvency norms to ensure fair and efficient resolution of cross-border insolvency matters.

Keywords: Cross-Border Insolvency, Insolvency and Bankruptcy Code (IBC), UNCITRAL Model Law, Global Trade, Legal Framework, Corporate Restructuring, International Cooperation, Insolvency Proceedings, India

INTRODUCTION

Cross-border trade promotes economic growth.  A shared language facilitates cross-border trading.^[1] The same is true with regard to unified business legislation.  On the other hand, the distinction between language and corporation law is crucial.  Although English is not inherently suited to tackle distributive issues in economic action, commercial law does.^[2]This prevents the unified business law process from moving forward as it should.  It is important to remember that participants to commercial transactions frequently switch positions while trying to understand how the distributive concerns inherent in substantive commercial law obstruct the development of uniform commercial law from the bottom up.

People might therefore prefer the laws of one nation for a particular transaction while choosing the laws of another for a different one.  As a result, the unified substantive business law is unlikely to be able to enforce itself on its own.  Therefore, states must agree on a single strategy in order to achieve unity.  Cooperation across nations to achieve commercial law unanimity is difficult since commercial law reflects the judgements made by a society about the distribution of resources.  In light of this, states may be forced to abandon their favoured commercial legislation.  States focus their efforts on finding solutions to legal issues resulting from cross-border economic activity when they are unable to harmonise substantive commercial law.  This article discusses “cross-border insolvency law,” the area of law that addresses the legal issues that occur when a bankrupt person has assets spread across multiple states.  Each state has its own unique statute regarding cross-border bankruptcy.

When it comes to the laws that regulate insolvency across international borders, countries can choose between two basic approaches: territorialism and universalism.  Applying each state’s substantive insolvency legislation to a global corporation’s assets situated inside its boundaries is known as a territorial approach.  According to the universalist perspective, a multinational corporation’s worldwide assets are governed by the substantive insolvency laws of the nation where the corporation’s “centre of principal interests” is situated.  One of the most important distinctions between universalism and territorialism is that under universalism, states must acquire foreign law for it to apply to assets located within their jurisdiction, while under territorialism, states are guaranteed the application of their own insolvency law to assets located within their jurisdiction.

 The search method for handling insolvencies that happen across international borders has grown in tandem with the growth of multinational corporations.  the establishment of a worldwide and regional insolvency law that transcends national boundaries.  The creation of the UNCITRAL Model Law on Cross-Border Insolvency by the United Nations Commission on International Trade Law (UNCITRAL) on May 30, 1997, is especially significant.  This law can be promptly incorporated by governments into their own laws.  The European Union Regulation on the proceedings for insolvency became operative in 2002.^[3]

The Model Law on Cross-Border Insolvency (MLCBI) was created in 1997 by the United Nations Commission on International Trade Law (UNCITRAL) to help states create a more modern, uniform, and equitable framework for managing cross-border procedures involving debtors who are facing extreme financial hardship or insolvency.  The Guide to Enactment, which comes with the MLCBI, was updated in 2013 with new background and explanation material to increase its efficacy.  The four parts of the UNCITRAL Legislative Guide on Insolvency Law (2004) comprise the guide.  In addition to helping to create an effective legal framework, national authorities and legislative bodies can consult it when creating new laws and regulations or assessing how appropriate the ones that are already in place are.  The 2009 UNCITRAL Practice Guide on Cross-Border Bankruptcy Collaboration refers to real-world cases to give judges and practitioners insight into the practicalities of communication and cooperation in cross-border bankruptcy situations.^[4]

[1] “Edward P Lazear, ‘Culture and Language’ (1999) 10”

[2] “cf Douglass C North, Structure and Change in Economic History (WW Norton & Co 1981) 17 (‘No these rules spell out the system of incentives and disincentives that guide and shape economic activity also determine the underlying distribution of wealth and income of a society.)”

[3] “Council Regulation (EC) 1346/2000 of 19 May 2000 on insolvency proceedings [2000] OJ LI60/1 (EC Insolvency Regulation”

[4] “United Nations Commission On International Trade Law, https://uncitral.un.org/en/texts/insolvency”