Model Law on Cross-Border Insolvency Comes of Age - New Times or New Paradigms

The UNCITRAL Model Law on Cross-Border Insolvency (Model Law) was conceived with the aim of providing a framework for countries to adopt to obtain consistency in the recognition of foreign insolvency proceedings and granting relief in aid of the foreign courts. The Model Law has achieved moderate success internationally and four jurisdictions in Asia-Pacific, Australia, Singapore, Japan and Korea, have enacted legislation that is based on the Model Law. However, there has not been complete harmonisation for the following reasons. First, states have not implemented the Model Law in full in their domestic law. Second, the courts in the states have not interpreted the legislation enacting the Model Law consistently.
We examine the divergent implementation of the Model Law in Australia, Singapore, Korea and Japan, and explain the reasons for the divergence. We argue that the reasons are not only founded in the legal origin of the implementing states; rather, where states are shifting from a moderately territorialist approach towards cross-border insolvency to the modified universalist approach as envisaged by the Model Law, they are more likely to implement the Model Law in full. However, where states start from an exclusively territorialist approach, they are likely to adopt the Model Law as a signal of their international commitment towards adopting global norms, but would demand changes to fit local conditions. Our study illustrates the limitations of achieving the objectives of the Model Law and has implications for other jurisdictions which are considering adopting the Model Law.