Evaluating Legal Certainty under Insolvency Regulations of the European Union

Abstract

This article examines the insolvency rules of the European Union, specifically, the Recast European Insolvency Regulation (EIR Recast 2015), in order to determine whether such rules help enhance legal certainty in cross-border insolvency cases involving corporate groups with the objective of reducing abusive forum shopping. The problem of cross-border insolvency with corporate groups is a very timely one, especially in light of the global growth of international trade, the movement towards the economic integration of various regions around the world, such as the European Union, the greater flow of capital, and the ease of global communications. Forum shopping refers to the practice of such a company seeking the most favourable jurisdiction for its insolvency proceedings. This practice is known as ‘abusive’ when it reaches the point when a particular interest group, in so doing, seeks to appropriate wealth that belongs to others. The outline of this article is as follows: Section 1 of this article starts by providing an overview of cross-border insolvency of corporate groups. Then Section 2 explores in depth the main provisions of the EIR Recast 2015 that are relevant to enhancing legal certainty in a way beneficial to reducing abusive forum shopping, Section 3 proposes some recommendations to improve the EIR Recast 2015 in regard to enhancing legal certainty with the objective of reducing abusive forum shopping, and Section 4 concludes.