Cross-Border Insolvency Law: A Comparative Institutional Analysis

Any choice of a state for a cross-border insolvency regime involves a trade-off between increased cross-border economic activity and application of less-preferred substantive insolvency law. A state may be relatively more dependent ('dependent state') on the economy of another, less dependent, state ('dominant state') than vice versa. This article shows that the dependent state, to increase its gains from cross-border economic activity, has an interest in the dominant state applying territorialism. Applying unilateral universalism vis-a-vis the dominant state, the dependent state increases these gains even more. Within the conceptual framework of historical and comparative institutional analysis (HCIA), the influence of the United States on the drafting of the UNCITRAL Model Law on Cross-Border Insolvency is used as a case study.