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Comments from ACCA
November 2005

ACCA is pleased to comment on the above consultation paper. As a matter of principle, we support the decision to go ahead with implementation of the Model Law on the ground that increased certainty about cross-border rights in insolvency provides an important encouragement to international trade. We see the adoption of the Model Law as being consistent with other comparable contemporary developments including the European Company Statute, measures to harmonise shareholder rights within the EU and the adoption of international financial reporting standards.

Although the Model Law is not being handled on a pan-EU basis we consider that its implementation is a useful demonstration of the UK’s preparedness to pursue a policy of international co-operation in this matter. It would in our view be helpful if other EU states followed suit.

As a general point, we would query whether it is correct for the UK to aopt the Model Law on the basis proposed, viz by presenting the contents of the proposed Schedule 1 to the Cross Border Regulations as the ‘UNICTRAL MODEL LAW ON CROSS BORDER INSOLVENCY’, divided into ‘articles’ which closely follow the format adopted in the Model Law. Arguably, this gives the impression that the Model Law has been adopted in its entirety and that the UK’s version of it is wholly consistent with the version adopted in other states. This impression of course would not be correct since, it is being proposed, the UK version will comprise features which diverge from both the Model Law and, possibly, from the versions adopted elsewhere. We do not think that it would be inconsistent with the Model Law concept for the UK to adopt it via a format which was more in keeping with UK practice.

We set out below our reactions to certain of the specific questions posed in the document.

Q2 What are your views on the way in which the interaction between the Model Law and the EC Regulation has been dealt with?

We agree that the treatment of the relationship in the draft regulations is sufficient.

Q5 Do you agree with our approach to article 12 of the Model Law?

The right to ‘participate’ is indeed a vague term. Given that, in para 46 of the consultative document, The Service appears to have a more exact understanding of what is meant by the term, we would favour some elaboration of its meaning in the final version of the regulations.

Q6 Do you agree that foreign representatives should provide details of all insolvency proceedings and that any supporting documents should be in por translated into English?

Yes.

Q7 Are you content for the court to decide the debtor’s centre of main interests (COMI)?

Since there is in the regulations a definition of ‘establishment’, it would seem to be appropriate for there to be an attempt to define COMI. But sinmce a COMI could well be either a registered office or a main commercial base, we accept that, to remain consistent with the Model Law, there would have to be a degree of flexibility in any definition.

Q8 Do you agree with the inclusion of the additional words in paragraph 17?

Yes.

Q 10 What are your views on the drafting of article 20?

We note that, at article 20(2)(a), only windings up the court are covered.

Q12 What are your views on the drafting of article 23?

We query whether paras (7) and (8) are necessary.

Q13 Do you agree that it is not necessary to define ‘intervene’ in relation to article 24?

Again, the term ‘intervene’ is rather vague and generalised. Could it, for example, be elaborated upon to cover the foreign representative’s exercise of any of the powers and rights which are available to a person carrying out the same functions under British law?

Q14 Do you believe that using the word ‘may’ co-operate in articles 25, 29 and 30 is sufficiently strong?

We think that the passages concerned should make clear that the court must co-operate in the defined circumstances. It would not be proper to give the court the discretion as to whether to co-operate or not.

Q16 Do you believe that the current drafting of article 28 will pose any particular problems?

We believe it would be better to retain the current position under British law.

On another point of detail, we query whether, bearing in mind the existence of the EU Insolvency Regulation, there needs to be a specific definition of ‘foreign’ in the context of insolvency proceedings.

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