Charting Coherent Cross-Border Insolvency: Addressing Judicial Cooperation and Legal Gaps in India’s Adoption of the UNCITRAL Model Law

India is on the cusp of enacting a cross-border insolvency framework aligned with the UNCITRAL Model Law on Cross-Border Insolvency 1997. This imminent development promises to facilitate the recognition of foreign insolvency proceedings within India. However, the need arises to investigate whether supplementary mechanisms, beyond the Model Law, are essential for addressing cross-border insolvency matters effectively.

Currently, the Insolvency and Bankruptcy Code (“IBC”) does not clearly address foreign creditors’ rights to initiate insolvency proceedings before the National Company Law Tribunal (“NCLT”). The article posits that foreign representatives could leverage India’s commercial courts under common law principles to fill this void, emphasising the need for Indian courts to adopt a proactive and cooperative stance. Furthermore, the study critically evaluates the role of judicial cooperation in operationalising the Model Law, drawing lessons from international best practices.

Although India is set to adopt the Model Law, it is crucial to assess whether an additional basis for recognising and assisting cross-border insolvency proceedings in India is necessary. This is important for several reasons: first, the Model Law is not intended to be the sole pathway for foreign creditors seeking remedies under domestic law; second, in cases where neither the ‘Centre of Main Interests’ nor an establishment of the debtor is in India, common law jurisdiction may be required to provide assistance and cooperation; and third, India’s framework will rely on reciprocity, which might exclude some countries. An independent basis for recognition in India could, therefore, be advantageous for those countries not meeting reciprocity requirements.