3. THE STRUGGLE OVER J U R I S D I C T I ON

In order to achieve effective deployment and fair distribution, co-operation and coordination

between all jurisdictions invoked is a precondition. At the same time, it

is a fallacy to assume that states would be prepared to unconditionally accept the effects

of foreign insolvency proceedings. The local interests (be they of public or private

nature) at issue in insolvency cases, as well as the differences between the substantivelaws,

are too large. In other words, neither the principle of universality nor that of

territoriality in their strict form presents a realistic option for states. It should come

as little surprise that

[ i ] n the world of reality (...) internationalist collaboration is historically verv much

the exception rather than the rule. In practice, the approach of most legal systems

to matters ot cross-border insolvency has been aptly, if cynically, summed up in

the maxim: 'Nehmen ist seliger als geben'.1 '

Both the principle of universality and the principle of territoriality lack a balanced

choice of law analysis.1 ' The law of the insolvency forum, whether a territorial or

universal torum, applies generally and /';; tolo. On one level, this may raise questions

from a general private international law perspective, legal relationships, irrespective

of their governing law outside insolvency or the legal system with which they are most

closely connected, become subject to the law of the forum as far as the impact of

insolvency is concerned. On another level, the lack of a more balanced choice of law

analysis lies at the heart of the legal context in which cross-border insolvencies take

place.

In his 'Quest for Reasonableness' L.owenfeld argues that

choiee of law plays a kind ot mediating role among the laws of the states touched

in some way by the transaction or controversy. When the opportunity to engage

in choice of law is absent, the mediating role is absent as well. What is left is a

struggle over j u r i s d i c t i o n . . . 1

A 'struggle over jurisdiction' accurately characterises the state of affairs ofcross-border

insolvency regulation under the universality-territoriality dichotomy. Neither under

the principle of"universality nor under that ot territoriality are the legitimate interests

and concerns of foreign states and their creditors in any way addressed or accommodated.

1 , J As their interests will not be addressed in the conflicts process of the adjudicating

foreign court, states are left with no option but to seize jurisdiction themselves.

Only by allowing for proceedings under its own law will a state be able to implement

its own policies.

In reality therefore, many states have formulated their cross-border insolvency laws

so as to actively engage - or to enable their creditors to do so - in such a struggle.

Contrary to what Fletcher suggests, it is not 'an inherent part ot the doctrine of Unity

that the process is opened at the place with which the debtor's affairs, interests and

general circumstances have their closest affinity'.1 " This may be an ideal, but strictly

speaking, the one question that is not answered by either principle is that ot international

jurisdiction.1 ' 1 Instead, the laws of many states set the threshold for (universal)

jurisdiction at a much lower level. United Kingdom courts may assert jurisdiction

where the debtor has a sufficiently close connection with the forum, which may be

established even in the absence of the presence of a s s e t s . 1 ' ' The laws of numerous other

states allow for the opening of proceedings in cases where the debtor has an establishment

or simply assets in the court's jurisdiction.1 " Rarely does the fact that proceedings

are pending abroad prohibit the exercise of local jurisdiction, though it may result in

limitation on geographical reach. These extensive grounds of jurisdiction, resulting

in overlapping and conflicting proceedings, are part and parcel of the traditional legal

context of cross-border insolvency.

CONCLUSION

Under the traditional principles of universality and territoriality the cross-border

insolvency dilemma is bound to end in a 'struggle over jurisdiction'. It has been argued

that unilateral state action is unlikely to end this struggle. ! However, unilateral state

action geared towards co-operation between jurisdictions appears to be exactly what

modern cross-border insolvency regulation is about. It rejects the need for an 'all or

nothing' approach. Instead, it concerns itself with building structures within crossborder

insolvency that allow tor co-operation between jurisdictions rather than

struggles over jurisdiction. This will be explored in the next Chapter.