2 . 6 . C O - O R D I N A T I O N O P C O N C U R R E N T P R O C E E D I N G S

Under the approach of the Model Law ample room is left tor insolvency proceedings

to take place in different states concurrently. Although relief does not in itsell require

the opening of proceedings in the recognising state, such proceedings always remain

an option and may be requested by creditors and representatives. The co-ordination

of concurrent proceedings regarding one and the same debtor i s of paramount importance

in order to ensure an efficient and fair administration and distribution.

The Model Law regulates two general situations of concurrent proceedings: the coordination

of a local proceeding with concurrent foreign proceedings; and the coordination

of concurrent foreign proceedings. Generally, the Model Law does not

prescribe or a im for any preconceived solutions. Instead, the approach taken is to place

all jurisdictions involved firmly within the general and mutual duty to co-operate

imposed by virtue of Articles 25 to 27.'" Thus the Model Law purports to "create an

environment in which there are opportunities for the representatives, and lor the

courts of the concerned jurisdictions, to try to reach an accommodation through the

process of co-operation and dialogue'.

One significant co-ordinating principle of a less open-ended nature is expressed by

Article 28. In cases where a foreign proceeding has been recognised as a foreign main

proceeding by the enacting state, a local proceeding may only be commenced when

there are assets present in that jurisdiction. The effects of such a local proceeding are

in principle limited to those assets. The co-ordinating 'effect' of the provision is to

prevent the conflicts and complexities that would arise were the local proceeding to

claim universal effect. It may he noted that states are allowed to base local proceedi ngs

on the presence of assets alone. The presence of an 'establishment' is not required,

although in the absence thereof proceedings are not eligible for recognition as foreign

non-main proceedings or for related relief under the Model Law. " On the other hand,

proceedings are subject to the general duty of co-ordination and co-operation with

other proceedings, and to the extent that such co-operation requires, may even have

an extra-territorial effect.

In directing the co-ordination ot local proceedings with concurrent foreign proceedings,

Article 29 essentially ensures that courts are able to guarantee the integrity of their

local proceedings. Any relief already granted before a local proceeding was opened,

or granted after opening, must be 'consistent' with the local proceedings. In other

words, at least as tar as the local assets are concerned, courts enter 'the process of c o operation

and dialogue' under Article 2 5 - 2 7 as equal partners. As far as courts are faced

with the task of co-ordinating concurrent foreign proceedings, Article 30 instructs the

courts to ensure that any relief granted is consistent with the foreign main proceeding,

i t one is so recognised, or with the limited scope of non-main proceedings in

accordance with Article 28.

The Model Law's final provisions provide for the application of the so-called 'hotchpot'

rule in concurrent proceedings. In concurrent proceedings where (some) creditors

file in more than one proceeding, there is a risk that some creditors receive full payment

(or even more) while others receive only a fraction of their claim (or less). Therelore

a mechanism is required to ensure the principle of paritas creditorum as much

as possible. According to Article 32 a creditor who receives payment in one proceeding

may not receive payment in another proceeding as long as the other creditors

in that latter proceeding have not received an equal share of their claim.