3 . 2 . A F R A M E W O R K FOR C O - O P E R A T I ON

The paradigm's regulatory centre of gravity i s the accommodation of co-operation

rather than the prescription of outcome. The focus of t he above legislative approaches

is therefore the establishment of a clear and effective framework for cross-border

insolvency co-operation. The function of such a framework is two-fold.

On the one hand, it provides a clear authorisation or even instruction to domestic

courts to enter into co-operation with foreign courts and/or representatives. Courts

must feel that co-operation is in line with the legislator's intention. Equally important

i s that courts and other actors are not merely instructed to enter into co-operation,

but that they are also equipped with the necessary tools and powers to build on and

actively give shape to that co-operation. Thus, under the paradigm, not only are

powers for granting the necessary (interim) relief provided, but channels of communication

and the exchange of information are also provided. This 'domestic' aspect ol

the frameworks is, as the Model Law makes clear, of particular importance for those

states whose courts are not used to exercising discretionary powers in this area of t he

law.

On the other hand, a clear framework enhances the efficacy of co-operation and may

provide it with its own momentum. First, it serves as a signal to the outside world of

the receptive attitude prevalent within the jurisdiction. This is important, as without

that signal it is likely that many representatives will forego the pursuit of co-operation

in light of t he costs involved. Conversely, where a clear co-operative framework has

been brought into place, it expresses a commitment to co-operate in good faith and

to provide the assistance asked for if reasonably possible. For this reason, Fletcher

argues that the common law principles of English law regarding ancillary proceedings

should be restated in statutory form. Codifying would increase the accessibility of the

law, so that its 'potential may be more widely a p p r e c i a t e d ' . " :

Secondly, by providing a clear framework the (transaction) costs of co-operation may

be significantly reduced. In the absence of clear frameworks, the impetus for cooperation

has been provided by much publicised large-value insolvencies such as

Maxwell and Olympia & York. In these instances, the costs involved in the pursuit of

co-operation could be borne by the estate! s ) , while the possible benefits of co-operation

outweighed those costs. However, in many smaller-value cases, successful crossborder

insolvency co-operation may never be achieved because of the (relatively)

prohibitive costs involved. Consequently, with an effective cross-border insolvency

regime the number of reported cases may actually r i s e . " ' Over time, this should further

reduce the costs of co-operation through the j udicial authority and experience gained

by the various actors. 1 Clearly, the introduction of a uniform, or at least harmonised,

framework by the UNCITRAI, Model Law i s of particular importance in this regard.

Not only will the costs of future co-operation be reduced, but once co-operation has

been established as the n o rm between players, the costs of deviating from that norm

will increase because of the weakening of the norm. ' As a result, co-operation

generates its own momentum. Where Balz observes that co-operation is 'sweeping

the World', then that sweeping momentum is in part inherent in the co-operative

paradigm itself. "