2 Research Questions

The objective of this Thesis is to examine the extent to which the European Union insolvency rules can help improve legal certainty in the insolvency proceedings of MCGs. In order for this objective to be achieved, the topic will have to be examined from multiple perspectives. A proper foundation for this examination requires looking at the principles of separate legal personality and limited liability, and how these principles contribute to enhancing legal certainty in insolvency cases involving MCGs. Another foundational examination requires us to look at the theories of conflict of laws, such as universalism, territorialism, modified universalism, cooperative territorialism, and contractualism.

The EIR 2000 and the New Recast EIR 2015 both adopt the notion of the Centre of Main Interests (COMI) as a mechanism to determine which court has jurisdiction over cross-border insolvency proceedings. Thus, this Thesis examines the extent to which the notion of the COMI can be used to enhance legal certainty in cross-border insolvency cases involving MCGs, and the extent to which the notion of COMI succeeds or fails in preventing abusive forum shopping to the detriment of creditors.

The EIR 2000 and the New Recast EIR 2015 are not the only tools available to enhance legal certainty in cross-border insolvency cases involving MCGs, and it is essential to examine other mechanisms that can help provide a solution to such insolvency cases, such as the substantive consolidation approach, the coordination and cooperation approach, the harmonisation approach, and the party autonomy approach.

The New Recast EIR 2015 contains specific provisions on corporate groups, and therefore it is necessary to evaluate the extent to which such provisions contribute to resolving the shortcomings of the current European Insolvency Regulation (i.e. EIR 2000) and enhancing

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legal certainty in the cases of interest to this Thesis., that is cross-border insolvency cases involving MCGs.104

The original contribution of this Thesis lies in the extent to which European insolvency rules help reduce legal uncertainty in cross-border insolvency for the benefit of creditors. Furthermore, this Thesis provides an assessment of the extent to which the New Recast EIR 2015 succeeds in resolving the shortcomings of the notion of the COMI under the EIR 2000 in terms of enhancing legal certainty in MCG insolvency proceedings. The Thesis also makes recommendations for filling some of the gaps that the New Recast EIR 2015 has failed to eliminate, such as the ambiguity of the notion of COMI and the non-binding nature of the coordination and cooperation provisions in the Regulation.

The insolvency of domestic corporations and individuals is not within the scope of this Thesis. Similarly, insurance corporations, investment undertakings and banking institutions are excluded from the analysis due to their exclusion from the EIR 2000, stated in Article 1, as well as their special status and specific policy issues. Nevertheless, in some areas, reference will be made to specific insolvency statutes or rules that are applicable to all sorts of companies (national and international) and in some occasions to individuals as well. In those cases, only the impact of such instruments on MCGs is taken into consideration. Finally, this Thesis is limited to jurisdictions to which the EU Insolvency Regulation applies.

3 Research Methodology

This study takes a doctrinal and theoretical approach. The doctrinal approach, or black-letter law approach, is based on extensively utilising court judgments and statutes to provide a clearer explanation and a more comprehensive understanding of the law.105 McConville and

104 Regulation (EU) 2015/848 of the European Parliament of the Council of 20 May 2015 on insolvency proceedings (recast) OJ L141.

105 Mike McConville and Wing Chui, Research Methods for Law (Edinburgh University Press 2007) 3.

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Wing classified legal research as either doctrinal or non-doctrinal. Whereas non-doctrinal research can adopt a qualitative or quantitative methodology, doctrinal research is normally qualitative.106 Specifically, doctrinal research focuses primarily on analysis of a legal doctrine and how it has been developed and applied. Such studies, also known as pure theoretical research, are often used to examine a legal doctrine and the underlying theory behind it.107 It consists of either a simple study directed at finding a specific statement of the law, or a more complex and in-depth analysis of legal reasoning.108

The black letter approach explains the law as it is, clarifies ambiguities within its rules, and places those rules within a logical and coherent structure.109 Therefore, this approach is adopted in the present Thesis in order to systematise, clarify and evaluate legal rules to ascertain the best solution to the problem under investigation through careful analysis of authoritative texts that consist of both primary and secondary sources.110 Using a black letter approach means that the Thesis is not restricted solely to explaining and clarifying the EIR 2000 and the New Recast EIR 2015, but also discusses critiques and suggestions for reform of the law essential to address the research question.111 In other words, a doctrinal approach encompasses different elements including, for example, interpretation of legal rules and thorough examination and evaluation of the views and arguments of other legal scholars.112 In keeping with the objectives of the Thesis, a comparative approach is also adopted to look at the similarities and differences between the EIR 2000 and the New Recast EIR 2015 in order

106McConville and Chui (n 105) 3.

107W. Bradley Wendel, ‘Essay Explanation in Legal Scholarship: The Inferential Structure of Doctrinal Legal

Analysis’ (2010-2011) 96 Cornell Law Review 1035.

108Kenneth Kress, ‘Legal Reasoning and Coherence Theories: Dworkin`s Rights Thesis, Retroactivity, and the Linear Order of Decisions’ (1984) 72 California Law Review 369.

109Paul Chynoweth, ‘Legal Research’ in Andrew Knight and Leslie Ruddock (eds), Advanced research methods in the built environment (Wiley-Blackwell 2008) 29.

110McConville and Chui (n 105) 5.

111Caroline Morris and Cian Murphy, Getting a PhD in Law (Hart Publishing 2011) 31.

112Stella Cottrell, Critical Thinking Skills: Developing Effective Analysis and Argument (2nd edn, Palgrave Macmillan 2011) 2.

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to evaluate the extent to the latter improves and enhances legal certainty in cross-border insolvency cases involving MCGs.

The EIR 2000 and the New Recast EIR 2015 are the primary legal instruments that regulate insolvency proceedings in the European Union.113 These instruments have been selected as the main instruments for analysis in this Thesis because they are legally binding instruments on all Member States of the European Union and consequently, all domestic insolvency laws must comply with them. It is acknowledged that the New Recast EIR 2015 has been issued, but as the EIR 2000 is still in force at the time of writing, the Thesis examines both by looking at the notion of COMI under the EIR 2000 and then considers the extent to which the New Recast EIR 2015 helps resolve the shortcomings of the EIR 2000.

An effective examination of the operation of the EIR 2000 requires looking into how the Court of Justice of the European Union and domestic courts in the EU have implemented the notion of the COMI in dealing with insolvency cases of MCGs. This will help in understanding how the law operates in practice and the extent to which the courts have been able to use this notion to enhance legal certainty in such cases.

In addition to the primary sources mentioned above, the Thesis examines secondary material, including academic literature such as journal articles and books, official reports from the European Commission, and other industry reports, such as those prepared by INSOL Europe.114 These resources are used to assess the extent to which the notion of COMI as well as other mechanisms of managing insolvency proceedings succeed in enhancing legal certainty in MCG insolvency proceedings.

113Council Regulation (EC) No 1346/2000 on Insolvency Proceedings [2000] OJ L 160.

114INSOL, ‘Revision of the European Insolvency Regulation’ (INSOL EUROPE, 2012)

<https://www.nautadutilh.com/Documents/Publications%20to%20profiles/Revision_of_the_European_Insolven cy_Regulation.pdf >accessed 10 May 2016.

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The Thesis acknowledges that there are numerous initiatives around the world that aim at finding a practical solution to the difficulties presented by the cross-border insolvency of MCGs. Specifically, these initiatives have been championed by leading international institutions, which have developed legislative guides, principles and good practice standards with regard to various aspects of insolvency law.115 Such initiatives include the United Nations Commission on International Trade Law Legislative Guide on Insolvency Law 2004,116 the World Bank’s ‘Principles and Guidelines for Building Effective Insolvency

Systems and Debtor-Creditor Regimes’ of 2001,117 the revised World Bank-UNCITRAL Principles of 2005,118 the European Principles and Best Practices for Insolvency Office Holders,119 the European Bank for Reconstruction and Development Core Principles for an Insolvency Law Regime (EBRD) in 2004,120 the Core Principles for an Insolvency Law Regime,121 and the Principles of European Insolvency Law of 2003.122 Although the Thesis focuses primarily on the EIR 2000 and the New Recast EIR 2015, and not on the aforementioned non-binding instruments, they are nevertheless sometimes referred to in

115Irit Mevorach, ‘Is the Future Bright for Enterprise Groups in Insolvency? Analysis of UNCITRAL’s New Recommendations on the Domestic Aspects’ in Paul Omar (ed) International Insolvency Law Reforms and Challenge (Ashgate 2013) 363.

116UNCITRAL (ed), Legislative Guide on Insolvency Law (United Nations Publication 2005) <https://www.uncitral.org/pdf/english/texts/insolven/05-80722_Ebook.pdf> accessed 26 May 2016.

117World Bank, ‘Principles and Guidelines for Effective Insolvency and Creditor Rights Systems’ (World Bank,

April 2001) <http://www.worldbank.org/ifa/ipg_eng.pdf> accessed 2 August 2015.

118World Bank, ‘Principles for Effective Insolvency and Creditor Rights Systems (Revised)’ (World Bank, 2005) <http://www.worldbank.org/ifa/FINAL-ICRPrinciples-March2009.pdf> accessed 2 August 2015.

119Iris Wuisman, ‘Jan Adriannse and Bernard Santen, ‘European Principles and Best Practices for Insolvency Office Holders’ (Universiteit Leiden, 19 September 2013) <http://www.tri- leiden.eu/uploads/files/IOH_project_-_Report_I.pdf> accessed 11 May 2016.

120Ronald Harmer and Neil Cooper, ‘Report on the Results of the Assessment of the Insolvency Laws of

Countries in Transition’ (European Bank for Reconstruction and Development, June 2003) <http://www.ebrd.com/downloads/legal/insolvency/report_ia.pdf> accessed 11 May 2016.

121European Bank for Reconstruction and Development, ‘Core Principles for an Insolvency Regime’ (European Bank for Reconstruction and Development, 2006) <http://www.ebrd.com/downloads/legal/insolvency/principle.pdf> accessed 14 May 2016.

122William W McBryde, Axel Flessner, and Sebastianus Kortmann (eds), Principles of European Insolvency Law (Kluwer Legal Publishers 2003).

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