Учебный год 2023 / phd

The first approach insists on the importance of ensuring that standards adoption, implementation and assessment give due consideration to the domestic focus, experience, needs, and capabilities of a low income country with the objective of market development and enhancing market efficiency.134 In realising this, the approach suggests that the prioritisation of the standards should reflect needs and fundamental values of the country. It is emerging from this approach that regard has to be had to regional needs and dimensions of economic development. This is ideally based on the growing phenomena of regionalism which underpins intraregion commerce and raising low income countries’ ownership of the standards and assessment of their observance.

In view of this approach, customisation of the insolvency standards to reflect local contexts is important because the standards are essentially modelled on the institutions and practices prevailing in the developed countries which may not be directly relevant to the specific problems and needs of the developing countries in SSA.135 Customisation therefore emphasises promotion of innovation and accommodation of local contexts that seem to be embedded in the standards, though with some reservation in some respects as identified above.

Regional initiatives such as Africa’s Peer Review Mechanism (“APRM”) under the New Partnership for Africa’s Development (“NEPAD”) devised to facilitate the design, implementation and monitoring of standards to complement ROSCs is supposedly one example of such approach, undertaken at regional level.136

134YV Reddy (n 43); PD’s Investment (n 66); M Cardona and M Farnoux, ‘ International Codes and Standards: Challenges and Priorities for Financial Stability’ , (2002) FSR 143 , 147-149 <http://www.banque-france.fr/gb/publications/telechar/rsf/2002/et8_1102.pdf> accessed

23/10/2009; TC Halliday, ‘Lawmaking and Institution Building in Asian Insolvency Reforms: Between Global Norms and National Circumstances’, (5th Forum for Asian Insolvency Reform, Beijing, 27-28 April 2006) <http://www.oecd.org/DAF/corporate-affairs/ > accessed 17 July 2009 [33]

135TC Halliday, and BG Carruthers (n 84); TC Halliday (n 26); N Onder (n 18) 2; J Stiglitz (n 16); and D Berkowitz, K Pistor and JF Richard (n 88)

136See African Union, ‘New Partnership for Africa’s Development Declaration on Democracy, Political, Economic, & Corporate Governance’, AHG/235 (XXXVIII) Annex I 2002 <http://www.sarpn.org.za/NEPAD/july2002/declaration/declaration.pdf> accessed 31/07/2009; PD’s Investment (n 73). NEPAD’s Declaration reflects African leaders’ commitment to adhere to international standards in the conduct of policy. In terms of para 166, NEPAD’s Capital Flows Initiative has three objectives on promoting the private sector, namely: ‘To ensure a sound and

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This is important given the complexity and origins of the issues involved in the standards as well as historical, political, philosophical and socio-cultural policy dimensions attached to insolvency.137 To ensure ownership and wide public acceptance, the mechanism allows for wide public discussion and citizenry involvement at national levels. It is however a pity that APRM under NEPAD does not presently cover the insolvency standards,138 although it recognises ‘the need for appropriate insolvency systems [which] became most apparent with the financial crises that hit emerging economies especially in Asia in the mid 1990s’.139 Nevertheless, NEPAD APRM has been criticised for embracing the Washington Consensus prescriptions of market centred reform approaches and for its failure to engage with the unfairness of standards inimical to Africa.140 Notwithstanding the NEPAD’s shortcomings, it still serves ‘as a useful model of an African-driven initiative; rather than contorting the African agenda to fit the

conducive environment for private sector activities, with particular emphasis on domestic entrepreneurs; (b) to promote foreign direct investment and trade, with particular emphasis on exports; (c) to develop micro, small and medium enterprises, including the informal sector.’

137Africa’s Peer Review Mechanism (“APRM”) seeks, with the support from the standard setting bodies as well as multilateral donors and African regional institutions, to foster compliance with standards by inter alia helping African countries to identify the constraints that they face in implementing the standards and facilitate formulation of credible and action-oriented programmes towards addressing the constraints and implementing the standards. See for instance Africa Development Bank Group, ‘Framework for Implementation of Banking and Financial Standards in Africa’ < http://www.afdb.org/fileadmin/uploads/afdb/Documents/Project-and- Operations/00473846-EN-PAPER-NEPAD-BANKING-AND-FINANCIAL-STANDARDS- FRAMEWORK.PDF > accessed 31/07/2009 [6] &[ 7]

138See for instance, Article 8 of the NEPAD Declaration (n 142) which provides thus: ‘…the eight prioritized and approved codes and standards set out below [which the African Union believe to] have the potential to promote market efficiency, to control wasteful spending, to consolidate democracy, and to encourage private financial flows - all of which are [regarded to be] critical aspects of the quest to reduce poverty and enhance sustainable development. These codes and standards have been developed by a number of international organizations through consultative processes that involved the active participation of and endorsement by African countries. Thus, the codes and standards are genuinely global as they were agreed by experts from a vast spectrum of economies with different structural characteristics. They are the following: a. ‘Code of Good Practices on Transparency in Monetary and Financial Policies’; b. ‘Code of Good Practices on Fiscal Transparency’; c. ‘Best Practices for Budget Transparency’; d. ‘Guidelines for Public Debt Management’; e. ‘Principles of Corporate Governance’; f. ‘International Accounting Standards’; g. ‘International Standards on Auditing’; and h. ‘Core Principles for Effective Banking Supervision’. Nevertheless, as SSA countries are increasingly reforming their insolvency systems they miss the assistance that they could have obtained if insolvency standards were within the standards covered within the NEPAD APRM.

139Africa Development Bank Group (n 137) 37

140J Gathii, ‘A Critical Appraisal of the NEPAD Agenda in Light of Africa’s Place in the World Trade Regime in an Era of Market Centered Development’(2003) 13 Transnat’l L. & Contemp Probs 179, 180-81; and I Taylor, ‘NEPAD Ignores the Fundamental Politics of Africa’, (2004)

Contemp Rev 29, 32

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needs of developed countries, NEPAD and measures like it can guide both Africa and the West to create technical assistance programs that fulfil the African agenda.’ 141

Perhaps one recent example that comes closer to this approach, is the ‘Declaration on Insolvency and Creditor Rights Systems for the Middle East and North Africa’ (“MENA”) promulgated on 27 May 2009 with the object of forging a reform and harmonisation of insolvency systems of member states in light of the international insolvency standards, whilst adhering to the needs of the countries in the region.142 The declaration represents commitments to participating and making recommendations to modernise insolvency frameworks tailored to the needs of the countries in the region but one that balances the local context with the global standards. An obvious feature of this declaration is insistence on local and regional needs and circumstances as well as facilitating benchmarking and sharing of best practices that would help elevate and advance the insolvency and creditor rights agenda.

As the emerging consensus recognises the fundamental place of agriculture, natural resources, informal sector and small and medium scale enterprises and the need to fight poverty in SSA, this fact among others will perhaps need to be taken into account in modernising their insolvency systems and cross-border insolvency in particular.143 However, such needs ought to be balanced by the drive to develop the private sector and in particular trade and foreign investment.

141M Florestal, ‘Technical Assistance Post-Doha: Is There any Hope of Integrating Developing Countries into the Global Trading System?’ (2007) 24 Arizona J Int’l and Comp Law 121, 130

142See Hawkamah-The Institute for Corporate Governance, ‘Declaration on Insolvency and Creditor Rights Systems for the Middle East and North Africa’, Abu Dhabi, 27 May 2009 <http://www.hawkamah.org/events/conferences/insolvency_declaration/files/hawkamah_declarat ion_on_insolvency_english> accessed 7/10/2009; and Hawkamah and others, ‘Survey on Insolvency System in the Middle East and North Africa’ < https://insol.org/Projects/MENA%20Survey%20into%20Insolvency%20and%20Creditor%20Rig hts.pdf > accessed 15/07/2011

143See World Bank, World Bank Assistance to Agriculture in Sub-Saharan Africa (World Bank, Washington 2007); and USAID (n 121)). Indeed, almost all UNCTAD’s reports on foreign direct investment shows that the large percentage of foreign direct investment flow into SSA is in the natural resource sector, although the financial sector and telecommunication industry are also reportedly on the increase.

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Another approach insists that countries must adopt a more gradual approach to the implementation of the standards when a substantial amount of reform is required.144 This boils down to the need of assuring complementarities of the standardised insolvency law with the entire laws of a country’s legal system. This view reflects the very nature of insolvency which tends to influence nations to legislate for it in a manner that takes into account and reflects the nations’ historical, socio-economic, political and cultural needs.145 As such, different national policies have to be consulted in making different policy choices that will essentially characterise the insolvency law that is designed. This approach therefore makes it unrealistic to aim at achieving compliance with the standards of best practices and benchmarks within a short period without fixing priorities. Perhaps this approach seems to be preferred by some countries as is the case for Tanzania and more recently Mauritius, which, as will be shown in subsequent chapters, have enacted cross-border insolvency regimes which allow for gradual and perhaps cautious application.

Notably, whereas the former approach reflects the theoretical view against transplants and a ‘one-size-fits-all’ approach and which encourages consideration of local contexts,146 the latter reflects the incrementalist theory which advocates for modesty and gradual reform of global insolvency law giving allowance for substantial deviation while also reducing the risk of outright rejection.147 Nevertheless, both approaches complement one another in so far as their application to a developing country is concerned.148 It will thus seem that the best result mandates invocation of both approaches. Invocation of both approaches

144YV Reddy (n 43); PD’s Investment (n 66); and M Farnoux (n 134). See also TC Halliday (n 134) 28, stating that the implementation process ‘can be sharply divided between those approaches that are incremental, piecemeal or gradual versus those that are dramatic, systemic and rapid.’ See also IF Fletcher (n 81) 774

145See n 69 above

146See R Parry and H Zhang, ‘China’s New Corporate Rescue Laws: Perspective and Principles’ (2008) Journal of Corporate Law Studies 113, 125; CG Paulus (n 24) 765; N Martin (n 72) 5; JJ Chung, ‘The New Chapter 15 of the Bankruptcy Code: A Step Towards Erosion of National Sovereignty,’ (2006-2007) 27 Nw J Int’l L & Bus 89, 107 and 108

147JAE Pottow, ‘Procedural Incrementalism: A Model for International Bankruptcy’, (20042005) 45 Va J Int’l L 936. See also S Block-Lieb and TC Halliday, ‘Incrementalisms in Global Lawmaking’ (2006-2007) 32 Brook J Int’l L 851

148Text to n 158-178 in chapter 2

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will help reflect and complement the theory that the best strategy for legal reform must, in order to avoid transplant effect, aim at improving legality by carefully selecting legal rules whose meaning can be understood and whose purpose is appreciated within the context of domestic circumstances by domestic law makers, law enforcers, and economic agents, who are the final consumers of these rules.149 And above all, it must ensure that there is a domestic demand for the new law, and that supply can match demand.150 The latter aspect of the theory closely follows the gradualism and thus incrementalism.

3.7Drivers behind the Emerging Reform Trends in Sub-Saharan Africa

There is a growing trend among SSA countries to reform their insolvency laws including cross-border insolvency frameworks along the lines of the modern trends.151 It is noteworthy that the reform in these countries has been undertaken with a view to attraction and facilitation of foreign investments as part of activities in the poverty reduction strategy papers (“PRSP”).152 Indeed, reform of

149D Berkowitz, K Pistor and JF Richard (n 94) 186 and 192

150Ibid 192

151To this extent, Tanzania, Burundi, Ghana, Mauritius, Rwanda, Uganda, Mozambique and Kenya offer good examples of this trend in SSA. While Uganda and Kenya offer example of such countries which are at various stages of the reform process Mauritius presents an example of countries which have recently enacted and brought into force new insolvency legislation. See ‘Bills proposed to ease business’ in Kenya’s Daily Nations, 2 November , 2009 <http://www.Nation.co.ke/News/-/1056/471244/-/tkt2f1/-/index.html> accessed 2/11/2009; M Whitehead, ‘A New Insolvency Act is Coming……So Lenders, Borrowers and Insolvency Practitioners Get Ready’ (2009) Financial Focus 1, 8 < http://www.pwc.com/en_KE/ke/pdf/pwc-financial-focus.pdf > accessed 17/08/2010 . See also Uganda-Bill on Commercial Justice Tabled, August 23, 2009 <http://www.lexisnexis.com/uk/nexis/returnTo.do?returnToKey=20_T751837676095&randomN

o=0.753109278650188> accessed 6/10/2006.; The Mauritius Insolvency Act 2009 was brought into force in 1st June 2009. See the Mauritius’s new Insolvency Act 2009 <www.gov.mu/portal/goc/compdiv/file/insolvact09.pdf> accessed 3 November 2009; Republic of Rwanda Press Release, ‘Rwanda is Doing Business 2010’s Top Reformer’, Kigali, 9 September 2009 <http://www.gov.rw/IMG/doc/20090909_Press_Release_Doing_Business__FINAL.doc> accessed 6 November 2009. See also, RN Kormo, ‘Review of 2009 Draft Law on Business Insolvency (Mozambique)’ (USAID Support Programme for Economic and Enterprise Development 2011) < http://www.speedprogram.com/library/resources/speed/2011/memoondraftbankruptcylawmozambiquespeed06221 1.pdf > accessed 26 October 2011

152U Miller and S Ziegler, Making PRSP Inclusive (Project Print, Munich 2006) 4, stating that poverty reduction strategy paper (“PRSP”) “is a concept developed by the World Bank and the International Monetary Fund (IMF) in 1999.The idea behind this was that low-income, highly indebted countries should develop and formulate a national plan on how to reduce poverty in their country and improve the living situation of their citizens. Once a country has established a

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insolvency law in most of these countries is clearly reflected in and regarded as an aspect within the respective countries’ poverty reduction strategy paper.153

One important aspect is that as far as SSA countries are concerned, such a route is becoming more attractive to the governments and effective for bringing about reform. One of the reasons is because such poverty reduction strategy papers, funded by the multilateral institutions, encapsulate good governance issues which directly link with the problems at hand which the governments of SSA countries are seeking to prioritise and resolve.154 But the main reason is that it is now becoming the practice that it is almost only through the poverty reduction strategy papers that such countries can qualify for funding (e.g loans, grants and other subventions) from the multilateral institutions based on the prioritised activities clearly indicated on such strategic plans and clearly linked to the way they contribute to poverty reduction.155 It is common place to find in such PRSPs long lists of laws and areas earmarked respectively as requiring reform and legislation which is not uncommon now to include insolvency and indeed all areas and aspects that seem to dominate the agenda of the multilateral institutions and the international community.156 It seems that the trend of commissioning studies by local and foreign consultants with a view of reforming the insolvency laws is mainly being funded by the multilateral institutions or other international institutions based on the prioritised and planned activities.157

national PRSP, it can apply for debt relief from the World Bank, the IMF and donor countries, and may gain access to new credits, loans and grants.”

153See for instance Government of Ghana ‘Implementation of Ghana Poverty Reduction Strategy 2005: Annual progress Report 2006 < http://www.ndpc.gov.gh/GPRS/AnnualProgressReport2005.pdf > accessed 2/9/2010. It is however still questionable if this new trend is really consistent with what has been proposed by J Stiglitz (n 16) 82 and 83 and discussed in text to n 71 above.

154MS Grindle, ‘Good Enough Governance: Poverty Reduction and Reform in Developing Countries’ (Paper Prepared for the Poverty Reduction Group of the World Bank 2002) <

http://www.gsdrc.org/docs/open/HD32.pdf > accessed 13 September 2010

155U Miller and S Ziegler (n..) 4 arguing that “[ t]he PRSP approach is becoming increasingly

important, since it is not an isolated tool used just by the World Bank and the IMF, but is also supported by other international development partners…”

156U Miller and S Ziegler (n 152) 4, such lists “...provide a roadmap indicating the priority actions to be taken that will lead to poverty reduction.”

157n 17 above

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Contrary to what has been said, it is very obvious that there is a clear link between funding from multilateral institutions and insolvency related reforms as is the case with other legal reforms. Although governments are deemed to have a leading role in the process, one can see how the multilateral institutions, whose role is to provide technical and financial support to the process,158 are indeed better placed to ensure that their agenda and recommendations emerging form ROSC on insolvency reform or otherwise are accommodated in the PRSPs.159 Their role caters for the whole process from formulation and implementation, to monitoring and evaluation. In fact such endeavour can be achieved whether or not there is a ROSC so far undertaken for a particular country.

Indeed, the reforms are, by and large, not pushed by and undertaken as a direct result of, involvement of the countries under study in the growing number of insolvency cases affecting these countries.160 As such, the emerging reforms are not undertaken as a measured approach to address an immediate and pressing demand arising from the surge in incidences of cross-border insolvency affecting such countries. Rather, it seems that, as far as such countries are concerned, the drive and primary pre-occupation is ‘adopt[ing] a new insolvency law system just for the sake of the supposed economic advantage’161

158 U Miller and S Ziegler (n 152) 4

159In many countries the different donor organisations form groups that meet regularly (e.g. monthly) to discuss the state of progress of the PRSP. On this observation see U Miller and S Ziegler (n 152 ) 5

160 See for instance, C Manuel, ‘Consultative Paper on Key Proposals for the Reform of Insolvency Law’ ( Commercial Law Project Report) (1999); Uganda, ‘A Study Report on Insolvency Law’ (Report) (2004) Law Com. Pub. No. 13 of 2004. See also the statement reported to have been made by the Mauritius government in relation to the enactment of the new Insolvency Act 2009 that ‘the…..Act will secure reputation of Mauritius as a well governed business and financial services centre and a trustworthy investment destination.’ See Government Information Service, Prime Minister’s Office, ‘Insolvency Act 2009: Shoring Up Corporate Goodwill and Protecting Stakeholders’ <www.gov.mu/portal/site/Mainhomepage/menuitem.a42b24128104d9845dabddd > accessed 3/11/2009

161IF Fletcher, ‘Maintaining the Momentum: The Continuing Quest for Global Standards and Principles to Govern Cross-Border Insolvency’ (2006-2007) Brook J Int’l L 767, 774. See also HE Hon President M Kibaki, ‘Speech During the Official Opening of Parliament’ (the Fourth Session of the Tenth Kenyan Parliament 23rd February 2010) < www.parliament.go.ke/index.php?option=com_docman&task > accessed 12/04/2010 President Mwai Kibaki of Kenya in his Speech to the parliament made the following statement with regard to inter alia the Insolvency Bill that was to be tabled before the Parliament: the

Insolvency Bill will ‘provide an enabling legal environment to make Kenya more competitive for business and investment.’ <

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The looming risk is that the desire to attract investments and businesses in order to impress the international community and investors may override or marginalise other local needs and contexts which are equally relevant and important in enabling effective implementation of the law possible. This is critical in two ways. On the one hand, a majority of these countries lack a practical experience of the application of cross-border insolvency law, let alone the domestic insolvency practical experience. On the other hand, whilst it is a generally accepted view that there is no ‘one size fits all’ approach to insolvency law,162 as each country has its diverse values and norms, which require different policy choices for its insolvency system and thus cross-border insolvency regime; the trend is that the reforming countries have to a large extent tended to adopt systems that have seemingly worked well elsewhere and preferably from their former colonial powers.

3.8Conclusion

The development of effective cross-border insolvency systems is now more relevant in SSA countries than it was before. This is particularly so in view of the extent to which SSA countries are increasingly being integrated to the global economy through trade and foreign direct investments. The relevance is underpinned by the efforts that these countries have over the years been making to compete in promoting and attracting cross-border trade and investment through liberalisation of their economies and the creation of conducive legal environments with the support from the multilateral institutions and conclusion of cross-border trade and investment arrangements.

http://www.parliament.go.ke/parliament/downloads/tenth_forth_sess/SPEECH%20BY%20HIS% 20EXCELLENCY%20HON.pdf > accessed 23/03/2010

162 See R Parry and H Zhang ‘China’s New Corporate Rescue Laws: Perspective and Principles’ (2008) Journal of Corporate Law Studies 113, 125; CG Paulus, ‘Global Insolvency Law and the Role of Multinational Institutions’ (2006-2007) 32 Brook J Int’l L 755,765; N Martin ‘The Role of History and Culture in Developing Bankruptcy and Insolvency Systems: The Perils of Legal Transplantation’ (2005) 28 BC Int’l & Comp L Rev 1, 5; JJ Chung (n 146) 107 and 108

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The growing number of cross-border trade and investment arrangements implies a further challenge to the SSA countries to align their insolvency regime with their entire legal environment for facilitation of trade and investment and the international insolvency benchmarks. Despite the relevance as above stated, the approach for reform need not be rapid as incidences of cross-border insolvencies are still if at all very limited, though the pre-conditions for their occurrences are in place and building up. However, the major limitation inherent in this process is the fact that the assessment initiative for the extent of compliance with the international insolvency standards does not seem to delve into the details of the local contexts and needs that may influence the shape and implementation of insolvency law for a particular country. This is critical given that the insolvency standards do not contain a version translated into the contexts of circumstances pertaining to developing countries such as those in SSA, though they ostensibly allow innovations to reflect local circumstances. The other limitation is perhaps in the extent and manner in which local experts are employed in the process, which limits their role in the assessment exercise in terms of ownership and control. The relationship between SSA countries with the multilateral institutions which conduct the assessments is also critical. The risk is that SSA countries seem to face a potential risk of succumbing to prescriptions of the multilateral institutions as to the manner in which they should carry out reform which might not have sufficient regard to the local contexts.

The most critical challenge is to identify the relevant local contexts that reflect SSA countries’ historical, cultural, philosophical, psychological, political, economic, political, institutional and social aspects and needs and balance them against the insolvency benchmarks in a manner that will improve and modernise their cross-border insolvency frameworks. The danger is looming that these countries may adopt the benchmarks in their laws to please the international community without necessarily having them complied with in actual practice. The emerging approaches for reform, if integrated with the theories against transplant effect and enhancing effectiveness as above discussed, stand a better chance to allow crafting of an appropriate framework for regulation of cross-

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border insolvency in the countries under study. The next chapter explores further the existing cross-border trade and investment arrangements with a view to determining the nature of a possible cross-border insolvency framework to which such arrangements point for SSA countries.

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