Учебный год 2023 / phd
.pdf
Indeed, an approach that is pragmatic and balances the varied interests might be advantageous in many respects, as opposed to ‘dogmatic insistence on the means by which a result is to be achieved’.157 The question remains how best such a balanced approach could be devised, if it is at all needed.
2.7Some Thoughts and Issues Relating to Reform Strategies
Some thoughts and issues have evolved over the years and amidst the debate and promulgation of global initiatives with regard to reform strategies of insolvency law systems. The thoughts and issues that have been raised attempt to explain what reform of the insolvency law system should consider and how it should be undertaken.
Firstly, it is increasingly becoming accepted among theorists and academics that there is no ‘one size fits all’ approach to insolvency law.158 This view is premised on the assumption that each country has its diverse values and norms, which have to be taken into account in the reform process, as they would require different policy choices for its insolvency system that should not necessarily correspond ‘lock stock and barrel’ with other countries’ insolvency systems or global insolvency norms.159 Such differences are reflected in divergences in priorities and understandings of the goals of insolvency proceedings, such as the protection of creditors, workers, and companies. This thought seemingly warns against the dangers of legal transplantation and it indeed runs counter to the idea of ‘best practices’.160 However, this view seems to over emphasise the peculiarity of the national values and norms that account for the claimed diversity. The implication
157IF Fletcher (n 48) 124
158See R Parry and H Zhang (n 145) 125; CG Paulus (n 18) 765; N Martin (n 14) 5; JJ Chung (n
70) 107 and 108
159TC Halliday, ‘Lawmaking and Institution Building in Asian Insolvency Reforms: Between Global Norms and national Circumstances’(5th Forum for Asian Insolvency Reform 27-28 April 2006) <http://www.oecd.org/DAF/corporate-affairs/>, accessed 17/07/2009 [33]
160See F Dahan and J Dine, ‘Transplantation for TransitionDiscussion on Concept Around Russian Reform of the Law on Reorganisation’ (2003) 23 Legal Studies 285-310; and H Xanthaki, ‘Legal Transplants in Legislation: Defusing the Trap’ (2008) 57 ICLQ 659-673; and TC Halliday, ‘Legitimacy, Technology, and Leverage: The Building Blocks of Insolvency Architecture in the Decade Past and the Decade Ahead’ (2006-2007) 32 Brook J Int’l L 1081, 1097-1101
48
is that the over emphasis on the peculiarity of the national values, if taken without caution, may unnecessarily complicate the approach to insolvency law reform. The complication is that it may not be that easy, in contemporary pluralistic societies, to determine those propositions of values that are not only representative of a national wide consensus but also relevant to cross-border insolvencies.161 Despite this intricacy, it is necessary to accept the challenge for the purpose of a coherent insolvency policy.
The second theoretical view related to reform of insolvency systems is incrementalism.162 In relation to insolvency law reform, and in particular the global convergence, this view advocates for modest and gradual reform mechanisms in relation to global insolvency law, allowing for substantial deviation, whilst also reducing the risk of outright rejection. 163 This approach claims to accommodate even the sceptical individuals or states that may not be happy with or ready to carry out a wholesale reform and adaptation as it accords room for gradual and piecemeal reform. This approach is significant in crossborder insolvency by virtue of the absence of theoretical and political consensus of how best to design international insolvency regimes. The benefits of incrementalism in international law making have been summarised thus:
Rather than confront states immediately with a legal regime that couples challenging goals with strong sanctions for failure to meet them, states can be gradually led towards stronger legal rules. This can be accomplished by starting with relatively weak international rules backed by little or sanctions that all states feel comfortable joining, but then gradually pushing states to accept successfully stronger and more challenging requirements.164
An incrementalist approach to the development of global law is more relevant where law reformers possess limited authority and the subject is either
161 PH Brietze (n 143) 24 and 25; and G Johnson, ‘Towards International Standards on Insolvency: The Catalytic Role of The World Bank’ (2000) Law in Transition online 1. <http://www.ebrd.com/pubs/legal/lit072.pdf> accessed 15/6/2009
162JAE Pottow (n 114) 936. This is an international law theory, which in connection with crossborder insolvency law reform was first presented by Pottow.
163JAE Pottow (n 114) 936; S Block-Lieb and TC Halliday ‘Incrementalisms in Global Lawmaking’ (2006-2007) 32 Brook J Int’l L 851
164OA Hathaway, ‘Between Power and Principle: An Integrated Theory of International Law’ (2005) 72 Univ Chicago Law Rev 469, 531 also quoted in S Block-Lieb and TC Halliday, ibid
49
controversial or technical.165 It has been argued that it is this approach that the UNCITRAL Model Law on Cross-border Insolvency adopted, thus making it possible to overcome the theoretical gap between universalism and territorialism whilst also implicitly advancing universalism. According to Block-Lieb and Halliday, incrementalism, in its dynamic form, operates vertically, horizontally and in a pyramidal form, which creates potential for broad, and in depth application involving international organisations and building from prior efforts.166 Notwithstanding its advantages that include minimising chances for confrontation and resistance, the approach is biased towards a universalist stance and more importantly, it operates in a manner that conceals the ultimate intent of the reform process.
The third thought is based on the assumption that an effective and efficient insolvency law which guarantees certainty, predictability, transparency and efficiency should stimulate efficient market exchange processes and thus strengthen national and global economies.167 It thus advocates for strategic reform of insolvency laws so as to conform to the global market and in particular to attract investments and support the operations of the credit system. The argument is that such law enables investors and creditors to effectively plan their commercial transactions while assured that, in the event of insolvency, the proceedings will be conducted fairly and efficiently.
Apparently, this view assumes a correlation between the growth of a country’s foreign investment and national economy on one hand and the presence of an effective functional insolvency law, though no global comprehensive empirical study has been undertaken in this regard.168 The inherent difficulty of measuring such a correlation and obtaining reliable evidence thereof has long been
165S Block-Lieb and TC Halliday, ibid 852
166Ibid 854
167S Hagan, ‘Insolvency Reform and Economic Policy’ (2001-2002) 17 Conn J Int’l L 63; R Parry and H Zhang (n 145)123; R Sanderson, ‘Making Insolvency System Work’ (2007) Law in Transition online 1. <http://www.ebrd.com/pubs/legal/lit072.pdf> accessed 15/6/2009; CG Paulus (n 18) 757-759; M Balz, ‘Market Conformity of Insolvency Proceedings: Policy Issues of the German Insolvency Law’ (1997) 23 Brook J Int’l L 167,170-172
168TC Halliday, and BC Carruthers (n 21) 440. Halliday and Carruthers state interlia that “relationship between good law and investment remains open to empirical confirmation.”
50
acknowledged though it is a widely held belief that such a relationship does pertain.169 This view is seen as particularly relevant for economies in transition, as well as developing countries, where it can play a critical role in addressing economic problems in these countries.170 However, it has been argued that it is unrealistic to expect such countries to adopt a new insolvency law system for the sake of the supposed economic advantage; as such a move would require a long term approach involving the sharing of skills and expertise.171 As noted earlier, having an effective insolvency law is one thing, but its effective implementation is quite another thing for the latter is highly dependent on the existence of a strong institutional infrastructure, something that cannot be developed within a time frame necessary to respond to immediate and pressing needs.172
Arguably, none of the approaches discussed is sufficient in itself to provide an effective reform strategy for SSA which faces by a number of problems. To be sure, it may be imperative for these approaches to operate collectively and in a holistic manner for want of an efficient output. This is probably the reason why each of them when viewed critically seems to be just an aspect of the other, such that employment of one strategy would necessarily lead to consideration and application of the other. However, the collective and holistic utilisation of all the strategies is highly demanding in terms of human and financial resources which might be lacking in SSA. Indeed, the drive for international convergence undertaken by the global and regional institutions seems at least in theory to have adopted these strategies, though the resulting benchmarks arguably do not reflect the least developed economies’ perspectives.173
169See M Balz (n 167) 167,169 and 170; and TC Halliday, and BC Carruther (n 21) 440
170IMF(n 6); ED Flaschen and TB DeSieno, ‘The Development of Insolvency Law as Part of the Transition from a Centrally Planned to a Market Economy’ (n 143) 668
171IF Fletcher (n 139) 774
172S Hagan (n 167) 72 and 73
173See n 4 and 6 above; N Onder, ‘Global Financial Governance: ‘Soft’ Law and Neoliberal Domination’ (Paper for the Canadian Political Science Association Congress, June 2-4 2005 London) < http://www.cpsa-acsp.ac/papers-2005/Onder.pdf > accessed 25/11/2009; and B Schneider, ‘Do Global Standards and Codes Prevent Financial Crises? Some Proposals on Modifying the Standards-Based Approach’ (UNCTAD Discussion Paper No 177, April 2005)<http://www.unctad.org/en/docs/osgdp20051_en.pdf > accessed 17/07/2009 [1]
51
2.8Conclusion
It is apparent that every theoretical approach that is being advocated is not free from one disadvantage or another. While one approach might be seen as advantageous from the perspective of globalisation and from the standpoint of multinational corporations, it might not equally be seen as a favourable option to a particular country in view of its domestic policies, level of development and extent of integration to the global economy. While an approach might be theoretically sound, in practical terms it might be unattainable in the near future. The above circumstances seem to justify the emergence of a pragmatic approach, and hence development of the alternative approaches which some scholars have described as transitional strategies to universalism. Nevertheless, the debate serves to expose the benefits and ills of each approach, which then need to be considered in developing a framework for legislation in light of the existing global initiatives and the local contexts. In all, the theoretical models and the resulting debate provide an important benchmark which any reform measure ought to take into account while prioritising the specific needs and values of the SSA countries.
It is however worthwhile to note that the endeavour of exploring the theories for cross-border insolvency has proceeded under the assumption that there is a greater challenge for increasing cases of cross-border insolvency arising from the growing scale of international business. The apparent question is whether this is realistic and equally the same in all countries and in particular SSA countries, bearing in mind that the endeavours to develop coherent theoretical models and the resulting debate over the same have evolved from developed economies which are characterised by multinational corporations, advanced technology and sophisticated financial and credit systems. Certainly, another challenge is on the methodology to be adopted to unveil what would constitute relevant specific needs and values for these developing countries. The next chapter looks at the global convergence of insolvency law in relation to the quest for a cross-border insolvency framework for SSA.
52
CHAPTER THREE
THE GLOBAL CONVERGENCE OF INSOLVENCY LAW AND THE QUEST FOR A SUB-SAHARAN AFRICAN CROSS-BORDER INSOLVENCY FRAMEWORK
3.1Introduction
The globalisation drive has not only led to an intense debate over the competing cross-border insolvency theories addressed from the perspective of developed countries but also to macroeconomic instabilities. These instabilities have facilitated the development of international insolvency standards under the auspices of the multilateral institutions within the context of the international financial architecture and global convergence of laws. However, the international insolvency standards that have emerged as benchmarks for standardising development of effective domestic insolvency systems are based on the ‘best practices’ prevailing in advanced economies which may not necessarily be directly relevant and appropriate for Sub-Saharan African (“SSA”) countries. There is thus a potential risk for the efforts by these countries to comply with the standards as they approach the crafting of a workable and appropriate crossborder insolvency framework to result in unsuitable legislative reform. Although the international benchmarks seem in some ways to inherently recognise the differences between legal regimes and allow room for innovation to reflect local circumstances, they potentially suggest a ‘one size fits all approach’ to the vulnerable countries of SSA which are taking initiatives to impress the international community as a strategy to attract foreign direct investment, aid and technical assistance as they can hardly withstand the pressures and incentive for reform from international institutions.
This chapter provides an insight into the dilemmas and challenges for crossborder insolvency reform posed by such developments for SSA- a major group of developing countries with a large number of countries adjudged by the United Nations as “least developed” countries.1 It provides a perspective on the
1 Text to n 21 in chapter 1
53
ramifications of the international insolvency standards for SSA that arises from the multilateral institutions involvement in facilitating the observance of the standards and the nature of the standards themselves. Salient features of the standards, and emerging aspects and issues within the assessments for compliance with the standards will be identified and considered with particular reference to the SSA context. This chapter begins by giving an overview of the globalisation of trade and capital and its implication for convergence of insolvencies before outlining the development of international insolvency standards within the context of the international financial architecture. Attention then turns briefly to the salient features that underpin adoption and observance of the standards in general and this discussion will be used as a basis for a discussion of the relevancy of the standards to SSA and appraisal of the multilateral institutions’ assessments of observance of the standards, before a view from SSA is given as to the potential implications of the current crisis for any potential reform process.
3.2Globalisation and the Pressure for Convergence of Insolvency Law Systems
Globalisation of trade and capital is having a direct impact of opening up and linking together national market economies across the globe.2 Enterprises are increasingly taking a more global outlook, pursuing strategies which link and coordinate the production and distribution of goods and service on an international basis;3 and setting up business and undertaking economic expansion
2This is noticeable in the emergence of new patterns of commercial links involving emerging economies and SSA and steady growth of volume of global trade and capital flow. See World Trade Organisation (WTO), International Trade Statistics 2006 (WTO Publications, Geneva 2006); R Jenkins and C Edwards, ‘The Economic Impacts of China and India on Sub-Saharan Africa: Trends and Prospects’ (2006) 17 J Asian Econ 207–225
3Multinational enterprises from developed countries are still dominant, though there is a rapid increase of such enterprises from emerging economies as well. In SSA, such trend is said to be more characterised by the growth and expansion of South Africa industry, though there is evidence of significant outward investment from other countries such as Kenya, Nigeria and Mauritius. See L Thomas, J Leape, N Bhinda, and M Martin, ‘Intra-Regional Private Flows in Eastern and Southern Africa: Findings from Mozambique, South Africa, Tanzania, Uganda, Zambia and Zimbabwe’ (Research Paper at the LSE Centre for Research into Economics and Finance in Southern Africa & Development Finance International 2003) < http://www.development-finance.org/en/services/research-a-analysis/publications-and-technical- briefings/private-capital-publications/synthesis-analysis/173-intra-regional-private-capital-flows-
54
in more than one jurisdiction.4 These developments have led to growth in transnational activities undertaken by ordinary enterprises having international connections in multiple jurisdictions.5 This is increasingly leading to interconnectedness and interdependence of national economies which consequently demands for harmonisations of domestic systems to facilitate and sustain trade and investments growth and in particular the operations of multinational enterprises.
To this extent, the emerging global economic order has made it imperative for international regulation of the global markets to ease international commerce by ensuring stability, certainty, and predictability. This is sought to be achieved by forging a harmonised framework for crisis resolution which is expected to reduce transaction costs.6 Such endeavour is partly reflected in the growing number of arrangements for facilitation of trade and capital that have been concluded across the globe and the emerging trend towards renegotiation and negotiation of such and similar arrangements.7 It is within this context that attention has greatly been given to cross-border insolvency treatment, standardisation initiatives and indeed, the debate on the competing theoretical approaches for dealing with cross-border insolvencies.8
in-eastern-and-southern-africa.html > accessed 06/07/2011; and I Mevorach, Insolvency Within Multinational Enterprise Groups (OUP, Oxford 2009)
4 R Mason, ‘Implications of the UNCITRAL Model Law for Australian Cross-border Insolvencies’ (1999) Int’l Insolv Rev 83, 84; PJ Omar, European Insolvency Law (Ashgate, England 2006)15; and SO Riain, ‘States and Markets in an Era of Globalization’ (2000) 26 Annu Rev Sociol 187, 189
5World Bank, World Development Indicator, 2009 (Washington 2009). The World Indicator notes that this also involves establishment of footholds in new markets and shifting production sites to other jurisdictions to take advantage of lower cost or gaining access to supplies of natural resources.
6World Bank, World Development Report 2005: A Better Investment Climate for Everyone
(World Bank, Washington 2004) 181
7These are in the nature of international investment treaties and bilateral investment treaties. See, United Nations Conference on Trade and Development (“UNCTAD”), World Investment Report 2008: Transnational Corporations and Infrastructure Challenge (United Nations, New York 2008). Chapter 4 of this thesis is devoted to these facilitation arrangements as they implicate cross-border insolvency regulation in SSA.
8The theoretical aspects of cross-border insolvencies are thoroughly discussed in chapter two of this thesis.
55
All these developments reflect pressures for global convergence of corporate insolvency laws involving multilateral institutions and other international organisations. This is in part a reflection of insolvency as a feature of any welldeveloped market based economy.9 The pressure for convergence has indeed in the last few decades given way to the rise of global insolvency norms based on practices predominantly found in advanced economies and has focussed attention upon the global dimensions of insolvency law reform. It is noteworthy that more pressure has been greatly felt in developing countries than the developed ones given the involvement of multilateral institutions which have hitherto been responsible for the liberalisation policies that were being implemented as a precondition for eligibility for loans.10 This pressure is mostly because of the vulnerability of the developing countries and lack of capacity to withstand such forces.11
As far as developing countries are concerned the pressure for convergence of insolvency law by using models of best practices from advanced economies started to be experienced long before the promulgation of the global insolvency norms. Indeed, modernisation of the insolvency systems, by the use of foreign models, was at times a condition for qualifying for international lending from such international institutions and advanced countries.12 The use of foreign models was open to criticisms centred on the suitability of the legal transplantations given that their effectiveness is dependant on among other things ‘the recipient country’s legal culture and tradition and the degree of similarity of such factors to those of the importer.’13 In some quarters, the approach of the
9S Hagan, ‘Insolvency Reform and Economic Policy’ (2001-2002) 17 Conn J Int’l L 63
10S Hagan (n 9) 63
11R Tomasic, ‘Insolvency Law Reform in Asia and Emerging Global Insolvency Norms’ (2009)
Insolv LJ 15
12G Ajani, ‘By Chance and Prestige: Legal Transplants in Russia and Eastern Europe’ (1995) Am J Comp L 93, 113; and F Dahan and J Dine, ‘Transplantation for Transition on Concept around Russian Reform of the Law on Reorganisation’ (2003) 23 Legal Studies 284; and H Xanthaki, ‘Legal Transplants in Legislation: Defusing the Trap’(2008) 57 ICLQ 659
13F Dahan and J Dine (n 12) 284, 289; G Ajani (n 12); H Xanthaki (n 12) 659; JR Hay and others, ‘Privatization in Transition Economies: Toward a Theory of Legal Reform’ (1996) 40 Eur Econ Rev 559, 565; and TW Waelde and JL Gunderson, ‘Legislative Reform in Transition Economies: Western Transplants- A Short-Cut to Social Market Economy Status?’ (1994) 43
Int’l & Comp LQ 347, 360
56
international institutions has been criticised for equating modernisation of insolvency law with westernisation of developing countries’ laws;14 which practice was predominant in colonial days and reflects the prevailing inequalities in power structure among nations.15 While the pressure for convergence of insolvency law was particularly and directly felt in developing economies of Eastern Asia, Latin America and the transition economies in Eastern Europe, it was a different story in SSA where the pressure, during that time, was broadly felt on implementation of the ‘one-size-fits all’ structural adjustment policies and other development protocols promoted and imposed by the multilateral institutions (i.e the World Bank and the International Monetary Fund) which were also characterised by the importation or imposition of Western legal rules and institutions.16
3.3Global Insolvency Norms and the Benchmarking of Insolvency Reform Process
Consistent with the above discussion, the globalisation of trade and capital and the implications it has had in insolvency law, influenced and inspired multilateral institutions, driven by the collective will of G7 to create global insolvency norms to benchmark development of effective insolvency law systems across the globe.17 Special regard is given to developing countries, as they are considered to
14S Steele, ‘The New Law on Bankruptcy in Indonesia: Towards a Modern Corporate Bankruptcy Regime’ [1999] MULR 5 < http://www.austlii.edu.au/au/journals/MULR/1999/5.html > accessed 11 August 2009; CRP Pouncy, ‘Stock Markets in Sub-Saharan Africa: Western Legal Institutions as a Component of Neo-Colonial Project’ (2002) 23 U Pa J Int’l Econ L 85; TA Kelley, ‘Exporting Western Law to the Developing World: The Troubling Case of Niger’ (2007) 7 Global Jurist (Frontiers) Article 8 < http://wwwbepress.com/gj/vol7/issu3/art8 > accessed 01/06/2010; T Halliday ‘Crossing Oceans, Spanning Continents: Exporting Edelman to Global Lawmaking and Market-Building’ (2004) 38 L & Soc’y Rev 213, 217; and SE Merry, ‘From Law and Colonialism to Law and Globalization’ (2003) 28 Law and Social Inquiry 569, 570
15SE Merry (n 14) 570
16J Stiglitz, Globalization and its Discontents (Penguin Books, London 200); and CRP Pouncy (n 14) 86
17World Bank and UNCITRAL, ‘The Unified Creditor Rights and Insolvency Standard Based on World Bank Principles for Effective Creditors Rights and Insolvency Systems and UNCITRAL Legislative Guide on Insolvency Law’ <http://www.worldbank.org/ifa/FINAL-ICRStandard- March2009.pdf> accessed 22 July 2009. The Unified Global Insolvency Standard is based on and integrates the World Bank Principles for Effective Creditor Rights and Insolvency Systems and the UNCITRAL Legislative Guide on Insolvency Law. Thus, the unified standard essentially incorporates the benchmarks of all the previous efforts. It is noteworthy that the UNCITRAL Legislative Guide itself has had advantages of taking into account all the previous efforts
57