ELI Represented at the 61st Session of UNCITRAL Working Group V on Insolvency Law


The sixty-first session of the Working Group on Insolvency Law took place from 12–16 December 2022 at the Vienna International Centre in Austria. ELI sends an observer to attend these meetings as and was represented by Prof Stephan Madaus (University of Halle-Wittenberg, Germany) and Gert-Jan Boon (Leiden University, the Netherlands), Co-Reporter and Team member of the ELI project on Rescue of Business in Insolvency Law.

Members of the Working Group and observers to the session discussed the development of the following projects: (1) asset tracing and recovery in insolvency proceedings; and (2) applicable law in insolvency proceedings.

Asset Tracing and Recovery in Insolvency Proceedings

The session started by considering the results of a survey amongst Participants on tools available in their jurisdiction to trace, freeze and recover assets (ATR) in insolvency proceedings. These results are made available in the form of a comparative law study and provide a useful inventory of ATR tools found in the law or access to which is regulated by law. Other tools, such as searches of media, were not included.

The inventory consists of three chapters and an annex. The first chapter refers to the ATR tools found in laws relating to insolvency of the surveyed jurisdictions and in UNCITRAL insolvency texts. The second chapter refers to civil ATR tools of general application, such as those used in civil litigation or international commercial arbitration that may also be relevant to insolvency proceedings, especially in the context of provisional measures or if the insolvency representative commences, participates or intervenes in civil or arbitral proceedings for recovery of the debtor assets. The third chapter refers to criminal proceeding tools that may be used to aid ATR in insolvency proceedings. The annex highlights main points from State submissions, grouping them per category for ease of reference by the Working Group.

The Working Group reviewed the text of the study. The prevailing view was that the project would not cover criminal law tools. Divergent views remained as regards the nature, scope and form of a text to be prepared on the subject. The idea to develop a toolbox for ATR in insolvency proceedings received support. This could take the form of draft text for a model law and commentary.

Applicable Law in Insolvency Proceedings

The second topic was considered in greater length and detail. The project on applicable law in insolvency proceedings has already reached the stage of draft legislative provisions with accompanying commentary. These provisions included a definition of the scope and content of the issues covered by insolvency law – the lex fori concursus. The Working Group agreed that the project would cover liquidation and reorganisation, including insolvency proceedings commenced at an early stage of financial distress and interim and restructuring proceedings that met the test to be qualified as ‘insolvency’ or ‘foreign’ proceedings under the UNCITRAL insolvency texts. Out-of-court debt restructuring negotiations held under contract law would be excluded from the scope of the project at this stage. It was noted that distinct issues arise from the application of applicable law rules in reorganisation as opposed to liquidation.

There are divergent views in the Working Group on a number of issues as regards the scope of the lex fori concursus and exceptions to its application. Such issues include the treatment of digital assets and IP rights and licences, the treatment of contracts relating to immovables and labour, the effects of insolvency proceedings on pending litigation and arbitration proceedings, the ability to affect security interests in collateral abroad, and the obligations of directors in the vicinity of insolvency. The Working Group is determined to address all these issues but there is an obvious need for further deliberations in order to identify common grounds.

ELI is grateful to Prof Stephan Madaus and Gert-Jan Boon for representing it at the above session.