UNCITRAL Model Law on Cross-Border Insolvency continues to be adopted

Malaysia is the latest country to announce it is going to adopt the UNCITRAL Model Law on Cross-Border Insolvency (Model Law). Legislation based on or influenced by the Model Law has already been adopted in 63 jurisdictions – see Status: UNCITRAL Model Law on Cross-Border Insolvency (1997) | United Nations Commission On International Trade Law.

There are often long lead times between a country’s decision to adopt the Model Law and legislation adopting it being enacted, and so it may be several years before Malaysia enacts the required legislation. For example, Australia passed legislation adopting the model law in 2008, after first releasing a proposals paper recommending its adoption in 2002, and announcing it would adopt the Model Law in 2005.  

The Model Law is used by persons administering a foreign insolvency to seek recognition of the foreign insolvency in a country that has adopted the Model Law, so that they can obtain the assistance of courts in that country and other measures, such as a stay against the enforcement by creditors against assets located in that country, or orders for the examination of persons located in Australia.  

UNCITRAL has also published a Guide to Enactment and Interpretation of the Model Law to assist jurisdictions when adopting it. That guide was most recently updated in 2013. In December last year, UNCITRAL’s Working Group V (WGV) (which considers insolvency matters) endorsed a proposal by Australia that WGV conduct a review as to the currency of the Guide to Enactment and Interpretation and to update it as necessary. UNCITRAL will now consider whether WGV should be given a mandate to conduct the review.