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VOL. 7, ISSUE 3 (2025)
Cross-border insolvency and arbitration: Navigating jurisdictional conflicts in the resolution of MNC’s corporate distress
Authors
Dr. Mahipal Lather
Abstract
The intersection of cross border insolvency and international
arbitration is among the most challenging issues in modern transnational
dispute resolution. Insolvency law is designed to protect creditors
collectively, emphasising fairness, transparency, and universal application.
Arbitration, by contrast, relies on party autonomy and bilateral enforcement,
reinforced by the New York Convention’s strong pro-enforcement framework. When
multinational enterprises face financial collapse, these different foundations
collide, generating disputes over arbitrability, the scope of moratoria, the
treatment of avoidance and claw-back claims, and the recognition of foreign
insolvency judgments and arbitral awards. This paper analyses these tensions by
examining leading case law from the European Union, the United Kingdom, the
United States, Singapore, and India. Cases such as Eurofood, Seagon, Rubin,
Vidya Drolia, and Qimonda illustrate how courts draw boundaries between
collective insolvency claims and contractual disputes. The English rule in
Gibbs receives particular attention for its continued disruption of cross
border restructurings. The paper also explores the ongoing debates within
UNCITRAL’s Working Group V on whether international guidance is required to
harmonise insolvency and arbitration. The study highlights enduring gaps,
including blurred limits of arbitrability, inconsistent treatment of foreign
moratoria, and the absence of coordination mechanisms. It proposes reforms such
as insolvency-aware drafting, early recognition planning, cross border
protocols, and eventual legislative clarification. The argument advanced is for
“modified universalism with carve outs,” a balanced model in which insolvency
governs collective matters while arbitration continues to regulate bilateral
disputes.
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Pages:84-93
How to cite this article:
Dr. Mahipal Lather "Cross-border insolvency and arbitration: Navigating jurisdictional conflicts in the resolution of MNC’s corporate distress". International Journal of Law, Policy and Social Review, Vol 7, Issue 3, 2025, Pages 84-93
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