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63 In “The Jurisdictional Limits of Disclosure Orders in Transnational Fraud Litigation”, Campbell McLachlan pointed to the need to find a modern approach to private international law which deals adequately with three overall concerns:
We agree with those observations.
64 In this chapter we assess whether there is a need to reform New Zealand’s law on cross-border insolvency by reference to these criteria and by examining factors for and against reform of the law. We also consider whether the Model Law is the most appropriate method to achieve reform.
65 Three broad policy factors in favour of reform are:
– reduce the costs of obtaining a dividend; and
– lead to greater predictability of process and outcome in turn reducing the overall cost of litigation.
66 Factors which weigh against reform are:
Each factor is examined in turn.
67 The ability to transact business globally and to move large amounts of money from state to state has created an economic borderless world which must, nevertheless, operate within the boundaries of sovereign nations. Many nations, although not yet having adopted the Model Law, have laws relating to cross-border insolvency which allow for recognition of insolvency regimes commenced in other states and for assistance to be given to foreign insolvency administrators.
68 A number of states have laws which require them to render assistance to foreign courts who request aid on behalf of insolvency administrators situated within the requesting states. Assistance may consist of such matters as:
69 States in regular trade with New Zealand merchants with specific legislative provision for the rendering of assistance similar to the New Zealand Insolvency Act 1967 s 135 include:
70 Other major trading partners of New Zealand, while having statutory provisions enabling a court to render assistance to a foreign insolvency administrator on an application for aid, make the obligation to give aid conditional upon reciprocity. Reciprocity means that the court petitioned for assistance must consider whether the court of the state requesting assistance would, had the positions been reversed, render assistance on the subject matter of the request. Examples of states with such provision are:
71 A further category exists in which either
Malaysia and Singapore are examples of states where there is provision for giving assistance but the statutes do not stipulate states to which aid can be extended; both utilise the doctrine of comity to render assistance. France is an example of a state which will render assistance based on exequatur (the civil law equivalent of comity – see para 20).22
72 Finally, there are some states whose domestic law on cross-border insolvency is based firmly on the principle of territoriality so that foreign courts are unable to gain any assistance. Examples of states which adopt the territorial approach are Chinese Taipei (Taiwan), Iran, South Korea, Saudi Arabia, and the People’s Republic of China.
73 Japan also technically falls in the above category as it lacks legislation to assist a foreign representative and the insolvency legislation in place has territorialist foundations. Notwithstanding those features, Japanese courts have – in isolated cases – extended aid to foreign representatives (see Takeuchi 1994; in relation to assistance given in the BCCI and Barings Bank cases, see Miyake 1996). As stated by Koji Takeuchi, a Japanese practitioner:
Heretofore, we have seen that Japanese practice (or the law of practice) has essentially abandoned territorialism with respect to insolvency proceedings commenced in Japan. The question remains as to whether the law in practice will result in the same co-operative attitude upon the receipt of a request for co-operation in relation to a foreign insolvency proceeding. It seems likely that the Japanese courts will not selfishly pursue their own interests in view of the long passage to the present practical interpretations. However, it is still possible that such co-operation might be denied under the pretext of the lack of law or the protection of domestic creditors, thus provoking criticism from friendly nations. Fortunately, there has not been any instance in which a Japanese court has received a request deriving from a foreign proceeding to recognise the comprehensive power of execution in order to prohibit an individual creditor’s actions in Japan; thus, so far, the law in practice appears seamless. (Takeuchi 1994, 80–81)
74 In other areas of commercial law the adoption of consistent legislation to cover international transactions is becoming increasingly common. Examples are the Sale of Goods (United Nations Convention) Act 1994 (which adopts the Vienna Sales Convention) and the Arbitration Act 1996 which adopts the UNCITRAL Model Law on arbitration, with modification. Also, the UNCITRAL Model Law on Electronic Commerce is presently under consideration in New Zealand (as discussed in our 1998 report, Electronic Commerce Part One: A Guide for the Legal and Business Community (NZLC R50)).
75 In the United States, the Model Law awaits reconsideration of other bankruptcy reforms in the Bill in which it has been placed (see para 28 and 81). A draft statute has been prepared for consideration in South Africa. Further, our inquiries have revealed that Australia, the United Kingdom and Canada are likely to consider adoption of the Model Law in the near future. States in Asia are likely to be persuaded to adopt the Model Law as part of the requirements of IMF assistance (see paras 78–84).
76 The world economy is unstable. Since the first “post modern financial crises” (Arner 1998, 381) in 1994 there have been a number of financial crises throughout the world which have impacted in various ways on other economies. In a recent article, Douglas Arner stated:
Financial crises in Latin America and Asia since 1994 have drawn attention to the potential dangers of globalisation of the international financial system. In order to prevent the collapse of the financial system of the countries involved and reduce the risk of potential contagion throughout the international financial system, international financial rescues of unprecedented proportions have been organised for Mexico, Thailand, Indonesia and South Korea. Including contributions from multilateral and bilateral creditors, these financing packages have totalled US$48.8 billion for Mexico in 1995, and US$17 billion for Thailand, US$40 billion for Indonesia and US$57 billion for South Korea in 1997. In these respective packages, the contribution of the International Monetary Fund (IMF) alone totalled US$52.8 billion: US$17.8 billion for Mexico, US$4 billion for Thailand, US$10 billion for Indonesia and US$21 billion for South Korea.
. . .
The magnitude of these international financial rescue packages and the as yet indeterminate impact that they will have on the international financial system underlines a number of ongoing changes in the international financial system. These changes can be seen in respect of the potential dangers to emerging markets of international capital flows, the importance of international minimum standards and best practices in financial regulation, and in the changing role of the IMF. (Arner 1998, 380)
Taking Indonesia as an example, in July 1998 inflation was running at about 85 percent, interest rates were at about 65 percent and the government forecasted negative 10 percent Gross Domestic Product for the next 2 years (Dywer 1998, 14; see generally the International Monetary Fund, International Capital Markets: Developments, Prospects and Key Policy Issues (1998)).
77 Subsequently there has been a financial crisis in Russia, a recession in Japan, and predictions of further financial crises in Latin America.23 Many states have sought assistance from the International Monetary Fund (IMF).
78 A valuable overview of the work of the IMF is provided by Michel Camdessus, IMF Managing Director, in an address to the Economic Club of Washington DC in 1998: “Reflections on the IMF and the International Monetary System” (available at www.imf.org). The IMF is akin to a revolving fund. Each state allied to it subscribes resources to the Fund on an annual basis, without return, in exchange for the ability to draw upon funds when the need arises to finance a severe balance of payments deficit.24 This arrangement enables the resources of members that are in strong balance of payments positions to be lent temporarily to other member states in need. Money borrowed from the Fund has to be repaid, but the loan terms are fluid and favourable, as compared with what would be available on the open market. The amount that can be borrowed is dependant upon:
79 One of the criteria for eligibility to receive assistance is the existence of bankruptcy laws that treat foreign creditors fairly. If the domestic law of the state seeking assistance does not treat foreign creditors fairly, the IMF requires, as part of its loan conditions, that modern bankruptcy laws remedying the position are on the agenda of proposed reforms (Armey 1998; Camdessus 1998, 3).
80 Each state which contributes to the IMF has voting rights which are determined in accordance with the IMF’s internal rules. The United States contributes the greatest amount of money to the IMF which entitles it to around 18 percent of the voting rights. (Information on voting rights is available at www.IMF.org/external/np/exr/facts/quotas.htm: “IMF Quota and Quota Reviews”.)
81 The United States House of Representatives passed a Bill (HR 3579) entitled “An Act making emergency supplemental appropriations for the fiscal year ending September 30, 1998, and for other purposes” on March 31 1998. Amongst other things, that Act (available at http://thomas.loc.gov/) introduced into American law the following:
(d) BANKRUPCTY LAW REFORM – The United States shall exert its influence with the International Monetary Fund and its members to encourage the International Monetary Fund to include as part of its conditions of assistance that the recipient country take action to adopt, as soon as possible, modern insolvency laws that –
(1) emphasize reorganization of business enterprises rather than liquidation whenever possible;
(2) provide for a high degree of flexibility of action, in place of rigid requirements of form or substance, together with appropriate review and approval by a court and a majority of the creditors involved;
(3) include provisions to ensure that assets gathered in insolvency proceedings are accounted for and put back into the market stream as quickly as possible in order to maximize the number of businesses that can be kept productive and increase the number of jobs that can be saved; and
(4) promote international cooperation in insolvency matters by including –
(A) provisions set forth in the Model Law on Cross-Border Insolvency approved by the United Nations Commission on International Trade Law, including removal of discriminatory treatment between foreign and domestic creditors in debt resolution proceedings; and
(B) other provisions appropriate for promoting such cooperation.
82 When the Act was before the Senate in Bill form, Senator Stevens from Alaska said:
. . . I believe that it is crucially important to encourage the IMF to encourage nations which seek IMF economic assistance to implement meaningful bankruptcy and insolvency reforms. In fact, last year, I held extensive hearings on the subject of international bankruptcies. To my surprise, I learned that Wall Street analysts who assess how risky it is to invest in a particular developing country often look at the type of bankruptcy system in place. On the basis of these risk assessments, investors decide whether to invest in a particular country. In other words, bankruptcy reform will encourage private development and investment in emerging economies. My amendment has been developed to encourage the kind of bankruptcy reform which will in turn encourage increased private investment. (Congressional Record Amendment No. 2119: March 24 1998 (Senate))
Emphasis has been placed on this issue in the IMF’s dealings with both Indonesia and Korea. (Letters of intent to the IMF from Indonesia and Korea are available at www.imf.org/external/np/loi/072998.htm and www.imf.org/external/np/loi/072498.htm respectively.)
83 The matters raised by Senator Stevens provide a useful reminder of the need to bear in mind aspects of insolvency law when considering both fiscal and business law policy – a point made more starkly by Wood who said, to quote him again, “bankruptcy is the most crucial indicator of the attitudes of a legal system . . .” (Wood 1995, 1).
84 In short, it is likely that countries seeking IMF funding will enact the Model law for three reasons:
For New Zealand this means that a number of our Asian neighbours, with whom we have considerable trade, are likely to enact the Model Law.
85 The IMF works in close co-operation with the World Bank, although they are distinct entities with disparate purposes underlying their provision of assistance (see Driscoll, “The IMF and the World Bank: How Do They Differ?”, available at www.imf.org). On 5 October 1998, the Report of the Working Group on International Financial Crises encouraged the wider use of the UNCITRAL Model Law or the adoption of similar mechanisms to facilitate the efficient resolution of cross-border insolvencies (available at www.worldbank.org).
86 This encouragement is consistent with recommendations made by the Group of Thirty in conjunction with INSOL International in the discussion draft, International Insolvencies in the Financial Sector. The summary of the draft states that legislation should enact
laws to ensure judicial co-operation, access and recognition in international financial insolvencies, preferably supporting the norms of universality. (Group of Thirty and INSOL International 1996, iii)
This recommendation was supported by the following comments
One element of the work by INSOL and UNCITRAL explores the possibility of legislation to ensure judicial co-operation, access and recognition. Some countries already have such laws. Others are considering legislation, and more may do so in the future. The advantage of legislation is that it reduces uncertainty about the initial steps in an international insolvency. And it need not remove all national discretion on the conduct of an insolvency: generally speaking, legislation that provides co-operation in cross-border insolvencies reserves the right to refuse recognition when that would conflict with legitimate public policy.
In the case of financial insolvencies, the first policy consideration should be the systemic risk. This tends to strengthen the case in favour of international co-operation rather than against it. Laws that acknowledge this fact would be beneficial; and the norms of universality, which call for a global approach to insolvency, should wherever possible be incorporated into new law for financial insolvencies. (7)
87 In the National Bureau of Economic Research’s 1998 working paper, An Economic Analysis of Transnational Bankruptcies, Bebchuk and Guzman demonstrate that an approach based on universality is more economically efficient: under such a regime an investment decision by a foreign company will be based only on the expected return of the project. Under a territorialist approach an investment decision will also take into account the likelihood of payment being made if an insolvency ensues in the state in which the investment is made. Applying this to the New Zealand context, in the absence of legislation dealing with cross-border insolvency issues, doubts about recoverability (on bankruptcy) of loans made by offshore entities are likely to impact adversely on foreign investment in New Zealand.
88 The relationship between insolvency law and modern capitalism was also addressed by Joseph Stiglitz, Senior Vice President and Chief Economist of the World Bank, in “The Role of International Financial Institutions in the Current Global Economy” (a speech given to the Chicago Council on Foreign Relations on 27 February 1998, available at www.worldbank.org/html/extdr/extme/jssp
022798.htm). Stiglitz commented:
A keystone in the development of modern capitalism has been limited liability and bankruptcy laws. Modern bankruptcy laws attempt to balance two considerations: promoting orderly workouts so that business values can be retained and production losses can be kept to a minimum, and providing appropriate incentives so that those engaged in risky behaviour bear the consequences of their actions.
In the absence of orderly workout procedures, countries may worry that unless they issue guarantees or assume private debts, the disruption to the economy will be unbearable. (22)
89 Concluding his speech Mr Stiglitz went on to say:
Today, we stand on the edge of a new world economy. But we do not have international institutions to play the role that the nation-States did in promoting and regulating trade and finance, competition and bankruptcy, corporate governance and accounting practices, taxation, and standards within their borders. Navigating these uncharted shoals will be a great challenge. But just as much of the prosperity of the past one hundred and fifty years can be related to the expansion of markets that those transformations afforded, so too the prosperity of the next century will depend in no small measure in our seizing the opportunities afforded by globalization.
In approaching the challenges of globalization, we must eschew ideology and over-simplified models. We must not let the perfect be the enemy of the good. As one of my friends put it, in a downpour, it is better to have a leaky umbrella than no umbrella at all. I believe that there are reforms to the international economic architecture that can bring the advantages of globalization, including global capital markets, while mitigating their risks. Arriving at a consensus about those reforms will not be easy. But it is time for us to intensify the international dialogue on these issues. (25–26)
90 Globalisation exposes the New Zealand economy to fluctuations in the world economy. As compared with other states, the outlook for the New Zealand economy is highly dependant on the fortunes of the global economy because of our dependence on international trade for income and the high degree of foreign investment (both debt and equity) in New Zealand. The recent recessionary state of New Zealand’s economy is evidence of this susceptibility.
91 The New Zealand Treasury’s September 1998 Economic and Fiscal Outlook noted that the New Zealand economy is dependent on overseas trade for the bulk of its income. In addition, the level of international investment in New Zealand far outweighs the level of New Zealand investment abroad.25 The bulk of the country’s trade is with Australia, Japan, the United States and the European community. Other than Japan, in Asia there are lesser but significant trading relationships with the People’s Republic of China, Korea, Malaysia, Singapore, Taiwan and Thailand. Lesser trading relationships again exist with the Asian states of Hong Kong and Indonesia. Together the Asian states (including Japan) represent the final destination for approximately 37 percent of the total value of New Zealand’s exports (this was the figure for the year ending June 1997; the Asian crisis will have depressed exports to that region) (Statistics New Zealand, New Zealand Official Yearbook 1998, 520–526).
92 New Zealand is also highly dependent on foreigners for their continued financial investment in New Zealand business. Ninety-five percent of registered banks which operate in New Zealand are foreign owned;26 the only wholly owned New Zealand bank is now the Taranaki Savings Bank. The May 1998 issue of the Rural Bulletin, in an article entitled “Asia’s Economic Crisis”, noted that overseas investors now own approximately 61 percent of the value of New Zealand’s share market, up 23 percent from 1992. Furthermore, as noted in the International Investment Position: 31 March 1998, foreign investment in New Zealand – the level of New Zealand’s financial liabilities owed to non-residents – increased significantly from $113 billion in 1997 to 124.7 billion in 1998 (Statistics New Zealand 1998, 2). The 1989 foreign investment figure of $51.3 billion illustrates the striking rise of foreign investment in New Zealand (“Rising Risk”, Evening Post, 16 May 1998). Foreign direct investment in New Zealand – that is, the total lending by the New Zealand direct investor to its overseas direct investment enterprise less the borrowing of the New Zealand direct investor from its overseas direct investment – increased $10.3 billion in the year to March 1998 to stand at $64.5 billion; this is the highest amount of direct foreign investment since the recording of foreign investment in New Zealand in 1988 (Statistics New Zealand 1998, International Investment Position, 1).
93 The graph below illustrates the gradual increase in foreign investment between 1994 and 1998.
94 Each of the top ten listed companies is predominantly owned by overseas investors (“Rising Risk”, Evening Post, 16 May 1998). The “Overseas Investment Commission 1997 Figures” notes that the Commission approved 164 applications for foreign investment and declined only four (with a combined total of $3.2 billion) in the six months to 31 December 1997 (figures available at //oic.govt.nz/publicat.htm).
95 At the time of Treasury’s 1998 Economic and Fiscal Outlook, the New Zealand economy was in recession, primarily as a result of the effects of the Asian financial crises. In presenting the 1998 Budget to Parliament, the then Treasurer, the Hon Winston Peters MP, made the following observations in relation to forecasts for export earnings:
96 Subsequently, on 8 September 1998, revised estimates were presented by the Treasury in the Economic and Fiscal Outlook. That document made it clear that expected economic growth was down in the year to March 1999, as compared with the Budget predictions. Treasury said:
This reflects the weak start to 1998, a slower recovery, and a weaker outlook for world growth.
. . .
The changes in the near term reflect financial market volatility, lower confidence, larger-than-expected drought effects and a deeper and more broadly based downturn in Asia than expected. (Economic and fiscal outlook, 3)
97 Treasury went on to point out that
the outlook for the New Zealand economy is heavily dependent on the fortunes of the global economy. A key judgment is the extent to which developments in the world economy offset or support the competitive gains arising from the exchange rate depreciation.
(9–10)
The 8 September forecast was based upon the following key judgments:
98 It is plain that New Zealand’s economic growth is linked to recovery in Asia. In turn, recovery in Asia is linked to IMF assistance. Given the importance placed on corporate restructuring and cross-border insolvency law by the IMF, it is likely that an Asian recovery based on IMF funds will see adoption of the Model Law in that region.
99 The recent recessionary state of the New Zealand economy has tended to place a more immediate focus on the need to ensure that New Zealand exporters can recover moneys owed for the sale of goods or supply of services if the entities which they are trading with overseas are placed into a formal insolvency regime. As Bebchuk and Guzman have demonstrated, foreign investment may be undermined if a universalist approach to cross-border insolvency law is not adopted (Bebchuk and Guzman 1998, 15–23). From an exporter’s perspective, the likelihood of being paid from a foreign insolvency must be assessed. The New Zealand Government has already recognised the need for a universalist approach in the area of electronic commerce: the 1998 paper released by the Ministry of Commerce identified the need to adapt to the global economy to make gains for New Zealand traders: “The ‘Freezer Ship’ of the 21st Century: Government Statement on Electronic Commerce”.
100 The various matters discussed all impact on the ability to reduce transaction costs, promote trade and increase capital flows, and the ability to sell goods and provide services at competitive prices. These matters affect the general economic well-being of the New Zealand economy.
101 Predictability of outcome on any given factual base is an important policy objective in commercial law. With predictability of outcome there is less need for legal argument and, in that way, the overall costs of litigation are reduced. At present, when cross-border insolvency issues arise, the insolvency administrator’s advisors assess both the ease with which an application for assistance may be made and the way in which courts in particular states are likely to respond to requests for aid.
102 Predictability of outcome and consistency of decision-making contribute to the provision of effective and fair procedures for individual litigants. Uniformity of procedure is a solid foundation for fairness of treatment of creditors and debtors alike. Adoption of a law that is likely to result in different states treating like cases alike, notwithstanding the fact that each state may have a different substantive insolvency law, is another indicator of fairness.
103 The Model Law enhances predictability of outcome in identifying the initial processes to be followed to seek assistance and in establishing mechanisms for recognition of judgments of overseas courts. Streamlining the rules to be applied to cross-border insolvency issues will, consequently, provide a springboard for uniform practice, and thereby avoid costs and increase the speed of resolution of cross-border disputes (which is, in itself, often a cost-saving measure). However, the flexibility of approach retained by the Model Law to respond to particular cases lessens the predictability of decision-making.
104 An argument against adoption of the Model Law is the need to preserve New Zealand’s sovereignty to legislate as it thinks fit in respect of assets situated in New Zealand. The New Zealand Parliament could exercise its undoubted right to legislate in a manner which would better suit or protect domestic creditors who wish to gain access to assets in New Zealand. But, such an approach would be territorialist in nature and may act as a disincentive to foreign investment. In our view, a territorial approach is outweighed by the disadvantages which would flow from it. A global economy does exist of which New Zealand is part. It is unrealistic (and undesirable) for New Zealand to legislate in a manner inconsistent with global commercial trends. Because of its size, New Zealand is necessarily reactive to events overseas. The reverse is not true.
105 Furthermore, the force of this factor is diminished by the procedural nature of the Model Law; it does not purport to affect the substantive domestic law of insolvency applied in New Zealand. What it does do, however, is to change New Zealand’s focus, in the international insolvency arena, to a view based on a more universalist approach.
106 If New Zealand’s legislation is considered adequate at present to deal with cross-border insolvency issues then that is a factor against reform and therefore adoption of the Model Law.
107 In respect of the insolvency of companies, the law has been identified as in need of reform. In December 1988 the Law Reform Division of the then Department of Justice issued a discussion paper, entitled Insolvency Law Reform. Chapter 19 dealt with what was described as “cross-frontier insolvency”. Reference was made to s 135 of the Insolvency Act 1967 and to the lack of a companion provision in the Companies Act 1955. It was noted that Part XI of the 1955 Act provided for the winding-up of unregistered companies in a manner which could be applied to overseas companies.
108 The Law Reform Division proposed that the company law legislation should contain an equivalent of the bankruptcy “acting in aid” provisions. Further, it was suggested that efforts should be made to promote:
In the latter regard, specific reference was made to the Australian and New Zealand Attorneys-General signing of a Memorandum of Understanding on 1 July 1988 regarding the harmonisation of business laws between the two states (Insolvency Law Reform
140–141).
109 It has been suggested to us that the addition of an “acting in aid” provision to New Zealand company law would provide New Zealand courts with the necessary flexibility to deal on a case-by-case basis with issues of cross-border insolvency. That may be so, but the real issue is whether such an approach is better suited to New Zealand’s sovereign interests than adoption of the Model Law.
110 Although enactment of an “acting in aid” provision in New Zealand company law is likely to provide the necessary flexibility to deal with cross-border insolvency issues on a case by case basis, we believe that it would be more beneficial for New Zealand to be party to a global regime dealing with cross-border insolvency issues. It would be preferable for New Zealand to join the international regime when other countries adopt or signal adoption of the Model Law. This can be effected by delaying repeal of existing cross-border insolvency laws and the bringing into force of a statute based on the Model Law until those events occur.
111 We believe that the company law provisions in New Zealand are inadequate to deal with modern cross-border insolvency issues. The accumulated wisdom of those who have had practical experience of cross-border insolvency cases has led to the provisions of the Model Law. We do not see this factor as tilting the balance against adoption of the Model Law.
112 In our view, the globalisation, fiscal and efficiency and fairness factors favour reform of New Zealand cross-border insolvency law and far outweigh those against. Further, adoption of the Model Law seems to be the most appropriate way to achieve reform. We have come to these conclusions for the following reasons:
113 In our view it is for these reasons that the interests of New Zealand will be enhanced by adoption of the Model Law. Adoption of the Model Law by some countries is likely to encourage adoption in other countries. While New Zealand should not be timid about being one of the first countries to enact the Model Law, it should also recognise that adoption of the Model Law by a number of our trading partners is necessary to bring about the benefits which we have identified. Accordingly, we take the view that the Model Law should be enacted but not brought into force in New Zealand until such time as the Government is satisfied that other States with which we have major trading relations have enacted the Model Law or will shortly enact the Model Law.
114 In para 9 we touched on an issue which arises from the possibility of the Model Law and other cross-border insolvency remedies being on the statute book concurrently. We referred to the analogy of a court determining whether approval of a Proposal filed under Part XV of the Insolvency Act 1967 or the making of an order of adjudication in bankruptcy was more appropriate, and noted the likelihood that the court would need to resolve which choice should be made between two available and alternative remedies.
115 The choice to be made by the legislature is whether to retain parallel remedies on the statute book or to repeal existing New Zealand law affecting cross-border insolvency issues so that the Model Law is the only statute under which a foreign insolvency proceeding may be recognised. If the first option is chosen, the courts will be given the power to make whatever order, under whichever of the relevant legislation, it considers appropriate. If the latter option is chosen, then recognition will only be granted under the Model Law.
116 Our review of this subject has led us to the conclusion that the Model Law should be the sole piece of legislation by which recognition of a foreign insolvency administration can be granted. In our view, s 135 of the Insolvency Act 1967 and s 342 of the Companies Act 1993 should be repealed contemporaneously with the bringing into force of the Model Law. The existence of one regime is likely to lead, particularly after an international body of case law has built up, to a more uniform approach throughout the world to cross-border insolvency issues. Hence, predictability of outcome will be enhanced if there is no parallel remedy available.
117 We do, however, suggest that consideration of express transitional provisions be deferred until such time as the Model Law is to be brought into force. We envisage that consideration will be given to this issue by the Ministry of Commerce which, of course, has responsibility for the administration of insolvency law in New Zealand. At this stage, our inquiries reveal few cross-border insolvency cases to be pending under the provisions to be repealed. Accordingly, specific transitional provisions may be unnecessary. But, the position could well change in the interim between consideration of this report and the date on which the Model Law is to come into force in New Zealand. It is for that reason that we suggest deferral of transitional issues.
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