Legal Harmonisation Of International Insolvency Law

Author: LawSphereX

Category: Corporate & Insolvency

Published: 2026-08-23T20:30:42.96845+00:00

Updated: 2026-08-26T17:10:42.016+00:00

LEGAL HARMONISATION OF INTERNATIONAL

INSOLVENCY LAW

Dr. K. Nidhi Mohan, PhD from NLU, Delhi

ABSTRACT

Cross border insolvency is a facet of insolvency law whose importance has grown in recent times. The number and complexity of cross border insolvency cases has shown a substantial increase due to growth of international trade and commerce. Domestic insolvency laws of nations often neglect to provide for cases of insolvencies with multifarious economic linkages across jurisdictions. Also, the domestic insolvency laws are not a monolith. They provide conflicting rules on various aspects of insolvency proceedings e. g. , recognition of foreign proceedings, order of priority of claimants, reliefs due to various stakeholders etc. These variations across domestic insolvency legislations make cross border insolvency resolution difficult, time consuming and complicated.

Since this diversity of national insolvency laws proves to be a hurdle to restructuring efforts and insolvency resolution of cross-border businesses, harmonisation of cross border insolvency legal framework is recognised as an important goals of international insolvency law. The UNCITRAL Model Law on Cross Border Insolvency 1997 is one such vehicle of harmonisation which has found international acceptance having been adopted in 58 nations worldwide. In the Indian context Insolvency Law Committee in 2018 and Cross Border Insolvency Rules Regulations Committee in 2021 have recommended that the India adopt this model law as Draft Part Z of the Insolvency and Bankruptcy Code 2016. This paper will analyse the UNCITRAL model Law as a force for legal harmonisation of cross border insolvency laws. In doing so the author will study the Draft Part Z as sought to be adopted in India.

These divergences and similarities between UNCITRAL Model Law on Cross Border Insolvency 1997 and the recommended Draft Part Z will illustrate the success of legal harmonisation and India’s contribution to this global shift. Keywords: Cross Border insolvency, Legal Harmonisation, International Insolvency

I. INTRODUCTION

Cross border insolvency is when an insolvency transcends the confines of a single legal system in manner that a single set of domestic insolvency law provisions cannot be immediately and exclusively applied without having regard to the issues raised by the foreign elements of the case. This can arise when the insolvent debtor has assets or creditors in more than one State or when insolvency proceedings are begun in more than one jurisdiction concurrently. The United Nations Commission on International Trade Law (UNCITRAL) Model Law on Cross border Insolvency defines cross border insolvency as “one where the insolvent debtor has assets in more than one State or where some of the creditors of the debtor are not from the State where the insolvency proceeding is taking place. ”1 The defining characteristic of a market economy is the use of competitive methods to achieve maximum profit.

Incurring the risk of business failure in seeking increased profit is a sine qua non of economic activity. Every business activity is accompanied by the risk of business failure and indeed, the only way to avoid this risk is by not doing business at all. 2 Insolvency law has evolved as a conscious effort mitigate the ill effects of such risks upon the economy by providing for corporate rescue, faster insolvency resolution and maximisation of value of the financially stressed businesses, failing which it also provides for ease of exit. It has evolved from a need to find an acceptable principle upon which the competing and irreconcilable interests of the creditors, debtor and other stakeholders can be balanced in an orderly and fair fashion.

3 In a scenario where a financially stressed debtor is unable to repay its debts, such debtor would seek to be released from the burden of his liabilities, the creditors would have the natural desire to be repaid in full and society at large would demand that the general confidence in the integrity of legal obligations that are ultimately based upon credit be maintained as a matter of public policy. Insolvency law thus creates a system of insolvency administration which offers a degree of fairness for all parties and which operates in sympathy with the practical needs of a credit-based economy. 4

1 UNCITRAL Model Law on Cross-Border Insolvency with Guide to Enactment and Interpretation 1997

available at https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/12-57491-guide-touncitral-e.pdf last accessed on 20 July 2023

2 3 R Goode, Principles of Corporate Insolvency Law (London: Sweet & Maxwell, 2011) 57

3 Ian Fletcher, Law of Insolvency (London: Sweet & Maxwell, 2009)

4 Id.

Most nations function with insolvency law that provides for insolvencies upon the assumption that the case would raise questions of a purely internal character i. e. , there would be no elements within it which give rise to the need to refer to the law of any other country. These purely domestic insolvency laws are inward looking and apply to their full efficiency when all the elements of the insolvency, e. g. , creditors, debtor, other stakeholders, assets and liabilities are situated withing a single jurisdiction. However, in practice it may so occur that the circumstances or corporate affairs of the insolvent include significant elements of contact with other jurisdictions. With interdependent business systems and the growth of global trade and commerce the number and complexity of cross border insolvency cases has shown a substantial increase.

With more and more nations interacting with each other through trade and becoming integrated into the world economy, there is greater likelihood that with business failure situations of cross border insolvency would arise. 5 Several theories have evolved to conceptualise a global approach to dealing with international insolvency. These include the traditional theories of Universalism and Territorialism which have sought to guide international insolvency jurisprudence in polar opposite directions as well as mid ground theories such as Modified Universalism, Cooperative Territorialism, Corporate Charter Contractualism etc. Universalism as a theory works on basic principle that cross border insolvencies should be unitary and universal6.

The model therefore envisions a system wherein all aspects of insolvency would be resolved in one single proceeding with all the assets across the world are to be pooled and collectively dealt with by the principal court whose jurisdiction would be recognised worldwide. While the advantage of universalism is certainly that single worldwide proceeding would reduce administrative costs, provide certainty and clarity to all parties concerned and would help avoid forum shopping, universalism is a long way from becoming the accepted reality. This is because it requires such degree of close cooperation between states that has so far not been accomplished by anyone and by design requires states to give up some of their political and economic sovereignty and allow the proceedings to be overseen by a foreign court under foreign law by excluding local courts jurisdiction.

The territorialist model on the other hand requires that insolvency proceedings be confined to one single jurisdiction with the court only dealing with that portion of the debtors’ assets which are situated in that

5 S. Batra, Corporate Insolvency: Law and Practice. India: EBC, (2017).

6 R Bork, Principles of Cross Border Insolvency Pg. 28,29 (2017)

jurisdiction. The assets of the debtor are not dealt across state borders as a collective whole and rather are dealt with in a piecemeal manner in separate jurisdiction under the local rules of that jurisdiction. 7 While limiting the effect of insolvency to a jurisdiction as advocated by the territorialist model is simpler and evidently clear cut, from an economic standpoint breaking up the assets of an insolvent which are situated in the jurisdiction and distributing them in a disjointed manner it has been criticised as would lead to destruction in value and uneven results.

Moving away from the polar opposite theories of universalism and territorialism, the Corporate Charter Contractualist approach as developed by Professor Robert Rasmussen allows the parties of insolvency the freedom to choose the jurisdiction and laws which will govern them, similar to any other commercial transaction. 8 Yet another approach is the Cooperative Territorialist model which requires a high degree of cooperation between the various jurisdiction in which separate insolvency proceedings are begun. 9 Finally the hybrid model of Modified Universalism advocates for mutual cooperation, understanding, comity, reciprocity, procedural fairness and recognition. 10 This approach requires that the relevant jurisdictions work out the jurisdiction best suited to take the lead in conducting the proceedings with the remaining jurisdictions providing assistance and cooperation as needed.

11 This paper studies the idea of legal harmonisation of international insolvency law. In light of the fact that the UNCITRAL Model Law on Cross Border Insolvency is sought to be incorporated in the Insolvency and Bankruptcy Code 2016 as the Draft Part Z12, this paper would study the Model law as a force for legal harmonisation and the contribution of India in the same. Part I provides the conceptual understanding of cross border insolvency and the various theories regarding the same. Part II highlights the diversity of national insolvency laws and the necessity of harmonisation of the law on international insolvency. Part III introduces the UNCITRAL Model Law on Cross Border Insolvency and Part IV discusses its role as a vehicle of harmonisation. Part V examines the Indian Draft part Z which is based on the 7 Edna Sussman and Jennifer L.

Gorskie, Capturing the Benefits of Arbitration for Cross Border Insolvency Disputes, Contemporary Issues in International Arbitration and Mediation, The Fordham Papers 2012, Ed. Arthur

W. Rovine, Leiden, Netherlands: Martinus Nijhoff Publishers, (2013)

8 Robert K. Rasmussen, A New Approach to Transnational Insolvencies, 19 Mich. J. Int. L. 1 (1997).

9 Jay Lawrence Westbrook, Choice of Avoidance Law in Global Insolvencies, 17 Brook J. Int. Law 499

10 Jay L. Westbrook, A Global Solution to Multinational Default, Michigan Law Review, (2000)

11 Id.

12 Report Of Insolvency Law Committee On Cross Border Insolvency, Oct. 2018 Available at

https://ibbi.gov.in/uploads/resources/Report_on_Cross%20Border_Insolvency.pdf

UNCITRAL model law and the divergences it has incorporated. Drawing from the manner in which the UNCITRAL Model Law is sought to be modified and incorporated in Indian law analysis of the legal harmonisation of international insolvency law from an Indian perspective is done. Finally, Part VI concludes.

II. DIVERSITY OF NATIONAL INSOLVENCY LAWS AND NECESSITY OF LEGAL

HARMONISATION

The world is subdivided juridically as well as politically into great many distinct entities. These different systems of law though capable of being a generalised classification into relatively small number of legal families, nevertheless differ from each other in numerous details. The variations between the different national laws governing bankruptcy and company liquidations pertain to the substantive and procedural aspects of the insolvency law and manifest themselves in different ways. 13 The domestic insolvency laws are not a monolith. Insolvency laws of various jurisdictions provide different rules on various aspects of insolvency proceedings e. g. , recognition of foreign proceedings, order of priority of claimants, reliefs due to various stakeholders etc.

These laws while consistent within a jurisdiction may be conflicting in cases of international insolvency where multiple jurisdictions are involved. These variations across domestic insolvency legislations make cross border insolvency resolution difficult, time consuming and complicated. 14 Since this diversity of national insolvency laws proves to be a hurdle to restructuring efforts and insolvency resolution of cross-border businesses, harmonisation of cross border insolvency legal framework is recognised as an important goals of international insolvency law. Often a strict linguistic interpretation of the term ‘harmonisation’ is taken to mean that harmonisation shuns legal diversity and that harmonisation equates to uniformity. Many a times the word “harmonisation” is often used interchangeably with words such as “convergence”, “coordination” and “uniformity”.

15 However, harmonisation of laws does not mean enforcing uniformity, but rather, increased similarity or reduced dissimilarity. Such harmony can be achieved through hard law legislative measures such as legislations, rules, regulations and directives or softer measures such as

13 Ian Fletcher, Law of Insolvency (London: Sweet & Maxwell, 2009)

14 Id.

15 Emilie Ghio, International Legal Cooperation and the Principle of Harmonisation: Lessons from Cross-Border Insolvency” 23 Juris Poiesis 576 (2020).

international legal cooperation.16 Harmonisation is thus an umbrella term which encompasses diverse methods to achieve convergence.

III. UNCITRAL MODEL LAW ON CROSS BORDER INSOLVENCY

The UNCITRAL Model Law on Cross Border Insolvency 1997 is one such vehicle of harmonisation which has found international acceptance having been adopted in 58 nations worldwide. 17 The United Nations Commission on International Trade Law (UNCITRAL) recognised that due to growing global trade and commerce , there are bound to be insolvencies of cross-border nature and found that national insolvency laws are ill - suited to deal with cases of a cross-border nature. 18 Therefore the Model Law on Cross Border insolvency was adopted by the UNCITRAL on 30 May 1997.

19 The policy objective of the model law is to promote and fulfil the following: • The need for greater legal certainty for trade and investment; • The need for fair and efficient management of international insolvency proceedings, in the interests of all creditors and other interested persons, including the debtor; • The need for protection and maximization of the value of the debtor’s assets for distribution to creditors, whether by reorganization or liquidation; • The need for courts and other competent authorities to communicate and cooperate when dealing with insolvency proceedings in multiple States; and • The need to facilitate the rescue of financially troubled businesses, with the aim of protecting investment and preserving employment. 20 The Model law addresses the cross-border insolvency problem in a fourfold manner.

It enables recognition of foreign proceedings, requires that foreign insolvency professionals be provided access to courts of the enacting country, enables cross border cooperation and coordination of concurrent insolvency proceedings and requires that assistance from foreign jurisdiction be

16 Id.

Status,

UNCITRAL

Model Law on Cross-Border Insolvency (1997), Available at https://uncitral.un.org/en/texts/insolvency/modellaw/cross-border_insolvency/status last accessed on 20 July

18 Id. at Pg. 20

19 Id. at Paras. 12-225

20 Preamble, UNCITRAL Model Law on Cross-Border Insolvency with Guide to Enactment and Interpretation 1997 available at https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/12-57491-guideto-uncitral-e.pdf last accessed on 20 July 2023

made available for an insolvency proceeding taking place in an enacting country. The major principles upon which the Model Law is built are namely “Access”, “Recognition”, “Relief” and “Cooperation and Coordination”.21

IV. UNCITRAL MODEL LAW AS A VEHICLE OF HARMONISATION

The Model law is a soft law that provides a legislative framework required for facilitating successful resolution of cross border insolvency cases. Unlike a treaty or international conventions which has to be ratified by the adopting nations or notified to the United Nations or other states that may have also enacted it, a model law by design, being a legislative text recommended to States for incorporation into their national law, gives the adopting states the flexibility to modify and depart from its provisions and adopt only selected aspects in its jurisdiction. 22 In fitting the Model Law into existing national law, its scope is limited to some procedural aspects of cross-border insolvency cases.

Thus, Model law, as an instrument, respects the differences among national laws and focusses on procedural mechanisms of cross border insolvency resolution rather than attempting to enforce substantive unification of insolvency laws.

This is manifested in several ways such as limiting the new legal terminology added to existing national law so as to reduce conflict with terminology in existing law; the model law permitting the enacting state to align the relief from recognition of a foreign proceeding with the relief available in a comparable national law23; allowing the local creditors to initiate or continue collective insolvency proceedings in the enacting State despite recognition of foreign proceedings24; making the relief available to the foreign representative subject to protection of local creditors and other stakeholders against undue prejudice25; making the relief subject to compliance with the procedural requirements of the enacting State26; also the public policy exception allowing for excluding or limiting any action which is in favour of the foreign proceeding on the basis of overriding public policy considerations27.

21 Ronald J. Silverman, Advances in Cross-Border Insolvency Cooperation: The UNCITRAL Model Law on

Cross-Border Insolvency, 6 ILSA J. Int & Comp. Law 265 (2000).

22 Gerard McCormack & Wan Wai Yee, The UNCITRAL Model Law on Cross-Border Insolvency Comes of Age:

New Times or New Paradigms? 54 Texas Int. Law J. 273, 276 (2019)

23 UNCITRAL Model Law on Cross-Border Insolvency (1997), Art 20

24 Id. Art 28

25 Id, Art 22

26 Id. Art 19 para 2

27 Id. Art. 6

In incorporating the text of a model law into its system, a State may modify or leave out some of its provisions. Such possibility of changes being made to the uniform text by the States is highly restricted in cases of international conventions. While the flexibility inherent in a model law is desirable and advantageous in situations where the State wishes to make modifications to the before enacting it as a national law, this also the cause for the model law achieving a lesser degree of harmonisation than one achieved through an international convention. Therefore, in order to achieve a satisfactory degree of harmonization and certainty, the Guide to Enactment of the Model law recommends that States make as few changes as possible in incorporating the Model Law into their legal systems.

28 When the enacting state utilises the flexibility of the model law with due consideration for the need for uniformity in its interpretation and limits deviations from the uniform text to a minimum, it is beneficial. The enacting state would be adopting modern, generally acceptable international practices in insolvency matters. This would assist in making the national law as transparent as possible for foreign users and it will make it easier to cooperation from other States in insolvency matters. 29

V. INDIAN PERSPECTIVE- ANALYSIS

Domestic insolvency laws of nations often neglect to provide for cases of insolvencies with multifarious economic linkages across jurisdictions. India too, was one such jurisdiction where the law did not include a strong provision for cross border insolvency. The was sought to be remedied with the enactment of the Insolvency and Bankruptcy Code 2016 which has two provisions which deal with cross border insolvency. 30 The S. 234 empowers the Central Government to enter into bilateral agreements with foreign nations for purpose of enforcing the IBC and S. 235 empowers Indian courts to send a letter of request to the foreign courts where asset is situated for assistance in taking evidence or action etc. together these provisions were supposed to address cross border insolvency situations.

However, they were found to be inadequate and seldom used with no such bilateral agreement having been entered into by India. The Insolvency Law Committee acknowledged the unworkability of the above stated provisions of the code and noted absence of an adequate and effective framework for crossborder insolvency. In its Report of Insolvency Law Committee on Cross Border Insolvency

2018 (ILC 2018) it gave detailed recommendations on a legislative framework for cross-border

insolvency in India (Draft Part Z) based on the UNCITRAL Model Law to be inserted in the Insolvency and Bankruptcy Code 2016. 31 More recently, Cross-Border Insolvency Rules and Regulations Committee (CBIRC) came out with Report of the Cross Border Insolvency Rules and Regulations Committee 2021 (CBIRC 2021). It recommended draft rules, regulations, notifications, guidelines, and capacity building for cross-border insolvency under the aegis of the Draft Part Z. 32 An examination of the Indian Draft part Z which is based on the UNCITRAL model law and the divergences from the original text that it has incorporated would show the extent of legal harmonisation of international insolvency law from an Indian perspective.

The draft part Z consists of six chapters dealing with the following aspects; General Provisions; Access of Foreign Representatives and Creditors to the Adjudicating Authority; Recognition of a Foreign Proceeding and Relief; Cooperation with Foreign Courts and Foreign Representatives; Concurrent Proceedings; and finally Miscellaneous. Chapter I of the Draft Part Z covers the general provisions and correlates to the Chapter 1 of the UNCITRAL Model Law on Cross Border Insolvency consisting of Art. 1 to 8. Chapter II deals with the principle of ‘access’ and allows foreign representatives and foreign creditors to seek recognition and access to the insolvency proceedings in the enacting state. This correlates to chapter 2 of the UNCITRAL Model Law on Cross Border Insolvency consisting of Art. 9 to

14. Chapter III covers the ‘recognition’ and ‘relief’ principle of the Model law and consists of

the process, presumptions and procedure for recognising proceedings and the relief that may be granted upon such recognition, be it as foreign main or non-main proceeding. This chapter correlates to chapter 3 of the UNCITRAL Model Law on Cross Border Insolvency consisting of Art. 15 to 24. Chapter IV deals with the ‘cooperation’ principle correlating to chapter 4 of the UNCITRAL Model Law on Cross Border Insolvency consisting of Art. 25 to 27. These provisions enable the adjudicating authority of enacting state, domestic insolvency representatives, foreign representatives and foreign courts to cooperate and communicate with each other to resolve the insolvency. Chapter V provides for ‘coordination’ principle in dealing

31 Report Of Insolvency Law Committee On Cross Border Insolvency, Oct. 2018 Available at

https://ibbi.gov.in/uploads/resources/Report_on_Cross%20Border_Insolvency.pdf last accessed on 20 July 2023 Cross-Border Insolvency Rules and Regulations Committee

(CBIRC),

2021, Available at https://ibbi.gov.in/uploads/whatsnew/2021-11-23-215206-0clh9-6e353aefb83dd0138211640994127c27.pdf last accessed on 20 July 2023

with concurrent proceedings. Concurrent proceedings are insolvency proceedings that take place simultaneously in multiple jurisdictions. Chapter VI covers the remaining miscellaneous aspects of Part Z and but does not have a corresponding chapter in the Model Law. The Draft Part Z also has a Schedule whose Part A enumerates the “countries that have adopted the UNCITRAL Model Law” and Part B enlists the “countries with which agreements have been entered under Clause 1(5) of the Draft” i. e. , countries with whom special insolvency treaties would have been entered.

The Draft Part Z is largely a faithful rendition of the UNCITRAL model law text but there are variances is following aspects - • Applicability While the Model law is applicable to all kinds of entities, since the IBC provisions relating to individual insolvency has not yet been notified the Draft Part Z to corporate debtors only with the definition of “corporate debtor” including foreign companies to ensure that creditors and insolvency professionals of foreign companies can seek cooperation or recognition or relief in India • Reciprocity The UNCITRAL Model Law does not reject the idea of reciprocity i. e. , that the provisions of the model law should only be made applicable if the other involved jurisdiction reciprocates and grants similar protections.

Since enacting countries are free to incorporate reciprocity provisions within the uniform text of the model law, the Draft Part Z too is applicable on a reciprocal basis. This was done keeping in mind the stage of development of the Indian insolvency infrastructure, along with our overall economic development and global position. Such a reciprocity requirement was contemplated as a temporary provision by the ILC, which may be diluted based on the future experience the insolvency regime. • Excluded persons The Article 1(1)(d) of the Model Law allows creditors as well as “other interested persons” in foreign countries to commence and participate in domestic insolvency proceedings.

The Draft Part Z does not include the term other interested persons because it was felt to be too vague with lack of clarity on who these parties would be and whether granting such parties the right to commence and participate in insolvency proceedings would delay or otherwise hinder the

process. Thus, under the Draft Part Z only the creditors have such right to commence and participate in the domestic insolvency proceedings. Similarly, Art. 24 of the Model Law permits the foreign representative to intervene in any proceeding (not merely insolvency proceeding) in which a debtor is a party. This provision was excluded because it was believed by the Insolvency Law Committee 2018 that it would not be necessary to provide such expansive power to foreign representatives because they can anyway intervene in the proceeding by satisfying the court that they are a party of interest. Therefore, this provision was excluded from Draft Part Z.

• Rebuttable presumption in favour of registered office being COMI The proceedings in the court of jurisdiction where the corporate debtor has the Centre of main Interest (COMI) would be declared foreign main proceedings and consequent reliefs would flow from such recognition as per the scheme of the model law. The Model Law does not define Centre of main interest (COMI) but provides a rebuttable presumption in Article 16(3) that a corporate debtor’s registered office is its COMI in the absence of proof to the contrary. Clause

14 of the Draft Part Z follows the Model Law in this presumption. While it makes identification

of the COMI easy in clear cut cases it may in certain cases lead to abuse and forum shopping. Thus, in the Draft Part Z this presumption has been modified incorporating a look back period i. e. the presumption is inapplicable in cases where the corporate debtor has relocated its registered office to another country within the 3-month period prior to the request for opening insolvency proceedings. • Interim relief The Model Law provides for two kinds of relief - interim relief and relief on recognition with the former provided by the court until an application for recognition of foreign proceedings is decided upon, the latter being granted if a foreign proceeding is recognised.

Since the IBC does not provide for any interim relief in CIRP and does not give the Adjudicating Authority such discretion before any decision for admission is taken because it may be misused or cause delay power, the provisions for interim relief have been excluded from the Draft Part Z. Accordingly, references to “interim relief” in Articles 21(1)(f), 22, 23, 28 and 29 have been deleted as such relief is not adopted in the draft Part Z. • Moratorium Article 20 of the Model Law provides that an automatic moratorium shall apply on recognition

of foreign main proceedings. The Draft Part Z incorporates a moratorium similar in scope as S. 14 of the IBC. However, the power to modify or terminate the moratorium relief as provided in Article 20 of the Model Law is excluded because it would be providing excessive discretion to the Adjudicating Authority and moreover the IBC does not empower the Adjudicating Authority with a similar power to modify the moratorium in S. 14 of the Code for domestic proceedings. • Test of insolvency The IBC 2016 does not contemplate the satisfaction of a test of insolvency for the purposes of commencement of a proceeding. Rather insolvency proceedings are initiated by creditors based on default by the debtor. The presumption relating to a test of insolvency as provided in the Model Law thus did does not have practical significance.

Thus, initiating insolvency resolution proceedings in India is made simpler by recognising the insolvency proceeding in the corporate debtor’s COMI. The Draft Part Z thus provides that, instead of test of insolvency, recognition of a foreign main proceeding may be presumed to be proof of default by the corporate debtor for the purposes of commencement of CIRP.

VI. CONCLUSION

From the above discussion it is evident that the Draft Part Z is largely unchanged from the provisions of the Model law. However, modifications and exemptions have been made to certain sections of the Model law to make it suitable to Indian legal system. A conservative approach taken to making variances to the uniform text and wherever possible the scope of modification is left to subordinate legislation. Aspects such as the extent of the right to access of foreign representatives through domestic insolvency representatives and designating the kinds of entities which are exempted from the application of the Model Law etc have been left to subordinate legislation rather than making changes in the Model Law text itself. In other provisions such as the Clause 4 of the Draft Part Z which mirrors Art. 6 of the Model Law that provides for a public policy exception i. e.

, gives countries the right to refuse to take any action covered under the Model Law, including denial of recognition or relief, if such action would be manifestly contrary to the public policy of the country, have been retained as it is without any changes in line with the spirit of the Model Law. The proposed Indian adoption of the UNCITRAL model Law is a further boost to international efforts for legal harmonisation in cross border insolvency laws. Moreso since the Draft Part Z

as modified and sought to be adopted in India has introduced few divergences and is largely similar to UNCITRAL Model Law on Cross Border Insolvency 1997. Thus, this initiative represents an important step forward to align national legal system without amounting to complete uniformity.