THE IMPACT OF JURISDICTION PRINCIPLES AND LEGALTRADITION TO ADOPT OF UNCITRAL CROSS BORDERINSOLVENCYIN
JAPAN, SOUTH KOREA, INDONESIA, THAILAND, MALAYSIA,SINGAPORE, PHILLIPINE, USA and EROPEAN UNION

By :ARITONANG, Parulian Paidi
GrasPP MPP/IP University of Tokyo

BackgroundsEnacted GATT and Establishing WTO 1994

Article I and Article III GATT.
National Treatment / NT

Most Favored Nation / MFN

Failures of The Dispute Panel Body Unit of WTO

Global Economic market, trade have reduction of trade barriers andestablished multilateral/ economic regional forum i.e. AFTA, NAFTA,
TPP , ASEAN plus 3.

Enterprise /individual have assets more than one state, cross border
Insolvency.

UNCITRAL introducing Model Law : Cross Border Insolvency 1997.

Variable Research Dependent Variable
1.

The Adoption Policy of Japan, South Korea, Indonesia, Malaysia,Thailand, Philippine, EU and USA to The UNCITRAL Model
Law on Cross Border Insolvency

 Independent Variable
1. Legal tradition in each countries have affect in adoption ofUNCITRAL on CBI.
2. The model of Jurisdiction (universality/territoriality/modified)have result in adoption UNCITRAL on CBI
3. Each country policy in order to proceeding of the foreign
insolvency judgments ?

Cross Border Insolvency
Definition :Cross Border Insolvency may occur, for instance where an insolvent
debtor has asset in more than one state , or where creditors are
not from the state where the insolvency proceedings are taking
place , yet the cross border insolvency can apply to individual orcorporate (Roman Tomasic: 2005)“..includes cases where some of the creditor of the debtor are notfrom state insolvency proceedings is taking place.
” (UNCITRAL Model Law on CBI 1997

CBI
 Insolvent condition (person or company)
 Debt (money value) between debtor and creditor
 Minimum debt or more than 2 creditor
 Different territory jurisdiction among parties/ crossborder.
Increasing Cross Border investment and Trade potentially
Increasing Cross Border insolvency matter.

Countries Adoption

Legal Traditions the Countries
 Civil Law
 Common Law
 Islamic , indigenous legal tradition
 Mix legal tradition
 Legal system : legal substance, legal structure, legal culture Existing law ???

Legal System
is an operating set of legal institution , procedure andrules (JH Marryman 1985)
Legal system refers to the nature and content law generally
and the structure and method whereby it is legislated
upon , adjudicated upon, and administered, within given
jurisdiction (Robert C Wilkins 1999)

Civil law
 May be defined as that legal tradition which has its
origin in Roman law, codified in the corpus Juris Civilis
of Justinian, as subsequently develop in Continental
Europe and around the world.
 Codified roman law (French Civil Code of 1804 and itprogeny and imitator continental Europe) andUncodified Roman law (Scotland and South Africa).
 Civil law is highly systemized and structured and relies
on declaration of broad, general principles, often
ignoring details.

Common Law
 Legal tradition which evolved in England from eleventh
century . Its principles appear for the most part inreported judgments , usually of the higher court ,inrelation to specific fact situation arising in dispute which
court have adjudicative. The common law is usuallymuch more details its prescription than civil law.
Colonies British empire, British Commonwealth.

Differences
Civil Law and Common law
1. Jurisprudence and Doctrine
2. Doctrine function
3. Doctrine Style
4. Jurisprudence Function
5. Style of Law Drafting
6. Appointment of Judges
7. Forum Non Conviniens

Jurisdiction Principles
 Prof Lynn Lo Pucky: (1) universalism;
 (2) modified universalism;
 (3) territorialism.

Universalism
 Universalism, unity is a system in which all aspects of a
debtor's insolvency are conducted in one central
proceeding under one insolvency law, one bankruptcy
judgment could entry into force in all territory(countries) Foreign judgment should automatically binding in homecountry and enforcement in executorial asset debtor.
Universalism Modified: not automatically /by request,
no reexamination, limitation with public order/nationalinterestTerritorialism
The Territorialism approach: a separate and independent plenary
case is pursued in each forum in which the debtor's assets arelocated.
Territorialism is the default system for all cross-border insolvency
systems, because it relies on actual territory control overassets
The benefits of territorialism are varied. At the most basic level,territorialism, unlike any of the alternatives, does not require
any special legislation, nor does it deviate from the universallyadopted rules of jurisdiction and sovereignty

UNCITRAL Model Law on CBI 1997
 Enacted 1997 to harmonizing CBI
 Universalism principle and Automatically Recognition
under Article 20 UNCITRAL Model Law on CBI Similarity with chapter 15 US Bankruptcy act. Influencecommon law tradition.

JAPAN Before bankruptcy Reform (2000) : principle ofterritoriality system Chapter III Bankruptcy Law (TosanHo) Law No 71 , 1992
 Reforming system : Universality by Law on Recognition
and Assistance for Foreign Insolvency Proceedings Law
No 129, 2000 and amended Chapter III Bankruptcy Act,
Act No 75 June 2, 2004.
Adoption of UNCITRAL Model law CBI (2000)

Reform Policy Civil Rehabilitation Law , Law No 225 , 1999 amended
Law No 128, 2000
 New Corporate Reorganization Law No 154 , 2002
 Bankruptcy Act (Tosan Ho) Act No 71 , 1992 amended
Bankruptcy (Tosan Ho) Act No 75 June 2, 2004
 Law on Recognition and Assistance for Foreign
Insolvency Proceedings Law No 129, 2000

Foreign Recognition
Law on Recognition and Assistance for Foreign Insolvency Proceedings
Law No 129, 2000:(Jurisdiction over recognition and assistance)
Article 4 : recognition and assistance cases shall be subject to theexclusive jurisdiction of the Tokyo District Court
Article 5 : the court prescribe in the proceeding article may, when it finds
its necessary in order to avoid substantial harm or delay, by its own
authority , transfer of recognition and assistance case to the district
court that has jurisdiction over the debtor domicile, residence,business, office, or other office or or the location of the debtors
property , upon making an order of recognition of foreign
insolvency proceeding or after making such an order.

Japan reasonsIn order to see the Japanese changing policy on bankruptcy law such as
adoption of the Model Law, Raj Bhala have point of view reasons that
there is a larger context to consider, namely, the reaction of the international
business and legal community. Foreign creditors would applaud the move.

They might interpret it as signaling a more favorable business climate, and reactby extending more credit, or credit on easier terms, to Japanese debtors.

No doubt Japanese debtors would welcome the increased liquidity.

The international legal community, might it not see Japan as taking out
leadership on international insolvency reform , especially the first AsianCountryJapan's experience, both good and bad, with international insolvencies
demonstrates why the modified universal framework should be theparadigm of cross-border insolvency. Modern Japanese practice shows firstthat a modified universal approach is possible in today's world

The Japanese cases highlight the benefits of allowing aregime to be supple enough to accommodate systemic
modifications designed for the actual circumstances.
In Japanese experience illustrates the inequities andinefficiencies that occur under a territorial regime. Inshort, Japan shows that the modified universal approach
has all the elements of an attractive paradigm efficiency(Kent Anderson 1999)

EU Convention on Insolvency Proceeding Majority Civil law system ( except UK )
 Universalism , automatically recognition without any
further restriction , EU Conv. on Insolvency
Proceeding , Nov 1995 under article 3 jo 16 jo 17
Any judgment opening insolvency proceedings handed down
by a court of member state which has jurisdiction pursuant toarticle 3 shall be recognized in all other member states fromthe time that it becomes effective in the State of the opening ofproceedingIndonesia Banckruptcy Law
 Before 1998 in Indonesia enacted bankruptcy law from
Dutch Colony 1906 (name: Faillissements-Verordening,Staatsblad 1905:217 juncto Staatsblad 1906:348). In 1998
enacted Bankruptcy Law No 1 Year 1998 andAmendment with Bankruptcy Law No 37 Year 2004.
 Bankruptcy law in Indonesia, adopt two principle
 territoriality for foreign judgment insolvency proceedings
 the principle of universality of the existence of thebankruptcy properties the debtor in overseas art 21 Law
No 37 , 2004.

Indonesia Bankruptcy Policy on Recognition of Foreign InsolvencyProceedings
 Under the article 18 AB (Algemene Bepalingen van Wetgeving), plenty
said : “ the form of every action is determined by the law of thecountry where the act or do” (locus regit actum)”.
Under article 436 RV regarding recognition and the enforcement offoreign Judgement ( bankruptcy) : Except in cases specified by Article
724 Commercial Code and other legislation, can not be implemented thedecisions spoken by foreign judges or the courts a foreign court in theRepublic of Indonesia.

 (Arindra Maharani :2010) The presence of the prohibition to carryout a foreign judgment in the Indonesia serve targeted because ofperceived as a violation of the principle of sovereignty Republic ofIndonesia. It is due to the enactment or principle of the sovereignty
principle of territorial (if territorial sovereignty principle) that is heldin Indonesia, which requires that decision set in foreign countries,
can not directly implemented in other regions on its own strength.
Kingdom of Thailand
Civil Law System (Roman Tomasic)

Forum on Bankruptcy Court

Thailand Bankruptcy Act 1999



Territoriality Principle(Black Dowson Waldron :2004) The only limitations placed on the jurisdictionof the court of Justice Thailand is with regard to the execution of a judgment.
Thai Judgment are not recognized in other countries, nor will foreign judgments
be recognized in Thailand. Although foreign Judgment maybe used in evidence ,cases must be re investigated in a court of justice in Thailand.

Section 177 Thailand Bankruptcy Act 1999, the controlled of property and thebankruptcy law of other countries has no effect on property in the Kingdom

South Korea
 Civil Law System, 1998 started to reform regulation regardingBankruptcy
 Changing territoriality to universality following model lawsystem.
 Debtor Rehabilitation and Bankruptcy Act (DRBA) March
21st 2005, which including 4 Act reformed

Corporate Reorganization Act
The Composition Act
The Bankruptcy Act
The Act on Rehabilitation of Individual debtor.

Philippine
 Civil Law system
 Territoriality, Non recognition automatically FINANCIAL REHABILITATION AND
INSOLVENCY ACT(FRIA) RA 10142 2000

Singapore, Malaysia
 Territoriality with an exception (bilateral mutualrecognition)
 Similarity benchmark and system , Common Law
System and adaptation from United kingdom
Bankruptcy Act 1883
 Agreement regarding mutual recognition andenforcement of cross border bankruptcy between
Singapore and Malaysia …which applied on Malaysia
Bankruptcy Act article 104(3) and Singapore Bankruptcy
Act article 105.

Legal Tradition
CIVIL/JURISDICTCOMMON LAWJAPANCIVIL LAWTerritorialism to Universalism

SOUTH KOREA CIVIL LAW

Territorialism to Universalism

MALAYSIACOMMON LAW

Territorialism
Bilateral recognition SGSINGAPORECOMMON LAW

Territorialism
Bilateral recognition MAL

INDONESIACIVIL LAW

Territorialism but universalism for
debtor asset liquidity

PHILIPINE

CIVIL LAW

Territorialism

THAILANDCIVIL LAW

Territorialism

UNCITRAL CBI

Influenced byCommon Law

UNIVERSALISM

COUNTRIESBANKRUPTCY LAWJAPANBankruptcy (Tosan Ho) Act No 75 June 2, 2004
Law on Recognition and Assistance for Foreign
Insolvency Proceedings Law No 129, 2000

SOUTH KOREA

Debtor Rehabilitation and Bankruptcy Act (DRBA)
March 21st 2005

INDONESIA

Law 37 of 2004 on Bankruptcy and Suspension of Debt
Payments

MALAYSIA

Malaysia Bankruptcy Act 360 1967 amendment Jan. 2001

SINGAPORE

Singapore bankruptcy Act 1995

THAILAND

Thailand Bankruptcy Act No1 1940 BE 2483 amendment
No 2 1968, No 3 1983, N0 4 1998, No 5 1999

PHILIPPINEFINANCIAL REHABILITATION AND INSOLVENCYACT(FRIA) RA 10142 2000

Countries&UNCITRAL

Foreign Bankruptcy Judgment Recognition

UNCITRAL

Automatically binding and enforce

JAPANRecognition by requested to Tokyo district court,
non re examination, possible deliver to another
district court

SOUTH KOREA

Indirect and Direct recognition

MALAYSIA

Non Recognition, except Singapore (apply in law),
Commonwealth

SINGAPORE

Non Recognition, except Malaysia (apply in law)
Commonwealth

THAILAND

Non Recognition, except bilateral agreement, reexamination

INDONESIA

Non Recognition, except reciprocity, reexamination .

PHILLIPINE

Non Recognition , and legal standing of property

Jurisdiction with Degree Recognitions

Legal Tradition & Level Recognition

Conclusions
1. Globalization of economy has thrown new challenges since
the world shrinking in economic, as one world/market, thePolitic economic activities also need to be harmonize, toachieve by having similarly principle universality and possible
to have recognition of foreign proceeding automatically inefficiency, next UNCITRAL Model Law on Cross Border
Insolvency should be adopt by countries such Indonesia,Thailand, Philippine, Malaysia and Singapore.
2. Legal traditions each countries might not established barrier
indirectly, to adopt the UNCITRAL Model Law on CBI butwith similarity legal tradition (common law) more suitableand easier considering jurisprudence, doctrine, style law
drafting, Judges appointed and mindset.
3. Jurisdiction in some condition easier matching (common law)
but most of them related to sovereignty of the staterecomendation
Indonesia should have adopt system like Japan in caseforeign Arbitral award , and possible apply such Japan
Model in Indonesia CBI considering have similarity ofCivil Law legal tradition.

Thank you for yourlistening