Cooperation In International Insolvency Procedures Under Law 141-15
|Author:||Mr Fabio Guzmán Ariza|
|Profession:||Guzman Ariza Attorneys At Law|
Summary: Law 141-15 pertains to restructuring and liquidation of companies and commercial persons places the Dominican Republic among the countries with the most advanced and modern legislation in the matter. Said law not only establishes procedures and mechanisms necessary for companies and local merchants to have options for surpassing financial difficulties without recurring to the liquidation of the company assets. Furthermore, it transcends the regulation of commercial restructuration and liquidation in an international aspect by including in its title IV the cooperation in international procedures. With this article we will explain in detail the origin of this title, its objectives, its scope in international cooperation, and finally, its repercussions in the Dominican and international legal spectrum.
Key words: Law 141-15, restructuring, insolvency, liquidation, cooperation, international, UN, model law, UNCITRAL, foreign procedure, main foreign procedure, foreign representative, creditors, debtor, court, establishment, preventive measures, recognition, parallel procedures, Dominican Republic.
Before we refer to the specific origin of title IV of Law 141-15, it is relevant to briefly mention the origins of Law 141-15 (here on referred to as Law 141-15 or The Law).
The law has its origins in the legal, investment, business, and international treaty's scopes.
Regarding the legal origins, if we consider the precepts of Law 141-15 we can identify that the Dominican Constitution encourages the national economy to strengthen the development of all its sectors and promote the protection, development, and competition of all its subjects in the interest of general social wellbeing1.
On the other hand, regarding the origins in the investment and business spectrums, it is common knowledge that the Dominican Republic has maintained through the years a position of disadvantage in regards to other countries, as seen in the annual classification given by the World Bank about business climate (Doing Business). In 2017's last report2, the general grade given to us as a country placed us in the 103rd spot of 190 countries considered in the classification. This grade is divided in the following ten categories3:
Starting a business Construction permits Access to electricity Property registry system Access to financial credit Protection of minority investors Tax system Foreign trade Legal safety of contracts Insolvency system Regarding the specific category of the insolvency system, our country was placed in the 160th place, due to the fact that the Dominican laws that govern the bankruptcy procedure can be traced back to the Napoleonic era. During this time, liquidation was the only foreseeable option, which implied high costs for the company and its creditors, as well as risks for the employees, in turn contributing to the uncertainty that emanated from the time these processes took and the negative impact they had in the national economy.
In the end, it was clear that a legal reform in the area was highly necessary to propel us into a higher level of commercial and industrial competition.
In relation to the origins of the law in the international treaty sphere, various instruments of which the Dominican Republic is a part of propelled the use of the law - the Free Trade Agreement subscribed between the Dominican Republic, Central America, and the United States (DR-CAFTA), the agreements subscribed by the Dominican Republic as part of the World Trade Organization, and lastly, the commitments assumed by our country as member of the United Nations (UN).
Finally, in regards to the specific origins of title IV, which verses on the cooperation in international procedures, Law 141-15 derives from the UNCITRAL model law about cross-border insolvency procedures, which emanates from the Legal Commission for International Trade of the UN, and published through the Resolution No. 52/158 of the UN General Assembly on December 15th, 1997, in its 72nd plenary session.
The Legal Commission for International Trade of the UN (UNCITRAL) was created by means of UN's Resolution No. 2205 on December 17th, 1966, with the goal of watching over the strengthening of international commerce and to serve as support for those countries in the process of development, so they may advance in the matter of cross-border commerce.
In that sense, considering the surge and increase of international commerce, UNCITRAL developed a model law about cross-border insolvency procedures as a base for the creation of legislations in countries in the process of development in regards to the coordination and cooperation in multijurisdictional insolvency procedures.
UNCITRAL's model law is divided in to the following five chapters:
General dispositions (Chapter I); Representatives' and creditors' access to the Courts (Chapter II); Recognition of a foreign procedure and existing measures (Chapter III); Cooperation with the Courts and foreign representatives (Chapter IV), and; Parallel procedures (Chapter V). It is no surprise that Law 141-15 is comprised of the same chapters and that most of the 32 articles that compose it are the same as those found on UNCITRAL's model law. In other words, title IV of our law comes directly from UNCITRAL's model law.
Through UNCITRAL's model law the UN has offered solutions and suggestions to the legislative branches of member states, which were at the time considered and accepted by most of our legislators for the following objectives4:
Provide the foreign representative with access to the courts in order to allow cooperation between insolvency jurisdictions. Determine when foreign insolvency procedures should be recognized by local courts. Provide foreign creditors with a transparent legal regime to start or take a part of an insolvency procedure. Allow the cooperation and...
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