The Calman Commission on Scottish Devolution was tasked with recommending changes to the present constitutional arrangements for Scotland. The Commission has now reported and has proposed that the UK Insolvency Service should have responsibility for lawmaking in respect of all elements of Scottish corporate insolvency with "appropriate input from the relevant department(s) of the Scottish Government".
At present, legislative powers for corporate insolvency are split between devolved and reserved matters in a highly confusing and somewhat arbitrary fashion. For example, the grounds for, and the general legal effect of, windings up are reserved matters but the process of, and conduct of, windings up are devolved.
The law on either side of the border in many areas relevant to insolvency can be very different, particularly in matters of security and property law. The lack of a joined up approach to lawmaking always has the potential to lead to unsatisfactory results. One need only consider the uncertain limbo of the current law of hypothec following the introduction of the Bankruptcy and Diligence Act to appreciate the consequences of ill-considered legislation in this area.
Similarly, the reversal by the Westminster Parliament of the Leyland Daf decision has put that issue beyond all doubt (at least for England & Wales) but has left Scots practitioners wondering whether the same position pertains in Scotland by reason of Leyland Daf never having applied here at all. High on the wish-list for practitioners in this field is that there should be a consistent approach (so far as possible having regard to the different legal systems) in cross-border insolvencies.
The proposal that the UK Insolvency Service take over primary responsibility for the production of legislation in this area is likely to promote the production of the coherent and consistent legislation that is necessary for the current economic times.