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Cross-border insolvency

Recognition of foreign proceedings

Under what circumstances will the courts in your jurisdiction recognise the validity of foreign insolvency proceedings?

In India, the method of enforcement of decrees (including such decrees which have been passed by foreign courts) is governed by the Code of Civil Procedure 1908, which is the applicable procedural law for civil cases.

A decision taken by an executive body or a quasi-judicial body shall not be treated as a foreign judgment and cannot be executed by the Indian courts. Therefore, orders passed by a foreign tribunal during insolvency proceedings before a foreign tribunal are not enforceable by courts in India.

However, the Insolvency and Bankruptcy Code stipulates a two-pronged solution regarding cross-border insolvency:

  • the government can into agreements with other countries to enforce the Insolvency and Bankruptcy Code; and
  • the National Company Law Tribunal can issue the authority to write a letter to the courts and authorities of other countries to seek information or request action in relation to the assets of the debtor situated outside India.

India has not yet adopted the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Cross-Border Insolvency. In case of bilateral agreements suggested by the code, it will be a difficult and lengthy process to negotiate an agreement with each country. 

Winding up foreign companies

What is the extent of the courts’ powers to order the winding up of foreign companies doing business in your jurisdiction?

The Insolvency and Bankruptcy Code is at a nascent stage. However, a branch of a foreign company may be wound up, in accordance with the provisions of the Companies Act 2013, if it is established that it is unable to pay its debts or if the company has already been dissolved or ceased to conduct business or is conducting business only to wind up its affairs.

Centre of main interests

How is the centre of main interests determined in your jurisdiction?

Since India has not adopted a mechanism like the UNICTRAL Model Law to date, there is no recognition of the principles of ‘foreign main proceeding’, ‘foreign non-main proceeding’ or ‘centre of main interest’. 

Cross-border cooperation

What is the general approach of the courts in your jurisdiction to cooperating with foreign courts in managing cross-border insolvencies?

It is expected that India will adopt a mechanism like the UNCITRAL Model Law on Cross-Border Insolvency to manage cross-border insolvency issues and to work towards global integration in the field of insolvency to achieve the desired results in line with the Insolvency and Bankruptcy Code and other recent measures introduced by the government and the Reserve Bank of India.

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