Conceptualising upcoming Chinese bank insolvency law: Cross‐border issues

Abstract

This paper examines the cross‐border effectiveness of bank resolution measures in the context of current and soon‐to‐be revised Chinese bank insolvency legislation, that is, the Bank Resolution Regulation. The general framework is regulated in the Chinese Enterprise Bankruptcy Law. With regard to the outgoing effects of Chinese bank resolution measures, the ultimate decision is in the hands of China's counterparts. However, it is proposed that the contractual approach could be a solution to enhance legal certainty. On the other hand, the incoming effectiveness of foreign resolution measures has to be firstly recognised in China. Three major tests in terms of recognition and enforcement are international agreement, reciprocity, and public policy exception. These criteria should be interpreted against the background of emerging international regime for bank resolution and latest development in the Chinese legal community.

China Embraces Capitalism and the Prospect of Bankruptcy of State-Owned and Private Companies: Can Provisions for Individual Bankruptcy Be Far Behind?

“…The 2007 legislation makes it possible to engage in "cross-border insolvency proceedings" commenced in the PRC pursuant to the bankruptcy law which "cover not only the debtor's assets in the PRC but also extend to its overseas assets" (Cheung, 2019; see also Guo, 2019a;Wang, 2018). The legislation also recognizes the validity of foreign bankruptcy proceedings involving assets in the PRC so as to allow execution of any legitimate foreign judgment in the PRC provided "there are reciprocal treaties between the PRC and the foreign country; the foreign bankruptcy proceedings do not contravene the laws, sovereignty, security, social and public interests of the PRC; and if the legal interests of creditors in the PRC are not prejudiced" (Cheung, 2019).…”