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Today, the activities of enterprises and individuals cross borders, and furthermore, the markets of goods and capital are limitless without borders and the resources, such as technology and labor force, have become circulating internationally. In this era, it’s natural that the economic destruction of a debtor takes the form of internationality.
The existing Korean laws related to bankruptcy were based on the idea to complete the bankruptcy process only in Korea within the reach of the jurisdiction of Korea. The territorial principle of Article 3 of the previous law of insolvency and Article 11 of the existing Composition Law is contrasted with universalism (or dissemination). Universalism is the position to affirm the international effect of bankruptcy overseas not just nation which starts the procedure for insolvency. At this time when international bankruptcy has been increasing, the existing strict territorial principle cannot have its legitimacy any more and goes against the global trend, so a new law “Debtor Rehabilitation and Bankruptcy Act” has been legislated.
EU regulations clearly separate main procedures and subordinate ones and clarify the effect of each procedure, and we can see that England has commenced the main procedure in London where there are no property of debtors and no creditors by using the weak point of the combination of the concepts of COMI (center of main interest) and headquarter function, makes a progress with the procedures for insolvency according to its national law, and makes use of the courts of other member nations in order to realize its profit.
When it’s observed that ethnocentrism through hunting in the jurisdiction is strong within EU nations which the principles of automatic approval and the principle of priority, based on mutual trust, are supposed to be applied to, it raises doubts of the impossibility of the ideal of pure universalism. Rather than pursuing just the improvement of the procedures of approval ․ execution (for example, simplification of execution, such as automatic approval system), the elasticity of making integrated use of different methods verified so far should be maintained.
Securing the integrity between the procedural law of insolvency and the substantial law of insolvency or the close interrelatedness with the nation which starts the procedure for insolvency are being indicated, but in reality, it’s almost impossible to separate the effects of the adjective law of the insolvency procedure from the those of the substantial law, so it’s thought to result from the realistic need to avoid it. Because of the characteristics of the procedure of insolvency, it’s practically difficult to make a sharp distinction between procedural ones and substantial ones and to regulate according to each principle of law. Therefore, it’s basically desirable to follow the law of the nation which has started the procedures when it comes to the procedure of overseas insolvency and its effects.
Debtor Rehabilitation and Bankruptcy Act, which is in force in Korea since April 1st, 2006, regulates 15 provisions on international insolvency, but has no direct regulations on the jurisdiction of international insolvency, so it needs to be solved with Article 3 of the general provisions of the same law and with the regulations on the general jurisdiction of international civil suit under Article 2 of private international law.