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Cross-Border Insolvency in India: Legal Framework and Emerging Jurisprudence
Introduction
The increasing integration of global economies has fundamentally transformed how businesses operate across international borders. As multinational corporations expand their footprint beyond national boundaries, the complexities surrounding cross-border insolvency have become more pronounced. When a company with assets, creditors, or operations spanning multiple jurisdictions faces financial distress, determining which country’s insolvency laws apply and how different legal systems coordinate becomes a critical challenge. India, as one of the world’s fastest-growing economies and a major destination for foreign direct investment, finds itself at the crossroads of this complex legal landscape.
The traditional approach to insolvency, which operated within the confines of domestic territorial jurisdiction, has proven inadequate in addressing the multifaceted challenges posed by cross-border insolvencies. These challenges include conflicting legal frameworks, difficulties in asset recovery across borders, and the absence of mechanisms for judicial cooperation between different countries. The need for a harmonized approach has led to the development of international frameworks, most notably the UNCITRAL Model Law on Cross-Border Insolvency adopted in 1997 [1], which provides a template for countries to establish coordinated insolvency resolution mechanisms.
India’s journey toward establishing a robust cross-border insolvency framework has been gradual but significant. The enactment of the Insolvency and Bankruptcy Code in 2016 marked a watershed moment in India’s insolvency regime, consolidating previously fragmented insolvency laws under a unified statutory framework [2]. However, the provisions specifically addressing cross-border insolvency remain limited and largely unoperationalized, creating uncertainty for stakeholders involved in international business transactions.
The Insolvency and Bankruptcy Code, 2016: Foundation and Limitations
The Insolvency and Bankruptcy Code, 2016 represents India’s most ambitious attempt at reforming its insolvency landscape. Prior to its enactment, insolvency matters in India were governed by thirteen different statutes, creating a fragmented and inefficient system characterized by delays and poor recovery rates. The Code introduced a time-bound resolution process aimed at maximizing asset value while balancing the interests of all stakeholders. Under this framework, the National Company Law Tribunal serves as the adjudicating authority for corporate insolvency matters, with appellate jurisdiction vested in the National Company Law Appellate Tribunal.
While the Code brought revolutionary changes to domestic insolvency proceedings, its provisions for cross-border insolvency remain rudimentary. The relevant provisions are contained in Sections 234 and 235 of the Code, which were introduced based on recommendations from the Joint Parliamentary Committee during the legislative process [3]. Section 234 empowers the Central Government to enter into bilateral agreements with foreign countries to facilitate the application of the Code’s provisions to assets of corporate debtors, individual debtors, and their guarantors located outside India. Section 235 authorizes the adjudicating authority under the Code to issue letters of request to courts in countries with which such agreements have been established.
However, these provisions suffer from significant practical limitations. Neither Section 234 nor Section 235 has been notified or operationalized since the Code’s enactment. The dependence on bilateral agreements creates a cumbersome process, as negotiating separate treaties with multiple countries is time-consuming and requires concessions in unrelated policy areas. Moreover, the absence of any bilateral agreements means that these provisions remain entirely dormant, leaving stakeholders without a clear statutory mechanism for addressing cross-border insolvency issues.
Civil Procedure Code, 1908: The Traditional Enforcement Mechanism
In the absence of operationalized provisions under the Insolvency and Bankruptcy Code, parties seeking to enforce foreign insolvency proceedings in India must rely on the general provisions of the Code of Civil Procedure, 1908. Section 44A of the Civil Procedure Code provides for the execution of decrees passed by superior courts of reciprocating territories [4]. A reciprocating territory is defined as any country or territory outside India which the Central Government declares through official notification to have reciprocal arrangements for the enforcement of judgments with India.
Under this framework, a certified copy of a decree from a superior court of a reciprocating territory can be filed in a District Court in India, and the decree may be executed as if it had been passed by that District Court. However, this mechanism has limited applicability to insolvency matters for several reasons. The Civil Procedure Code provisions primarily address the enforcement of monetary decrees and are not specifically tailored to the unique requirements of insolvency proceedings, which often involve reorganization, administrative orders, and the coordination of multiple stakeholders across jurisdictions.
Furthermore, the list of reciprocating territories under the Civil Procedure Code is limited, and the procedure does not address critical issues specific to cross-border insolvency such as parallel proceedings in multiple jurisdictions, the recognition of foreign insolvency professionals, and the coordination between courts of different countries. The requirement for conclusiveness under Section 13 of the Civil Procedure Code adds another layer of complexity, as foreign judgments must satisfy specific conditions including being pronounced by a court of competent jurisdiction, being given on the merits of the case, and not contravening Indian law or natural justice principles.
UNCITRAL Model Law on Cross-Border Insolvency
The United Nations Commission on International Trade Law adopted the Model Law on Cross-Border Insolvency on 30 May 1997, providing countries with a modern legislative framework to address cross-border insolvency more effectively [1]. The Model Law has been adopted by 62 states in a total of 65 jurisdictions, demonstrating its widespread acceptance as a viable solution to the challenges of international insolvency. The Model Law focuses on four key elements: access for foreign representatives and creditors to domestic courts, recognition of foreign insolvency proceedings, relief and assistance to foreign proceedings, and cooperation and coordination between courts and insolvency professionals across jurisdictions.
One of the most significant contributions of the Model Law is the concept of Centre of Main Interests, which serves as the primary jurisdictional connecting factor for determining where the main insolvency proceedings should take place. The Model Law distinguishes between foreign main proceedings, which take place in the jurisdiction where the debtor has its centre of main interests, and foreign non-main proceedings, which take place in jurisdictions where the debtor has an establishment. This distinction carries important consequences for the type and extent of relief that may be granted following recognition.
The Model Law provides for automatic relief upon recognition of foreign main proceedings, including a stay on execution against the debtor’s assets and a suspension of the right to transfer or otherwise dispose of the debtor’s assets. For non-main proceedings, relief is granted at the discretion of the recognizing court. The Model Law also establishes mechanisms for direct communication between courts involved in related proceedings and cooperation between insolvency representatives. Importantly, it includes a public policy exception allowing countries to refuse to take action that would be manifestly contrary to their public policy.
Legislative Developments: Draft Part Z and the Road Ahead
Recognizing the inadequacies of the existing framework, India has taken significant steps toward adopting provisions based on the UNCITRAL Model Law. The Insolvency Law Committee, established in 2017, submitted its report in March 2018 recommending the integration of the Model Law into the Insolvency and Bankruptcy Code through a separate chapter [5]. This recommendation led to the drafting of Part Z of the Code, which was released for public consultation by the Ministry of Corporate Affairs in June 2018.
Draft Part Z comprises 29 sections addressing critical aspects of cross-border insolvency, including access for foreign representatives and creditors to Indian courts, recognition of foreign insolvency proceedings, cooperation between Indian and foreign courts, and coordination of concurrent proceedings. The draft provisions incorporate the core principles of the UNCITRAL Model Law while making necessary adaptations to suit the Indian legal framework and protect the interests of domestic stakeholders.
The Insolvency Law Committee recommended that these provisions should initially apply only to corporate debtors, with the possibility of extension to personal insolvency cases in the future. Significantly, the Committee expanded the definition of corporate debtor for purposes of Part Z to include companies incorporated outside India, enabling foreign companies with assets or operations in India to access the cross-border insolvency framework. The Committee also recommended that Part Z should apply in two scenarios: first, in countries that have adopted the UNCITRAL Model Law, and second, in countries that have entered into bilateral agreements with India specifically for the enforcement of cross-border insolvency provisions.
However, despite the passage of several years since the public consultation, Draft Part Z has not been enacted into law. The delay in implementation has left India without a statutory cross-border insolvency framework, forcing courts and practitioners to rely on general principles of law and judicial innovation to address cross-border insolvency issues as they arise.
Landmark Judicial Precedents
Jet Airways: India’s First Cross-Border Insolvency Case
The saga of Jet Airways represents a watershed moment in India’s cross-border insolvency jurisprudence. In June 2019, following an application by State Bank of India under Section 7 of the Insolvency and Bankruptcy Code, the National Company Law Tribunal admitted Jet Airways into the Corporate Insolvency Resolution Process [6]. However, prior to the commencement of proceedings in India, two European creditors had initiated bankruptcy proceedings in the Netherlands under Article 2(4) of the Dutch Bankruptcy Act, and the Dutch Court had appointed an administrator to oversee Jet Airways’ assets in the Netherlands.
The Dutch administrator approached the National Company Law Tribunal seeking recognition of the Dutch proceedings and a stay on the Indian Corporate Insolvency Resolution Process. In its order dated 20 June 2019, the Tribunal refused to recognize the foreign proceedings, citing the absence of notified provisions under Sections 234 and 235 of the Insolvency and Bankruptcy Code and the lack of any reciprocal arrangement with Dutch authorities. The Tribunal also noted that Jet Airways’ registered office and primary assets were located in India, giving it jurisdiction over the matter.
On appeal, the National Company Law Appellate Tribunal took a more nuanced approach. In its orders dated 12 July 2019 and 21 August 2019, the Appellate Tribunal directed the Indian Resolution Professional to explore cooperation with the Dutch administrator to establish a joint corporate insolvency resolution process [7]. This direction led to the development of a cross-border insolvency protocol between the Indian and Dutch insolvency professionals. The Appellate Tribunal approved this protocol on 26 September 2019, marking the first time an Indian tribunal had facilitated such international cooperation in an insolvency matter.
The cross-border insolvency protocol established a framework for coordination between the Indian and Dutch proceedings while recognizing India as the jurisdiction where Jet Airways had its centre of main interests. The protocol provided for information sharing, coordination of asset sales, and participation of the Dutch administrator in meetings of the Committee of Creditors in India. It explicitly stated that while the Indian proceedings focused on the revival and resolution of the company, the Dutch proceedings dealt with the liquidation of assets located in the Netherlands, and both processes would work toward maximizing value for all creditors.
Re Compuage Infocom Ltd: International Recognition of Indian CIRP
In a development that has significant implications for the future of cross-border insolvency in India, the Singapore High Court in Re Compuage Infocom Ltd [2025] SGHC 49 became the first foreign court to recognize an Indian Corporate Insolvency Resolution Process as a foreign main proceeding under the UNCITRAL Model Law [8]. This landmark judgment addressed several critical questions about the recognition of Indian insolvency proceedings in foreign jurisdictions.
Compuage Infocom Limited, an Indian company specializing in information technology distribution, was admitted to Corporate Insolvency Resolution Process by the National Company Law Tribunal in Mumbai in 2023 following an application by a financial creditor under Section 7 of the Insolvency and Bankruptcy Code. The company had assets and bank accounts in Singapore, and the appointed Resolution Professional sought recognition of the Indian proceedings in Singapore to gain control over these assets.
The Singapore High Court analyzed whether the Corporate Insolvency Resolution Process qualified as a foreign proceeding under the UNCITRAL Model Law as adopted in Singapore through the Insolvency, Restructuring and Dissolution Act, 2018 [9]. The Court found that the Corporate Insolvency Resolution Process met all requirements for a foreign proceeding: it was collective in nature, involving multiple creditors through the Committee of Creditors; it was a judicial or administrative proceeding, as the National Company Law Tribunal exercised adjudicative powers; it related to insolvency and reorganization; and the assets and affairs of the debtor were subject to court control and supervision.
Significantly, the Singapore High Court addressed the question of whether the National Company Law Tribunal, being a quasi-judicial body rather than a traditional court, could be considered a foreign court under the Model Law. The Court held that the definition of foreign court in the Model Law includes both judicial and non-judicial authorities, and the critical factor is whether the body exercises adjudicative powers in controlling or supervising insolvency proceedings. Based on this analysis, the Court concluded that the Tribunal qualified as a foreign court, and the Resolution Professional was a foreign representative authorized to administer the reorganization of the corporate debtor.
The Court also determined that India was the centre of main interests of Compuage Infocom Limited, as the company was incorporated in India, had its registered office in India, and conducted its primary business operations from India. Consequently, the Singapore High Court recognized the Indian Corporate Insolvency Resolution Process as a foreign main proceeding and granted relief to the Resolution Professional, including authority to repatriate assets from Singapore to India for distribution to creditors.
Regulatory Framework and Institutional Structure
The institutional architecture supporting insolvency proceedings in India consists of several key entities. The Insolvency and Bankruptcy Board of India, established under the Insolvency and Bankruptcy Code, serves as the regulatory authority overseeing insolvency proceedings in the country. The Board is responsible for regulating insolvency professionals, insolvency professional agencies, and information utilities that maintain records of financial transactions. It also establishes standards for insolvency resolution processes and lays down educational and professional development requirements for insolvency professionals.
The National Company Law Tribunal and National Company Law Appellate Tribunal constitute the adjudicatory arm of the insolvency framework. The Tribunal has jurisdiction over corporate insolvency matters and plays a crucial role in admitting applications, appointing insolvency professionals, approving resolution plans, and ordering liquidation when resolution fails. The Appellate Tribunal hears appeals against orders of the Tribunal and has the power to modify or set aside such orders.
Insolvency professionals play a central role in the resolution process. They are licensed professionals appointed to manage the affairs of the corporate debtor during insolvency proceedings, form and chair meetings of the Committee of Creditors, invite and evaluate resolution plans, and ensure compliance with the Code’s provisions. The Committee of Creditors, comprising financial creditors of the corporate debtor, exercises voting rights on critical decisions including approval of resolution plans.
For cross-border insolvency matters, the lack of operational provisions under the Code means that these institutions must navigate uncharted territory, often relying on judicial guidance and international best practices. The Singapore High Court’s recognition of Indian proceedings demonstrates that Indian institutional arrangements, particularly the powers and functions of the National Company Law Tribunal and insolvency professionals, are compatible with international standards embedded in the UNCITRAL Model Law.
Challenges and the Path Forward
Despite progress in legislative drafting and judicial innovation, India’s cross-border insolvency framework faces several significant challenges. The continued non-operationalization of Sections 234 and 235 of the Insolvency and Bankruptcy Code leaves a statutory vacuum. The absence of enacted provisions based on the UNCITRAL Model Law means that recognition of foreign proceedings in India remains uncertain, potentially deterring foreign investment and complicating the resolution of distressed multinational enterprises with Indian operations.
The recognition of Indian proceedings abroad, while bolstered by the Singapore High Court’s decision in the Compuage case, cannot be taken for granted in jurisdictions that have not adopted the Model Law or that may interpret its provisions differently. The lack of reciprocity creates an imbalance where Indian insolvency proceedings may gain recognition abroad under the Model Law framework, but foreign proceedings cannot obtain equivalent recognition in India due to the absence of corresponding provisions in Indian law.
The determination of centre of main interests in complex corporate structures presents analytical challenges. While the concept is central to the UNCITRAL Model Law framework, its application requires careful consideration of factors such as the location of head office functions, the place where management decisions are made, the location of principal assets, and the place that is ascertainable by third parties. In cases involving holding companies, subsidiaries, and complex group structures, determining the appropriate centre of main interests may not be straightforward.
The protection of domestic creditors’ interests must be balanced against the need for international cooperation. Any cross-border insolvency framework must include adequate safeguards to ensure that domestic creditors are not disadvantaged compared to foreign creditors, while also facilitating efficient resolution processes that maximize value for all stakeholders. The Model Law’s provisions for public policy exceptions and additional protections for local interests provide some mechanisms for achieving this balance, but their implementation requires careful consideration.
Comparative Perspectives
Examining how other jurisdictions have implemented cross-border insolvency frameworks provides valuable insights for India’s continued development in this area. The United States incorporated the UNCITRAL Model Law through Chapter 15 of its Bankruptcy Code, which has been operational since 2005. The US experience demonstrates the practical benefits of having clear statutory provisions for recognition of foreign proceedings, including facilitation of international cooperation, protection of assets across borders, and coordination of complex multi-jurisdictional insolvencies.
The United Kingdom adopted the Model Law through the Cross-Border Insolvency Regulations 2006, which apply throughout Great Britain. The UK framework has enabled British courts to recognize and assist foreign insolvency proceedings while maintaining appropriate safeguards for domestic interests. Singapore’s adoption of the Model Law through its Insolvency, Restructuring and Dissolution Act, 2018 has positioned the city-state as a regional hub for restructuring and insolvency matters, as evidenced by its willingness to recognize Indian proceedings in the Compuage case.
Australia enacted the Model Law through the Cross-Border Insolvency Act 2008, incorporating it as Schedule 1 to the Act. The Australian approach demonstrates how common law jurisdictions can successfully integrate Model Law principles into their existing insolvency frameworks while adapting specific provisions to suit local legal traditions and policy objectives.
Conclusion
Cross-border insolvency represents one of the most complex challenges facing modern insolvency law. As businesses continue to expand globally and capital flows increasingly transcend national boundaries, the need for effective mechanisms to address multinational insolvencies becomes ever more critical. India’s position as a major global economy and a significant destination for foreign investment makes the development of a robust cross-border insolvency framework not merely desirable but essential.
The enactment of the Insolvency and Bankruptcy Code in 2016 laid the foundation for reform, but the specific provisions for cross-border matters remain inadequate. While Sections 234 and 235 provide enabling provisions for bilateral cooperation, their continued non-operationalization has left stakeholders without clear statutory guidance. The drafting of Part Z based on the UNCITRAL Model Law represents a positive step, but its failure to progress to enactment means that India continues to operate without a comprehensive cross-border insolvency statute.
Judicial innovation, particularly in cases like Jet Airways and the international recognition achieved in the Compuage case, demonstrates both the practical need for cross-border cooperation and the potential for Indian insolvency proceedings to gain acceptance in foreign jurisdictions. These cases have shown that Indian institutions, including the National Company Law Tribunal and the insolvency professionals regulated under the Code, can function effectively within international frameworks like the UNCITRAL Model Law.
The enactment of Draft Part Z would represent a significant milestone in India’s insolvency law development. It would provide certainty to stakeholders, facilitate foreign investment by offering predictable mechanisms for insolvency resolution, and enable Indian courts and insolvency professionals to cooperate effectively with their foreign counterparts. The framework would position India alongside leading jurisdictions that have adopted the Model Law, enhancing the country’s attractiveness as a destination for cross-border business and investment.
However, implementation must be approached thoughtfully, with due consideration for the protection of domestic creditors’ interests, the preservation of judicial sovereignty through appropriate public policy exceptions, and the development of institutional capacity to handle complex cross-border matters. As India moves forward with this reform, the experiences of other jurisdictions and the principles embedded in the UNCITRAL Model Law provide valuable guidance, but adaptation to India’s unique legal, economic, and social context remains essential.
References
[1] UNCITRAL Model Law on Cross-Border Insolvency (1997). United Nations Commission on International Trade Law. https://uncitral.un.org/en/texts/insolvency/modellaw/cross-border_insolvency
[2] The Insolvency and Bankruptcy Code, 2016 (Act No. 31 of 2016). Government of India. https://www.indiacode.nic.in/handle/123456789/2154
[3] Ministry of Corporate Affairs. (2018). Draft Insolvency and Bankruptcy Code (Amendment) Bill, 2018 – Part Z. https://ibbi.gov.in/webadmin/pdf/legalframwork/2018/Aug/The%20Insolvency%20and%20Bankruptcy%20Code%20(Second%20Amendment)%20Act,%202018_2018-08-18%2018:40:34.pdf
[4] The Code of Civil Procedure, 1908 (Act No. 5 of 1908), Section 44A. Government of India. https://www.indiacode.nic.in/bitstream/123456789/13813/1/the_code_of_civil_procedure,_1908.pdf
[5] Insolvency Law Committee. (2018). Report of the Insolvency Law Committee on Cross Border Insolvency. Ministry of Corporate Affairs, Government of India. https://ibbi.gov.in/ILRReport2603_03042018.pdf
[6] State Bank of India v. Jet Airways (India) Limited, National Company Law Tribunal, Mumbai Bench (2019). https://ibbi.gov.in/webadmin/pdf/order/2019/Jul/5th%20July%202019%20in%20the%20matter%20of%20Jet%20Airways%20(India)%20Ltd.%20C.P.%20(IB)-2205(MB)-2019_2019-07-16%2011:37:58.pdf
[7] Jet Airways (India) Limited vs State Bank Of India & Anr, Company Appeal (AT) (Insolvency) No. 707 of 2019, National Company Law Appellate Tribunal, New Delhi. https://indiankanoon.org/doc/12824528/
[8] Re Compuage Infocom Ltd and another [2025] SGHC 49. Singapore High Court. https://www.judiciary.gov.sg
[9] Insolvency, Restructuring and Dissolution Act, 2018 (Act 40 of 2018). Singapore Statutes. https://sso.agc.gov.sg
