ABSTRACT
There is a symbiotic relationship between viable banks and the stability of the financial system. By the very nature of their business as primary providers of credit in society, banks are necessary but risky ventures. They therefore require special treatment in comparison with other companies. The purpose for the application of special rules during bank insolvency cases is allied with the public interest in financial stability and with the systemic effects the bank failure may cause. Thus, the existence of legal frameworks for bank insolvencies is extremely important. The United Nations Commission on International Trade Law (UNCITRAL) adopted a Model Law on Cross-Border Insolvency (UNCITRAL Model Law/Model Law). The legal framework for bank insolvency would be more effective should it incorporate marked features of the UNCITRAL Model Law, including the mechanism for coordination between courts in cross-border insolvency cases. Several countries, including South Africa, Mexico, Poland, Romania and Japan, have adopted the provisions of the UNCITRAL Model Law in their national legislation. In truth, the adoption of the UNCITRAL Model Law supports the rule of law by promoting an ordered approach to cross-border insolvencies. This paper will discuss the UNCITRAL Model Law rules that may be relevant during bank insolvency, the reasons for the existence of a special regime for bank insolvency, and how the UNCITRAL Model Law principles should be considered.
