connecting the dots attracting foreign direct investment through harmonisation of european...

8/13/2019 Connecting the Dots Attracting Foreign Direct Investment Through Harmonisation of European Insolvency Law

http://slidepdf.com/reader/full/connecting-the-dots-attracting-foreign-direct-investment-through-harmonisation 1/30

Czech Yearbook

of International Law



Czech Yearbookof International Law

Volume IV

2013

Regulatory Measures and Foreign Trade

Editors

Alexander J. Bělohlávek Filip Černý Naděžda Rozehnalová

Professor Dr. Iur. Professor

at the VŠB TU Charles University at the Masaryk University

in Ostrava in Prague in Brno

Czech Republic Czech Republic Czech Republic

JURIS



Questions About This Publication

For assistance with shipments, billing or other customer service matters,

please call our Customer Services Department at:1-631-350-2100

To obtain a copy of this book, call our Sales Department:1-631-351-5430

Fax: 1-631-351-5712

Toll Free Order Line:

1-800-887-4064 (United States & Canada)See our web page about this book:www.jurispub.com

COPYRIGHT © 2013By Juris Publishing, Inc.

__________________

All rights reserved. No part of this publicationmay be reproduced in any form or by any electronicor mechanical means including information storage

and retrieval systems without permission

in writing from the publisher.__________________

Printed in the United States of America.ISBN 978-1-57823-334-2

ISSN 2157-2976

Juris Publishing, Inc.71 New Street

Huntington, New York 11743 U.S.A.www.jurispub.com

__________________

The title Czech Yearbook of International Law as well as the logoappearing on the cover are protected by EU trademark law.

Typeset in the U.S.A. by Juris Publishing, Inc.



C z e c h Y e a r b o o k o f I n t e r n a t i o n a l L a w

Advisory Board

Ján Azud Bratislava, Slovak Republic

Helena BarancováTrnava, Slovak Republic

Sir Anthony Colman London, United Kingdom

Jaroslav Fenyk Brno, Czech Republic

Karel Klíma

Pilsen, Czech Republic

Ján Klučka Košice, Slovak Republic

Zdeněk Kučera Pilsen, Czech Republic

Pierre LaliveGeneva, Switzerland

Peter Mankowski Hamburg, Germany

Andrzej Mączyński Krakow, Republic of Poland

Maksymilian Pazdan Katowice, Poland

August ReinischVienna, Austria

Michal Tomášek Prague, Czech Republic

Vladimír Týč Brno, Czech Republic

Nikolay NatovSofia, Bulgaria

Editorial Board

Filip Černý Prague, Czech Republic

Marcin Czepelak Krakow, Republic of Poland

Ludvík David Brno, Czech Republic

Jan Kněžínek Prague, Czech Republic

Oskar Krejčí

Prague, Czech Republic

Petr Mlsna Prague, Czech Republic

Robert Neruda Brno, Czech Republic

Monika Pauknerová Prague, Czech Republic

František Poredoš Bratislava, Slovak Republic

Matthias SchererGeneva, Switzerland

Vít Alexander Schorm Prague, Czech Republic

Miroslav Slašťan Bratislava, Slovak Republic

Václav StehlíkOlomouc, Czech Republic

Jiří Valdhans Brno, Czech Republic

Olexander Merezhko Kiev, Ukraine

Address for correspondence & manuscriptsCzech Yearbook of International Law

Jana Zajíce 32, Praha 7, 170 00, Czech Republic

www.czechyearbook.org



| vii


Impressum

Institutions Participating in the CYIL Project

Academic Institutions within the Czech Republic

Masaryk University (Brno), Faculty of Law,

Department of International and European Law

[ Masarykova univerzita v Brně, Právnická fakulta, Katedra mezinárodního a evropského práva]

University of West Bohemia in Pilsen, Faculty of Law,

Department of Constitutional Law & Department of International Law

[ Západočeská univerzita v Plzni, Právnická fakulta, Katedra ústavního práva & Katedra mezinárodního práva]

VŠB – TU Ostrava, Faculty of Economics,

Department of Law

[VŠB – TU Ostrava, Ekonomická fakulta, Katedra práva]

Charles University in Prague, Faculty of Law,

Department of Commercial Law, Department of European Law & Centre for

Comparative Law

[Univerzita Karlova v Praze, Právnická fakulta, Katedra obchodního práva, katedra evropského práva & Centrum právní komparatistiky, PrF UK ]

University College of International and Public Relations Prague[Vysoká škola mezinárodních a veřejných vztahů Praha]

Institute of State and Law of the Academy of Sciences of the CzechRepublic, v.v.i.[Ústav státu a práva Akademie věd ČR, v.v.i.]



Impressum

viii |

C z e c h Y e a r b o o k o f I n t e r n a t i o n a

l L a w

Non-academic Institutions in the Czech Republic

Office of the Government of the Czech Republic, Department of Legislation, Prague

[Úřad vlády ČR, Legislativní odbor, Praha]

Arbitration Court Attached to the Economic Chamber of the CzechRepublic and Agricultural Chamber of the Czech Republic, Prague

[ Rozhodčí soud při Hospodářské komoře České republikya Agrární komoře České republiky]

ICC National Committee Czech Republic,Prague

[ ICC Národní výbor Česká republika, Praha]

Institutions outside the Czech Republic Participatingin the CYIL Project

AustriaUniversity of Vienna [Universität Wien],

Department of European, International and Comparative Law,

Section for International Law and International Relations

PolandJagiellonian University in Krakow [Uniwersytet Jagielloński v Krakowie],

Faculty of Law and Administration,

Department of Private International Law

Slovak RepublicSlovak Academy of Sciences, Institute of State and Law [Slovenská akadémia vied, Ústav štátu a práva], Bratislava

University of Matej Bel in Banská Bystrica[Univerzita Mateja Bela v Banskej Bystrici],Faculty of Political Sciences and International Relations,

Department of International Affairs and Diplomacy

Trnava University in Trnava [Trnavská Univerzita v Trnave],Faculty of Law, Department of Labour Law and Social Security Law

| | |

Proofreading and translation support provided by: Agentura SPA, s. r. o., Prague,Czech Republic, and Pamela Lewis, USA.



| ix


Contents

List of Abbreviations ........................................................................................... xi

ARTICLES

Jesse Kennedy

Protecting Regulatory Measures in Investment

Treaty Law ............................................................................................................... 3

Leonid Shmatenko

Regulatory Measures through Plain Packaging of Tobacco

Products in the Light of International Trade Agreements ....................... 27

Dominik Moškvan | Veronika VrbováConnecting the Dots: Attracting Foreign Direct Investment

through Harmonisation of European Insolvency Law ............................... 49

Nikolay Natov

The EU and Foreign Investment: Some Questions

after the New Regulation..................................................................................... 69

Alexander J. Bělohlávek

Regulation of Financial Markets and Money Laundering:

Contemporary Trends in European and International

Cooperation ............................................................................................................ 91

Libor Klimek

Effective Enforcement of Sanctions for Market Abuse in the EU:

Introduction of Criminal Sanctions ................................................................ 105



Contents

x |


l L a w

Miluše Hrnčiříková | Filip Černý | Jan HavličekA Few Thoughts on the New Common European Sales Law ................... 123

Daniela Nováčková

International Trade Economic Measures Applied in Slovakia ................ 143

Carmen Adriana Gheorghe

Publicity and Protection: A Comparative Analysis of Legal

European Protection Granted to Credit and Events Consumers ............ 159

BOOK REVIEWS

UNIDROIT Principles of International Commercial Contracts 2010 ................................. 177

Anatoliy Dovgert | Vasil’ Kisil’ |

Private International Law: General Part ............................................................ 181

Milan Jančo | Monika Jurčová | Marianna Novotná et al. |

European Private Law ............................................................................................ 184

Alexander J. Bělohlávek | Arbitration in the European

Countries ................................................................................................................... 187

Václav Stehlík | Application of National Procedural Rules

in the Context of EU Law ....................................................................................... 189

NEWS & REPORTS

Current Events, Past & Ongoing CYIL/CYArb Presentations ....................... 197

Alexander J. Bělohlávek | Lucia Kováčová | Jaroslav Králiček

Selected Bibliography of Czech and Slovak Authors for 2012 ....................... 200

Important Web Sites .............................................................................................. 218

Index ......................................................................................................................... 225

All contributions in this book are subject to academic review.



| 49


Dominik Moškvan |

Veronika Vrbová

Connecting the Dots:Attracting Foreign DirectInvestment throughHarmonisation ofEuropean Insolvency Law

Abstract | Considering the fact that participationin insolvency proceedings may be viewed as anentry-mode for investment in a foreign market, aswell as a form of business wind-up, this paperinvestigates the relation between the quality ofinsolvency law and foreign direct investment in the European Union. Although foreign directinvestments are a cardinal feature in the EUinternal market, their definition is missing in the European Treaties. Similarly, despite insolvency

laws being harmonized, substantial differences onnational levels remain. Apart from an analysis of European Union law, these discrepancies arecomparatively addressed by a confrontation of two fundamentally different Member States’ jurisdictions – the traditionally business friendly jurisdiction of the United Kingdom and thedynamically evolving legal system of Slovakia. A focus on efforts striving for the perfection of nationalinsolvency laws should deserve more attention asthe economic decline, caused by an on-going financial crisis, has increased the number ofinsolvency proceedings and inflicted a drop in

investment flows.

| | |

Key words: Foreign Direct Investment│ EU Insolvency Regulation│ FinancialCrisis │ UK Insolvency Act │ Slovak Bankruptcyand Restructuring Act

Dominik Moškvan is a

Ph.D. Candidate at the

Faculty of Law of the

University of Antwerp,

Belgium. He holds

Master’s degrees from

Tilburg Law School and

Masaryk University. His

research interests lie in

the area of European

Union internal market

law, external relations of

the EU and international

investment law andarbitration. e-mail:

dominik.moskvan@

ua.ac.be

Veronika Vrbová is a

PhD. candidate at the

Faculty of Law of the

Pan-European

University, Slovakia

where she deals with the

area of European

Insolvency Law. She

studied at the Faculty of

Law of Comenius

University in Bratislava,where she earned a

Master’s degree and a

Juris Doctor degree. She

also studied



Dominik Moškvan │ Veronika Vrbová

50 |


l L a w

I. Introduction

3.01. The purpose of this paper is to review the

relevance of insolvency law to the aptitude of a

state to attract foreign direct investment in light

of the financial turbulence of the last few years

stemming from the burst of the American

housing bubble in 2008. The resulting economic downturn took its toll

on the economic health of state institutions and businesses, as well as

family budgets. The biggest financial crisis since the Great Depression1

still represents persistent risks such as high unemployment, debt, low

growth, and poor access to financing. The probability of a much

broader freezing up of capital markets and a deeper global crisis may

not be ruled out yet.2 Before 2008, investors were less vigilant than they

are these days. The serious impact of the credit crunch, huge financial

losses, and negative future economic prognoses for the economies of

EU countries resulted inter alia in reduced foreign direct investment

(FDI).3 Nevertheless, FDI remains an important driver for either

gaining access to new markets or cost reduction.4 Investors worldwide

are now more prudent in making their investment decisions since the

risk of facing insolvency has increased significantly. Therefore,

investors wishing to locate their FDI look also for effective insolvency

law jurisdictions. What does effective insolvency law mean for

investors? It is essential that the local bankruptcy law support the

efficient resolution of financial distress.5 Professionals believe that the

lack of effective bankruptcy regulations represents one of the majorregulatory deficiencies affecting FDI as well as the overall business

1 Josh Bivens, Worst Economic Crisis since the Great Depression?, By a long shot,Economic Policy Institute, available at: http://www.epi.org/publication/snapshot_20100127/

(accessed on February 15, 2012).2 The World Bank, Global Economic Prospects: Uncertainties and Vulnerabilities,

(2012), available at: http://siteresources.worldbank.org/INTPROSPECTS/Resources/334934-

1322593305595/8287139-1326374900917/GEP_January_2012a_FullReport_FINAL.pdf

(accessed on February 15, 2012).3 UNCTAD, World Investment Prospects Survey 2010-2012, 10 (2010), available at:

http://www.unctad.org/en/docs/diaeia20104_en.pdf (accessed on February 15, 2012).4

Deloitte, Investing in Central Europe: Opportunity Knocks 4 (2011), available at:http://www.deloitte.com/assets/Dcom-Global/Local%20Assets/Documents/Tax/dtt_tax_

investinginCE_2011.pdf (accessed on February 15, 2012).5 Stijn Claessens, Daniela Klingebiel and Luc Laeven, Financial Restructuring in Bankingand Corporate Sector Crises: What Policies to Pursue? National Bureau of Economic

Research (2001).

International Business

law at Tilburg

University in the

Netherlands, where she

earned a Master’s degree.

e-mail:

[email protected]



Connecting the Dots: Attracting Foreign Direct Investment

| 51


climate.6 In this paper, we would like to demonstrate that the quality of

the relevant insolvency law does have an impact on the investment

decisions of foreign investors. Therefore, when promoting economic

growth via FDI, it should be borne in mind that strong incentives for

the overall improvement of the legal environment are of extreme

importance. Since 1989, formerly undemocratic communist Central

and Eastern European states as well as those that were formerly part of

the Soviet Union, have shifted from an isolation from Western Europe

to the gradual re-establishment of political and economic bonds.7

However, only in Hungary has the foreign direct investment risen from

570 million USD in 1990 to 248 billion USD in 2009, 8 which is

commonly attributed to the legal alleviation of investors’ concerns

about the risks associated with investment. Since the European Unionmembers are undergoing a substantial convergence process from both

economic and legal perspectives, the aim of this article is to map the

unusual link between FDI and insolvency law as such, as well as the

rapprochement of different national insolvency law systems.

II. Freedoms of the Internal Market in the Contextof FDI and Portfolio Investments

3.02. From the perspective of an investor, systematic economic

repercussions, like the persisting economic downturn in the European

Union,9 constitute a liquidity crisis either in terms of a) a discontinuous

asset price drop or b) the default of a borrower.10 The default of a

borrower is more typical for FDI while a price drop is more applicableto portfolio investment.11

6 OECD, OECD Reviews of Foreign Direct Investment: Czech Republic 10 (2001),

available at: http://www.oecd-ilibrary.org/docserver/download/fulltext/2101111e.pdf?

expires=1329316663&id=id&accname=ocid177291&checksum=71EB6323874B4AFC7AF

770C8AFCAE58F (accessed on February 15, 2012).7 House of Lords European Union Committee, The Further Enlargement of the EU:Threat or Opportunity? Report with Evidence, 53rd Report of Session 2005–06, London

para.68 (2006).8 UNCTAD, World Investment Report 2010, 172. Available at:

http://www.unctad.org/en/docs/wir2010_en.pdf (accessed on June 1, 2012).9 EU’s GDP is expected to fall 0.3% in 2012; Euro area by 0.4%. Eurostat, Real GDP

Growth Rate – Volume. Percentage Change on Previous Year. Available at:

http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&plugin=1&language=en&pcode=tec00115 (accessed on December 11, 2012).10 DEMOSTHENES TAMBAKIS, STRATEGIC DEFAULT RISK AND GLOBAL LIQUIDITY CRISES:

THE CASE OF FOREIGN DIRECT INVESTMENT 2 (2008).11 The view suggesting the same protection for portfolio investment and FDI is not

generally accepted by the international investment law. Inclusion of portfolio investments




52 |


l L a w

3.03. When looking for the definition of ‘scope of investment’ under the

Community law, interaction between essential freedoms of an internal

market comes into question. Since investment is a cross-border activity

which triggers capital flow and additionally links investors not only to

their home countries, but also to the host states, the free movement of

persons and capital may shield them. The case law 12 regarding the

difference between the two closely interactional freedoms explicitly sets

forth that the decisive factor for granting protection under the freedom

of establishment necessarily requires a definite influence or control of

the company’s decisions and its activities, while allowing the investor to

participate in management of the company involves the free movement

of capital.13 Although this distinction is substantial for the

identification of protections for portfolio investment14 and FDI underextra-EU BITs, in intra-EU foreign direct investment the two freedoms

interact to an appreciable extent.15

3.04. Although the definition of foreign direct investment is missing in the

European treaties, this is compensated by case law.16 The European

Court of Justice defined direct investments in Commission v. Italy 17 as

under the protection of BITs with no foundation in the treaty is erroneous, although not

uncommon. MUTHUCUMARASWAMY SORNARAJAH, THE INTERNATIONAL LAW ON FOREIGN

DIRECT INVESTMENT, Cambridge: Cambridge University Press 9, 196 (3rd ed. 2010).

What is more, it is in the host state’s best interest to attract foreign direct investment

instead of portfolio investment since portfolio investment runs the risk of sudden reversal.

MATTHIAS BUSSE AND CARSTEN HEFEKER, POLITICAL RISK, INSTITUTIONS AND FOREIGN

DIRECT INVESTMENT, Hamburg: Hamburgisches Welt-Wirtschafts-Archiv (HWWA),

Hamburg Institute of International Economics, 1 (2005).12 ECJ Judgment of 09 March 1999, C-212/97, Centros Ltd v. Erhvervsog Selskabsstyrelsen

[1999] ECR I-1459; ECJ Judgment of 16 December 2008, C-210/06, Cartesio Oktató ésSzolgáltató bt [2008]; ECJ Judgment of 30 September 2003, C-167/01, Kamer van Koophandel en Fabrieken voor Amsterdam and Inspire Art Ltd [2003] ECR I-10155; ECJ

Judgment of 26 March 2009, C-326/07, Commission of the European Communities v. Italian Republic [2009] ECR I-2291, Council Directive 88/361/EEC.13 Wolf-Georg Ringe, Domestic Company Law and the Free Movement of Capital: Nothing Escapes the European Court? 42 LRPS 7 (2008).14 Portfolio investment would then fall within the compass of free movement of capital.15 ECJ Judgment of 26 March 2009, C-326/07, Commission of the European Communitiesv. Italian Republic [2009], ECR I-2291, para.36.16 ECJ Judgment of 12 December 2006, C-446/04, Test Claimants in the FII Group Litigation v. Commissioners of Inland Revenue [2006] ECR-I-11753; ECJ Judgment of 26

March 2009, C-326/07, Commission of the European Communities v. Italian Republic

[2009] ECR I-2291; ECJ Judgment of 20 May 2008, C-194/06, Staatssecretaris van Financiën v. Orange European Smallcap Fund NV [2008] ECR I-3447; ECJ Judgment of 24

May 2007,C-157/05, Winfried L. Holböck v. Finanzamt Salzburg-Land [2007] ECR I-

11767.17 ECJ Judgment of 26 March 2009, C-326/07, Commission of the European Communitiesv. Italian Republic [2009] ECR I-2291.




| 53


“investments of any kind made by natural or legal persons which serve toestablish or maintain lasting and direct links between the persons

providing the capital and the undertakings to which the capital is madeavailable in order to carry out an economic activity...” while “the sharesheld by the shareholder enable him to participate effectively in themanagement of that company or in its control.”18 In Test Claimants inthe FII Group Litigation, the ECJ among other things affirmed that the

notion of direct investment involves (long) lasting economic links.19

This is opposed to the nature of portfolio investment as it is “theacquisition of shares on the capital market solely with the intention ofmaking a financial investment without any intention to influence themanagement and control of the undertaking.”20 Compared to somewhat

divergent opinions on portfolio investment under general internationalinvestment law, European law clearly sets their respective boundaries

through the institutional activism of the European Commission and the

European Court of Justice. Nevertheless, it should be borne in mind

that portfolio investments are shielded by the freedom of capital

movement as already indicated.

3.05. Flows of portfolio investments, despite their already mentioned

protection under European law, are not dependent on the quality of

insolvency laws for four reasons. First, portfolio investments, although

strongly influenced by the current market setting and the price induced

on paper in insolvency proceedings, will in most cases lack the

intention of a long-lasting activity. Second, most investors do not have

any impact on the business policy of the company they invested in,

either because the legal instrument does not allow for it, or the amountof shares owned is insignificant. There is also a lack of interest to

participate in the corporate governance, potentially leaving room for

the investor activism21 such as of institutional investors or so called

hedge funds.22 Third, relatively facile transferability of portfolio

investment instruments, such as promissory notes and bonds, may

incur no entitlement to the protection under certain jurisdictions as

18 Ibid , para. 35.19 ECJ Judgment of 12 December 2006, C-446/04, Test Claimants in the FII Group Litigation v. Commissioners of Inland Revenue [2006] ECR-I-11753, para. 180.20 ECJ Judgment of 28 September 2006, Joined Cases C-282/04 and C-283/04, Commission

of the European Communities v. Kingdom of the Netherlands [2006] ECR-I-9155.21 Marcel Kahan and Edward Rock, Hedge Funds in Corporate Governance andCorporate Control , 155 (5) UNIVERSITY OF PENNSYLVANIA LAW REVIEW 1079 (2007).22 For difference between the mentioned agents see Andrew Lo, Risk Management for Hedge Funds: Introduction and Overview (2001), available at:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=283308 (accessed on March 10, 2012)




54 |


l L a w

was stated in Fedax v. Venezuela judgment.23 Therefore, European

Union law or member states’ insolvency law has little impact on them

as some other potential benefits or problems are more obviously

associated with such instruments. Fourth, portfolio investments,

although theoretically being the entry form in helping indebted or

insolvent companies, are often excluded by default from favourable

investment protection treatment anchored in bilateral investment

treaties, because their withdrawals can precipitate financial crises. This

was the case in the Asian financial crisis.24

3.06. As for investors, the protection under a bilateral investment treaty

(BIT), the most common investment protection framework, can be

claimed only by natural persons with the nationality of either

contracting states. As for legal entities, the situation is a little morecomplicated since the traditional doctrine of seat theory or

incorporation may be warped by the real economic bond of the

company and the state of incorporation25 depending on the wording of

the BIT. This may give rise to serious complications in terms of

investment26 as well as European insolvency law which shall be

elaborated below. International investment law would prescribe the

investor to have a sufficient linkage to the country and as such predicts

to protect only such connections which are of a genuine character. This

argumentation, essentially coming from the illustrious Nottebohm27

case, clearly shows the interaction of international investment and

international law in general. The test of a genuine link attracts more

attention when the attribution of the state’s responsibility is in

question. But even when contested, the practice in generalinternational law has shown that a formal link is usually only barely

23 FEDAX N.V. v. The Republic of Venezuela, ICSID Case No.ARB/96/3, Award of 09

March 1998.24 MUTHUCUMARASWAMY SORNARAJAH, THE INTERNATIONAL LAW ON FOREIGN DIRECT

INVESTMENT , Cambridge: Cambridge University Press 197 (3rd ed. 2010).25 Saluka Investments B.V. v . Czech Republic, PCA Partial Award of March 17, 2006;

Yaung Chi Oo Trading Pte Ltd v. Government of the union of Myanmar, ASEAN Case no.

ARB/01/1, Award of March 31, 2003, 42 ILM 540 (2003); Aguas del Tunari v. Bolivia,

ICSID Case No.ARB/02/3, Decision on Respondent’s Objections to Jurisdiction of 21

October 2005.26

In Phoenix Action v. Czech Republic both combined: “Having fled from the Czech Republic and obtained Israeli nationality in 2002, Mr. Beňo created an Israeli company tobuy the two Czech companies he owned as a Czech citizen living in the Czech Republic, afterthe actions taken by the Czech Republic against these companies.” Phoenix Action Ltd. v.Czech Republic, ICSID Case No. ARB/06/5, Award of April 15, 2009, para.137.27 Nottebohm case (Liechtenstein/Guatemala) Judgment, ICJ 1955.




| 55


sufficient.28 When contemplating the nationality of the investor, Art.18

of TFEU abolishes the discrimination on grounds of nationality, due to

the binding standard of non-differential treatment to its nationals

within EU, and thus to a certain extent prevents such imbroglio in the

intra-European Union area.

3.07. In the case of Saluka v. Czech Republic,29 the petitioner claimed

safeguard of the investment under the Netherlands – Czech Republic

BIT, although the company incorporated under Dutch law, could be

considered solely a shell company with Japanese shareholders. This

case, representative of a current trend in investment forum shopping,

shows how investors are prone to the selection of more convenient

standards of investment protection. Although economically

understandable, this matter raises a number of political and socialissues. Future EU-wide articulate policy may ensure equal pan-EU

standard of protection for investors seated in Member States and it

may as well significantly prevent the regulatory race to the bottom.3031

Nonetheless, as far as the social policy guarantees are concerned,

fundamental social rights conflict with economic freedoms in the EU

internal market as has been recently discussed in the Viking Line32 and Laval 33 cases. These cases highlight the significant legal, financial and

demographic implications for investors as well as for populations from

both old and new Member States of the EU.34

28 International Law Association, General Public Law and International Investment Law

36 (2008).29 Saluka Investments B.V. v. Czech Republic, PCA-UNCITRAL Arbitration Rules; IIC

210, Award of 17 March 2006.30 Although the link between the regulatory race to the bottom on whole-national level

and increase in FDI has not been completely proved by studies, the race to the bottom is

quite probable if a country has a dominance of certain industry in its economy. Kevin

Gray, Foreign Direct Investments and Environmental Impacts – Is the Debate Over?,RECIEL 11 (3) 309 (2002).31 Not only may a regulatory gap imply a race to the bottom. The level of enforcement

may make the difference. David Wheeler, Racing to the Bottom? Foreign Investment and Air Pollution in Developing Countries, 10 (3) JED 240 (2001).32 ECJ Judgment of 11 December 2007, C-438/05, International Transport Workers’

Federation and Finnish Seamen’s Union v. Viking Line ABP and OÜ Viking Line Eesti [2007] ECR I-1077933 ECJ Judgment of 18 December 2007, 341/05, Laval un Partneri Ptd. v . v Svenska Byggnadsarbetareförbundet et al. [2007] ECR I-5751.34 Uladzislau Belavusau, The Case of Laval in the Context of the Post-Enlargement EC Law, 9 (12) GERMAN LAW JOURNAL, 2305 (2008).




56 |


l L a w

III. EU Insolvency Law Reforms and HarmonisationProcess

3.08. It is apparent that in the future, the protection of investment in EU law

has to be built on a more solid base. Although the European Union

indirectly offers substantial protection for investment, current

discussions35 show that there is a legitimate expectation for further

harmonisation, especially when it comes to the status of investor-state

arbitration and capital transfer guarantees. The resolution to the

conflict of intra-EU bilateral investment treaties and European law

should also offer equal investment protection to all EU nationals. This

is currently impossible due to their non-dirigible, yet patulous network

and the European investment framework is thus expected to bedistinctively harmonised and follow the fate of European Insolvency

Law with the introduction of Council Regulation (EC) No 1346/2000 of

29th May 2000 on Insolvency Proceedings (the Insolvency Regulation).

Nonetheless, the Regulation is far from flawless and it is expected to

have a facelift. This is due to the fact that the recent financial crisis and

the serious economic stagnation in the European Union Member States

stressed even more the need for European insolvency law reform. Based

also on the presumption that disparities between national insolvency

laws create competitive advantages or disadvantages and difficulties for

companies with cross-border activities, and that insolvency has an

adverse impact not only on the business concerned but also on the

economies of the Member States. The European Parliament has already

created a resolution with recommendations to the Commission oninsolvency proceedings in the context of EU company law. According

to the International Monetary Fund (IMF), experience has

demonstrated that reform in this area can play a major role in

strengthening a country’s economic and financial system.36

3.09. Attracting FDI is commonly placed high on the agendas of

policymakers and is presented to the public as highly desirable due to

the immediate employment opportunities as well as to less tangible

economic improvements such as technology and knowledge spillover,37

35 Nikos Lavranos, New Developments in the Interaction between International Investment Law and EU Law 9 LAW & PRACTICE OF INTERNATIONAL COURTS AND

TRIBUNALS, 409-441 (2010).36

Orderly & Effective Insolvency Procedures, International Monetary Fund, LegalDepartment 1 (1999), available at: http://www.imf.org/external/pubs/ft/orderly/ (accessed

on December 22, 2012).37 Emma Xiaoqin Fan, Technological Spillovers from Foreign Direct Investment − A Survey, Development Bank, 18 (2002), available at: http://www.adb.org/Documents/

ERD/Working_Papers/wp033.pdf (accessed February 15, 2012)




| 57


increased productivity and competitiveness of domestic industries.38

Although the positive effects of FDI are massively dependent on a

number of factors which are not universal,3940 national policies are of

immense significance when considering FDI by investors. In

contemplating the placement of investment in a specific country,

investors typically look at the difficulty of starting business there41 and

other related variables.42 It is desirable to avoid uncertainty concerning

FDI policy since it correlates with a low ratio of investment. 43 Empirical

studies naturally affirm that the effective implementation of laws

related to FDI is strongly associated with high levels of FDI stock. 44 The

increase in transnational insolvencies is naturally linked to FDIs as a

form of investment and arises from the growth in international trade as

such.45

The complexity of globalization and the proliferation ofinternational business presence facing the bleak insolvency proceedings

can be illustrated in many cases, e.g. Barings, or BCCI46 with its offices

38 Beata Smarzynska, Does Foreign Direct Investment Increase the Productivity of Domestic Firms?, in I SEARCH OF SPILLOVERS THROUGH BACKWARD LINKAGES (2923) World

Bank Policy Research Working Paper 13 (2002).39 Maria Carkovic and Ross Levine, ‘ Does Foreign Direct Investment Accelerate EconomicGrowth? ’ University of Minnesota 13 (2002).40 For the determinants of the correlation of economic growth and FDI see: Ewe-Ghee

Lim, Determinants of, and the Relation Between, Foreign Direct Investment and growth: A Summary of Recent Literature, 01/175 IMF W ORKING PAPER (2001).41 Typical factors considered: (i) The openness to foreign investment by sector;

(ii) quality of institutions related to resolving investment disputes; (iii) time, procedures

and rules required to set up wholly foreign-owned subsidiaries. Swarnim Wagle, Investingacross Borders with Heterogeneous Firms – Do FDI-specific Regulations Matter? The World

Bank International Trade Department, (5914) POLICY RESEARCH W ORKING PAPER 2 (2011).42 (i) Potential financial risks and benefits to the investor, (ii) the stability of an

investment environment, (ii) the availability of appropriate human capital, (iii) access to

effective enforcement procedures, (iv) embedded personal and professional relationships

and others.

Susan D. Franck, Foreign Direct Investment, Investment Treaty Arbitration and the Rule of Law, 19 MCGEORGE GLOBAL BUSINESS AND DEVELOPMENT LAW JOURNAL 337, 339 (2007),

available at: http://ssrn.com/abstract=882443 (accessed on February 15, 2012). 43 Elizabeth Asiedu, On the Determinants of Foreign Direct Investment to DevelopingCountries: Is Africa Different? 14 (2011), available at SSRN: http://papers.ssrn.com/sol3/

papers.cfm?abstract_id=280062 (accessed on February 15, 2012).44 Swarnim Wagle, Investing across Borders with Heterogeneous Firms – Do FDI-specific Regulations Matter?, World Bank International Trade Department, 5914 POLICY RESEARCH

W ORKING PAPER 44 (2011).45 Samuel Bufford and others, Bench Book on International Insolvency for United States

Judges, Washington D.C.: Federal Judicial Center 2 (2001) available in electronic format:

http://www.fjc.gov/public/pdf.nsf/lookup/IntlInso.pdf/$file/IntlInso.pdf (accessed on

February 15, 2012).46 BCCI Holdings (Luxembourg) S.A.




58 |


l L a w

in more than 73 countries ultimately hampering the effective recovery

of a creditor’s claims.47 Conventional approaches may not effectively

ensure maximized value available for distribution to creditors and it

may not limit systemic costs adequately.48 A lengthy insolvency period

may also have very damaging spillover impacts, especially if the

company or institution actively trades in global markets.49 More than

ever, in cases of financial trouble, effective cross border insolvency

proceedings become an essential need for an investor.

3.10. Recognizing the fact that cases of insolvency with cross-border

implications may affect the proper functioning of the internal market, 50

the EU has endeavoured to harmonise its insolvency law protection of

investors against loss. The European Bank for Reconstruction and

Development51

(EBRD) emphasises that the current financial crisishighlights the fact that credit automatically flows to places where

creditors are fairly treated and that the modern insolvency regime

represents a cornerstone of sustainable economic development.

However, EU policymakers are also aware of the fact that establishing

the right balance for protection of a creditor’s rights at both the

international and European level is complicated. Despite the existence

of EU insolvency directives and regulations, there still exist debtor-

friendly jurisdictions among the EU Member states. The Insolvency

Regulation applies to an insolvency proceeding whether the debtor is a

natural person or a legal person, a trader or an individual. Insolvency

proceedings concerning credit institutions, insurance undertakings,

investment undertakings holding funds or securities for third parties

and collective investment undertakings are covered by Directive2001/24/EC of the European Parliament and of the Council on the

Reorganisation and Winding-up of Credit Institutions. This represents

47 Angelos Kanas, Pure Contagion Effects in International Banking: The Case of BCCI’s Failure, 8 (1) JOURNAL OF APPLIED ECONOMICS 103 (2005).48 Richard J. Herring, BCCI & Barings: Bank Resolutions Complicated by Fraud andGlobal Corporate Structure 32, available at: http://www.iadi.org/Business%20Plans/

Cross_Border_Barings_BCCI_Paper.pdf (accessed on December 17, 2012)49 Ibid. 50 European Union, Insolvency Proceedings: Summaries of EU Regulations, available at:

http://europa.eu/legislation_summaries/justice_freedom_security/judicial_cooperation_in

_civil_matters/l33110_en.htm (accessed on February 15 2012).51

European Bank for Reconstruction and Development is the first international financialinstitution of the post-Cold war period. The EBRD is the only transition bank and today it

works in 29 countries from central Europe to central Asia financing projects, primarily in

the private sector, that serve the transition to market economies and pluralistic democratic

societies. For more information see: http://www.ebrd.com/pages/about/history.shtml

(accessed on January 02, 2013).




| 59


a special piece of legislation that should be implemented in national

jurisdictions of the EU Member States.

3.11. In spite of the fact that the Insolvency regulation is entirely and directly

applicable to Member states, there still exist substantial differences in

the national insolvency regimes. This is underlined by the adoption of

the coordinated universality principle which results in a rather chaotic

practice of interpreting the Centre of Main Interest (COMI).52 This

confusion may play an important role in choosing the destination for

FDI. In the past, EBRD demonstrated that a country’s likelihood to

attract foreign direct investments and bank credit grows directly with

the increase of effectiveness of that country’s insolvency legislation.53

One of the initial aims of the Insolvency regulation was to improve the

efficiency and effectiveness in cross-border insolvencies and it isgenerally accepted that the contribution of this regulation was

enormous. However according to Viviane Reding, the European

Commissioner for Justice, Fundamental Rights and Citizenship, ten

years after its entry into force, it is expected that the regulation will

need a facelift.54 Of course, the quality of the Insolvency regulation does

not only influence decisions of investors in the process of FDI. The

stability of internal market and progress in overall European business

and economic integration are the main concerns of relevant European

bodies. Therefore, the European Parliament already published a report

with recommendations to the Commission on insolvency proceedings

in the context of EU company law 55 and, according to the explanatory

statement the Legal Affairs Committee suggested a four-fold structure

of future legislative initiatives. These include inter alia improvement ofthe cooperation of liquidators and cooperation in general on an

administrative level as well as creation of an EU Registry for insolvency

52 The interpretation of COMI varies from considering the facts of the nationality of

directors’ nationality to the source code of computer programs.

Bob Wessels, The Changing Landscape of Cross-border Insolvency Law in Europe, (12)

JURIDICA INTERNATIONAL 116, 119 (2007).53 European Bank for Reconstruction and Development, Core Principles for an

Insolvency Law Regime (Last updated 21 May 2010), available at:

http://www.ebrd.com/pages/sector/legal/insolvency/core_principles.shtml (accessed on

February 15, 2012).54 Bob Wessels, Revision of the EU Insolvency Regulation: What type of facelift?, in

PROCEEDINGS FROM THE INTERNATIONAL CONFERENCE “THE FUTURE OF THE EUROPEAN

INSOLVENCY REGULATION,” Amsterdam, the Netherlands, 28 April 2011, 92 (2011),available at: http://www.eir-reform.eu/uploads/papers/PAPER%205-1.pdf (accessed on

December 22, 2012).55 Report of the European Parliament with recommendations to the Commission on

insolvency proceedings in the context of EU company law (2011/2006 INI) from 17th

October 2011.




60 |


l L a w

cases. The principle aim of future harmonisation should be the more

equitable treatment of creditors within the internal market and

diminishing legal uncertainty among liquidators.

3.12. Nevertheless, the most discussed issue concerning the Insolvency

Regulation has proved to be the legal institute of the COMI. This is not

due to its mere existence, but rather to the potential of the change of

jurisdiction which may serve as an abuse of law. COMI was introduced

into the Regulation as a determinant for the jurisdiction based on the

presumption that the execution of the insolvency proceedings should

be carried out in a place to which creditors are accustomed to and

where the debtor’s transactions with the creditors took place. Similarly

to the investors’ behaviour, the intensity of forum shopping surfaced

soon after that.56

In reality the insolvency proceedings under theRegulation proved to be chaotic57 which is to the detriment of EU

investment attractiveness.

3.13. When looking at the legal basis for foreign direct investment activities

under EU law, interaction between essential freedoms of an internal

market comes into question. Since investment is a cross-border activity

which triggers capital flow and additionally links investors not only to

their home countries, but also to the host states, the free movement of

persons and capital may shield them. The case law 58 regarding the

difference between the two closely interactional freedoms explicitly sets

forth that the decisive factor for granting protection under the freedom

of establishment necessarily requires a definite influence or control of

the company’s decisions and its activities, while allowing the investor to

participate in management of the company involves the free movementof capital.59

56 Wolf-Georg Ringe, Forum Shopping under the EU Insolvency Regulation, 33 OXFORD

LEGAL STUDIES RESEARCH PAPER 3 (2008), available at SSRN: http://ssrn.com/

abstract=1209822 (accessed on January 2, 2013).57 Federico Mucciarelli, Optimal Allocation of Law-Making Power over Bankruptcy Lawin “Federal” and “Quasi-Federal” Legal Systems, Is There a Case for Harmonizing orUnifying Bankruptcy Law in the E.U.?, 11-28 NYU LAW AND ECONOMICS RESEARCH PAPER

26 (2011), available at: http://ssrn.com/abstract=1921374 (accessed on January 2, 2013).58 ECJ Judgment of 9 March 1999, C-212/97, Centros Ltd v. Erhvervsog Selskabsstyrelsen

[1999] ECR I-1459; ECJ Judgment of 16 December 2008, C-210/06, ECJ Judgment of 16

December 2008, Cartesio Oktató és Szolgáltató bt [2008]; ECJ Judgment of 30 September

2003, C-167/01, Kamer van Koophandel en Fabrieken voor Amsterdam and Inspire Art

Ltd . [2003] ECR I-10155; ECJ Judgment of 26 March 2009,C-326/07, Commission of the European Communities v. Italian Republic [2009] ECR I-2291, Council Directive

88/361/EEC (of 24 June 1988) for the implementation of Article 67 of the Treaty

(88/361/EEC) .59 Wolf-Georg Ringe, Domestic Company Law and the Free Movement of Capital: Nothing Escapes the European Court? 42 LRPS 7 (2008).




| 61


3.14. Under Intra-EU foreign direct investment the two freedoms interact to

an appreciable extent.60 As for the exercise of the fundamental

freedoms mainly relevant to the investment activities –the freedoms of

establishment and free movement of capital − the differential test to

distinguish them was adopted in Cadbury’s Schweppes61 where

permanent presence of the company in the host state as well as pursuit

of a genuine economic activity in the host state must be both fulfilled

for Art.56 to apply. The Stauffer case62 further confirmed the

distinguishing factors for determination between freedom of

establishment and movement of capital. Differentiation between these

two freedoms may bear significant tax treatment impacts.63

3.15. Interestingly, it is the spreading legal framework of the European

freedoms that underpins the controversy of the intentional shift ofCOMI into a favourable jurisdiction. Actually, the freedom of

establishment as such protects potential shifts of COMI. Although

companies cannot just choose the law system which suits them best

irrespective of their seat location, the possibility to move their real or

actual head offices from one EU Member State to another may become

substantially troublesome if it is not attended by reincorporation and a

change in the applicable company law.64

IV. Comparative Perspective – Legal Systems of theUnited Kingdom and Slovakia

3.16. Despite the notable reforms of the Slovak legal environment towards

the internationally acceptable level that were introduced in recent years, there is still room for improvement in some areas crucial to the

business environment and foreign investments. This part of the article

aims to compare certain characteristics of insolvency proceedings

related to the transparency, effectiveness, familiarity to stakeholders,

60 ECJ Judgment of 26 March 2009, C-326/07, Commission of the European Communitiesv. Italian Republic [2009] ECR I-2291, para. 36.61 ECJ Judgment of 12 September 2006, C-196/04, Cadbury Schweppes plc and CadburySchweppes Overseas Ltd v. Commissioners of Inland Revenue [2006] ECR-I-7795, para. 54.62 “…in order for the provisions relating to freedom of establishment to apply, it is generally necessary to have secured a permanent presence in the host Member State and,where immovable property is purchased and held, that property should be actively

managed. …” ECJ Judgment of (14 September 2006),C-386/04, Centro di MusicologiaWalter Stauffer [2006] ECR I-8203, para. 19.63 Art.65 of the Treaty on the Functioning of the European Union.64 Horst Eidenmüller, Abuse of Law in the Context of European Insolvency Law 11 (2009),

available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1353932 (accessed on

March 15, 2012).




62 |


l L a w

pre-planning, level of court involvement, and employee and creditor

protection in the Slovak jurisdiction with the jurisdiction of the United

Kingdom of Great Britain and Northern Ireland. Within the EU scope

of national insolvency systems, Slovakia represents a developing

insolvency regime, while the UK business law is generally considered to

be one of the most attractive business jurisdictions in the world.65 It is

apparent that the differences between the Slovak and UK jurisdictions

are considerable, including, but not limited to, the overall business

environment, practices of entrepreneurs, or the legal systems (e.g.

common law in the United Kingdom versus civil law in Slovakia).

Nevertheless, Slovak lawmakers intend to reconstruct the Slovak law so

that its quality reaches the level of a legal system of a modern,

democratic and developed country. In 2006 Slovakia adopted the newBankruptcy and Restructuring Act (the Bankruptcy Act),66 which

introduced a flexible and effective insolvency law system, a more

“business-friendly” solution, and as such it lowered the investment risk.

However, it is still common practice in Slovakia that a company is

declared insolvent at the stage when it has no assets and money. It

would be very appropriate to grant creditors even more protection at

an earlier point, which may also increase the probability of the firm’s

further existence and increase the director’s obligations. Slovak

lawmakers also realised the shortcomings of this insolvency law and

thus the last more substantial amendment to the Bankruptcy Act,

effective as of 1st of January 2012, also contains several legal measures

for earlier launching of the insolvency proceedings.

3.17. Looking at the responsibility for the early launching of insolvencyproceedings, it can be noted that Slovak law recognises the

responsibility (both criminal and civil) of the statutory bodies to

commence insolvency proceedings but these provisions are not very

effective. In Slovakia the failure of managers and corporate directors

constitutes criminal liability but in practice the directors are rarely held

liable. The UK Insolvency Act contains provisions on creditor protection

which cannot be found in Slovak insolvency law, including lack of trust

recognition and detailed provisions on directors’ liability in the case they

breach their statutory duties (for example, fraudulent or wrongful

65 In the last UK Attractiveness Survey 2012 from Ernst and Young, the UK retained its

long-standing position at the top of European foreign direct investment rankings, despite 7%decrease of inward investment. Germany occupied the second place with a positive outlook of

further growth. Ernst and Young. UK Attractiveness Survey 2012 (2012), available at:

http://www.ey.com/UK/en/Issues/Business-environment/2012-UK-attractiveness-survey

(accessed November 17, 2012).66 Slovak Act No. 7/2005 Coll.




| 63


trading.67) Slovak law as a civil law jurisdiction does not recognise the

institute of trust. The main idea of trust as a common law concept is

based on the principle that assets can be legally held on trust by a subject

that is different from the economic owner of these assets. The result is

that the trustee holds the assets for one or more beneficiaries who do not

bear the risk of insolvency on the part of the trustee. This separation of

legal ownership from economic ownership creates a situation

unrecognised by the Slovak or other civil law systems.68

3.18. The possibility to separate assets from the personal estate of the

trustee, particularly in cases of the trustee’s insolvency has a positive

influence on commercial relationships and business confidence because

the trust assets are not available for the trustee’s general body of

creditors. On first sight, it is obvious that obtaining a high level ofprotection for the investor against the loss of their investment is not

automatic, nor as effective in Slovakia as it is in the UK. To have at least

some guarantee of not losing your entire investment, one has to be at

least in the position of a secured investor. Every commercial investor is

interested in making a profit from their investment but in many cases

the first fundamental concern is to obtain protection against loss of the

investment and therefore a legal framework for secured transactions is

a key requirement in creating an investor-friendly climate.69 The

programme of secured transactions reform in Slovakia, effective since

2003, has introduced an advanced framework for secured credit in

Europe and has several benefits.70 These include quick, simple, and

flexible legal regulation, which can also cover fluctuating pools of assets,

future debt security, registration in a publicly available register, etc…71

67 Where a company is in liquidation, a liquidator can apply to the court to have a person

who is or has been a director declared personally liable to make such contribution to the

company’s assets as the court thinks proper. (Insolvency Act 1986, Section 214). A defence

is, however, available if the respondent director shows that, having reached the state of

knowledge referred to, he took every step with a view to minimising potential loss to the

company’s creditors that ought to have been taken as stated in Section 214 (4) (b).68 See Reinout Wibier, Can a Modern Legal System Do without the Trust ?, 25 TILBURG

LAW SCHOOL RESEARCH PAPER (2010), available at: http://ssrn.com/abstract=1677810

(accessed on January 2, 2013).69 John Simpson and Jan-Hendrik Rover, Model Law on Secured Transactions, EBRD 1

(1994). available at: http://www.ebrd.com/downloads/legal/secured/modellaw.pdf

(accessed on January 20, 2013).70

See EBRD, Commercial Laws of the Slovak Republic −An Assessment by the EBRD(2009), available at: http://www.ebrd.com/downloads/sector/legal/slovak.pdf (accessed on

June 15, 2012).71 See EBRD, Analysis of the current secured transactions legal regime in Slovakia,

available at: http://www.ebrd.com/downloads/legal/facts/slksur.pdf (accessed on June 15,

2012).




64 |


l L a w

3.19. In addition, the UK insolvency regime is more accommodating to

stakeholders than any other national insolvency regime and that is why,

for example the US stakeholders may prefer to manage and restructure

the European interests through the UK, where the respective judiciaries

have co-operated in the restructurings.72 Unlike the Slovak Republic,

the UK also allows more pre-planning than the Slovak jurisdiction,

which does not allow for pre-pack administration. However, this may

not be viewed as a benefit for unsecured creditors since their legitimate

interests can be seriously harmed in the process of a pre-packed

administration. In a pre-pack administration the streamlined version of

the administration procedure is realised. It involves the imposition of a

moratorium on the enforcement of claims and repossession of security,

and the appointment of an administrator who takes over running of thecompany.73 Unlike in the Slovak Republic, an administrator in the UK

can be appointed not only by the court but also on the out-of-court

basis by either a holder of a qualifying floating charge or by the

company itself. Once appointed, considerable powers are delegated on

the administrator in order to allow flexibility in achieving the

procedure’s purposes. At the same time, the statutory framework is

designed to ensure that the office-holder remains accountable to those

with a tangible interest and that decision making is transparent.74 With

regard to protection of the unsecured creditors, the pre-pack

administration process is often criticized, mostly because of unsecured

creditors’ inability to provide effective check of the administrators’

actions. Nevertheless, according to some practitioners the pre-packs

might be effective, as under certain circumstances they improve returnsto creditors or help to preserve the business of a failed company, hence

saving jobs.75

72 Louise Webb and Matthew Butter, Insolvency proceeding: Shopping for the best forum,(2009), available at: http://www.practicallaw.com/8-500-7219 (accessed on January 14,

2013).73 John Armour, The rinse of the “pre-pack”: Corporate restructuring in the UK and

proposals for reform, Sydney, Ross Parsons Centre, 2012.74 Ibid. 75 The Insolvency Service, How to complain about misuses of the pre-pack administration process, http://www.bis.gov.uk/insolvency/insolvency-profession/professional%20conduct/

how-complain-against-an-ip/pre-packs-complaints-process (accessed on January 14,

2013).




| 65


V. Concluding Remarks

3.20. Since the magnitude of changes in the law is identified as highly

relevant for investment decisions,76 it is in Slovakia’s as well as many

other EU countries’ best interest to enhance their legal systems

especially considering the lack of substantial FDI flow recovery in the

years 2009-2011.77 What is more, the benefits stemming from these

changes will not only contribute to the easier flow of foreign capital but

they will advantage national businesses as well. Naturally, if insolvency

proceedings are even better harmonized on a supranational level, as

planned with the amendment of the Regulation by the European

Parliament,78,79 the integral block of EU countries will increase its

competitiveness in attracting FDI.

3.21. Despite significant contribution to the convergence of national

insolvency proceedings, imperfections of national laws and

questionable interpretation of the European Insolvency Regulation still

leaves room for the further refinement of existing instruments. Current

efforts for deeper harmonization of national insolvency regimes

through European Union law may accordingly contribute to the

investors’ expectations of a swift and effective execution of the

insolvency regime.

3.22. Learning from the United Kingdom’s legal experience, in order to

accelerate insolvency proceedings so that that insolvency law fully

assists the desired flow of investments, better protection of creditors at

an earlier stage, less corruption, minimisation of speculations and

fraudulent acting would enhance the effectiveness and overallattractiveness of developing jurisdictions in the eyes of foreign

investors.

| | |

76 Matthias Busse and Carsten Hefeker, Political Risk, Institutions and Foreign Direct Investment , 315 HWWA DISCUSSION PAPER 25 (2005), available at: www.wiwi.uni-

siegen.de/ewp/research/documents/hefeker/315.pdf (accessed on January 02, 2013).77 In 2009 Slovak inward FDI went sharply down from almost 5.000 million dollars to

minus 200. UNCTAD.78 Report of the European Parliament with recommendations to the Commission on

insolvency proceedings in the context of EU company law (2011/2006 INI) from 17th

October 2011.79 For further notes on the reform Bob Wessels, The Changing Landscape of Cross-border Insolvency Law in Europe, XII JURIDICA INTERNATIONAL 119 (2007).




66 |


l L a w

Summaries

DEU [ Die Steinchen fügen sich zum Mosaik: Harmonisierung des

europäischen Insolvenzrechts als Methode zur Anwerbung

ausländischer Direktinvestitionen]

Die Teilnahme am Insolvenzverfahren lässt sich gewissermaßen als eine Art Investitionsauftritt auf einem ausländischen Markt verstehen,ebenso wie als eine Form der Abwicklung einer Handelsgesellschaft; vondaher widmet sich der vorliegende Beitrag der Wechselbeziehungzwischen der Qualität des Insolvenzrechts und den ausländischen

Direktinvestitionen in der Europäischen Union. Ausländische Direktinvestitionen mögen zwar ein Schlüsselaspekt des EU- Binnenmarkts sein – in den europäischen Vertragswerken definiert sind

sie aber nicht. Analog dazu gilt, dass ungeachtet der Harmonisierungder Insolvenzvorschriften auf der Ebene der einzelnen Staaten nochimmer grundlegende Unterschiede bestehen. Neben einer Analyse des

EU-Rechts nimmt der vorliegende Beitrag eine komparative Analysedieser Unstimmigkeiten vor, und zwar in Form der Konfrontation zweierdeutlich verschiedener Rechtssysteme unter den Mitgliedstaaten der EU– die Rechtsordnung des Vereinigten Königreichs einerseits, welche demUnternehmertum traditionell wohlgesonnen ist, und die einedynamische Entwicklung durchlaufende Rechtsordnung der Slowakeiandererseits. Das hier verfolgte Ziel, in Form des Ringens um eineVervollkommnung der nationalen Rechtsvorschriften zur Insolvenz,hätte durchaus mehr Aufmerksamkeit verdient, denn der von der

fortdauernden Finanzkrise verursachte Rückgang dervolkswirtschaftlichen Leistungsfähigkeit hat zu einer steigenden Zahlvon Insolvenzverfahren geführt und steht ursächlich hinter dem

Austrocknen der Investitionsflüsse.

CZE [Spojování bodů: harmonizace evropského insolvenčního práva coby

způsob, jak přilákat přímé zahraniční investice]

Účast v insolvenčním řízení lze považovat za určitý způsob vstupuinvestice na zahraniční trh, jakož i za formu zrušení obchodní

společnosti; z tohoto důvodu se tento příspěvek věnuje vztahu mezikvalitou insolvenčního práva a přímými zahraničními investicemiv Evropské unii. Přestože jsou přímé zahraniční investice klíčovýmaspektem vnitřního trhu EU, nejsou v evropských smlouvách definovány.

Podobně platí, že přestože jsou předpisy o insolvenci harmonizovány,existují na úrovni jednotlivých států stále podstatné rozdíly. Vedlerozboru práva Evropské unie jsou tyto nesrovnalosti analyzoványkomparativním způsobem v podobě konfrontace dvou značně odlišných

právních řádů členských států EU – právního řádu Spojeného království,




| 67


který je tradičně vstřícný vůči podnikatelské sféře, a dynamicky serozvíjejícího právního řádu Slovenska. Cíl v podobě snahy o zdokonalenínárodních právních předpisů o insolvenci by si zasloužil více pozornosti,

protože pokles výkonnosti ekonomiky, způsobený trvající finanční krizí,zvýšil počet insolvenčních řízení a je příčinou utlumení toků investic.

| | |

POL [ Łączenie punktów: harmonizacja europejskiego prawa

upadłościowego jako sposób na przyciągnięcie bezpośrednich

inwestycji zagranicznych]

Niniejszy artykuł zajmuje się zależnością między jakością prawaupadłościowego a bezpośrednimi inwestycjami zagranicznymi w Unii

Europejskiej. Rozbieżności między prawem europejskim i krajowymi porządkami prawnymi zostały tu przeanalizowane metodą porównawczą, gdzie przeciwstawiono sobie dwa znacząco różne porządki prawne krajów członkowskich UE – porządek prawny Wielkiej Brytanii, tradycyjnie przychylny wobec sektora biznesowego, idynamicznie rozwijający się porządek prawny Słowacji.

FRA [ Deux éléments liés: l’harmonisation du droit de l'insolvabilité et

l’encouragement des investissements étrangers directs dans l’Union

européenne]

La présente contribution examine le lien entre la qualité du droit del’insolvabilité et les investissements étrangers directs dans l’Unioneuropéenne. Les disparités entre le droit européen et les droits nationaux

y sont analysées de manière comparative dans une confrontation entredeux droits d’États membres de l'UE divergeant considérablement − ledroit anglais, traditionnellement favorable aux entreprises et le droit

slovaque qui se développe activement.

RUS [Соединение точек: гармонизация европейского

законодательства о несостоятельности (банкротстве) как

способ привлечения прямых иностранных инвестиций]

В статье рассматривается взаимосвязь между качеством законодательства о несостоятельности (банкротстве) ипрямыми иностранными инвестициями в странах ЕвропейскогоСоюза. Расхождения между европейским правом и национальными

правовыми порядками анализируются сравнительным способом ввиде противостояния двух очень разных правовых порядковгосударств-членов ЕС – правового порядка Соединенного

Королевства, который характеризуется традиционным




68 |


l L a w

дружественным подходом к предпринимательской сфере, идинамично развивающегося правового порядка Словакии.

ESP [Conexión de puntos: armonización de la ley de insolvencia a nivel

europeo como una forma de atraer inversión extranjera directa]

Este artículo analiza la relación entre la calidad de la ley de insolvencia y la inversión extranjera directa en la Unión Europea. Las discrepanciasentre la legislación europea y los sistemas jurídicos nacionales seanalizan mediante el método comparativo a través de la confrontaciónde dos sistemas jurídicos muy diferentes de los Estados miembros de laUE – el sistema jurídico del Reino Unido, tradicionalmente respetuosocon el entorno empresarial, y el sistema jurídico de desarrollo dinámico

de Eslovaquia.

| | |