Universalism in Insolvency Proceedings and the Common Law

This article critically examines the principle, articulated by Lord Hoffmann in leading cases, that universalism in insolvency proceedings is the golden thread of the common law. This principle suggests that there should be a unitary bankruptcy proceeding in a bankrupt's 'home' jurisdiction that applies universally to all the bankrupt's assets and which receives worldwide recognition. The article argues that the principle is not a practical reality in the common law and should not influence the interpretation of the international insolvency agreements to which the UK is a party. It suggests that the common law, instead of reflecting a universalist ideal, has steered a pragmatic middle course that owes more to realpolitik than to principle. This is not surprising given that vital national policies are often at stake in insolvency, and given the mishmash of sometimes competing principles at the heart of the subject such as encouraging the prompt payment of debts, adjustment of prior transactions, restoring the status quo ante, investigating past misconduct and debtor and business rehabilitation.