activity. These ties are essential for ensuring that recognition aligns with the broader goals of cross-border insolvency regulation.
Second, replacing COMI with a private ordering mechanism, such as the ' Commitment Rule’, undermines a core principle of the MLCBI: modified universalism. The notion that the debtor and its main creditors are best positioned to select the lex fori concursus conceals a selective forum shopping practice that benefits only a few jurisdictions while jeopardizing the ideal of universalism. Importantly, the MLCBI is not an insolvency regulation and was not intended to govern the rights of creditors and debtors. Instead, it offers a middle ground by promoting cooperation among jurisdictions. And modified universalism is not a reconfigured version of universalism; rather, it represents a pragmatic and realistic acknowledgment that no country will relinquish its sovereignty and blindly enforce foreign judgments. It is an ideal of universalism permeated by territorial considerations, recognizing that diverse social and political factors must be weighed in insolvency proceedings. In other words, insolvency is not simply a mechanism for the collective enforcement of debts. Countries commit to UNCITRAL texts based on the belief that they will be treated equally and play an active role in managing cross-border insolvency cases, without compromising their sovereignty. However, adherence to the MLCBI heavily depends on courts’ willingness to recognize foreign judgments and cooperate with authorities in other countries. For a developing country that has recently adopted the MLCBI, such as Brazil, a forum selection clause relegates these nations to mere ' rubberstamp ' jurisdictions, passively endorsing decisions made by foreign courts while sidelining their own social policies. As initially noted by Ian Fletcher 6, the predominant
6
FLETCHER, Ian F. Insolvency in Private International Law. 2Nd edition. Oxford University Press, 2011, p. 13( stating that:“ The more usual approach [ of territorialism ] however has been one whereby the State approach of territoriality allows its own bankruptcy law to extend across borders while denying the effects of foreign decisions on local assets of the debtor. This reflects a parochial and uncooperative attitude. Only in theory does the ' Commitment Rule ' or similar contract-based frameworks appear to support a principle of modified universalism. In practice, however, his private ordering mechanism fosters a unilateral viewpoint dictated by a single jurisdiction selected by private actors, failing to account for the social policies that impact other stakeholders.
This mechanism exacerbates the issues inherent in pure universalism— an idealistic and unrealistic framework— but, by centralizing judicial power solely based on a private selection clause, it creates a downside effect akin to territorialism. The privately chosen court may feel empowered globally because the main assets are located abroad; however, as a privately selected forum, it is likely to be less willing to cooperate with foreign jurisdictions. The commitment rule is a contract-based theory; however, it departs from the fundamental principle of unanimous consent and tends to favor the forum chosen by the debtor or a few influential creditors.
Third, the main proceeding should be ascertained by creditors, as it primarily dictates the choice of applicable insolvency law. The Commitment Rule departs from independent and objective criteria, increasing legal uncertainty, as powerful creditors can pressure
regards its own, domestic bankruptcy laws as producing universal effects, particularly it the debtor ' s relationship with the country is a close one which enables the case to be classified as a ' domiciliary ' proceeding. On the other hand, the notion of territoriality is applied towards foreign proceedings involving debtors with property or other interests which lie within the jurisdiction of the State in question: by denying the capability of the foreign proceedings to produce any effects regarding that part of the debtor ' s patrimony, the way is left open for local actions to be taken by any party with standing to exercise rights over it.”. continued on page 38
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