Bronze Medal Winner Shuaidong Yan, Renmin University China Safeguards-in-Possession
Cross-border insolvency( CBI) is often explained through harmonisation instruments. These instruments remain essential, but they do not fully explain how cross-border coordination is produced in practice. While jurisdictions increasingly converge on the fundamental principles and values of insolvency law, they continue to diverge, and sometimes conflict, in how those principles are implemented and which objectives they prioritise. Controversies over debt discharge, third-party releases, and other issues still persist. Why do these controversies persist within an increasingly coordinated framework?
The paper suggests that part of the answer lies in the operation of safeguards. Mechanisms such as sufficient connection for jurisdiction, the Rule in Gibbs, public policy exceptions, and the no-worse-off test for third-party releases are traditionally understood as constraints or exceptions to CBI cooperation. Yet practitioners routinely invoke, negotiate, contest, and sometimes circumvent them. In practice, these mechanisms operate not merely as limits on coordination, but as governance devices that actively shape how coordination is structured and implemented.
Drawing on the historical development of CBI and more than 400 cases, the paper identifies a broader shift from a“ distributional paradigm” to an“ operational paradigm.” As CBI increasingly focuses on preserving enterprise value and coordinating complex global restructurings, safeguards have become instruments of ongoing engagement rather than static legal boundaries.
To capture this dynamic, the paper introduces“ Safeguards-in-Possession”( SIP). SIP focuses on how safeguards are deployed, interpreted, and contested by participants in CBI practice. In a single restructuring, for example, sufficient connection may support jurisdiction at the outset, the Rule in Gibbs may become relevant to the compromise of claims, and public policy may arise at the recognition stage. Different safeguards emerge at different points of the process and become available to different actors.
The SIP framework rests on two co-equal( protective and coordinative) functions of safeguards and identifies three intervention factors( structural, procedural, and factual) that shape how safeguards operate and with what effect. By organising these elements into a mapping structure, the framework provides a way to anticipate how safeguards may operate and where contestation is likely to emerge.
The paper’ s broader insight is that fragmentation and coordination need not be understood as opposites. Actors intervene, rules are tested, and outcomes are recalibrated. Through these interactions, an operational equilibrium may emerge. Modified universalism is therefore not displaced by safeguards; rather, it is continuously operationalised through their deployment and contestation, allowing the system to adapt to increasingly complex forms of CBI.
The paper thus reframes safeguards from passive limitations on cross-border cooperation into dynamic instruments through which coordination itself is negotiated and sustained. An increasingly important question in CBI is therefore not simply whether safeguards constrain cooperation, but who engages them, how they are engaged, and with what systemic consequences.
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