Cross-border bankruptcy, a complex and evolving area of international law, has gained significant attention in recent years due to the increasing globalization of economies and the rise of multinational corporations. As businesses operate across borders, the need for a coherent and efficient legal framework to address insolvency proceedings involving multiple jurisdictions has become paramount. Modified universalism has emerged as a leading principle in this context, offering a balanced approach to handling cross-border bankruptcy claims. This article explores the development of cross-border bankruptcy in international law, focusing on the principles of modified universalism and its transition from a theoretical concept to an emerging international custom. Modified universalism embraces principles in the cross-border bankruptcy proceeding, which comprise efficiency, coherence, minimum exceptions, jurisdiction of the foreign main proceedings state (center of the debtor’s main interests) and the sovereign supervision of the receiving state (state which approves recognition of a foreign proceeding) in handling cross-border bankruptcy claims. The purpose of this article is to answer to the question of what is the perspective of the development of cross-border bankruptcy in international law? The findings suggest that the modified universalism has turned from a "mere theory" into an "emerging international custom" as a source of the main source of international law.Modified universalism is a legal framework that seeks to harmonize cross-border bankruptcy proceedings by balancing the interests of efficiency, coherence, and sovereignty. It is rooted in the idea that insolvency proceedings should be centralized in the jurisdiction where the debtor’s main interests are located, while also respecting the supervisory role of the receiving state—the jurisdiction that recognizes and enforces foreign bankruptcy proceedings. This approach contrasts with strict universalism, which advocates for a single, global bankruptcy proceeding, and territorialism, which prioritizes the sovereignty of individual states over cross-border coordination.



The principles of modified universalism can be broken down into several key components:



Efficiency: Modified universalism emphasizes the importance of streamlining cross-border bankruptcy proceedings to minimize costs, delays, and administrative burdens. By centralizing proceedings in the debtor’s main jurisdiction, it reduces the need for parallel proceedings in multiple countries, thereby promoting a more efficient resolution of claims.



Coherence: The framework aims to create a consistent and predictable legal environment for cross-border insolvencies. This is achieved by recognizing the jurisdiction of the foreign main proceedings state—typically the location of the debtor’s center of main interests (COMI)—as the primary authority for administering the bankruptcy process.



Minimum Exceptions: While modified universalism advocates for the recognition of foreign proceedings, it allows for limited exceptions to accommodate the unique legal and policy considerations of the receiving state. These exceptions ensure that the framework remains flexible and adaptable to different legal systems.



Jurisdiction of the Foreign Main Proceedings State: The state where the debtor’s main interests are located is granted primary jurisdiction over the bankruptcy proceedings. This principle is based on the assumption that the debtor’s COMI is the most appropriate forum for administering the insolvency, as it is likely to have the most comprehensive understanding of the debtor’s financial affairs.



Sovereign Supervision of the Receiving State: Modified universalism acknowledges the sovereignty of the receiving state, which has the authority to approve or deny recognition of foreign bankruptcy proceedings. This ensures that the interests of local creditors and public policy considerations are taken into account.The concept of modified universalism has evolved significantly over the past few decades. Initially, it was regarded as a theoretical framework, proposed by legal scholars as a middle ground between strict universalism and territorialism. However, its practical application in cross-border bankruptcy cases has led to its recognition as an emerging international custom—a source of international law that derives from consistent state practice and a sense of legal obligation.



One of the key milestones in the development of modified universalism was the adoption of the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Cross-Border Insolvency in 1997. The Model Law, which has been incorporated into the domestic laws of numerous countries, embodies many of the principles of modified universalism. It provides a legal framework for the recognition of foreign insolvency proceedings and facilitates cooperation between courts in different jurisdictions. The widespread adoption of the Model Law has contributed to the growing acceptance of modified universalism as a guiding principle in cross-border bankruptcy cases.



In addition to the UNCITRAL Model Law, judicial decisions in various jurisdictions have played a crucial role in shaping the development of modified universalism. Courts in the United States, the United Kingdom, and other countries have increasingly relied on the principles of modified universalism when adjudicating cross-border insolvency cases. For example, in the landmark case of In re Maxwell Communication Corp., the U.S. Bankruptcy Court recognized the primacy of the UK insolvency proceedings, emphasizing the importance of centralized administration and international cooperation. Similarly, in the case of Re HIH Casualty & General Insurance Ltd., the UK courts demonstrated a commitment to the principles of modified universalism by recognizing the Australian insolvency proceedings and facilitating cross-border coordination.



These judicial decisions, along with the adoption of the UNCITRAL Model Law, have contributed to the growing body of state practice that supports the recognition of modified universalism as an emerging international custom. While it is not yet universally accepted, the trend toward its adoption in both legislation and case law suggests that it is becoming an increasingly influential principle in the field of cross-border bankruptcy.