Cross-Border Insolvency Regulations 2006

I thank noble Lords for their comments on these draft regulations and I shall try to deal with the questions raised. The noble Lord, Lord De Mauley, asked about credit institutions and insurance undertakings, and perhaps I can deal with that first. As a result of our consultation process, we accept that there could be benefits in bringing these entities within the ambit of the regulations, given that they conduct business throughout the world. Following consultation with the Treasury, and in light of the extensive EC legislation regarding the winding-up and reorganisation of credit institutions and insurance companies, we have decided to exclude these bodies from the regulations for the time being. We will consider their inclusion as soon as it is practical and possible to do so. EU legislation relating to credit institutions and insurance companies is particularly complex and we want to ensure that we get it right. The intention is to include them at some stage but we are not in a position to do so yet. An issue was raised about reciprocity and what we are doing to encourage others to introduce the legislation. As I said, and has been acknowledged in the discussion pad, we hope that introducing the model law itself will provide an example to other countries which will encourage them to implement the law. Obviously, we have the protection for non-friendly countries; if they seek to abuse the powers, Article 6 of the model law gives the right to refuse assistance on public policy grounds. The noble Lord, Lord Maclennan, raised the question of how the provisions interact with EU regulations. In any case, when the EC regulation on insolvency proceedings applies, it prevails over these regulations, which means that these regulations can apply to the extent that the EC regulation does not or to the extent that the model law regulations do not conflict with the EC regulation, but there is not in that sense a choice of shopping between them. The question of other countries that have adopted the provision was raised. It has been adopted by Japan, Mexico, Poland, South Africa, the British Virgin Islands and Montenegro. The USA, which is our largest trading partner, is within that initial group. Other major trading partners including Australia, India and New Zealand are actively considering adoption of the legislation. As the noble Lord, Lord De Mauley, said, the provisions may not have been needed much to date. However, given the global expansion of trade and investment, we think that there will be an increasing incidence of cross-border insolvency. That is why it is important to be seen to sign up to this. Unpredictability in the administration of cases of cross-border insolvency can become a disincentive to the flow of capital and cross-border investment, so we think that it is very much in our interests to proceed with the regulations. On Question, Motion agreed to.