Introduction
In the global economy, corporate insolvency is rarely a purely domestic affair. Large Indian companies operate through subsidiaries, branches, and contractual networks spanning multiple jurisdictions. Foreign companies do business in India, hold Indian assets, employ Indian workers, and have Indian creditors. When such companies enter insolvency, the question of which country’s law governs the proceedings, which court has jurisdiction, how assets are distributed across borders, and how an insolvency proceeding in one jurisdiction interacts with proceedings in another is not merely an academic concern. It has profound practical consequences for creditor recovery, asset preservation, and the efficient resolution of financial distress.
India’s Insolvency and Bankruptcy Code, 2016 has conspicuously lagged in developing an effective cross-border insolvency framework. Sections 234 and 235 of the IBC contemplate bilateral agreements between India and foreign countries for the purposes of cross-border insolvency, and permit courts to issue letters of request to foreign courts seeking assistance in insolvency proceedings. However, these provisions are framework provisions: they create the legal hook for bilateral agreements but are not self-executing. In the years since the IBC’s enactment, not a single bilateral agreement under Sections 234 or 235 has been concluded. India remains, in a fundamental sense, a closed system for cross-border insolvency purposes.
This gap became spectacularly apparent during the Jet Airways insolvency proceedings of 2019 to 2023, when a Dutch administrator appointed by a Dutch court and an Indian Resolution Professional appointed by the NCLT operated simultaneously over the same company without any legal framework for coordinating their activities. The improvised solution, negotiated between the two administrators with judicial supervision from both courts, produced a workable outcome, but it was a solution crafted in spite of the absence of law rather than because of it.
Legal Framework
Sections 234 and 235 of the IBC are the entire statutory framework for cross-border insolvency in Indian law. Section 234 empowers the Central Government to enter into agreements with countries that are parties to any international treaty or convention relating to insolvency proceedings, for the purpose of enforcing provisions of the IBC in those countries and for obtaining assistance from those countries in enforcing IBC provisions. Section 235 empowers the NCLT to issue letters of request to courts in countries that have reciprocal agreements with India, seeking assistance in connection with insolvency proceedings under the IBC.
The constitutional basis for these provisions reflects India’s traditional preference for bilateral treaty-based cooperation rather than multilateral convention adoption. However, the drafting of these provisions has been criticised as insufficiently specific to provide operational guidance even where bilateral agreements are concluded. The provisions do not address the core questions of cross-border insolvency law: which court has jurisdiction (Centre of Main Interests), what happens when two proceedings are opened in different countries (main and secondary proceedings), what relief a foreign insolvency representative may seek from Indian courts, and how assets should be distributed when insolvency proceedings are pending in multiple jurisdictions.
The Ministry of Corporate Affairs published a draft Cross-Border Insolvency Bill in 2018, prepared by the Insolvency Law Committee’s Sub-Committee on Cross-Border Insolvency (the CCRICI). The draft Bill proposed the adoption of the UNCITRAL Model Law on Cross-Border Insolvency, 1997, as the basis for India’s cross-border framework. As of 2026, this Bill has not been enacted, and the government has not publicly committed to a legislative timeline.
The UNCITRAL Model Law, which has been adopted by 59 countries including the United Kingdom, the United States, Singapore, Australia, Japan, and South Korea, provides a comprehensive framework for cross-border insolvency cooperation. Its key elements include: recognition of foreign insolvency proceedings (both main proceedings, where the debtor’s Centre of Main Interests is located, and non-main proceedings, where the debtor has an establishment); automatic stay of domestic proceedings upon recognition; relief available to foreign insolvency representatives; cooperation between courts of different countries; and coordination between concurrent proceedings in multiple jurisdictions.
Judicial Developments
The Jet Airways insolvency produced the most significant judicial engagement with cross-border insolvency questions in India’s IBC history. Jet Airways was incorporated in India and had its principal operations in India, but was listed in the Netherlands through its holding company Jet Airways (India) Limited’s subsidiary. When Jet Airways entered CIRP in India in 2019, a Dutch creditor initiated insolvency proceedings in the Netherlands and a Dutch administrator was appointed.
The NCLT and the Dutch court engaged in an unprecedented exercise of judicial diplomacy, culminating in a “Cross-Border Insolvency Protocol” negotiated between the Indian RP and the Dutch administrator, subsequently endorsed by both courts. This Protocol established a framework for information sharing, coordination of creditor communication, and a joint agreed-upon approach to the resolution process. The Jet Airways resolution, ultimately approved in 2023, was eventually concluded under the Indian CIRP framework with the Dutch proceedings playing a subsidiary role.
The Jet Airways Protocol was a creative solution but it was also, as commentators noted, a solution built on judicial goodwill and professional cooperation rather than on any legal entitlement. An Indian court has no statutory authority to recognise a foreign insolvency proceeding or to grant a foreign insolvency administrator any rights in India. The Protocol created ad hoc mechanisms that worked because both sides cooperated; it created no precedent binding on future cases where cooperation might not be forthcoming.
NCLT decisions in other cross-border contexts have highlighted the legal lacunae. Where foreign creditors have sought to participate in Indian insolvency proceedings, their rights have been assessed under domestic law without any cross-border insolvency framework applying. Where Indian RPs have sought cooperation from foreign courts, they have had to rely on the comity of those courts rather than on any treaty-based entitlement.
Contemporary Issues and Analysis
The consequences of India’s cross-border insolvency gap are both practical and systemic. At the practical level, several categories of cases are genuinely difficult to manage in the absence of a cross-border framework. These include Indian companies with significant foreign assets or subsidiaries that attempt to shelter assets from Indian insolvency proceedings by relocating them to non-cooperative jurisdictions; foreign companies that have Indian creditors, employees, or assets and become insolvent in their home jurisdiction without any mechanism for Indian creditors to participate in an orderly foreign proceeding; and corporate groups with entities in both India and foreign jurisdictions where the group’s financial difficulties require a coordinated resolution that cannot be achieved when each entity must be resolved under its own jurisdiction’s law.
At the systemic level, the absence of a cross-border framework affects India’s attractiveness as a jurisdiction for international debt capital markets and cross-border lending. Sophisticated international lenders assess cross-border insolvency frameworks when making decisions about lending to emerging market borrowers. A creditor that cannot predict how its rights will be enforced when an Indian borrower becomes insolvent or when a foreign borrower with Indian assets becomes insolvent is a creditor that will price that uncertainty into its lending terms or decline to lend at all.
India’s aspiration to develop its financial markets, attract foreign portfolio investment, and become a global capital market centre sits awkwardly alongside the continued absence of a modern cross-border insolvency framework. The International Finance Corporation and various multilateral development banks have consistently flagged the cross-border insolvency gap as a structural weakness in India’s insolvency regime.
Comparative and International Perspective
The United Kingdom adopted the UNCITRAL Model Law through the Cross-Border Insolvency Regulations, 2006. The UK framework has been tested extensively, including in several cases involving Indian-connected companies, and has been generally regarded as effective in providing a predictable, rules-based framework for cross-border cooperation. The UK’s experience with the Gibbs rule (the principle that a debt governed by English law can only be discharged by a proceeding that is effective under English law) has created some friction with the Model Law’s goals of universalism, but this has been a subject of ongoing judicial and academic debate rather than a fundamental failure of the framework.
Singapore enacted the UNCITRAL Model Law through the Companies (Amendment) Act, 2017, and has developed the framework further through judicial cooperation protocols with the US and with the UK. Singapore’s courts have been proactive in developing cross-border insolvency jurisprudence, and the Singapore International Commercial Court now handles significant cross-border restructuring cases. Singapore’s approach has combined Model Law adoption with strong judicial cooperation mechanisms, creating one of the most sophisticated cross-border insolvency frameworks in the Asia-Pacific region.
The United States adopted the UNCITRAL Model Law as Chapter 15 of the Bankruptcy Code in 2005. Chapter 15 provides a comprehensive framework for foreign representatives to seek recognition of foreign proceedings in the US and to obtain a range of relief, including stays and discovery assistance. The US has used Chapter 15 extensively, and it has become an important tool for multinational restructurings with US connections.
Practical and Policy Implications
The practical implication of India’s cross-border insolvency gap is that every cross-border case involving India currently depends on judicial improvisation and professional cooperation rather than legal entitlement. This is acceptable in cases where all parties are cooperative and well-resourced enough to negotiate cross-border protocols; it is wholly inadequate in cases where parties are uncooperative, where assets are at risk of dissipation, or where the debtor has purposefully structured its affairs to exploit the jurisdictional gap.
For India’s domestic insolvency practitioners and the NCLT, the absence of a framework means that Indian insolvency proceedings are not recognised in other jurisdictions by operation of law. An Indian RP seeking to recover assets located in the United Kingdom or the United States has no automatic entitlement to recognition of their authority in those jurisdictions and must rely on general principles of private international law and the comity of foreign courts, which is uncertain and time-consuming.
For foreign creditors in Indian insolvencies, the absence of a cross-border framework similarly means that the information they receive about Indian proceedings and the rights they can exercise in those proceedings are governed entirely by Indian domestic law without any international baseline of treatment.
Suggestions and Reforms
The path forward for India is clear, even if the political will to traverse it has been absent. Parliament should enact the UNCITRAL Model Law on Cross-Border Insolvency as proposed in the 2018 draft Bill. The Model Law is a mature, well-tested instrument that has worked effectively in dozens of jurisdictions. Its adoption would immediately provide Indian courts with the tools needed to handle cross-border cases efficiently.
Enactment of the Model Law should be accompanied by bilateral judicial cooperation protocols, analogous to those developed by Singapore, with the major jurisdictions from which Indian insolvency cases are most likely to have cross-border dimensions: the United Kingdom, the United States, Singapore, and the United Arab Emirates. These protocols, while not legally mandatory, provide practical guidance for judicial cooperation that accelerates case resolution and reduces uncertainty.
IBBI should also develop training programmes for insolvency professionals on cross-border insolvency law and practice, so that IPs handling cases with international dimensions are equipped to manage foreign coordination effectively. The Jet Airways Protocol demonstrated that skilled insolvency professionals can negotiate effective cross-border arrangements; a legislative framework and professional training would make such arrangements more systematic and less dependent on individual expertise.
Additionally, the Central Government should designate specific NCLT benches to handle cross-border insolvency matters, building specialised expertise and developing a consistent body of jurisprudence on cross-border issues.
Conclusion
India’s cross-border insolvency framework is a significant and growing gap in what is otherwise an increasingly sophisticated insolvency regime. The IBC has transformed domestic corporate insolvency; it has barely touched cross-border insolvency. The Jet Airways proceedings illustrated both the creativity of Indian courts and professionals in managing cross-border cases without a legal framework and the fundamental inadequacy of improvisation as a substitute for law.
The 2018 draft Bill, based on the UNCITRAL Model Law, provides a ready-made solution. Its enactment has been deferred for too long. As India’s corporate sector becomes more internationally integrated and as cross-border insolvencies involving India become more frequent, the cost of this gap, both in terms of impaired creditor recovery and reduced attractiveness to international capital, will only increase. The time for enactment is overdue.
