A lex concursus europaea as Insolvency Law No. 28

As is well known, the capital market has been pushing for harmonisation of inter alia the member states’ insolvency laws for around 15 years. In the present political surrounding, where the European Union is trying to overcome obstacles to compete with other major players in the global market (the United States and China), it appears to be appropriate and prudent to not regard this sceptically but rather to proactively pursue its path. However, since experience teaches that such harmonisation is a slow and burdensome process within the EU, we propose in a recent paper a much speedier way of achieving the goal: The Commission should enact a regulation which allows companies to opt in to a separate pan-european insolvency law which we call lex concursus europaea and which would constitute the 28th set of insolvency law.

The advantages are evident: reduction of transaction costs for foreign investors, no hassle with a debtor’s COMI, no concerns about forum shopping, procedural consolidation for company groups etc. Moreover, such regulation could strive for best possible rules rather than for ones which are watered down by political compromises. As such, it does not prevent regulatory competition at national level, and it might even serve as a model for subsequent national improvements. Disadvantages are also obvious: they are likely to centre around academics’, lawyers’ and firms’ path dependency, which suggests that strong opposition is to be expected.

On a general level, the idea of a 28th regime is anything but new: It is addressed in the Letta Report (04/24), in the Draghi Report (09/24), in the Commission’s Competitive Compass (01/25), in the EU Startup- and Scaleup-Strategy (05/25) and in the Repasi Report (07/25). This fact reduces to a certain degree the issue of a legal basis for the EU’s competence for such a regulation – candidates are Articles 352, 50, 114 of the TFEU, or Article 20 of the TEU and 326 et seq. of the TFEU.

Regarding the contents, there is, fortunately, no need to ‘rediscover the wheel’, since the UNCITRAL Legislative Guide seems to us as being not only a good starting point but also a reliable indicator for relevance. And it indicates also where interfaces with respective domestic law (such as property law, labour law etc) should be considered. For the sake of the law’s intended uniformity, the aim of the European legislative endeavour should be to elaborate a statute as comprehensive and exhaustive as possible. Accordingly, not only liquidation and restructuring proceedings should be regulated but also – following the pan-European trend including the Directive (EU) 2019/1023 – a preventive proceeding. Because of its economic importance and its factual omnipresence, rules on the insolvency of groups of companies (or parts of it) should be included, as well as questions of jurisdiction. Above all, drafters of the law should strive for clarity regarding the purpose of the 28th insolvency law. The often-cited difference of purposes between the French and the German law reminds us that even within a coherent group of states like the European Union there are considerable differences in purposes of insolvency laws.

Taking all these political, economic and legal deliberations together demonstrates that the concept of a 28th insolvency law, a lex concursus europea, is more than just an idée fixe. It is feasible. As a regulation, its choice should be offered to companies from a certain size on and with their registered seat in one of the member states. And it may be particularly relevant as regards new legal proposals for start-ups and innovative companies (See, EU Parliament, Draft Report 2025/2079 with recommendations to the Commission on the 28th Regime: a new legal framework for innovative companies (2025/2079(INL)). Once again, the advantage of such lex concursus europea is that it can strive for the best solution without concerns as to the member states’ acceptance. It should determine the opting-in mechanism, in particular, its publicity and the compliance with the commitment, as well as the competent insolvency court(s) and other office holder such as IPs.

An elaboration of the pros and cons of this proposal for a 28th regime, and how it might work in practice, can be found in our paper. 

Francisco Garcimartin is a Chair Professor of Private International Law at Universidad Autónoma de Madrid.

Christoph G. Paulus has been a professor of law at the Humboldt-Universität zu Berlin/Germany.

The authors' paper can be found here.