The New Architecture of 'Choice': Forum Shopping and the Emerging 28th Regime

On 7 November 2025, the OBLB Annual Conference, ‘Harmonization and Competition in Corporate and Insolvency Law Within the Framework of the Savings and Investments Union’, jointly organised by Bocconi University, the University of Oxford, and ECGI, examined the merits and limitations of further integration of corporate and insolvency law in the European Union (EU).

The central theme of the discussion was the 28th regime, understood as an optional EU-level framework designed to coexist with, rather than replace, national legislation. The model envisages an opt-in system allowing firms to subject themselves voluntarily to a uniform EU rulebook, including corporate, insolvency, labour, and tax law. The underlying rationale of the 28th regime is to overcome regulatory fragmentation, e.g. nationally bounded company forms, which cannot be seamlessly transferred across jurisdictions, divergent insolvency procedures, and inconsistent employee-participation rules, long regarded as a key barrier to scaling across borders, while respecting entrenched national choices concerning creditor hierarchies, restructuring regimes, and discharge conditions. Within this broader architecture, my analysis focuses on the insolvency dimension, examining how a voluntary submission to harmonised EU-level insolvency rules could facilitate cross-border activities and procedures without requiring full harmonisation across Member States. More specifically, the analysis specifically addresses the risk of forum shopping, asking whether the design of such a flexible regime might undermine its capacity to prevent incentives for abusive jurisdictional choice.

Across the evolution of EU insolvency legislation, the European Union has sought to strike a balance between, on the one hand, allowing a degree of forum selection in light of the freedom of establishment under Articles 49–55 Treaty on the Functioning of the European Union (TFEU), and, on the other, curbing forum shopping where it amounts to an abusive relocation of the registered office aimed at disadvantaging affected stakeholders. Instruments specifically designed to restrain opportunistic relocations, most prominently Regulation (EU) 2015/848 (EIR), are evidence of this balancing exercise. As is well known, Article 3 of the EIR allocates jurisdiction to the courts of the Member State in which the debtor has its centre of main interests (COMI), which is presumed, unless established otherwise, to coincide with its registered office. The legislature tempers the effect of this presumption by providing that it applies only where the registered office has not been transferred to another Member State within the three months preceding the request to open insolvency proceedings.

Set against this comparatively stringent legislative approach is the case law of the Court of Justice which, in its role as the ultimate interpreter of EU law, has consistently adopted a more liberal understanding (e.g., see Case C-501/23 Land Berlin [2024], Case C-723/20 Galapagos [2022], and Case C-253/19 Novo Banco [2020]. In these cases, while the Court does not explicitly refer to the freedom of establishment when interpreting COMI, it focuses on objective, externally ascertainable and genuine connections. This approach shows a consistent effort to balance the protections of creditors with the freedom for debtors to operate across borders. Moreover, a more direct reliance on the freedom of establishment as a basis for permitting forum shopping is typical of the Court’s corporate-law case law, such as Case C-106/16 Polbud [2017]). A workable equilibrium can emerge only through this dynamic interaction of legislative constraints and judicial counterweights.

The forum shopping dimension is expressly acknowledged in recent legislative materials. In preparing the Proposal for a Directive harmonising certain aspects of insolvency law (COM(2022) 702 final), the Commission required a study from Tipik and Spark Legal Network to (1) assess abusive forms of strategic forum selection following the amendments to the EIR and (2) examine the extent to which divergences in national insolvency frameworks continue to enable abuse by relevant stakeholders. As the EIR has not harmonised Member States’ insolvency regimes, which remain markedly heterogeneous, significant incentives, for debtors and creditors alike, persist to initiate proceedings in jurisdictions perceived as more favourable to either group. Jurisdictional and procedural factors (including the speed, simplicity, language, and cost of proceedings; the predictability of judicial decisions; the experience and commercial awareness of the judiciary; and the calibre and cross-border recognition of insolvency practitioners) interact with substantive factors (conditions for opening proceedings; creditor ranking; avoidance actions; directors’ duties; discharge rules; creditor majorities and cram-down mechanisms; and asset-tracing tools) in shaping these incentives (see Tipik & Spark Legal Network, Study on the Issue of Abusive Forum Shopping in Insolvency Proceedings, 43 ff.). 

Although the boundary between procedural and substantive law is not clear-cut, the distinction remains analytically useful. Indeed, the findings of this study provide a useful starting point for three observations on the proposed 28th regime and its effect on the strategic choice of forum.

First, elements classified as substantive can limit forum shopping only through approximation of the relevant national rules. By contrast, procedural elements are deeply embedded in domestic systems, as they reflect long-standing legal traditions and depend on institutional and professional features (such as judicial training, court organisation, docket management, and informal practices). Moreover, given the EU’s lack of a general competence to harmonise national civil procedure, such elements may, irrespective of harmonisation efforts, continue to operate as jurisdictional pull-factors which—consistent with freedom of establishment—could justify or even incentivise strategic relocations and induce other Member States to adjust their own procedural frameworks.  Thus, the study reveals how substantive aspects remain the critical dimension on which a European regulatory intervention is required to effectively curb strategic jurisdictional choices. Given this background, the perspective regulatory dualism under the 28th regime may prove beneficial to the extent that it identifies and standardises specific substantive features that presently encourage actors to opt into the European model, thereby enabling debtors and creditors to rely on such features without altering the competent forum. In this respect, the regulatory dualism emerging from the 28th regime could indirectly mitigate forum shopping.

Secondly, a less favourable consequence of the 28th regime opt-in system is the risk of increased substantive regulatory fragmentation in the absence of a European supervisory or interpretative mechanism. Allowing actors to refrain from opting into the European framework would reduce the interpretative role of the Court of Justice and shift greater responsibility to national courts. This may, on the one hand, increase rigid domestic approaches to forum shopping and, on the other, further accentuate regulatory inconsistency across Member State; one which is conducive to strategic and potentially abusive corporate behaviour. 

Thirdly, Brexit adds a further layer of complexity. The English insolvency system—typically more market-oriented—sits uneasily alongside the more public-law-driven systems prevalent within the EU. As the above-mentioned study highlights, the UK has long functioned as “the restructuring capital of Europe with a number of financially stretched foreign companies using the UK procedure to restructure their debts” (Tipik & Spark Legal Network, Study on the Issue of Abusive Forum Shopping in Insolvency Proceedings, 111), thereby exerting a strong positive jurisdictional pull. Insolvency/restructuring proceedings commenced outside the EU may therefore appear attractive, but this raises the subsequent question of whether such private-law schemes will be recognised within the EU where recognition is required. These dynamics suggest the need for a form of hard harmonisation capable of ensuring more uniform recognition standards. By contrast, an opt-in mechanism such as the proposed 28th Regime, grounded in softer harmonisation, risks reinforcing regulatory nationalism, weakening any common approach and further diminishing the unifying influence of EU-level judicial interpretation in recognising divergent regimes. From the perspective of cross-border investment, this structural concern warrants particular attention, as it may ultimately result in the emergence of barriers to cross-border economic activity. 

To conclude, the 28th regime embodies both potential and limitations in addressing forum shopping in EU insolvency law. By harmonising substantive rules through an opt-in model, it may reduce incentives for strategic relocations. At the same time, if companies choose not to opt-in, the continued dominance of national regimes may weaken the role of the CJEU and reinforce regulatory fragmentation, thereby sustaining incentives for abusive forum shopping. Moreover, in the post-Brexit landscape, increased fragmentation may complicate recognition and discourage positive jurisdictional choices. The effectiveness of the 28th regime in curbing abusive forum shopping will therefore depend on how its substantive rules result attractive to economic actors. If the regime is sufficiently appealing, debtors and creditors will be willing to opt into the EU framework and rely on its features, rather than changing the competent forum in search of more favourable national rules.

Stefania Cirillo is a Post-Doc Research Fellow in the Department of Law, Bocconi University.

This post is published as part of the series ‘Harmonization and Competition in Corporate and Insolvency Law Within the Framework of the Savings and Investments Union’.