Close-out netting provisions in private international law and international insolvency law (Part II)

Abstract

There has been only partial harmonization on the basis of secondary European Union (EU) law both in regard to the substantive and the international insolvency law provisions on close-out netting. In non-harmonized areas, the legal position in the Member States still shows considerable differences. English insolvency law is generally netting-friendly. Apart from the implementation of the European Council Directive 2002/47 on financial collateral arrangements (Financial Collateral Directive),1 English insolvency law generally upholds close-out netting provisions as a matter of principles of case law.2 Moreover, even in the absence of a contractual agreement to this effect, broad rules on statutory, automatic set-off in insolvency are applicable,3 the effects of which are often regarded as equivalent to a close-out netting mechanism.4 In regard to cross-border aspects of insolvency, English law has maintained...