Foreign and Domestic Creditors in Bankruptcy Proceedings. Remnants of Discrimination?

Abstract

One of the resolutions adopted by the First Conference of the Inter-American Bar Association 1 dealt with the protection of foreign investments. The academies, institutes, and associations of lawyers, particularly those which are members of the Inter-American Bar Association, were urged to exert influence in their respective countries in behalf of uniformity in matters relating to foreign investments. It was asked that, in such uniform legislation, principles be included which, while assuring the integrity and economic and commercial progress of each country, shall at the same time afford the foreign investor sufficient protection to encourage such investments.2 Any law relating to the exercise of creditor rights and which differentiates between domestic and foreign creditors by granting priority rights to the former, is, in fact, in opposition to this resolution. If foreign creditors are to be paid only after payment of domestic creditors, they are not sufficiently protected. It is a wide-spread belief that, in some countries, such discrimination between foreign and domestic creditors still exists. If this is true, a change will not be effected merely by passing resolutions of a general character. Cases of alleged discrimination must be cited to insure clarification, and to provoke modification in the domestic legislation, if necessary. Foreign criticism of domestic legislation is often resented, especially if the questions involve fairness to other countries.3 In a world