The European Union goes Comi-tose: hazards of harmonizing corporate insolvency laws in the global economy.

The problem, however, is not the "first to file" race by competing forums. The problem is with the racing guidelines and officials. (200) The E.U. Insolvency Regulation's definition of COMI is too vague and allows the foreign courts too much discretion in determining whether a particular country is the debtor's COMI. (201) Even Chapter 15 lacks a clear definition of the COMI and fails to provide any guidelines by which bankruptcy judges may determine whether a foreign proceeding is a main or a non-main proceeding. (202) Without such guidelines, U.S. bankruptcy judges may rely on differing choice of law analyses, such as the "center of gravity" analysis. (203) To ensure uniformity in making determinations as to whether a proceeding is main or non-main, courts need more conclusive and uniform guidelines by which to abide. Such guidelines will reduce forum shopping, provide courts with a better ability to apply the law to the reality of the circumstances, and increase predictability and uniformity.

A. Providing Guidelines

The recent ECJ Eurofood ruling made some headway into providing specific guidelines for determining the proper COMI of a debtor. The court held that "the centre of main interest must be identified by reference to criteria that are both objective and ascertainable to third parties." (204) The court stated that the COMI is presumed to be the member state where the subsidiary company is registered, and this presumption can be rebutted only if there are "objective and ascertainable" factors establishing that the company's actual COMI is somewhere else. (205) The court listed the "letterbox company" an example of such a circumstance, but did not elaborate on the definition of a letterbox company aside from describing a "company not carrying out any business in the territory of the Member State in which its registered office is situated." (206) The court made clear that in the case of a company like Eurofood, "the mere fact that [the debtor's] economic choices are or can be controlled by a parent company in another Member State is not enough to rebut the presumption laid down by the [E.U. Insolvency] Regulation." (207)

Where additional guidelines are necessary, courts may look to alternative "objective and ascertainable" factors, such as choice of law rules. (208) The American Law Institute's Second Restatement of Conflicts of Laws (Restatement) presents some helpful guidelines, (209) and many states in America have enacted, or promulgated through case law, versions of these guidelines for courts to use in determining which laws should apply to tort and contract cases. (210) With a uniform set of guidelines, competing courts would be less tempted, or able, to use tenuous contacts to arrive at a biased conclusion of debtor's COMI.

A uniform set of guidelines should focus on the debtor's relationships with its creditors. Contracts govern much of an insolvent debtor's business. (211) The debtor has contracts with its creditors, including, for example, its employees. (212) European countries use Restatement-like guidelines to determine which laws will apply to contracts. (213) The Rome Convention generally provides parties within the European economic community with Restatement-like guidelines that grant parties to a contract freedom to choose the applicable law to govern their contracts. (214) In the absence of any such choice, the Rome Convention presumes that the law of the country where a corporation's "central administration" is located will apply to the contract. (215) This so-called presumption is rebutted where the agreement calls for performance in a country other than the corporation's principal place of business, in which case the law of the place of performance shall apply. (216) The Rome Convention provides some helpful guidelines, but its application is limited in the insolvency realm. (217)

Additionally, guidelines may be found in UNCITRAL's Legislative Guide to Insolvency Law (Legislative Guide). (218) On December 16, 2004, the United Nations endorsed the Legislative Guide for all states considering implementing the Model Law or E.U. Insolvency Regulation. (219) The Legislative Guide focuses on drafting effective and efficient insolvency laws in spite of numerous differences in policy and legislative treatment from country to country. (220) With the many different policies in mind, the Legislative Guide emphasizes issues arising in reorganization proceedings. (221)

Among the issues discussed in the Legislative Guide is which law should apply in insolvency proceedings. (222) Most countries apply the choice of law rule of lex fori concursus, or the law of the state hosting the insolvency proceedings. (223) This means the law of the forum state will apply to most issues arising during the insolvency proceeding, whether the proceeding is one of liquidation or reorganization. (224) However, many countries also have exceptions in which the forum country will not apply its local law, but rather the law that is more applicable to the particular litigation. (225) Examples of these exceptions are employment contracts, (226) security interests, (227) and avoidance actions. (228)

B. Appointing a Panel

While uniform guidelines may remove bias from a court's COMI determination, such a determination will still depend largely upon the policy of that country. (229) Because so much depends on where a court determines a debtor's COMI to be, such a determination should not be made by a single country's court. (230) Recital 22 of the E.U. Insolvency Regulation specifically calls for the "first to file" rule, which puts courts in a rush to declare their home country the debtor's COMI. (231) To avoid such a hasty and potentially biased decision, the European Union should consider forming a panel of transnational insolvency specialists, preferably consisting of acting or retired judges. Each member state could appoint such a specialist to represent itself on panels. When an insolvency proceeding is opened in a member state and an issue over which member state is the COMI arises, a special panel, consisting of three arbitrarily chosen specialists, would convene.

The competing proceedings would be stayed until the special panel has the opportunity to consider all interested parties' arguments. For this reason, notification of the special panel's proceeding is of key importance. (232) The panel would then make its determination and the stayed proceedings could continue, subject to the panel's designation of the true COMI. The proceeding in the member state that the panel deems as the COMI would be the main proceeding, and the proceeding in the member state that is not the COMI shall be deemed a secondary proceeding and could only be a liquidation proceeding. (233)

Applying these concepts to the facts of Eurofood would result in both the Irish and Italian courts' proceedings being stayed until the specialists' panel could have made its own determination. The panel woUld have had the opportunity to hear from all parties of interest about what they had expected with regard to Eurofood's insolvency proceedings. If Eurofood's creditors had expected an Irish winding up proceeding, the creditors could present their expectations before the panel to consider with the other aforementioned factors. On the other hand, Dr. Bondi, the Italian administrator of the Parmalat reorganization, could argue that Eurofood, part of a larger corporate structure, could not be liquidated without upsetting the Parmalat reorganization. (234) The panel could then make its determination before the other courts begin reorganizing or liquidating, rather than after the fact. (235)

VI. CONCLUSION: SLIPPING OUT OF THE COMI

It is difficult to imagine a country or a union with many different insolvency laws harmonizing those successfully. However, if not for the passage of the Bankruptcy Act of 1898, that may well be where America would stand today. (236) Instead, the United States has taken many steps over the course of the last hundred years--some steps in response to economic need, and other steps due to the growth and development of American bankruptcy policy. (237) Europe is heading there too, but its countries have longer traditions of differing laws and policies to overcome. (238) As this Comment has discussed, even countries with similar insolvency laws can have substantially different outcomes based on their long-standing policy goals. (239)

As the Eurofood cases demonstrate, if it is possible that an insolvent corporation's COMI could be within a court's jurisdiction, that court will open an insolvency proceeding to stake its claim. The ECJ may have implicitly endorsed through its Eurofood opinion a "first to file" rule for a forum to proclaim itself as a debtor's COMI. (240) The recent attempts by the European Union and the United Nations to pass harmonious transnational insolvency laws and regulations appear to have an undertone of universalism. (241) It would seem simple to harmonize transnational insolvency proceedings as more and more countries are moving toward a reorganization-focused regime.