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BAIL-IN AND PRIVATE INTERNATIONAL LAW: HOW TO MAKE BANK RESOLUTION MEASURES EFFECTIVE ACROSS BORDERS

Published online by Cambridge University Press:  21 December 2016

Matthias Lehmann
Matthias Lehmann*
Affiliation:
Director of the Institute of Private International and Comparative Law, University of Bonn, Germany, [email protected].
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Abstract

Bank resolution is key to avoiding a repetition of the global financial crisis, where failing financial institutions had to be bailed out with taxpayers’ money. It permits recapitalizing banks or alternatively winding them down in an orderly fashion without creating systemic risk. Resolution measures, however, suffer from structural weakness. They are taken by States with territorially limited powers, yet they concern entities or groups with global activities and assets in many countries. Under traditional rules of private international law, these activities and assets are governed by the law of other States, which is beyond the remit of the State undertaking the resolution. This paper illustrates the conflict between resolution and private international law by taking the example of the European Union, where the limitations of cross-border issues are most acute. It explains the techniques and mechanisms provided in the Bank Resolution and Recovery Directive (BRRD) and the Single Resolution Mechanism (SRM) Regulation to make resolution measures effective in intra-Eurozone cases, in intra-EU conflicts with non-Euro Member States and in relation to third States. However, it also shows divergences in the BRRD's transposition into national law and flaws that have been uncovered through first cases decided by national courts. A brief overview of third country regimes furthermore highlights the problems in obtaining recognition of EU resolution measures abroad. This article argues that regulatory cooperation alone is insufficient to overcome these shortcomings. It stresses that the effectiveness of resolution will ultimately depend on the courts. Therefore, mere soft law principles of regulatory cooperation are insufficient. A more stable and uniform text on resolution is required, which could take the form of a legislative guide or, ideally, of a model law. It is submitted that such a text could pave the way for greater effectiveness of cross-border resolution.

Keywords

asset transferbail-inbank resolutionconflict of lawscross-border restructuringFSBKey Attributes of Effective Resolution Regimesmodel lawprivate international law
Type
Articles
Information
International & Comparative Law Quarterly , Volume 66 , Issue 1 , January 2017 , pp. 107 - 142
Copyright
Copyright © British Institute of International and Comparative Law 2016 

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References

1 A comprehensive overview can be found in FSB, ‘Key Attributes of Effective Resolution Regimes for Financial Institutions’ (2014) 7–10. See also Lastra, RM and Campbell, A in Lastra, RM (ed), Cross-Border Bank Insolvency (Oxford University Press 2011) 44–6Google Scholar.

2 For an overview of these tools, see Grünewald, SN, The Resolution of Cross-Border Banking Crises in the European Union: A Legal Study from the Perspective of Burden Sharing (Kluwer Law International 2014) 32ff Google Scholar; Binder, J-H, ‘‘‘Resolution”: Concepts, Requirements and Tools’ in Binder, J-H and Singh, D (eds), Bank Resolution: The European Regime (Oxford University Press 2016) 25ff Google Scholar; M Haentjens, ‘Party Autonomy, Public Policy and European Bank Insolvency Law’, Hazelhoff Research Paper Series No 7, available at <http://papers.ssrn.com/abstract=2608903>; Wojcik, K-P, ‘Bail-in in the Banking Union’ (2016) 53 CMLRev 91, 106 ffGoogle Scholar.

3 The alternative way would be to increase the asset side of the bank through the issuance of new equity, see eg Admati, A and Hellwig, M, The Bankers’ New Clothes (Princeton University Press 2013) 81ff CrossRefGoogle Scholar. However, in the current financial environment it may prove difficult to find investors willing to inject more equity into the bank.

4 See Haentjens (n 2) 13 (arguing that expropriation and bail-in ‘may boil down to the same thing, because expropriated investors have the right to appropriate damages’).

5 Things are different for shareholdings in a company. They are governed by the law of the entity under resolution, so there is no conflict-of-laws problem in so far as equity concerned. The bail-in of shareholders will work in a cross-border as in a domestic context.

6 FSB, ‘Principles for Cross-Border Effectiveness of Resolution Actions’ (2015).

7 BRRD, (Directive 2014/59/EU of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms, [2014] OJ L 173/190),art 45(1), first sentence.

8 ‘Minimum Requirement of Own Funds and Eligible Liabilities’ (MREL) is the EU's version of the Total Loss-Absorbing Capacity (TLAC) that is set by the FSB. See FSB, Principles on Loss-absorbing and Recapitalisation Capacity of G-SIBs in Resolution – ‘Total Loss-absorbing Capacity (TLAC) Term Sheet’ (2015).

9 Basel III is a capital standard for banks published by the Basel Committee on Banking Supervision (BCBS). It is transposed into EU law by the Capital Requirements Directive – CRD IV (Directive 2013/36/EU) and by the Capital Requirements Regulation – CRR (Regulation (EU) 575/13).

10 BRRD, art 45(5).

11 FSB (n 1) 34.

12 On the genesis of private international law, see Mills, A, ‘The Private History of International Law’ (2006) 55 ICLQ 1 Google Scholar; Gutzwiller, M, Geschichte des Internationalen Privatrechts: Von den Anfängen bis zu den grossen Privatrechtskodifikationen (Helbing & Lichtenhahn 1977)Google Scholar.

13 A notable exception is the United States, where some courts apply very different methodologies such as governmental interest analysis, see Hay, P et al. ., Conflict of Laws (5th edn, West 2010) 27ff Google Scholar; Symeonides, S, The American Choice-of-Law Revolution: Past, Present and Future (Martinus Nijhoff Publishers 2006) 14–18 Google Scholar.

14 Hartley, T, International Commercial Litigation: Text, Cases and Materials on Private International Law (2nd edn, Cambridge University Press 2015) 560–1CrossRefGoogle Scholar; Fawcett, J, Carruthers, J and North, P, Cheshire, North & Fawcett: Private International Law (14th edn, OUP 2008) 41–5Google Scholar.

15 See eg Kegel, G and Schurig, K, Internationales Privatrecht: Ein Studienbuch (9th edn, CH Beck 2004) 131ff Google Scholar; Bureau, D and Watt, HM, Droit international privé, vol 1 (2nd edn, Presses Universitaires de France 2010) paras 340 and 347ffGoogle Scholar.

16 Hartley (n 14) 763; Kegel and Schurig (n 15) 138 and 765; Bureau, D and Watt, HM, Droit international privé, vol 2 (2nd edn, Presses Universitaires de France 2010) para 654ff Google Scholar; Collins, L (ed), Dicey, Morris & Collins on the Conflict of Laws, vol 2 (Sweet & Maxwell 2012) para 22R–001 (rule 128)Google Scholar.

17 Sfeir, KA, Droit international privé comparé, vol 1 (Sader 2005) 674 (para 544)Google Scholar.

18 See Lehmann, M, Finanzinstrumente (Mohr Siebeck 2009) 490 Google Scholar.

19 Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and securities settlement systems [1998] OJ L166/45, art 9(2); and Directive 2002/47/EC on financial collateral arrangements as regards linked systems and credit claims [2002] OJ L168/43, art 9(1). The PRIMA approach is also followed by the Hague Securities Convention, which has yet to enter into force, see Convention of 5 July 2006 on the Law Applicable to Certain Rights in Respect of Securities held with an Intermediary, Hague Convention, arts 4(1)2 and 5(1); and Goode, RM, Kanda, H and Kreuzer, K, Explanatory Report on the Hague Convention on the Law Applicable to Certain Rights in Respect of Securities Held with an Intermediary: Hague Securities Convention (Brill 2005) para Int–41Google Scholar.

20 See eg Rome I Regulation (Council Regulation (EC) 593/2008 of 17 June 2008 on the law applicable to contractual obligations [2012] OJ L 177/6), art 3(1); Inter-American Convention on the Law Applicable to International Contracts, done at Mexico, D.F., on 17 March 1994, art 7; Swiss Federal Private International Law Act, art 116; Law on the Application of Law for Foreign-Related Civil Relations of the People's Republic of China, art 41 phrase 1; Japanese Act on the General Rules of Application of Laws (Law No 10 of 1898, as newly titled and amended 21 June 2006), art 7; Russian Civil Code, art 1210.

21 See Rome I Regulation, art 4(1)(a), (b), (2); Swiss Federal Private International Law Act, art 117(1); Law on the Application of Law for Foreign-Related Civil Relations of the People's Republic of China, art 41 phrase 2; Japanese Act on the General Rules of Application of Laws, art 8(2); Russian Civil Code, art 1211(2).

22 See Rome I Regulation, art 6; Swiss Federal Private International Law Act, art 120; Law on the Application of Law for Foreign-Related Civil Relations of the People's Republic of China, art 42; Russian Civil Code, art 1212.

23 See also Haentjens (n 2) 9, who speaks of a ‘brutal restriction of party autonomy’. Although he uses the term to refer to freedom of contract (see ibid), the same applies to party autonomy in the sense that the term is used in conflict of laws.

24 On the conflicting sovereign interests, see eg Hüpkes, E, ‘‘‘Form Follows Function” – A New Architecture for Regulating and Resolving Global Financial Institutions’ (2009) 10 EBOR 369, 377Google Scholar; Hüpkes, E, ‘Rivalry in Resolution: How to Reconcile Local Responsibilities and Global Interests?’ (2010) 7 ECFR 216, 235Google Scholar.

25 See Bank for International Settlement (BIS), ‘Report and Recommendations of the Cross-Border Bank Resolution Group’ 15 (highlighting that ‘National resolution authorities will seek, in most cases, to minimise the losses accruing to stakeholders (shareholders, depositors and other creditors, taxpayers, deposit insurer) in their specific jurisdiction to whom they are accountable.’); see also C Hendren, Judicial and Administrative Approaches to Bank Resolution: Prospects for International Harmonization (Financial Institutions Center, Wharton School, University of Pennsylvania 2011) 11 (stressing that ring-fencing by individual countries can limit and undermine the actions taken by other jurisdictions).

26 The FSB has warned States against creditor discrimination, see FSB (n 1) 13. However, that does not mean that this type of behaviour does not occur. A particularly striking example of abusive and discriminating resolution is provided by the case BayernLB v Hypo Alpe Adria (the HETA case) discussed in section III.F.2.

27 FSB (n 6) 7–8.

28 BRRD, art 55(1).

29 For a cautious view on the efficiency of contractual bail-in clauses, see Sommer, JH, ‘Why Bail-In? And How!’, 20 Economic Policy Review (2014) 207, 228Google Scholar; Huertas, TF, ‘The Case for Bail-Ins’, Financial Institutions Center Working Papers, Wharton School, University of Pennsylvania (5 December 2012) 5 Google Scholar.

30 See in more detail section III.C.1.

31 FSB (n 6) 9.

32 BRRD, art 88. Outside the EU context, the same function is fulfilled by so-called Crisis Management Groups (CGMs) that have been created for global systemically important banks, see FSB (n 1) 14.

33 BRRD, art 91(10) for the resolution of subsidiaries and BRRD, art 92(6) for the resolution of parent undertakings.

34 BRRD, arts 91(8) and 92(4).

35 The FSB tries to ensure this by requiring that instruments eligible for TLAC are subject to the law of the jurisdiction in which the relevant resolution entity is incorporated, see FSB, ‘Total Loss-Absorbing Capacity (TLAC) Term Sheet’ (n 8) 17.

36 On the single point of entry strategy, see eg Gordon, JN and Ringe, W-G, ‘Bank Resolution in the European Banking Union: A Transatlantic Perspective on What It Would Take’ (2015) 115 ColLRev 1297, 1323–30Google Scholar.

37 See ibid.

38 SPOE resolution strategies may also be applied at the level of the top operating company, but that does not have all the advantages of an SPOE bail-in applied at a holding company level.

39 See K-P Wojcik, (n 2) 91, 136 (noting that many bank groups based in the EU have operating top-level banking entities).

40 DA Skeel, ‘Single Point of Entry and the Bankruptcy Alternative’ (2014) SSRN Scholarly Paper ID 2408544, 11 <http://papers.ssrn.com/abstract=2408544>.

41 See Huertas, T, ‘Safe to Fail’ (2013) 1 Journal of Financial Perspectives 93 Google Scholar.

42 BRRD, Recital 80.

43 Virgós, M and Garcimartín, F, The European Insolvency Regulation: Law and Practice (Kluwer Law International 2004) paras 11 and 14Google Scholar.

44 Council Directive 2001/24/EC of 4 April 2001 on the reorganization and winding-up of credit institutions (Winding-up Directive) [2001] OJ L 125/15 art 3(1), 9(1) subpara 1.

45 Winding-up Directive, art 3(2) subpara 1, art 10.

46 Winding-up Directive, art 3(2) subpara 2, art 9(1) subpara 2.

47 See Winding-up Directive, art 1(4), added by BRRD, art 117(1).

48 See Winding-up Directive, art 2, as amended by BRRD, art 117(2).

49 Winding-up Directive, art 21.

50 On the similar provision of Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings (European Insolvency Regulation) [2000] OJ L160/1, art 5 (now European Insolvency Regulation (Recast) (Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings, [2015] OJ L 141/19) Art 8): Virgós and Garcimartín (n 43) 142; Smid, S in Leonhardt, P, Smid, S and Zeuner, M (eds), Insolvenzrecht: Kommentar (2nd edn, Kohlhammer 2012) art 5 EuInsVO para 2Google Scholar.

51 Winding-up Directive, art 22.

52 Winding-up Directive, art 24.

53 Winding-up Directive, art 27.

54 There are different variants of netting, such as close-out netting; see Wood, PR, Set-Off and Netting, Derivatives, Clearing Systems (2nd edn, Sweet & Maxwell 2007) 4, margin no. 1-005Google Scholar; Paech, P, ‘Close-out Netting, Insolvency Law and Conflict of Laws’ (2014) 14 JCLS 419, 424Google Scholar.

55 cf Faulkner, MC, ‘An Introduction to Securities Lending’ in Fabozzi, FJ and Mann, SV (eds), Securities Finance: Securities Lending and Repurchase Agreements (Wiley & Sons 2005) 10–11 Google Scholar.

56 See Winding-up Directive, arts 25 and 26.

57 See section III.E.

58 cf European Insolvency Regulation (Recast) (Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings, [2015] OJ L 141/19), art 1(1), 2(a) and (c) and Appendices A and B.

59 For a list of reasons why a special resolution regime for banks is necessary, see RM Lastra and A Campbell, in Lastra (n 1) 34 – 5 (para 2.27).

60 See art 3(1) European Insolvency Regulation (Recast) (n 58).

61 BRRD (n 7).

62 Reg No 806/2014 of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund [2014] OJ L 225/1.

63 The BRRD also has relevance for the European Economic Association (EEA), which comprises in addition to the 28 EU Member States Iceland, Liechtenstein and Norway. However, the BRRD only applies within the EU until the EEA Joint Committee amends the EEA Agreement to allow its application in the EEA States.

64 See in more detail section III.B.

65 SRM Reg, art 29(1).

66 See eg Grünewald (n 2) 115 (addressing ‘centralized resolution in Banking Union’).

67 BRRD, art 66(1), (2).

68 On the country-of-origin principle in EU law, see eg Roth, W-H, ‘From Centros to Überseering: Free Movement of Companies, Private International Law, and Community Law’ (2003) 52 ICLQ 177 Google Scholar; Michaels, R, ‘EU Law as Private International Law? Reconceptualising the Country-of-Origin Principle as Vested-Rights Theory’ (2006) 2 JPrivIntL 195 Google Scholar; A Mills, The Confluence of Public and Private International Law (Cambridge University Press) 200–1.

69 SRM Reg, art 7(4).

70 SRM Reg, art 7(3).

71 SRM Reg, art 18(6). For the sake of clarity, one must not confound the ‘resolution scheme’ in the sense of the SRM Regulation with the ‘group resolution scheme’ under the BRRD. While the latter is binding only on those Member States that have not explicitly disagreed with it, the resolution scheme adopted by the SRB is mandatory for all Member States in the Eurozone without any possibility to deviate.

72 See SRM Reg, art 29(1).

73 SRM Reg, art 29(2) SRM.

74 In the same sense: Wojcik (n 2) 102 (citing the Meroni doctrine as a reason for the SRM's sophisticated decision-making sequence).

75 See Cases C-9/56 and C-10/56 Meroni v High Authority [1957/1958] ECR 133.

76 See eg Regulation (EU) 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority) [2010] OJ L 331/12 (European Banking Authority Regulation).

77 Case C-270/12 United Kingdom v Parliament and Council [2014] CJEU ECLI:EU:C:2014:18.

78 On the latter restriction, see SRM Reg, art 18(7).

79 See section III.B.

80 See section II.D.

81 BRRD, art 66(1).

82 ibid.

83 See BRRD, art 66(2) in fine (emphasis mine).

84 The principle of equivalence requires that Member States apply the same rules to the enforcement of European Union law as to the enforcement of national law, see eg Case C-118/08 Transportes Urbanos y Servicios Generales SAL v Administración del Estado [2010] ECJ 2010 I-00635, paras 33–48.

85 See Rome I Regulation, art 3(1).

86 See eg art 19 of the Swiss Federal Private International Law Act 1987.

87 Kegel, G and Seidl-Hohenfelder, I, ‘On the Territoriality Principle in Public International Law’ (1981) 5 HastingsIntl&CompLRev 245, 255Google Scholar. In the slightly different but similar context of assessing expropriations under the Act of State doctrine, US courts have determined the situs of debt as well by reference to the debtor's domicile, see Menendez v Saks and Co., 485 F.2d 1355, 1364–1365 (2nd Cir. 1973); United Bank Ltd. v Cosmic International Inc., 542 F.2d 868 (2d Cir. 1976). At the heart of this localization is the fact that the State of the debtor has exclusive power to enforce the claim; see Johnson, JA, ‘Act of State: The Fundamental Inquiry of Situs Determination for Expropriated Intangible Property: Braka v. Bancomer, S.N.C.’ (1986) 11 NCJIntlL&ComReg 121, 129Google Scholar; Goldthwaite, KL, ‘Recent Approaches to Situs of Debt in Act of State Decisions’ (1985–86)1 ConnJIntlL 151, 167Google Scholar. In later decisions, the domicile of the creditor was also taken into consideration, eg in Allied Bank International v Banco Credito Agricola de Cartago, 757 F.2d 516, 521 (2d Cir. 1985), but merely as a means to fend off expropriations of claims of US banks and not as a basis of expropriating the claim by the State of the creditor's domicile. It is interesting to note that the EU itself considers that claims against third parties to be situated in the Member State of the debtor's main centre of interest, art 2(9) (viii) European Insolvency Regulation (Recast) (Regulation (EU) 2015/848 of 20 May 2015 on insolvency proceedings, [2015] OJ L 141/19).

88 See section I.

89 BRRD, see art 66(3), (5).

90 BRRD, art 85(2), (3).

91 BRRD, art 66(6).

92 This is an insight from the perspective of international administrative law, see Ruffert, M, ‘Perspektiven des Internationalen Verwaltungsrechts’ in Möllers, C, Voßkuhle, A and Walter, C (eds), Internationales Verwaltungsrecht (Mohr Siebeck 2007) 409 Google Scholar.

93 On this point see section III.F.2.

94 This will be different where the parties have expressly consented to be bound by resolution measures affecting their co-contractor; see section II.B. The text assumes that no contractual bail-in clause has been inserted in the instrument.

95 BRRD, art 93(1).

96 BRRD, art 93(2).

97 BRRD, art 97.

98 BRRD, art 97(3)(e).

99 See the overview of third country regimes in section IV.

100 See BRRD, art 94.

101 FSB (n 6) 12.

102 See Meessen, KM (ed), Extraterritorial Jurisdiction in Theory and Practice (Kluwer 1996) 97 Google Scholar; Meessen, KM, Economic Law in Globalizing Markets (Kluwer 2004) 282 Google Scholar.

103 BRRD, art 67(1)(a).

104 BRRD, art 67(1)(b).

105 See section III.F.1.

106 BRRD, art 67(2).

107 BRRD, art 67(2).

108 See section III.F.1.

109 See eg section 6 ISDA Master Agreement 2002. The purpose of such clauses is to reduce the risk of a fallout of one contractual party in the event of an insolvency of its counterparty.

110 See section II.D.

111 FSB (n 1) 10; FSB (n 6) 7. For a detailed treatment of the effects of resolution measures on derivatives, see Alférez, F G, ‘Treatment of Derivative Claims in Cross-border Insolvency Proceedings’ in Faber, D and Vermunt, N (eds), Bank Failure: Lessons from Lehman Brothers (Oxford University Press forthcoming)Google Scholar.

112 See section II.D.

113 See the introductory clause of Winding-up Directive, art 25 as amended by BRRD, art 117(3). A similar clause has been inserted with regard to repos in the Directive's art 27 by BRRD, art 177(4).

114 BRRD, art 68(6).

115 BRRD, art 68(2).

116 BRRD, art 68(2).

117 For background, see <https://www2.isda.org/functional-areas/protocol-management/protocol/22>.

118 See section II.D.

119 See Reg 2, UK Credit Institutions (Reorganisation and Winding up) Regulations 2004, as amended by The Bank Recovery and Resolution (No 2) Order 2014 SI 2014/3348, sched 3. Accordingly the definition of ‘directive reorganisation measure’ in the 2004 Regulations include, besides ‘reorganisation measures’ in the original sense of the Winding-up Directive, ‘any other measure to be given effect in or under the law of the United Kingdom pursuant to Article 66 of the BRRD’.

120 See UK Credit Institutions (Reorganisation and Winding up) Regulations 2004, arts 23–35.

121 See French Monetary and Financial Code (Code monétaire et financier), arts L613-31-2, L613-31-5 and L613-31-6.

122 Art 153(1), (2) German Recovery and Resolution Act (Sanierungs – und Abwicklungsgesetz – SAG), Federal Gazette (Bundesgesetzblatt) 2014, Pt I, at 2091.

123 See section III.D.4.

124 Art L650-9(3) French Monetary and Financial Code (Code monétaire et financier).

125 UK Banking Act 2009, section 39(4)(a) Banking Act.

126 Section 81(1) no 2 German Recovery and Resolution Act.

127 UK Banking Act 2009, section 39(4)(b); art L650-9(3) French Monetary and Financial Code; section 81(1) no 2 German Recovery and Resolution Act.

128 See section III.D.5.

129 Section 81(2), last sentence German Recovery and Resolution Act.

130 UK Banking Act 2009, section 39(4a), introduced by section 38 of The Bank Recovery and Resolution Order 2014, SI 2014 No 3329.

131 Art L650-9(3) French Monetary and Financial Code. See also art L613-50(9).

132 BayernLB v Hypo Alpe Adria (HETA case) Regional Court, Munich I, judgment of 8 May 2015, BeckRS 2015, 15096.

133 The Federal Act on the restructuring of the Hypo Alpe Adria AG (HaanSanG), Austrian Federal Gazette (Österreichisches Bundesgesetzblatt), 31 July 2014.

134 Austrian Constitutional Court, decision of 3 July 2015, ECLI:AT:VFGH:2015:G239.2014.

135 Goldman Sachs International v Novo Banco SA [2015] EWHC 2371 (Comm), per Justice Hamblen.

136 See also A Gardella, ‘Bail-in and the Two Dimensions of Burden-Sharing’ in ECB (ed), From Monetary Union to Banking Union, on the way to Capital Markets Union, ECB Legal Conference 2015, 224, available at <http://www.ecb.europa.eu/pub/pdf/other/frommonetaryuniontobankingunion201512.en.pdf> (doubting the consistency of the High Court's judgment with the Winding-up Directive as modified by the BRRD).

137 In the same sense J-H Binder, ‘The Position of Creditors Under the BRRD’ in Commemorative Volume in memory of Professor Dr. Leonidas Georgakopoulos (2016) 26 <http://papers.ssrn.com/abstract=2698086>.

138 ‘Italian banks: Essential repairs’, Financial Times, 10 July 2016.

139 ibid.

140 On the direct application of EU rules by the SRB see section III.B.

141 See art 25ff Federal Act on Banks and Savings Banks (Bundesgesetz über die Banken und Sparkassen – BankG).

142 Section 37g(1), (3) Swiss Federal Act on Banks and Savings Banks.

143 See Botschaft zur Änderung des Bankengesetzes (Sicherung der Einlagen), 12 May 2010, Federal Gazette (BBl) (2010) 3993, 4021.

144 FSB (n 6) 18.

145 Section 37g(2) Swiss Banking Act (Bankengesetz – BankG).

146 For an analysis, see McDermott, MA and Turetsky, DM, ‘Restructuring Large, Systematically-Important, Financial Companies’ (2011) 19 American Bankruptcy Institute Law Review 401; Skeel (n 40Google Scholar).

147 Title II Dodd-Frank Wall Street Reform and Consumer Protection Act 2010.

148 Skeel (n 40) 9 (noting that the Act provides only ‘a handful of exhortations of US regulators to coordinate with their foreign counterparts’).

149 FDIC and BoE, ‘Resolving Globally Active, Systemically Important, Financial Institutions’, Joint Paper, (10 December 2012) <http://www.bankofengland.co.uk/publications/Documents/news/2012/nr156.pdf>.

150 Finanz AG Zurich v Banco Economico S.A., 192 F.3d 240, 246 (2d Cir. 1999).

151 In Re Treco, 240 F3d 148 (2d Cir. 2001)

152 Geen, D et al. ., ‘A Step Closer to Ending Too-Big-To-Fail’ (2015) 35 Futures & Derivatives Law Report 1, 5 fn 35Google Scholar.

153 See Harada, K et al. ., ‘Japan's Financial Regulatory Responses to the Global Financial Crisis’ (2015) 7 Journal of Financial Economic Policy 51, 61CrossRefGoogle Scholar.

154 FSB (n 6) 18–19.

155 J García, V Santillana and S Fernández de Lis, ‘Resolution Regimes in Latin America’ (2016) <https://www.bbvaresearch.com/publicaciones/regimenes-de-resolucion-en-america-latina/?idioma=en>.

156 IMF, ‘Cross-Border Resolution: Recent Developments’ (2014) at 2 <https://www.imf.org/external/np/pp/eng/2014/060214.pdf>.

157 Axelrod, R, The Evolution of Co-Operation (Penguin 1990) 10–11 Google Scholar.

158 See FSB (n 1) no 3.1: ‘Resolution should be initiated when a firm is no longer viable or likely to be no longer viable, and has no reasonable prospect of becoming so.’

159 FSB (n 6) 13.

160 An international convention on resolution has been suggested by the Institute of International Finance (IIF), Making Resolution Robust – Completing the Legal and Institutional Frameworks for Effective Cross-Border Resolution of Financial Institutions (June 2012). At the same time, the IIF has suggested that it would not be necessary to consider the convention as a ‘hard, binding treaty’; see ibid, at 14. The exact legal status of the text is therefore unclear.

161 See also Grünewald (n 2) 75 (noting that even legally binding obligations would not guarantee effective burden-sharing).

162 A uniform text in the form of a model law has also been suggested by Mevorach, I, ‘Beyond the Search for Certainty: Addressing the Cross-Border Resolution Gap’ (2015) 10 Brooklyn Journal of Corporate, Financial & Commercial Law 1 24–30 Google Scholar. To a large extent, this proposal is similar to the one made here. One difference, however, is that Mevorach is strongly influenced by ideas of general insolvency law. The plea made here draws a sharp distinction between insolvency and resolution because the latter has a different goal; see section II.D.

163 See Romano, R, ‘For Diversity in the International Regulation of Financial Institutions: Critiquing and Recalibrating the Basel Architecture’ (2014) 31 Yale Journal on Regulation 1 Google Scholar; Romano, R, ‘The Need for Competition in International Securities Regulation’ (2001) 2 Theoretical Inquiries in Law 387 Google Scholar; Tietje, C and Lehmann, M, ‘The Role and Prospects of International Law in Financial Regulation and Supervision’ in Cottier, T, Jackson, JH, and Lastra, RM (eds), International Law in Financial Regulation and Monetary Affairs (Oxford University Press 2012) 133, 149Google Scholar.

164 See eg the CISG Database, available at <http://www.cisg.law.pace.edu>. For court decisions and arbitral awards relating to the UNCITRAL's Conventions and Model Laws see the CLOUT database, available under <http://www.uncitral.org/uncitral/en/case_law.html>.

165 See, for instance, from the EU perspective, BRRD, arts 88–89.

166 Art 91(8), 92(4) BRRD.

167 Pistor, K, ‘A Legal Theory of Finance’ (2013) 41 Journal of Comparative Economics 315, 317Google Scholar.