The European Union recently amended its Regulation on insolvency proceedings to implement lessons learned during the previous iteration’s lifespan. However, its interaction with the E.U.’s Guarantee Mandate leads to unintended consequences in cross-border insolvencies that can frustrate the animating principles of both laws. This Comment argues for a dynamic approach to Member States’ guarantee funds under the Guarantee Mandate that will pay employee claims according to national law, rather than allowing the claim to be governed wholly by the law of the State administering the insolvency proceedings. This change will eliminate the disparate impact that changing substantive law can have on otherwise similarly-situated employees, while at the same time allowing Member States to internalize the costs of the disparate legal regimes, allowing them to more fully realize their national policy choices and allocate the internalized costs to the various stakeholders as they see fit. This change would reduce the costs disparately imposed on employees based solely on where their employer is headquartered, and increase the efficiency of the cross-border insolvency administration process.
Eastby, Joshua W.
"The Law of Unintended Consequences: The 2015 E.U. Insolvency Regulation and Employee Claims in Cross-Border Insolvencies,"
Chicago Journal of International Law:
1, Article 4.
Available at: http://chicagounbound.uchicago.edu/cjil/vol17/iss1/4