THE URGENT NEED FOR INDONESIA TO ADOPT THE UNCITRAL MODEL LAW ON CROSS-BORDER INSOLVENCY: OVERCOMING TERRITORIAL LIMITATIONS IN A GLOBALIZED ECONOMY

• Ghouva Syaifii Al Ma’arif

  Universitas Airlangga

  Author

In an era of intensified globalization, Indonesia's bankruptcy regime under Law No. 37 of 2004 remains anchored in the territoriality principle, which confines enforcement to domestic assets and creates profound inefficiencies in cross-border insolvency proceedings. This manifests in judicial coordination failures, heightened asset flight risks, discriminatory treatment of foreign creditors, and prolonged resolutions that undermine economic competitiveness. Drawing directly from doctrinal, conceptual, and comparative methodologies, this article rigorously evaluates the urgency of adopting the UNCITRAL Model Law on Cross-Border Insolvency (1997). It dissects contemporary challenges, including the complexities of borderless global business, recognition hurdles for foreign entities under PMDN/PMA frameworks, and systemic gaps in Law No. 37/2004. A detailed comparative analysis examines implementations in the United States (Chapter 15 Bankruptcy Code), the United Kingdom, and Singapore, highlighting best practices such as center-of-main-interests (COMI) determinations, court-to-court cooperation protocols, and rapid recognition mechanisms that have reduced litigation costs by 30-50% and improved asset recoveries. The article further elucidates the dire consequences of non-adoption, including eroded foreign direct investment, diminished Ease of Doing Business rankings, escalated litigation expenses, and the risk of Indonesia becoming a haven for asset concealment. Prescriptive recommendations advocate targeted amendments to Articles 16, 21, and 69 of Law No. 37/2004, alongside judicial guidelines and bilateral protocols with key trading partners. Adoption would harmonize Indonesia's framework with international standards, safeguard paritas creditorum across borders, and bolster national economic resilience. Without reform, Indonesia faces deepening legal uncertainty in multinational insolvencies).

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