4. Fostering of Communication, Cooperation and Diplomacy

Section 1525 of Title 11 discusses the mandatory nature of court-to-court communication, cooperation, and diplomacy:

(a) Consistent with section 1501, the court shall cooperate to the maximum extent possible with a foreign court or a foreign representative, either directly or through the trustee.

(b) The court is entitled to communicate directly with or to request information or assistance directly from, a foreign court or a foreign representative, subject to the rights of a party in interest to notice and participation*(179).

Section 1526 of Title 11 provides for direct communications between trustees, foreign courts, and foreign representatives, as follows:

(a) Consistent with section 1501, the trustee or other person including an examiner, authorized by the court, shall, subject to the supervision of the court, cooperate to the maximum extent possible with a foreign court or a foreign representative.

(b) The trustee or other person, including an examiner, authorized by the court is entitled, subject to the supervision of the court, to communicate directly with the foreign court or a foreign representative*(180).

While courts have not discussed the language of 11 U.S.C. §§ 1525 and 1526 at great length, it is important to note the mandatory nature of the cooperation required between courts*(181). The language regarding cooperation is not a permissive "should" or "may" but instead the obligatory "shall." A court, trustee, or "other person," including an examiner, is, subject to some limitation, entitled to communication and cooperation. This is the centerpiece to the functionality of Chapter 15. Without it, attempted communications may fall on deaf ears. But it can be difficult to balance the cooperation required in 11 U.S.C. §§ 1525 and 1526 with the public policy exception in 11 U.S.C. § 1506.

Also notable is the "direct" nature of the communication. This streamlines the process. As the Guide to the Enactment of the Model Law notes:

The ability of courts, with appropriate involvement of the parties, to communicate "directly" and to request information and assistance "directly" from foreign courts or foreign representatives is intended to avoid the use of time-consuming procedures traditionally in use, such as letters rogatory. This ability is critical when courts consider that they should act with urgency. In order to emphasize the flexible and potentially urgent character of cooperation, the enacting State may find it useful to include in the enactment of the Model Law an express provision that would authorize courts, when they engage in cross-border communications [...], to forgo the use of formalities (e.g., communication via higher courts, letters rogatory or other diplomatic or consular channels) that are inconsistent with the policy behind the provision*(182).

A court, however, in initiating a communication with a foreign court or foreign representative is not completely unfettered. Notice of a court's intent to communicate with a foreign court or foreign representative is required under Fed. R. Bankr. P. 2002(q). Under subsection (1) of this rule, 21-day notice of a hearing to recognize a foreign proceeding must be given by mail to the debtor, the United States Trustee*(183), all administrators in foreign proceedings of the debtor, entities against whom provisional relief is sought under section 1519 of the Bankruptcy Code, and entities against whom the debtor is engaged in litigation at the commencement of the case*(184). Notice given under Fed. R. Bankr. P. 2002(q)(i) must state whether the petition seeks recognition as a foreign main proceeding or foreign non-main proceeding*(185). Under subsection (2) of the rule, notice must be given of the court's intent to communicate with a foreign court or foreign representative to the same parties.

Further guidelines ("Guidelines") regarding court-to-court communications have been crafted and published by the American Law Institute ("ALI") and the International Insolvency Institute ("III")*(186). These Guidelines were originally prepared in conjunction with court-to-court communications between NAFTA nations (Mexico, United States and Canada)*(187). The ALI and III promulgated the Guidelines to be useful whenever there were transnational insolvency cases*(188). The Guidelines have been supported and their use has been otherwise encouraged by the National Conference of Bankruptcy Judges*(189). The text of the Guidelines is now available in Arabic, Chinese, Croatian, English, French, Georgian, German, Greek, Italian, Japanese, Korean, Portuguese, Russian and Swedish*(190). Though prior to 2011 the Guidelines were not widely used outside of NAFTA, efforts have been made to create awareness of the Guidelines in circles of insolvency practitioners and judges all over the globe*(191).

Other salient forms of cooperation and coordination include Section 1527 of the Bankruptcy Code. It sets forth a list of forms of cooperation. As acknowledged in the House Report to BAPCPA, 11 U.S.C § 1527 was derived from protocols previously used by various courts. Section 1527, in effect, puts into practice the general concept of comity as expressed by the United States Supreme Court in Hilton v. Guyot*(192). The Court held:

[Comity is] the recognition which one nation allows within its territory to legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens, or of other persons who are under the protections of its laws*(193).

11 U.S.C. § 1527 provides:

Cooperation referred to in sections 1525 and 1526 may be implemented by any appropriate means, including:

(1) appointment of a person or body, including an examiner, to act at the direction of the court;

(2) communication of information by any means considered appropriate by the court;

(3) coordination of the administration and supervision of the debtor's assets and affairs;

(4) approval or implementation of agreements concerning the coordination of proceedings; and

(5) coordination of concurrent proceedings regarding the same debtor*(194).

This non-exclusive list provides a framework from which courts may implement procedures to foster comity.

Recent case law from the Fifth Circuit explained that "Chapter 15 provides courts with broad, flexible rules to fashion relief appropriate for effectuating its objectives in accordance with comity"*(195). In fashioning such relief, courts must "take into account the interests of the United States, the interests of the foreign state or states involved, and the mutual interests of the family of nations in just and efficiently functioning rules of international law"*(196). Chapter 15 maintains, and in certain circumstances enhances, the goal of "maximum flexibility [] that section 304 provided bankruptcy courts in light of the principles of international comity and respect for the laws and judgments of other nations"*(197). And in In re Vitro S.A.B. de C.V., the Fifth Circuit clarified that it is unnecessary, and a court should not expect, that all relief requested by a foreign representative be identical to or available under United States law*(198).