IBC Section 234: Agreements with foreign countries

Section 234 of Insolvency and Bankruptcy Code, 2016: Agreements with foreign countries

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

(1) The Central Government may enter into an agreement with the Government of any country outside India for enforcing the provisions of this Code.

(2) The Central Government may, by notification in the Official Gazette, direct that the application of provisions of this Code in relation to assets or property of corporate debtor or debtor, including a personal guarantor of a corporate debtor, as the case may be, situated at any place in a country outside India with which reciprocal arrangements have been made, shall be subject to such conditions as may be specified.

Legal Commentary & Landmark Judgments: Section 234

Section 234 empowers the Central Government to enter into Bilateral Agreements with foreign governments for enforcing the provisions of the Code across international jurisdictions.

Cross-Border Reciprocal Agreements: The Central Government may enter into an agreement with the government of any country outside India for enforcing the provisions of the Code.
Extraterritorial Asset Reach: Allows application of the Code to assets or property of corporate debtors or personal guarantors situated in a foreign reciprocating territory.
Notification of Reciprocating Territories: Enforceable through formal gazette notifications designating reciprocating foreign territories.

Key Landmark Precedents:

State Bank of India v. Jet Airways (India) Ltd. (NCLAT 2019): In the landmark Jet Airways cross-border insolvency, the NCLAT sanctioned a Cross-Border Insolvency Protocol between the Indian RP and Dutch Bankruptcy Administrator, pioneering international coordination.
Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17: The Supreme Court recognized that cross-border insolvency cooperation under Section 234 is vital to trace overseas assets of Indian corporate defaulters.

Courtroom Practice & Strategic Litigation Guidance:

Where a corporate debtor owns significant assets or subsidiaries in foreign jurisdictions, the RP should move the NCLT to approve an international insolvency protocol under Section 234 r/w UNCITRAL Model Law principles.