The purpose of this memorandum is to obtain Parliament's approval for the Republic of South Africa to designate the United Kingdom in terms of Section 2(2)(a) of the Cross-Border Insolvency Act, 2000 (Act No 42 of 2000) (the Act).

The object of designation is to enable the Government of the United Kingdom, upon application by South Africa, to provide an effective mechanism to deal with cases of cross-border insolvency.

3.1 Previously the need was identified to strengthen the cooperation between the courts and other competent authorities of the Republic of South Africa and those of the foreign states involved in cases of cross-border insolvency. A fair and efficient administration of cross-border insolvencies that protects the interests of all creditors and other interested persons and parties, including the debtor, was proposed through the Act.

3.2 The Act was approved by Parliament on 2 November 2000. The Act was published in Government Gazette 21899 of 15 December 2000. According to section 34, the Act will come into operation on a date to be fixed by the President by proclamation in the Government Gazette. The Presidency has indicated that proclamation should be held over until States have been designated in terms of the Act. The Act will be implemented on 10 October 2003.

4.1 Section 2(2)(a) of the Act provides that the Act will only apply in respect of any State designated by the Minister of Justice and Constitutional Development by notice in the Government Gazette. In terms of Section 2(2)(b) of the Act the Minister may only designate a State if he is satisfied that the recognition accorded by the law of such a State to proceedings under the laws of South Africa relating to insolvency justifies the application of the Act to foreign proceedings in such a State.

4.2 Various countries, including the United Kingdom, Mexico, Australia and NewZealand, have been approached through the Department of Foreign Affairs. The only response received was from the United Kingdom.

4.4 The United Kingdom has indicated in the letter dated 4 August 2003 that they welcome the Department's proposal to designate the United Kingdom in terms of Section 2(2)(a) of the Act. With effect from 1 March 1996 the Republic of South Africa has been designated as a "relevant country" for purposes of section 426 of the United Kingdom's Insolvency Act of 1986.

4.5 If the United Kingdom is designated and the Act is made applicable to their insolvency proceedings, the reciprocity requirement will be satisfied. It follows that there will be no obstacles to obtain recognition of South African insolvency proceedings in the United Kingdom. Therefore, the Minister is satisfied that the recognition accorded by the law of the United Kingdom to proceedings under the laws of South Africa relating to insolvency justifies the application of the Act to foreign proceedings in the United Kingdom.

4.6 Subsequently information is being gathered in an ongoing process in order to decide on the designation of further States.

The proposed recommendation was submitted to the South African Law Commission, the State Law Advisors as well as International Law Advisors.

None

It is recommended that Parliament approve the designation of the United Kingdom in terms of section 2(2)(a) of the Cross-Border Insolvency Act, 2000 (Act No 42 of 2000).