Abstract The Hainan Free Trade Port Law grants Hainan unprecedented rule‐making autonomy compared with other domestic pilot free trade zones. This autonomy provides a solid foundation for Hainan to develop cross‐border insolvency rules for shipping. Despite the sector's rapid growth and increased investment from multinational and domestic shipping firms since the Hainan Free Trade Port's establishment, a significant gap in cross‐border insolvency provisions remains within Chinese law. Effective 1 December 2021, the ‘Regulations on the Bankruptcy Procedure of Enterprises in Hainan Free Trade Port’ do not cover cross‐border insolvency, underscoring the need for more specific legal frameworks. The Enterprise Bankruptcy Law of the People's Republic of China (‘Enterprise Bankruptcy Law’), particularly Article 5, serves as the primary legal foundation for cross‐border insolvency in China. The application and interpretation of this provision have been further elucidated through judicial opinions issued by the Chinese Supreme People's Court. For instance, the Proceedings of the Work Conference of the National Courts on Bankruptcy Trial highlighted the principle of reciprocity and the need to protect creditors' rights, emphasising the balance between domestic creditors' interests and international cooperation. These judicial opinions highlight the dynamic development of cross‐border insolvency law in China and the judiciary's significant role in its practical implementation. Although the Enterprise Bankruptcy Law of the People's Republic of China provides some guidance, its overly stringent and general nature fails to address the complexities of shipping‐related cross‐border insolvency. To protect creditors' and debtors' rights and manage the growing complexity of insolvency cases effectively, Hainan should establish specific rules for shipping insolvency. These rules should address jurisdictional conflicts between maritime and non‐maritime courts, define the application of ship preference in insolvency law, clarify conditions for the recognition and relief of cross‐border insolvency, and tackle barriers to international cooperation mechanisms in shipping insolvency. Building on this foundation, specific regulations can be formulated for managing jurisdictional conflicts, prioritising compensation for maritime liens, facilitating recognition and relief of foreign insolvency proceedings, and enhancing international cooperation in cross‐border maritime insolvency. Developing these regulations will create a more legal, international, and convenient business environment at the Hainan Free Trade Port.
Li et al. (Mon,) studied this question.