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2020-07-doc1 Jet Airways Insolvency Protocol

Once a pioneer of Indian aviation, Jet Airways (India) (Jet Airways) completely ceased its flight operations on 17 April 2019, attracting international concern. Legal hardship started for the debt-laden airline on 21 May 2019 when the Dutch Noord-Holland District Court placed the company, which had an establishment at Amsterdam Schiphol airport and its corporate seat in Mumbai, into bankruptcy (faillissement). In the same judgment, the court appointed a supervisory judge and Pot Jonker partner Rocco Mulder as insolvency practitioner (IP). Mulder took control of Jet Airways’ Boeing 777 parked at Schiphol Airport and then served Jet Airways and the leader of the Indian lender consortium, the State Bank of India, with copies of the Dutch judgment. No appeal was made against the court’s decision under Dutch law by either of the two recipients.

But within a month of the Dutch bankruptcy judgment, sensing an incorrigible stalemate from an application brought by two other operational creditors, a consortium led by the State Bank of India applied to initiate a corporate insolvency resolution process (CIRP) against Jet Airways, under Section 7 of the Insolvency & Bankruptcy Code (IBC) at the Mumbai bench of the National Company Law Tribunal (NCLT). This attracted an intervention from Mulder, who, in light of the Dutch proceedings, requested a stay of any action in India. But the NCLT dismissed the objections, and opened the CIRP. It ruled that the Dutch judgment was void ab initio as sections 234 and 235 of the IBC, which facilitate bilateral arrangements and recognition of foreign judgements, were not yet in force in India. This conferred the sole jurisdiction of the insolvency to the NCLT, making the CIRP the only recognised action under the IBC. Aggrieved by the Indian order, the Dutch IP appealed to the National Company Law Appellate Tribunal (NCLAT) in New Delhi to determine whether two separate proceedings can operate against the debtor if one of the countries involved does not possess territorial jurisdiction under the IBC, and whether he and the Resolution Professional (RP) appointed under the IBC may enter a joint agreement to cooperate. The NCLAT responded in the affirmative to both, and upon Mulder’s assurance he would take no action against the Dutch assets, it approved the creation of the ‘Cross Border Insolvency Protocol’.

What’s an insolvency protocol?

In general terms, a protocol can be described as a means of agreeing towards the alignment of different insolvency proceedings or of establishing how restructuring or pre-restructuring  measures should be taken across several jurisdictions. Such agreements are designed to overcome certain legal or factual obstacles that could otherwise be an impediment to achieving an efficient reorganisation or equitable liquidation. A protocol is a tool to direct and guide a joint approach in a cross-border case, broadly aimed at improving communication and data sharing, collecting and preserving assets, ensuring the uniform treatment of claims, allocating responsibilities between IPs, and facilitating communication between courts and parties.

First developed in practice, UNCITRAL introduced cross-border insolvency protocols in its Model Law on Cross-Border Insolvency (1997). Recent years have witnessed the conclusion of some well-known cross-border insolvency protocols, including those in the matters of Lehman Brothers, involving seventeen jurisdictions worldwide, and Bernard Madoff Securities, involving eight jurisdictions worldwide. The utility of insolvency protocols was also acknowledged in the European Insolvency Regulation (Recast) (EIR Recast), which came into effect in 2017 and which recognises that IPs and courts can enter  “into agreements and protocols for the purpose of facilitating cross-border cooperation of multiple insolvency proceedings” in different Member States (recital 49). Such protocols are available in proceedings concerning the same debtor or those concerning multiple debtors,


Transcending beyond the quintessential and conventional legal issues – such as whether parties can choose insolvency jurisdictions or applicable laws; whether the Rome I law applicable to contractual obligations applies to protocols; whether all parties in insolvency proceedings have permission to enter such protocols; and whether creditors can raise objections to the use or content of such protocols –  the Jet Airways protocol contains a host of very interesting and controversial provisions. For the text of the protocol, see

The first point to note is that India is evidently not covered by the EIR Recast and neither the Netherlands nor India have adopted the UNCITRAL Model Law. However, practitioners are not only guided by legal rules, but also positive global experiences from their peers. In the case at hand the protocol contains thirteen clauses. It strikes that the document is set up as if it were a regular agreement, both in form and make-up, including recitals, followed by the body of the protocol, using the term ‘agreement’, and ending with a signing paragraph. A part of the miscellaneous provisions under clause 12.7 states: “No Party may fully or partially rescind this protocol” and clause 12.8 provides that: “No Party may suspend performance of its obligations under or in connection with this Protocol”. If the protocol is to be seen as an agreement, it is clear that a clause containing a choice of law – be it Dutch law, Indian law or the law of a third country – could have been included, although it may very well have been that the parties deliberately left this matter vague. If the protocol is to be regarded as non-binding, it is inconsistent to use such terms as “rescind” or “suspend”. Besides, it is questionable as to what extent, in general, a protocol can be fully non-rescindable or non-suspendable. If an IP, however, does want to stress  the guiding nature of a protocol, one would expect the body to include a clear TINILEP-clause (This Is Not Intended to be a Legally Enforceable Protocol).


Raising a reasonable assumption of the protocol being a work of lawyers, Clause 2 (‘Purpose’) and Clause 3 (‘Aims of the Protocol’) are nearly a verbatim copy and paste of the Lehman Brothers protocol. In Clause 2 it is expressed that parties agree on the soft nature of their protocol: “this Protocol represents statement of intentions and guidelines” but – given the substantive differences in both countries’ insolvency laws – “this Protocol shall not impose […] any duties or obligations”. The clause signals the parties’ uncertainties about the legal nature of the protocol and its binding or non-binding character.

Clause 3 lays down the parties’ agreement that Jet Airways is an Indian company with its centre of main interest in India, and that the Indian proceedings are the main insolvency proceedings and the Dutch proceedings are the non-main insolvency proceedings. The expression ‘non-main’ comes from the Model Law. The legal question, however, is whether parties can ‘contractually’ agree on matters such as international insolvency jurisdiction, the idea being that ‘international jurisdiction’ is a matter of mandatory, public law.

Clause 4 (‘Effectiveness’) may have an impact on this matter. It provides that the protocol “shall come into effect upon receiving an approval on its terms from (i) NCLT/NCLAT and (ii) the Dutch Bankruptcy Court or other appropriate adjudicating authority in Netherlands responsible for overseeing the Dutch Proceedings”. The protocol seems to assume that the Dutch Bankruptcy Act includes such a rule of approval. In practical terms for the Netherlands, the approval should be given by the Dutch supervisory judge or the District Court itself. If the parties do not know which authority can give the requested approval, they should clearly address this vagueness.

Court as a drafter?

The Indian NCLAT has determined that the parties have accepted all clauses, except Clause 6.1.2, which relates to participation of the Dutch IP in the meeting of the Committee of Creditors (Coc). The parties disagree about the Dutch IP’s role in relation the CoC in the Indian proceedings. The Dutch IP wanted to participate in the meetings of the CoC as an observer but the Indian RP objected. The New Delhi NCLAT ruled in favor of the Dutch IP, accepting that “The Dutch Trustee shall be invited to participate in the meetings of the CoC as an observer but shall not have a right to vote in such meetings”. The tribunal, therefore, rejected the CoC’s stance on incorporating a clause that would not give such a right to the foreign IP. The involvement of the court in drafting the protocol, and selecting the ‘correct’ wording of a clause, is notable and puts into question the contractual nature of the protocol and the meaning of the courts’ intervention. Given that the 45-day limitation to appeal against the NCLAT order under Indian insolvency law has ended, it is unlikely the creditors will appeal to the Supreme Court of India, particularly as they have not publicly expressed any intention to do so.

International cooperation

In Clause 9 (‘Claims’), the parties agreed that each creditor should submit a claim in each proceeding. The Dutch IP shall collate all claims received by him and shall forward them to the RP who will then verify and admit such claims, and vice versa. The chosen system follows the model incorporated in Article 45(2) of the EIR Recast. In Clause 10 (‘Costs’), the parties seem to have introduced a new global principle, which says that “in the spirit of cooperation” the Dutch IP and the Indian RP, “shall be treated equally”. This ‘equality’ provision should facilitate trust and the spirit of respect between the cooperating parties. It goes far beyond the issue of costs, as the name of the clause suggests.

The Jet Airways protocol is a challenging quilt, multi-coloured with elements from the Model Law, the EIR Recast, other protocols and the parties’ own inventions, with the courts holding the pen for one specific clause. Where national states are slow with legislation and overemphatic on their own national jurisdictions and national interests, the Jet Airway protocol is an important achievement – not only for the case at hand. It signals the need for a more unified use of protocols, by increasing the know-how of the tool, by discussing certain ‘model’ provisions and guiding explanations to foster the adoption of protocols to achieve better results for all stakeholders, and to support judicial cooperation in cross-border insolvency proceedings.


District Court Noord-Holland 21 May 2019, ECLI:NL:RBNHO:2019:542

State Bank of India v. Jet Airways (India) Ltd. & Ors., CP 2205 (IB)/MB/2019

Jet Airways (India) Ltd. (Offshore Regional Hub) v. State Bank of India & Anr., Company Appeal (AT) (Insolvency) No. 707 of 2019, see https://nclat/Useradmin/upload/14485121915d8df2bae7814.pdf)

This is a slightly adapted version of a regular column Bob Wessels is writing for Global Restructuring Review (GRR) on the topic of cross-border restructuring and insolvency in a European context. GRR is a subscription-only publication, but here is a link to the full piece, which appeared in GRR in January 2020. See