Comparative Law Researches

Comparative Law Researches

The Effect of Conflict of Bankruptcy’s Laws on Proper Functioning of Payment Systems

Document Type : Original Research

Authors
Saeid Rahmatzadeh 1
Ebrahim Abdipour fard 2
Ebrahim Delshad Ma'aref 3
1 Ph.D. Student of private law, Law department, Qom Islamic Azad University, Qom, Iran.
2 Professor, Private law department, Faculty of Law and Political Science, Qom University, Qom, Iran.
3 Associate Professor, Law department, Qom Islamic Azad University, Qom, Iran.
Abstract
Proper functioning of payment systems mainly requires a legislative support by establishment a strong and cohesive legal framework. One of the important factors in the efficiency of these systems is the management of legal risks, i.e. losses due to unexpected or uncertain implementation of a law. Presence of foreign elements in international payment systems makes laws, governing these systems, conflict more likely and through those laws the conflict between bankruptcies laws, in cases which one of the parties gets bankrupt, is inevitable.

Analytically-Descriptive in manner and by comparative studies the present research discusses various approaches of different legal systems in resolving conflicts between bankruptcy laws and jurisdictional competences and also considers the impact of these laws on proper functioning of payment systems, especially those effects related to the principle of performed payment order’s irrevocability and the settlement finality principle.

According to the results of this study, preference of the law governing the payment and settlement system to the law governing bankruptcy affairs, establishing substantive regulations in support of payment systems in a manner that the validity of performed payment orders and settlements, which had been taken place before the commencement of bankruptcy processes, and also the validity of payment orders, which are taken place without awareness of bankruptcy sentence and after bankruptcy process commencement, would be maintained by elimination of provisions regarding the retroactivity of bankruptcy sentences and also elimination of any zero hour rule regarding payment systems, are crucial for avoiding adverse effects of bankruptcy laws conflicts on payment.systems.proper.functioning.as.well.as.to.reduce.legal.risks.of.such.systems.
Keywords
conflict of laws
payment system
settlement system
collateral
Bankruptcy
Settlement Finality

Subjects

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