The Twilight of the Law of the Fairs: Inventing International Cooperation on Bankruptcies in Early Modern Europe (Lyon, 1660–1710)

Abstract

Abstract Bankruptcy was a key institution in the development of markets in Europe. However, the territoriality of jurisdictions and legal systems made international insolvencies difficult to manage. In the middle of the seventeenth century, cities such as Lyon developed networks of cooperation by granting foreign merchants equal rights to local creditors on a reciprocal basis. However, courts were reluctant to give foreign authorities control over assets and creditors on their territory. The article examines how the Lyon commercial court changed its policy towards international insolvencies during the second half of the seventeenth century. Whereas equal treatment of foreign creditors was conditioned on the recognition of an extraterritorial jurisdiction in the medieval fairs system, it now depended on the reciprocity of the legal status granted to merchants abroad. This system of cooperation between equally sovereign courts prefigured in many ways the current situation of private international law in bankruptcy matters.