Section 234 of the Insolvency and Bankruptcy Code, 2016: Agreements with Foreign Countries

Text of Section 234 of the Insolvency and Bankruptcy Code, 2016

Meaning and scope of Section 234 IBC

Section 234 deals with the international or cross-border operation of the Insolvency and Bankruptcy Code where assets or property connected with an Indian insolvency or bankruptcy process are situated outside India. It creates an enabling framework based on agreements and reciprocal arrangements between India and foreign countries.

Section 234(1): Agreements with foreign governments

Under Section 234(1), the power to enter into an international agreement is vested in the Central Government. The agreement must be with the government of a country outside India and must concern enforcement of the provisions of the Insolvency and Bankruptcy Code.

The provision is therefore an enabling basis for government-to-government cooperation in matters where insolvency or bankruptcy has a cross-border element. It does not, by its wording, allow an insolvency professional, liquidator, creditor or corporate debtor independently to create the reciprocal arrangement contemplated by Section 234.

Section 234(2): Overseas assets and reciprocal arrangements

Section 234(2) concerns assets or property situated outside India. Where reciprocal arrangements have been made with the relevant foreign country, the Central Government may issue a notification in the Official Gazette directing that provisions of the Code will apply to such overseas assets or property subject to conditions specified in the notification.

The subsection expressly refers to assets or property of a corporate debtor or debtor, including a personal guarantor of a corporate debtor. Accordingly, the statutory language is not confined only to assets of corporate persons.

What is a reciprocal arrangement under Section 234?

In the context of Section 234, a reciprocal arrangement refers to the cross-border cooperation contemplated by the provision between India and another country for giving effect to insolvency and bankruptcy measures involving assets or property outside India. The precise rights, conditions and procedures depend on the applicable agreement, notification and other governing law.

Section 234 should therefore be read together with the particular reciprocal arrangement, if any, applicable to the foreign country concerned rather than as a standalone mechanism for automatic recognition or enforcement in every foreign jurisdiction.

Relationship between Section 234 and Section 235

Section 235 of the Insolvency and Bankruptcy Code complements Section 234. Where the statutory conditions are met and relevant assets are situated in a country with which reciprocal arrangements have been made under Section 234, Section 235 provides for an application to the Adjudicating Authority where evidence or action relating to those assets is required in connection with the insolvency resolution, liquidation or bankruptcy proceeding.

Sections 234 and 235 should therefore be read together when considering the Code's statutory framework for cooperation concerning assets located outside India.

Cross-border insolvency under the IBC

Cross-border insolvency may arise where a debtor has assets, creditors, operations or proceedings in more than one jurisdiction. Section 234 addresses one part of that problem by authorising bilateral governmental arrangements and conditional application of the Code to overseas assets or property. Section 235 provides the connected letter-of-request mechanism in qualifying cases.

The Insolvency and Bankruptcy Code has been amended from time to time, including by the Insolvency and Bankruptcy Code (Amendment) Act, 2026. For any live cross-border matter, the current text of the Code, commencement notifications, applicable rules and regulations, relevant reciprocal arrangements and judicial decisions should be checked before relying on the statutory mechanism.

Official legal resources

For the latest statutory and regulatory position, use official Government of India and IBBI sources.

Related provisions of the Insolvency and Bankruptcy Code

Readers examining cross-border issues may also refer to Section 233 - Protection of action taken in good faith, Section 235 - Letter of request to a country outside India in certain cases, Section 236 - Trial of offences by Special Court, Section 238 - Provisions of this Code to override other laws, Section 239 - Power to make rules and Section 240 - Power to make regulations.