'Without regard to foreignness': The Reciprocal Equal Treatment of Foreign Creditors in the Early Modern German Territories

Today, though previously widely accepted as fundamental for international economic growth, both free trade and the equal treatment of foreigners have become hotly debated topics. Whereas the first post-war decades saw an unparalleled liberalization of world trade under the auspices of the World Trade Organization, advocates for more protective, restrictive trade policies have seen their argument gain momentum in the political arena. An area in which the issue of an equal treatment of foreigners arose relatively early on, was insolvency law. Rules on insolvency can be seen as one of the core areas of any legal system. Therefore, the question on what the position of foreign creditors should be in insolvency procedures popped up quickly. In this chapter, I demonstrate that for the German territories, equal legal treatment of foreign creditors in insolvency procedures was agreed upon between various cities from the second half of the seventeenth century onwards. Guided by developments in academia and general political thinking, it was accepted that the equal treatment of one’s own creditors in foreign insolvency procedures could be demanded if a similarly favourable position was granted to creditors from this state or city in one’s own jurisdiction.

First, a brief overview is given of the historiography on cross-border insolvency law, and the legal position of foreigners specifically. Then, the spread of equal treatment clauses in early modern German city law is analyzed, followed by the negotiations and agreements between various cities on the equal treatment of their creditors. In this regard, communications between Frankfurt am Main and other cities have been studied, and there are clear indications that these findings are emblematic of a larger, general development. Finally, the outcome of the research is interpreted in the scheme of a broader debate on legal convergence.