Insolvency in International Commercial Arbitration (original) (raw)
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The interference between insolvency law and the law applicable to arbitration is inevitable. Council Regulation (EC) No. 1346/2000 of 29 May 2000, on insolvency proceedings (Regulation), deals with proceedings being conducted in one EU Member State, while an insolvency proceedings involving one of the parties to the arbitration agreement was opened in another Member State. The present article describing impacts of opening an insolvency proceedings (within the scope of Regulation) and declaration of bankruptcy on pending arbitration in light of recent decisions of the Czech, English and Swiss arbitral tribunals and courts dealing with the insolvency of one of the parties in pending international arbitrations. Some case law of particular Austrian, Dutch, French and German courts will be reflected as well. The formulation pending lawsuit within the meaning of Art 15 of the Regulations is broader than a lawsuit pending within the jurisdiction of the courts and it covers all proceedings, which might have the same or similar effect as a court judgment. The wording of Art 15 covers therefore pending arbitrations seating within the Member States applying the Regulation as well. Irrespective of the duty to apply all EC regulations within their territorial scope as a part of the law of all Member States (excl Danmark) the acceptance of the principle of suspension of ongoing proceedings, if being a part of the national law within the seat of any finding and contradictory dispute resolution mechanism, forms part of internal public policy. Neither arbitration (arbitration clause) nor any other jurisdictional clause create a security of an contractual obligation. Trying to take out arbitration from the scope of the Insolvency Regulation or any law applicable on the effect(s) of insolvency proceedings within the seat of arbitration is a breach of the public policy principle prefering the equal and partial distribution of the bankruptcy assets to all (registered) creditors under a public supervisory. A reliance on the arbitration clause as a principle can not prevail the equality of all unsecured creditors of the debtor. The prevalance of the later principle over a reliance on the arbitral clause has furthermore to be understood as a part of international public policy (ordre public).
This paper explores the assistance that can be had of international arbitration in international insolvency cases. As an operational scheme, they have hitherto operated in separate worlds, by and large without intersecting. They stake-holders need to develop understanding of the applicable laws of arbitration and insolvency, given the acknowledgeable role of international arbitration in the international insolvency proceedings. This paper examines the issue in seven parts. Part I walks through the structural firmament of international arbitration and insolvency laws, very briefly. Part-II advances perspectives with regard to their processes and applicability operations. Part-III looks for locus standi of using legally the arbitration in international insolvency cases against the backdrop of E.U. Insolvency Regulation and UNCITRAL Model Law. Part-IV explores enabling mechanism to enable the interaction of two areas, of international insolvency and international arbitration. Leading to Part V, this paper delves into possible uses of arbitration in international insolvency cases. Logically, then Part VI seeks to audit the process- the limitations inherent in the arbitration proceedings (of New York Convention), of processes borne out of relationship between the two and unavoidable features of arbitration. While Part VI explores the procedural limitations, Part VII discusses the possibility of intersection in terms of extant public policy of the stake-holder jurisdiction- the issues of public law qua private law, and assessing arbitration in terms of public policy. In conclusion, a sweeping obiter dicta attendant on the foregoing analysis wraps this paper observing that there is a need to further explore and elaborate the intersection of arbitration proceedings in insolvency context, and that much enterprise could be profitably done in this area.
PROCEDURAL ASPECTS OF EU LAW, 2017
The insolvency law contains summary processes for dealing with claims and protections against certain proceedings being initiated or continued. There has been some debate, as well as the recent case law, concerning the primacy of these rules over court proceedings and arbitration agreements. In the following article, we look at what the current position of Insolvency Regulation 2015/ 845 under EU law is, and we consider the relation between the arbitration and the insolvency proceedings and the impact on the arbitration agreement. Furthermore, we will discuss the differences between the EC Regulation 1346/2000 and the EU Insolvency Regulation 2015 /848. The first part will be dedicated to how the arbitration agreement and the Regulation relate. In the past, the initiation of insolvency procedure rendered the arbitration agreement null and void in some member states. Such cases happened under the Polish and Spanish national laws. Therefore, the case Elektim v. Vivendi will be discussed as an example. Moreover, the current situation in those countries will be analyzed. The second part of this paper analyzes the effects of the insolvency on the pending arbitration proceedings. A subject of discussion will also be the question of whether the arbitration procedure must be terminated or continued. A comparative analysis shows that some national laws provide for a compulsory termination of arbitration proceedings, while another group of countries allows for the continuation of the arbitration process. In the third part, we will examine the amendments of the EC Regulation 1346/2000 adopted and implemented in the EU Regulation. We will try to analyze what changes there are and what their impact is on the arbitration proceedings. In conclusion, all the arguments discussed in the paper will be summarized.
Bankruptcy and International Arbitration: Some Comparative Snapshots
The article contains the comparative snapshots of national laws and courts’ decisions which deal with the effects of bankruptcy on international arbitration. These effects are severe and they may affect the arbitrability of a dispute, the conduct of arbitration, or the validity of an arbitration agreement. They stem from the conflict of the underlying policies of the two procedures: bankruptcy and arbitration. While arbitration is based on the principle of parties’ autonomy and privity, and it supposes the decentralization of the forum, bankruptcy proceedings are judicial, collective, and centralized. This conflict is usually left to be resolved at the national level, which results in the lack of uniformity of solutions at the international level, and consequently there is no predictability for the parties involved in international arbitration. The author provided an overview and a critical analysis of the determination of the law applicable to the effects of bankruptcy on arbitration and the comparative analysis of several specific effects.
European Company and Financial Law Review, 2000
The relationship between arbitration and insolvency in a cross border context is fraught with difficulties which can blight transnational insolvency practice. This article is concerned with the judicial constructs applied (in the EU, civil law and common law traditions) to resolve the conflict between a pending arbitration in one country and forthcoming insolvency proceedings in another. Should the arbitration be allowed to continue and what law should be used to determine the issue? In the EU, it might be said that the question is largely determined by the EU Insolvency Regulation. A comparative law and teleological discussion would highlight the different imperatives adopted in the different judicial approaches to the problem. The debate has sometimes been reduced to a pro or anti arbitration dispute. This article is less concerned with that direct confrontation. Instead, it is interested in the debate about the public interest which is claimed to be maintained when arbitration is allowed or disallowed to proceed in the light of impending insolvency. It thus draws on case examples from different jurisdictions to examine the perceived judicial role to protect the public interest by controlling arbitrations in this context.
Set Off In International Commercial Arbitration
2017
This dissertation was written as part of the LL.M. in Transnational and European Commercial Law and ADR at the International Hellenic University. This research will try to identify whether set off can be used as a defense during arbitral procedures and will try to investigate any feasible alternatives that the arbitrators may have; remaining both consistent to relative procedural laws and doctrines. Meantime, the goal for efficiency and quick adjudication are core values of modern arbitration which have to be preserved. Finally, set-off is related to other important commercial institutions as the insolvency proceedings.
Czech Yearbook of International Law, Vol.VIII, 2017
The majority of doctrinal and judicial views agree that pathological arbitration clauses can and should be salvaged, however there are international norms which are interpreted as barring defective arbitration agreements from being validated, namely Article II(3) of the New York Convention. Meanwhile, the European Convention is alleged to be more progressive than its counterpart. This paper establishes how this conclusion applies to the legal basis laid out in the European Convention of determining the validity of defective arbitration agreements, what the standard for repairing defective arbitration clauses set by the European Convention is and whether it could be used for interpreting the New York Convention. The standard of the European Convention for repairing defective arbitration clauses consists in the inapplicability of Article VI(3) of the European Convention to invalidating pathological clauses due to the mechanism for repairing defective arbitration agreements laid out in Article IV of the European Convention. Thus, a state court may not assume jurisdiction where the arbitration clause is defective. It must refer the parties to the competent institution for repairing the clause. This standard for safeguarding the parties’ intention to arbitrate may also be used as a modern way of interpreting Article II(3) of the New York Convention.