The Coexistence of Arbitration and Trans-Border Bankruptcy

This article highlights the relationship between arbitration and cross-border insolvency proceedings and the most problematic issues that arise: whether an arbitration agreement becomes unenforceable once insolvency proceedings have commenced; whether an arbitration agreement can be entered into after insolvency proceedings have commenced; and the impact of cross-border insolvency on the enforceability of an arbitral award. The author describes approaches of different jurisdictions and identifies following approaches as prevailing: suspension of arbitration until the end of insolvency proceedings; termination of arbitration proceedings. Based on judicial practice, the author concludes that it is necessary to adopt an international legal act regulating the coexistence of arbitration and cross-border insolvency. In addition, the author touches upon other aspects of the «relationship» between arbitration and cross-border insolvency: the question of applicable law; conflicts of jurisdiction; and collision of national laws.