OPEN QUESTIONS AND THE ROLE OF EU LAW
The crossroads between arbitration and insolvency has been traditionally qualified as an “intriguing” intersection. This expression encapsulates the difficulties of identifying the effect that the opening of insolvency proceedings has on the arbitration commitments of the insolvent party in an international setting. This is a multifaceted question, which includes issues relating to arbitration agreements, proceedings and awards.
Firstly, it is possible for a declaration of insolvency to deprive the arbitration agreement of its validity and effectiveness, or to subject its operability to the approval of the insolvency court. It is also possible for the trustee to be deemed a party alien to the agreement and therefore not bound by it. Doubts might also appear regarding the trustee's authority to conclude new agreements on behalf of the estate.
Secondly, the insolvency might also cast doubt on the possibility of continuing pending arbitration proceedings and, if proceedings do continue, under what conditions. For instance, it would become necessary to examine the level of participation of the trustee, the compatibility between the requirement of confidentiality and the collective interest in the outcome of the dispute, and the availability of interim measures against the assets of the party subject to insolvency proceedings.
Finally, the financial difficulties of the debtor will affect the viability of the awards resulting from the arbitration. One of the major concerns in collective proceedings is the need to shield the insolvent estate from individual enforcement actions. Notwithstanding national peculiarities, this is the most relevant manifestation of the principle par conditio creditorum. The need to respect this principle requires evaluating the operation of national and international instruments that seek to facilitate the cross-border effectiveness of arbitration awards. Among them, the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards plays a prominent role. Equally, there might be effects on the possibility of setting aside the award and on the pro-arbitration regime that generally lies behind the resolution of those actions.