Insolvency Proceedings And Their Effect On International Commercial Arbitration

International commercial arbitration and bankruptcy as well as its cross bordereffect have frequently been the subject of legal writings. However few scholars inChina have thoroughly looked into the interaction between international arbitrationand insolvency. It is well observed that they do not coexist easily. The conflict of thetwo procedures may result from their different objectives and underlying policies.Arbitration is a private means of dispute settlement based on the will of the parties.Party autonomy as an underlying policy and the neutrality of the arbitral forum is themost important feature of the commercial arbitration. In contrast, insolvency is aprocedure which values the equality of creditors, centralization of claims, rescue ofthe insolvent party, a high degree of state control, a transparent and accountableprocess, a coordinated distribution of assets and authority derived from statute.Impacts insolvency may have on arbitration are complicated. As bankruptcyregimes are created and interpreted based on various social, political and economiccontexts of different countries, it is all the more difficult to rely on a general approachto answer the abovementioned questions. Thus this thesis only addresses someimportant issues thereof through comparative study and judicial analysis.The thesis consists of four chapters. Chapter I of this work discusses the issue ofarbitrability of insolvency related matters. Attention is going to be made on the relevant factors normally taken into consideration of arbitral tribunals and nationalcourts when determining the arbitrability of an insolvency related matter, such asdistinction between core and non-core bankruptcy issues. Also, the analysis ofsituation in China is covered and a pro-arbitrability trend is implied.Part II addresses the impact that insolvency proceedings of a party may have onthe effectiveness of the arbitration agreements concluded previously and theenforcement of the arbitration agreements in bankruptcy by the courts. The generalprinciple of the issue will be addressed and detailed analysis of the special andabundant judicial practice will be given in the United States.Impacts on the ongoing arbitral proceedings are illustrated in chapter III,including the considerations raised by one party’s insolvency for the enforcement ofarbitral awards. The key points are automatic stay, due process and public policy.Part IV sets forth recognition and conflict law issues in a cross-border settingwhen the international commercial arbitration is or to be seated in one country whilethe insolvency proceedings of one party is initiated in another. The issue ofcharacterization is highlighted through analysis of European Union Regulation andthe UNCITRAL Model Law as well as typical cases.