The relationship between insolvency and arbitration has been often analysed by focusing on the impact that the former may have on the latter, the main questions being whether the declaration of insolvency of a debtor may affect the validity/effects of arbitration agreements to which it is a party, its standing in arbitral proceedings, the status of arbitral proceedings already pending and the enforceability of the award vis-à-vis the bankruptcy administration. This perspective is influenced by the consideration that bankruptcy law pursues public interests and therefore mostly comprises mandatory rules, whereas arbitration law mostly regulates a contractual phenomenon grounded on party autonomy, with the corollary that in case of conflicts bankruptcy law would a priori trump arbitration law. Such traditional perspective, however, may be overturned if one considers that in modern legislations insolvencies are managed by recognizing more and more autonomy to the debtor, the bankruptcy administrator, the creditors, while arbitrations are increasingly viewed as an alternative modality for the exercise of the fundamental right of “access to justice” that may impact also public interests. Against this background, the private-public interests divide that once characterised insolvency and arbitration should be considered blurred and the two instruments should be put on an “equal footing”, meaning that one should try to achieve the highest possible level of coordination between them by looking at the different functions they play and the different interests they protect. Such an approach is even more justified when insolvency and arbitration overlap in a cross-border scenario, i.e., when more than one State may potentially have jurisdiction to regulate them, in particular when the State where the insolvency is declared is different from the State where the arbitration is seated. Prima facie, international arbitration seems to add complexity to the numerous private international law issues which cross-border insolvencies raise. At a deeper glance, however, arbitration may be a useful tool to increase the effectiveness, efficiency and predictability of the management of insolvencies, also thanks to the almost universal recognition that awards enjoy under the 1958 New York Convention. For arbitrations to deliver such beneficial effects in the context of insolvencies it is essential, though, that the numerous potential conflicts of jurisdiction and/or laws which the internationality of the matter may generate are addressed by adequately balancing the protection of party autonomy with the safeguard of the public interests involved. With respect to cross-border insolvencies falling within its scope of application, the law of the European Union may offer a rational solution, and create the framework for a “virtuous” forum/law shopping, once various fragments of regulation spread throughout different EU law instruments are jointly considered and general principles for the coordination of the legal systems of the Member States are drawn from them. The abovementioned fragments of regulations can be found in various provisions of Reg. no. 2015/848 on insolvency proceedings, Reg. no. 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, Arts. 49 and 54 TFEU, as well as in the 1958 New York Convention, which is jus commune for all the Member States. Through a systematic construction of such provisions the following principles can be distilled: (i) the prevalence to be accorded to the legal system of the Member State of the lex concursus, which, in general, has exclusive jurisdiction over insolvency-related issues; (ii) the favor arbitratus, which, in general, triggers the Member States’ duty to enforce arbitral agreements and foreign awards, the Member 456 States’ autonomy in laying down their arbitration laws and the exclusive jurisdiction of the Member State where the arbitration is seated over arbitration-related issues, (iii) the avoidance of gaps in the automatic recognition and in the enforcement of judgments rendered by Member States’ courts and of awards rendered by arbitral tribunals, (iv) the right to corporate mobility, which by allowing freedom of establishment beneficiaries to choose among the Member States’ laws of incorporation, and to change such law after the company has been incorporated, also allows them to indirectly choose and change the Member State of the lex concursus. Based on such principles: (i) the Member State of the lex concursus should be solely competent to regulate issues such as the arbitrability of an insolvency-related dispute, the effects of the declaration of insolvency over the standing of the debtor and the bankruptcy administrator in insolvency-related arbitrations, the power of the bankruptcy administrator to execute arbitration agreements and the enforceability vis-à-vis the bankruptcy of an award; (ii) the Member State of the seat of the arbitration should be solely competent to regulate issues such as the effects of a declaration of insolvency on the arbitral proceedings (whether already pending when the insolvency was declared or commenced thereafter), the validity and effects of pre-existing arbitration agreements, the vis attractiva of the forum concursus over claims submitted to arbitration, the allocation between its courts and the arbitral tribunal of the power to adjudicate on all such issues; (iii) the Member State of the seat of the arbitration should provide for the suspension of the arbitral proceedings and for the recognition within the arbitral proceedings of acts of the bankruptcy administrator or decisions of the competent bankruptcy court whenever this proves necessary for the implementation of the insolvency proceedings in accordance with their governing law; (iv) the arbitral tribunal called to adjudicate on an insolvencyrelated dispute should ensure that its award does not conflict with mandatory rules of the lex concursus whenever this may affect the public policy of the relevant Member State; (v) judgments on the relationship between arbitral and insolvency proceedings rendered by the courts of the Member State of the lex concursus and of the Member State of the seat of the arbitration pursuant to the allocation of competences set out above should be recognized by all Member States; (vi) awards rendered on insolvency-related disputes should be recognized pursuant to the 1958 New York Convention, provided that the courts of all Member States should be required to implement the applicable grounds for non-recognition set out by Art. V of the Convention so that the abovementioned allocation of jurisdiction between the Member State of the lex concursus and the Member State of the seat of the arbitration is safeguarded throughout the EU.

Il (risolvibile) puzzle del rapporto tra arbitrato internazionale e insolvenze transfrontaliere nel diritto europeo

Benedettelli, Massimo V.
2018

Abstract

The relationship between insolvency and arbitration has been often analysed by focusing on the impact that the former may have on the latter, the main questions being whether the declaration of insolvency of a debtor may affect the validity/effects of arbitration agreements to which it is a party, its standing in arbitral proceedings, the status of arbitral proceedings already pending and the enforceability of the award vis-à-vis the bankruptcy administration. This perspective is influenced by the consideration that bankruptcy law pursues public interests and therefore mostly comprises mandatory rules, whereas arbitration law mostly regulates a contractual phenomenon grounded on party autonomy, with the corollary that in case of conflicts bankruptcy law would a priori trump arbitration law. Such traditional perspective, however, may be overturned if one considers that in modern legislations insolvencies are managed by recognizing more and more autonomy to the debtor, the bankruptcy administrator, the creditors, while arbitrations are increasingly viewed as an alternative modality for the exercise of the fundamental right of “access to justice” that may impact also public interests. Against this background, the private-public interests divide that once characterised insolvency and arbitration should be considered blurred and the two instruments should be put on an “equal footing”, meaning that one should try to achieve the highest possible level of coordination between them by looking at the different functions they play and the different interests they protect. Such an approach is even more justified when insolvency and arbitration overlap in a cross-border scenario, i.e., when more than one State may potentially have jurisdiction to regulate them, in particular when the State where the insolvency is declared is different from the State where the arbitration is seated. Prima facie, international arbitration seems to add complexity to the numerous private international law issues which cross-border insolvencies raise. At a deeper glance, however, arbitration may be a useful tool to increase the effectiveness, efficiency and predictability of the management of insolvencies, also thanks to the almost universal recognition that awards enjoy under the 1958 New York Convention. For arbitrations to deliver such beneficial effects in the context of insolvencies it is essential, though, that the numerous potential conflicts of jurisdiction and/or laws which the internationality of the matter may generate are addressed by adequately balancing the protection of party autonomy with the safeguard of the public interests involved. With respect to cross-border insolvencies falling within its scope of application, the law of the European Union may offer a rational solution, and create the framework for a “virtuous” forum/law shopping, once various fragments of regulation spread throughout different EU law instruments are jointly considered and general principles for the coordination of the legal systems of the Member States are drawn from them. The abovementioned fragments of regulations can be found in various provisions of Reg. no. 2015/848 on insolvency proceedings, Reg. no. 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, Arts. 49 and 54 TFEU, as well as in the 1958 New York Convention, which is jus commune for all the Member States. Through a systematic construction of such provisions the following principles can be distilled: (i) the prevalence to be accorded to the legal system of the Member State of the lex concursus, which, in general, has exclusive jurisdiction over insolvency-related issues; (ii) the favor arbitratus, which, in general, triggers the Member States’ duty to enforce arbitral agreements and foreign awards, the Member 456 States’ autonomy in laying down their arbitration laws and the exclusive jurisdiction of the Member State where the arbitration is seated over arbitration-related issues, (iii) the avoidance of gaps in the automatic recognition and in the enforcement of judgments rendered by Member States’ courts and of awards rendered by arbitral tribunals, (iv) the right to corporate mobility, which by allowing freedom of establishment beneficiaries to choose among the Member States’ laws of incorporation, and to change such law after the company has been incorporated, also allows them to indirectly choose and change the Member State of the lex concursus. Based on such principles: (i) the Member State of the lex concursus should be solely competent to regulate issues such as the arbitrability of an insolvency-related dispute, the effects of the declaration of insolvency over the standing of the debtor and the bankruptcy administrator in insolvency-related arbitrations, the power of the bankruptcy administrator to execute arbitration agreements and the enforceability vis-à-vis the bankruptcy of an award; (ii) the Member State of the seat of the arbitration should be solely competent to regulate issues such as the effects of a declaration of insolvency on the arbitral proceedings (whether already pending when the insolvency was declared or commenced thereafter), the validity and effects of pre-existing arbitration agreements, the vis attractiva of the forum concursus over claims submitted to arbitration, the allocation between its courts and the arbitral tribunal of the power to adjudicate on all such issues; (iii) the Member State of the seat of the arbitration should provide for the suspension of the arbitral proceedings and for the recognition within the arbitral proceedings of acts of the bankruptcy administrator or decisions of the competent bankruptcy court whenever this proves necessary for the implementation of the insolvency proceedings in accordance with their governing law; (iv) the arbitral tribunal called to adjudicate on an insolvencyrelated dispute should ensure that its award does not conflict with mandatory rules of the lex concursus whenever this may affect the public policy of the relevant Member State; (v) judgments on the relationship between arbitral and insolvency proceedings rendered by the courts of the Member State of the lex concursus and of the Member State of the seat of the arbitration pursuant to the allocation of competences set out above should be recognized by all Member States; (vi) awards rendered on insolvency-related disputes should be recognized pursuant to the 1958 New York Convention, provided that the courts of all Member States should be required to implement the applicable grounds for non-recognition set out by Art. V of the Convention so that the abovementioned allocation of jurisdiction between the Member State of the lex concursus and the Member State of the seat of the arbitration is safeguarded throughout the EU.
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