1. It is well known that when an arbitration encounters judicial proceedings for dealing with companies' financial difficulties, this invariably causes concern, often arouses suspicion and sometimes even leads to misunderstandings and objections on both sides. Arbitrators are inclined to see such encounters as a threat to the smooth conduct of the arbitration proceedings, or even a breach of good faith in the pursuit of those proceedings and in the application of international business law, while the judiciary and insolvency officials see it as an attack on their exclusive jurisdiction, upsetting the sometimes delicate balance between the various demands that the legislator strives to unite, such as the payment or compensation of creditors (liquidatory function), the pursuance of contracts, e.g. employment contracts (corporate function) and the continuation of the business undertaking (economic function).

2. This is not to say that arbitrators are blind or unreceptive to such demands and the different ways in which they are ordered and organized in comparative law. In theory, there is no reason why an arbitrator cannot exercise his power to 'say the law' (jurisdictio) in the field of corporate insolvency. There would even seem to be growing support for the idea that although insolvency law contains an irreducible public policy component, this is not necessarily the preserve of the judiciary, 1 meaning that arbitrators would be entitled to take jurisdiction. 2 It is also necessary to ascertain whether most of the mandatory rules governing insolvency proceedings-be they of a procedural or substantive nature-are peculiar to domestic public policy, or whether they are also part of international public policy. Only in the latter case can they be invoked in international business situations. Lastly, the principle of pacta sunt servanda, which can itself be regarded as part of public policy, if only from the perspective of certain applications of good faith, 3 could be thought to be capable of removing or neutralizing the often puzzling and sometimes irritating peculiarities of insolvency proceedings.

3. The organization of processes for helping companies in difficulty is not a whim of rule-makers in national legal systems, but the fitting response to a real need for judicial organization, which the current rise in corporate bankruptcies linked to the so-called global 'financial crisis' can only confirm.

4. The difficulties caused by the collapse of an economic undertaking concern, of course, the bilateral relations between that undertaking and each of the partners with which [Page52:] it has contracted. Arbitration has its 'natural' place here. However, such situations also cause multilateral disorder, as in a game of jackstraws where a movement in one place can have a string of repercussions elsewhere. This is why legal tradition, firmly rooted in experience, has devised 'collective' judicial procedures for dealing with companies' difficulties. These collective procedures leave little room for partial or 'separate' processes, such as arbitration. It is not the presence of a special public policy that rules out arbitration: like judges, arbitrators have a responsibility to apply that public policy, regardless of whether they rule at law or in equity. 4 Yet, by definition, such proceedings have two imperatives, each of which is foreign to arbitration: firstly, a distinctly collective nature, which multiparty arbitration is unable to embrace; and secondly, a certain imperium deriving from executive, social and economic public policy functions. In other words, the two aspects of multipartism and imperium make arbitration ill-fitting.

5. The jurisdiction of the courts is therefore inevitable when it comes to the collective treatment of a company's difficulties. Given that there is no real international judicial system for business matters, jurisdiction in this field necessarily lies with individual nations. It should be added that the jurisdiction of State courts is not just a 'necessary evil' but also a means of respecting and implementing the requirement of good faith in commercial relations. No doubt, its purpose can be truly understood only if one has at least once in one's life lost the fruit of one's own work, 5 the cost of one's suppliers or part of one's capital as a result of a client's insolvency. Besides justifiable disappointment, one has an acute feeling of injustice, shared also by one's partners within and outside the company, 6 who may suffer direct or indirect harm. It is then that one should be able to rely on the imperium of collective judicial proceedings to bring the firm of the dishonest or unfortunate debtor under the hand of the law-at the expense of the debtor (seizure and dispossession) and the other creditors (collective enforcement)-for reasons of efficiency (albeit often mitigated) and economic morality.

6. It is true that a firm in difficulty can be rescued by consensual means. 7 This is indeed the best solution. As wisely pointed out by the French legislator when explaining the reasons for the bill that became the 26 July 2005 law on safeguarding businesses, creditors are better placed than anyone else to determine whether or not a recovery plan for an ailing debtor can be trusted. This is in fact borne out in practice: a debtor's problems are first the subject of discussions or negotiations. Any solution adopted at this stage is better than a judicial remedy. The French legislator showed a clear [Page53:] understanding of this when developing the 'legislative offer' in amicable recovery procedures. Furthermore, as one amicable remedy may hide another, it may be asked whether, if the answer to a company's financial problems may be found through amicable settlement, there is something to be said for accepting alternative dispute resolution in such cases. The reply is most definitely yes, and it may be that alternative methods of dispute resolution have here a new field to exploit. One will of course come up against the difficulties peculiar to multiparty settlements, but it could be imagined that this approach be adopted with just the principal creditors.

7. However, there are limits to consensual procedures. They presuppose that most, if not all, of the creditors trust the process, i.e. refrain from any move that could be seen as a demand for payment which the debtor could not honour. The set-up seems simple: (i) if payments have not been suspended, an amicable settlement is possible, and such an approach would be methodologically consistent with arbitration, insofar as both have a contractual basis; (ii) if payments have been suspended, however, public policy relating to property, fundamental rights and procedure comes into play, and the initiation of collective proceedings opens the door not only to substantive public policy rules but also, and above all, to the exclusive jurisdiction of the State courts.

8. Substantive public policy and the exclusivity of State court jurisdiction apply to arbitration. 8 This is not the place to expound on the extent to which arbitrators are in general required to comply with public policy. There is perhaps more fluctuation than progression in this field. In our view, if this requirement is consistently limited to manifest, deliberate, real and concrete violations of public policy, or those which are 'blindingly obvious', this is likely to undermine the jurisdictional nature of arbitration and ultimately its legitimacy. The point to note is that arbitrators are required to apply public policy. This is a discussion that goes beyond our present purpose, except of course that it will determine the position of an arbitrator vis-à-vis public policy relating to property subject to insolvency procedures. Practice shows that arbitrators are attentive to such public policy, although there is some diversity in the solutions they find. 9

9. On the other hand, there is no doubt about the exclusive jurisdiction of State courts in charge of collective proceedings. This is true both at a technical level where such procedures involve enforcement and aspects of imperium, and at a broader level justifying that imperium. The recurrent feature that emerges in comparative law is the necessity for public intervention to avoid harm or a risk of harm whenever the collapse of an economic agent breaks a relationship of trust with its partners. This rule has recently been illustrated in an unprecedented but most striking way by the national, regional and global responses-all public-to what has come to be called the 'financial crisis'. At the micro-economic and micro-legal levels, this has resulted in the exclusive jurisdiction of the State court system, 10 which no arbitration, including international arbitration, 11 can ignore. Arbitration has become confronted with 'a procedure conducted in parallel'. 12[Page54:]

10. The frequency with which arbitration encounters insolvency proceedings seems to be increasing, as is to be expected in the current economic climate and as shown by a number of awards recently rendered in ICC proceedings. 13 When faced with such a dilemma, arbitrators have a choice between two positions: (i) integration of the insolvency proceedings (which, if possible, is preferable), or (ii) confrontation.

I. Integration of the insolvency proceedings in the arbitration proceedings

A. Receptivity of arbitration to insolvency proceedings

a) Can arbitrators disregard insolvency proceedings to which a party is subject?

11. Insolvency proceedings are unsettling. At a practical level, they disturb the conduct of business relations, and even more so the conduct of an arbitration which has been, or could be, commenced to regulate those relations. At a theoretical level, they shake some of the beliefs that may have been taken for granted concerning the prevalence and effectiveness of commercial arbitration as a means of resolving international business disputes. Arbitrations therefore usually do not welcome the fact that a party is subject to insolvency proceedings. It is easy to become suspicious and see such proceedings as an unscrupulous contrivance by a party who (rightly or wrongly) 14 fears heavy punishment. There is a fear that the contractual procedure of arbitration will be distorted by the invasion of mandatory public economic law. It might even be thought that arbitrators could, or should, turn a blind eye to insolvency proceedings, leaving their impact to be considered when the award is enforced.

12. Some people may be receptive to such arguments, as illustrated by an award15 which refers merely to the principle of pacta sunt servanda, without any other procedural or technical details, to justify pursuing an arbitration despite the fact that one of the parties had been declared bankrupt. As a further reason, the arbitral tribunal added that in international relations parties often agree on arbitration to avoid having their dispute decided by the courts in the country of one or other of the parties, that in opting for arbitration parties express their wish to submit their dispute to a neutral panel normally composed of members chosen by each party, and that there is no justifiable reason why a foreign contracting partner should be denied the reasonable prospect of having its case decided by such a panel and instead be forced to submit the dispute to a bankruptcy court in the State where the other party is established.

13. Amidst the clash of legal cultures that may result from the eruption of insolvency proceedings in arbitration, an award like this is all the easier to understand since international insolvency proceedings conducted before State courts do not usually stand out as shining examples of efficiency. There is therefore a strong temptation for arbitrators to ignore insolvency proceedings, not only in order to remain loyal to their method and legitimate convictions, but also to avoid jeopardizing efficiency and intruding upon an area of public policy that could conceivably be considered as strictly national. [Page55:]

14. However, cases such as this remain few and far between. 16 The bulk of the awards studied for the purpose of this article-like previous awards, 17 French court decisions18 and other recent awards19-do not adopt this line of thinking. Other than in the event of fraud20-which corrupts any legal principle-arbitrators have a duty to integrate into their proceedings any insolvency proceedings to which a party may be subject.

b) How are insolvency proceedings integrated into arbitration?

15. The insertion of a debtor's declared insolvency in an arbitration to which the debtor is a party is in theory subject to an appropriate application of general principles of arbitration, including the principle of an adversarial process (1). Sometimes, such insertion calls for the application of more original solutions derived from the field of insolvency, for example concerning the subject matter of the arbitration (2).

1) General principles of arbitration procedure (adversarial principle)

16. The insolvency proceedings of a debtor who is a party to an arbitration touches firstly on the principle of an adversarial process. This principle is regarded as essential in arbitration, so much so that it is repeatedly mentioned in the French Code of Civil Procedure as being a precondition for the validity of the award. 21 However, the courts have been careful not to become imprisoned in a mechanical or even bureaucratic conception of its application, so as to prevent it from becoming a formal pretext for setting aside awards. They have thus discounted an insignificant breach of this principle, or looked to see whether the person alleging the breach was precluded from doing so by his or her behaviour during the proceedings. 22 Hence, in the course of the proceedings and depending on the circumstances, arbitrators sometimes have to assess whether the principle must be respected at all costs or whether they can, or rather should, disregard certain 'flaws', given their duty to move the proceedings forward. Such an approach is readily found in situations where one of the parties is subject to insolvency proceedings. [Page56:]

17. For example, in an award rendered in 2004, 23 it is reported that the respondent had been declared bankrupt shortly before the end of the arbitration proceedings. The difficulty this created was exacerbated by the passiveness of the respondent-or the receiver representing the respondent-during the final stages of the arbitration. Indeed, it was left to the claimant to inform the arbitral tribunal that insolvency proceedings had been commenced against the other party. Faced with this difficulty, the arbitrator rendered the award in the following circumstances. When the insolvency proceedings were commenced against the respondent, the parties had exchanged their briefs, supporting documentation and written testimonies, but the witnesses had not yet been heard. What is more, the hearing of the witnesses had initially been set for a date prior to the start of the insolvency proceedings, and had been postponed after the arbitrator learned from the respondent's counsel that the latter had resigned and was unable to say whether the representatives of the respondent company were able to attend. The award thus stated that 'not only were the proceedings nearing completion, but they would have been completed if it had not been for [Respondent]'s actions in failing to attend the initial hearing when it must have been aware of its financial difficulties'. The arbitrator concluded that he had jurisdiction to render the award, especially as the respondent had been given an opportunity to present its case, had provided written submissions in accordance with the procedural timetable and had been given an opportunity to participate in the witness hearing alone or represented by a lawyer.

18. Reference should also be made to a similar decision handed down recently by the French Cour de cassation, 24 which will doubtless be widely commented upon. Although the decision appealed to the Cour de cassation was overturned on other grounds, the claim that it violated the principle of an adversarial process was rejected. The liquidator of the party subject to insolvency proceedings failed to participate in the arbitration, despite having been informed and summoned, and contended that the award rendered in his absence was void. The Cour de cassation held that 'it is up to the court hearing the setting-aside motion to ensure that the parties to the arbitration conduct themselves fairly in the proceedings' and that 'the appeal court did not violate the principle of an adversarial process in characterizing the liquidator's attitude in the proceedings as estoppel'.

19. It is again an interpretation of the principle of an adversarial process, marked by the need to move the proceedings forward, which is found in an award25 that states that a party 'could well have asked . . . that the proceedings be resumed and, in particular, that the witnesses proposed be heard', 'that the fact that it had . . . gone into compulsory liquidation did not prevent it from doing so', and that 'for reasons of its own, on which the arbitral tribunal does not have to speculate, it decided not to do so'.

2) Original solutions (subject matter of the arbitration)

20. The commencement of insolvency proceedings against a party to an arbitration may have an impact on the subject matter of the arbitration, requiring it to be adapted, modified or redefined. It may even indirectly result in the disappearance of the subject matter altogether. This is what happened in a case26 where, in collective insolvency proceedings, a party to a shareholders agreement containing an arbitration clause was [Page57:] required to sell its shares and terminate its participation in the agreement. As it was thus no longer party to the arbitration agreement, no award could be rendered against it.

21. Assuming this is not the case and the subject of the arbitration does not disappear, it may be modified as a result of a party's insolvency. The change may concern not only the economic significance of the dispute (which is obvious) but also its legal definition. For instance, in one of the awards examined27 it was acknowledged that the claims of the other party 'are modified' due to the suspension of actions brought by individual creditors, and that the proceedings could be resumed only for the purpose of recording debts and determining the amount of such debts, but not for the purpose of ordering their payment.

22. Sometimes, a party's insolvency proceedings help to define the subject matter of the arbitration, opening a door for arbitration to become the means of resolving disputes arising from the debtor's bankruptcy and the ensuing insolvency proceedings. This was the case where an arbitration initially commenced to resolve a dispute over unfair competition turned into an arbitration to determine which contracts had been assigned in a scheme to buy out one of the parties to the arbitration, 28 or where the dispute concerned the interpretation of the scope of assets and obligations transferred in a takeover plan, 29 or-an even better example30-where the arbitration resembled an appeal against a takeover scheme. 31

23. Three comments can be made on these awards: Firstly, it can be seen that arbitration is in fact at ease in handling solutions concerning the takeover or restructuring of companies in financial difficulty. This is no doubt due to its flexibility and to the technical expertise of the arbitrators. Secondly, we cannot afford to ignore this arbitration 'case law', whose development may help to ensure that appropriate responses are found to the current economic downturn. Thirdly, the technical difficulties encountered by arbitration in relation to bankruptcy law concern not so much the outcome of insolvency proceedings but rather the prior period commencing when payments cease. It is not so much the economic solutions to corporate bankruptcy that disturb arbitration, but rather the imperium exercised in the period between the suspension of payments and the implementation of solutions. It is this imperium that is likely to have an impact on the conduct of the arbitration.

B. Impact on the conduct of the arbitration proceedings

24. Arbitration practice reveals three kinds of difficulties caused by the impact of insolvency proceedings to which one of the parties is subject: (a) doubts over the representation of that party; (b) uncertainty over the law applicable to the arbitration; (c) the need to coordinate proceedings.

a) Party representation

25. It is not unusual for the receiver representing an insolvent party to overlook the need to follow up an arbitration. There are several reasons for this and their legal relevance may vary. The receiver's negligence may be for sociological reasons (the [Page58:] receiver has little experience of arbitration), economic reasons (the receiver wishes to avoid spreading his efforts in a case where his fees are limited), or strategic reasons (the receiver wishes to keep open the possibility of setting aside the award on the grounds that he had not participated in his official capacity). All this is likely to cause obstruction to the arbitration proceedings (1) or the effectiveness of the award (2) if no appropriate solution is found by the arbitral tribunal or the court hearing the setting-aside action.

1) Progress of the arbitration prevails over flaws in the representation of an insolvent party

26. It is of course preferable, and indeed necessary, for the arbitral tribunal to concern itself with the powers of attorney of the legal representative of an insolvent party, for instance32 by obtaining irrefutable evidence of their scope (such as a copy of the relevant court decision), and by enquiring into the effectiveness of those powers and their applicability (for example, by checking that proper notice has been given of the administrator's appointment or the renewal of that appointment). If flaws are discovered, do they necessarily have to obstruct the arbitration?

27. In a case33 where, remarkably, both parties to the arbitration were in liquidation, the arbitral tribunal unsuccessfully tried on three occasions (in February, April and June of the same year) to obtain from the parties information on their respective intentions as to whether the arbitration should continue. In July, an order was issued announcing the closure of the proceedings for the end of August; this deadline was subsequently extended to 15 November. It was only on the day before the expiry of the deadline, i.e. 14 November, that the liquidator for the respondent and counterclaimant informed the arbitral tribunal that the respondent and counterclaimant wished the arbitration to continue, the main claim to be dismissed and its previous submissions to be reinstated. The tribunal had therefore granted nine months' grace and issued five procedural reminders only to arrive at a status quo! It nonetheless set another deadline of 14 February for updating and clarifying the counterclaim. This deadline had to be extended to the end of March, then to the end of May. The tribunal asked that the counterclaim be accompanied by a legal opinion on the situation of the other party at that time, so as to know under what conditions an award could be made against it. This opinion was not produced. The arbitral tribunal set the claimant a final deadline of 30 June to answer. No answer was given, and the tribunal commenced its deliberations.

28. The arbitration clause provided for the application of French law. As Article L. 621-41 of the French Commercial Code states that proceedings cannot be resumed until the receiver has been summoned, the arbitral tribunal enquired, in the reasoning of its award, whether the claimant had summoned the insolvency officials acting for the respondent and counterclaimant, failing which the case could not validly be heard. The claimant had been so absent that it had not made this summons, no doubt in the hope of eluding the effects of the counterclaim. However, the arbitral tribunal considered that this omission was covered by the voluntary intervention of the liquidator for the respondent and counterclaimant and, interestingly, stated that 'it is obvious that a creditor cannot paralyse pending arbitration proceedings by the mere fact of having omitted, without giving any reason, to issue a formal summons to the liquidators. It is consistent with Article L. 621-41 that the latter may cure the creditor's omission. The arbitral tribunal accordingly acknowledges that the voluntary intervention of the [Page59:] liquidators has covered the default of [the claimant].' Precedence was thus given to the progress of the proceedings.

29. The progress of the proceedings also takes precedence in a case34 where a mistake had been made when appointing the receiver and the judgment correcting this mistake had been published only several months later. In the interval, the receiver had participated in the arbitration. In the reasoning of its award, the arbitral tribunal asked: 'Does the fact that the rectification judgment of 5 April 2001, probably due to an administrative error, was only recorded in the commercial register on 13 February 2002 prevent it from normally producing its effects? The claimant has not cited any case law or literature in support of such a position. Furthermore, such a position would result in a serious anomaly in the functioning of the legal system. It therefore cannot be accepted.'

30. It was again an arbitral tribunal's wish to move the proceedings forward that caused it to consider35 that a claimant may pursue the arbitration at the behest of its receiver in circumstances where there was a suspicion that the receiver might have lost his powers but no clear evidence of this was provided. It is as if the benefit of the doubt was given to ensuring the effectiveness of the receiver's powers.

31. Likewise, in a situation similar to the voluntary liquidation of a company, 36 the arbitral tribunal37 upheld the company's commitment even though there was a formal flaw in the way the company was presented. 38

2) Efficiency of the arbitration prevails over a deliberate omission by the legal representative of the insolvent party

32. This was a case in which the French Cour de cassation39 ruled on an objection made by the respondent's liquidator to the enforcement of an award against it. The appeal court had dismissed the objection and affirmed the enforcement order, inter alia on the grounds that the attitude of the liquidator in the proceedings could be characterized as estoppel. The claimant had accused the liquidator of deliberately refraining from participating in the proceedings, despite having been fully informed thereof and summoned to appear, which fact prevented him from making a complaint in this respect at appeal. The claimant drew the conclusion that the liquidator could be considered to have waived the right to raise any flaws in the procedure and added that the liquidator had acted knowingly and engaged in fraudulent collusion, so as to reserve a means of challenging the award. The appeal to the Cour de cassation accused the appeal court of not inviting the parties to express themselves on the question of estoppel, which was not advanced by the claimant, and of thus having violated the principle of an adversarial process with respect to an argument raised sua sponte. This plea was rejected on the grounds that 'given that the rule of estoppel and the principle of an adversarial process may in certain cases be identical in scope and that it is up to the court hearing the setting-aside action to ensure that the parties to the arbitration act fairly towards each other in the proceedings, the appeal court did not violate the principle of an adversarial process in characterizing the liquidator's attitude in the proceedings as estoppel'. The significance of this decision, which relates to the rule of estoppel, goes beyond our present purpose. However, the solution is important and reflects the position of [Page60:] arbitrators endeavouring to ensure efficiency in the arbitration proceedings when faced with the procedural deftness of certain insolvency officials.

b) The law applicable to the arbitration

1) General private international law

33. As regards the general question of which rule of law arbitral tribunals should apply to the merits of the dispute, there may be some conflict-or hesitation-between the law theoretically applicable to the situation (contract, unfair competition, etc.) in dispute and the law of the insolvency proceedings to which one of the parties is subject, especially if that party is the respondent-as if the exclusive jurisdiction of the court in charge of the insolvency proceedings could, by a kind of imitation, result in the application of the law of the insolvency proceedings to the merits. 40 The question is all the more daunting, as it comes in the wake of a long tradition of uncertainty in comparative private international law over the law applicable to insolvency proceedings involving at least one foreign element. This uncertainty is explained by the tension existing between the conflicting principles of universality (applicable to the substantive issue of the debtor's assets) and territoriality (applicable to the procedural issue of enforcement) in relation to bankruptcy. 41 Under general private international law, this difficulty persists and has a dual aspect: should arbitrators concern themselves with the law of the insolvency proceedings, and, if so, what method should be used to determine the law of the insolvency proceedings?

34. It is often a difficult question, even for the parties. In one of the cases studied, 42 the arbitral tribunal considered that even if, as far as the merits were concerned, the arbitration was governed by French law, the compulsory liquidation of a party comes within the scope of that party's national law, which here was Italian law. The tribunal had invited the respondent and counterclaimant to provide it with an opinion on Italian law indicating in what conditions an award could be rendered against the claimant. In the end, it had to make do without this opinion, despite repeated extensions to the deadline within which the opinion had to be delivered. In these circumstances, the arbitral tribunal announced in its award that it considered itself under an obligation as far as possible to render an award capable of being enforced at the place where the losing party was established. It went on that the failure of the respondent and counterclaimant to provide evidence on Italian law meant that it did not know whether an award against the claimant would be in compliance with the Italian legal system and, if this was not the case, whether its non-compliance would prevent it from being enforced in Italy. Accordingly, the tribunal concluded that it was unable to render an award against the claimant, which it considered to be a sufficient reason in itself to dismiss the counterclaim. It is difficult to determine to what extent this vigorous reasoning was due to the respondent's-or rather its receiver's-repeated and even impolite failure to provide important legal information relevant to the preparation of the case or the fact that the counterclaim seemed to be unsubstantiated. 43[Page61:]

2) EC law

35. EC Regulation 1346/2000 on insolvency proceedings, which was adopted by the Council of the European Union on 29 May 2000 and is applicable (as per Art. 43) to insolvency proceedings commenced after its entry into force (namely on 31 May 2002, as per Art. 47), regulates a certain number of difficulties in private international law caused by cross-border insolvency proceedings. The second sentence of Article 47 states: 'This Regulation shall be binding in its entirety and directly applicable in the Member States in accordance with the Treaty establishing the European Community.' This is quite normal for an EC Regulation as far as State courts are concerned, but what about arbitrators? The area covered by the Regulation is traditionally considered to be part of public policy, and the public has an interest in certain aspects of the way in which insolvency proceedings are ordered. It may therefore be thought that arbitrators should comply with and apply the public policy provisions of this Regulation.

36. A note of caution needs to be sounded over the lack of interest, or even offhandedness, with which some commentaries and court decisions treat EC public policy in arbitration. This can be seen, for example, in the field of competition law. We shall go no further than this word of warning, for the present article does not set out to be an analysis of international public policy in business law. However, such precaution should be modulated by the following observation: arbitrators generally, and quite rightly, concern themselves with the performance of the award and it is therefore quite natural for them, subject to the scope of the Regulation as defined in Article 3, to take account of the principles laid down in the Regulation. This is what happened in the Vivendi/Syska-Elektrim case (2.1), which has recently given rise to a number of decisions from State courts called upon to review arbitral awards applying the Regulation, although with differences between England (2.2) and Switzerland (2.3).

2.1) How to reconcile Articles 4 and 15 of the Regulation: the Vivendi/Syska-Elektrim case

37. The dispute concerned the interpretation of the Regulation, or more exactly the combined application of, on the one hand, Article 4.2, which states that the law of the State in which the insolvency proceedings are opened shall determine, in particular, '(e) the effects of the insolvency proceedings on current contracts to which the debtor is party' and, on the other hand, Article 4.2(f), which makes an exception for lawsuits pending, and Article 15, which clarifies this exception by explaining that: 'The effects of insolvency proceedings on a lawsuit pending concerning an asset or a right of which the debtor has been divested shall be governed solely44 by the law of the Member State in which that lawsuit is pending.' Under Articles 4.2 and 15, should arbitrations be considered as 'current contracts' or 'lawsuits pending'?

38. The context was that of arbitration proceedings between the company Vivendi and the Polish-based company Elektrim concerning an economic operation in Poland (the development of a mobile telephone service). The arbitration proceedings were commenced in 2003 and insolvency proceedings were opened with respect to Elektrim in 2007. Polish law45 provides that an arbitration clause has no effect with respect to a party that is subject to insolvency proceedings. If Polish law were applied pursuant to Article 4.2(e) of the Regulation, this would suspend the arbitration proceedings. If the proceedings were to be continued, it would be necessary to apply not Polish law but English law, i.e. the law of the country where the arbitration institution was situated, to [Page62:] which Article 15 of the Regulation could be considered to refer with the words 'law of the Member State in which that lawsuit is pending'.

39. As is well known, arbitration is both a contract and a procedure. The wording of the EC Regulation on insolvency proceedings is in this respect flawed, as it imposes a distinction that is contrary to the nature of arbitration, for arbitration exists only by virtue of a contract, and the contract acquires meaning only through the procedure. Besides, it is somewhat risqué, from a technical point of view, to consider that the country in which the arbitration institution is established is 'the Member State in which that lawsuit is pending'.

40. Yet, accepting the application of a law that indiscriminately stays any ongoing or forthcoming arbitration is ill-adapted to the reasonable resolution of international trade disputes. This is not even required under bankruptcy law, which allows ongoing proceedings to be continued. Furthermore, if such a solution were adopted, it would open an escape door to any ill-intentioned party, as a declaration of insolvency would shield the party from any arbitration brought against it while the arbitration clause would shield it from any litigation brought against it. Neither economic efficiency nor contractual morality would be satisfied.

2.2) English solution: supremacy of Article 15 and continuation of the arbitration

41. Maybe for this latter reason, an English arbitral tribunal decided to continue the arbitration proceedings pursuant to Article 15 of the Regulation. The award was challenged by Elektrim's liquidator acting in this capacity. In a judgment of 2 October 2008, 46 the action brought against the award was dismissed and approval thereby given to the rejection of Polish law, the application of English law and the continuation of the arbitration initiated prior to the insolvency of one of the parties. 47 This judgment was affirmed upon appeal.

2.3) Swiss solution: supremacy of Article 4 and interruption of the arbitration

42. The same case also gave rise to an ICC arbitration seated in Switzerland, to which a different solution was found. 48 The arbitral tribunal considered that Article 142 of the Polish insolvency law applies to any arbitration involving a company established in Poland, irrespective of whether the proceedings are conducted in Poland or elsewhere. Given the difficulty such a solution was likely create for the fate of an arbitration conducted in Switzerland pursuant to Swiss law, the arbitral tribunal referred to Swiss rules of conflicts of law and, from this perspective, held that the consequences of Polish insolvency proceedings with respect to a Polish company-in particular its existence and its standing to be a party in the arbitration-should be decided pursuant to Polish law. The Swiss Federal Tribunal dismissed the action brought against this award for reasons relating to the company's standing and the application thereto of the lex societatis, namely Polish law. [Page63:]

c) Coordination of proceedings

43. It is very common in comparative law for the opening of insolvency proceedings to halt any ongoing proceedings (lawsuits or enforcement procedures) which creditors or other contracting parties may bring against the debtor. The term sometimes used is 'stay', if the proceedings may subsequently be resumed once it has been proven that certain procedural steps have been taken. This is the case in French law, for example, which requires claims to be lodged with the official in charge of the insolvency proceedings. However, once resumed, the ensuing proceedings cannot have as their purpose or effect the payment of a sum of money, but simply the acknowledgement that a debt is owing and its amount. The debt will be subject to the payment or 'clearing' arrangements decided on a collective basis in the insolvency proceedings. Proceedings, as generally understood, are therefore indeed halted and cannot be resumed unless the officials in charge of the insolvency proceed have been summoned. There has never been any problem over the principle that arbitration is subject to this general mechanism of a stay in the event of insolvency proceedings. In a seminal article, 49 Professor Philippe Fouchard referred to this as the 'coordination' of insolvency and arbitration proceedings. Thus, even if the arbitral tribunal is convinced of the existence of a debt, it can only record that debt but not order the debtor to pay it. At the very most, the arbitral tribunal can acknowledge the debtor's liability. 50

44. Hence, it is quite understandable that, in one of the awards studied, 51 the arbitral tribunal, after referring to Article L. 621-41 of the French Commercial Code, 52 remarked that 'the courts consistently hold that arbitration proceedings, just like State court proceedings, are subject to these provisions'. It is equally understandable that in another award53 the tribunal pointed out that, as the respondent had gone into receivership, the claimant submitted the debt owed to it for inclusion in the insolvent's liabilities, that the official receiver in charge of verifying the insolvent's debts considered that he was deprived of jurisdiction by the existence of an arbitration clause, and that the arbitral tribunal therefore had jurisdiction over the dispute.

45. Conversely, it is also understandable that the arbitral tribunal's jurisdiction cannot be affirmed until the procedure for verifying the debts is finished. Hence, in one of the awards studied, 54 as an appeal had been brought against the receiver's decision on the lodging of a claim and was being heard by the court of appeal, 'the tribunal has no jurisdiction to hear the present dispute, as its investiture is invalid'. The French Cour de cassation has clearly confirmed this analysis in a more recent decision55 in which it censured the position taken by a receiver in insolvency proceedings, saying that the only remedy available against decisions made by an official receiver on the acceptance of debts, including when that receiver declares himself to have no jurisdiction due to the application of an arbitration clause, is an appeal, and that therefore a court of appeal which held that a receiver's decision affirming his lack of jurisdiction should be referred [Page64:] directly to the arbitrators violated the first paragraph of Article 102 of the Law of 26 July 2005. 56

46. In a ruling made on 2 June 2004, 57 the French Cour de cassation censured a decision that had given precedence to the principle of Kompetenz-Kompetenz: 'in so ruling, whereas the public policy principle halting individual actions prevents a creditor whose claim originated before the opening of the insolvency proceedings from initiating arbitration proceedings after the opening of the insolvency proceedings without first undergoing the procedure for verifying debts, the court of appeal has violated the aforementioned provision' (i.e. Art. L.621-40 of the French Commercial Code). In another ruling delivered on the same day (no. 874), 58 the commercial division dismissed an appeal against a decision stating that a receiver must consider himself to have no jurisdiction unless the arbitration clause is patently void or inapplicable. The two decisions are perfectly compatible: the positive effect of the principle of Kompetenz-Kompetenz is overridden by the mechanism for the resumption of pending proceedings, or more precisely conditional upon compliance with the procedural requirements for this mechanism to come into play, whereas there is no reason to exclude the negative effect of the Kompetenz-Kompetenz principle.

47. When all is said, this public policy procedural requirement for insolvency proceedings is simple (a procedural act), logical (collective nature of the procedure and maybe also divestment of the debtor), inevitable (need to bring insolvency officials into the arbitration), and although it may disturb the conduct of the arbitration proceedings, this disturbance is after all limited. This is so in the case of an arbitration that is subsequently continued and where the resulting delay will be harmful to the creditor-if the debt owed to it by the respondent is confirmed and quantified-only if the creditor's claim is unenforceable outside the collective settlement of the insolvent's debts. As one of the awards studied59 quite rightly points out, the Cour de cassation's intention was to define the prior procedure of lodging claims as a process not so much for the creditor to declare the debt owed to it but rather to wait for that debt to be verified.

II. Confrontation between arbitration and insolvency proceedings

48. The meaning of 'confrontation' here needs to be explained. It is not to be understood broadly as the encounter in a specific case between the two bodies of rules constituted by arbitration on the one hand and insolvency proceedings on the other hand. Such encounters are on the increase and a rational solution is frequently found, as seen from the examples taken from a selection of ICC awards that we mentioned in Part I of this article. Needless to say, there are many other solutions. Commercial arbitration and the insolvency law of a party to arbitration are capable of organizing their mutual relations. They are both dynamic areas of business law. They are becoming better acquainted and gradually accepting situations in which one must yield to the other. Their acceptance of such situations is based on the legal reasons underlying the solutions found to these conflicts of rules. In such situations there is an encounter, but no confrontation. [Page65:]

49. On the other hand, confrontation occurs when no rational legal solution that is certain to be acceptable, or at least has to be accepted, can be found to such conflicts of rules-in other words, when legal science is deficient. In such situations, the law does not completely fulfil its role of pacifying conflicts. Given that arbitrators (who are judges) have to render a decision (unless they wish to be accused of a denial of justice), it may happen that an award reveals this state of restless encounter not fully apprehended by the law-and hence confrontation-between bankruptcy law and arbitration law. Highly uncomfortable though the situation may be, an arbitrator has no choice but to make do with this gap in the law.

50. The field of international bankruptcy law is already accustomed to the fact and provides an example of inadequate coverage by the law. Many decades of debate and reflection at key levels have been unable to resolve the duality of rules of conflict of laws in cases of international bankruptcy. The irreducible duality between universality and territoriality has triumphed over the most worthy intentions to harmonize private international law in this field through international treaties, including within the European arena, where it was in the end necessary to adopt a Regulation. A higher positive source of authority was thus needed to overcome the blockage. In the area that concerns us here, apart from the fact that such an authority does not exist for want of formal organization in the international business law world, it is not a priority for either insolvency law (due to its distinctive national identity) or arbitration law (due to its (legitimate) suspicion of any positive formal regulation). There is therefore no prospect of any development and even less of any 'progress' in this direction.

51. What can be done? The legal world must be given time to find a way of possibly bringing within the category we have described as integration, which we have listed and illustrated in Part I, some or all of the solutions currently reflecting this confrontation. Below, we give some examples of this confrontation. The range of situations is in fact quite wide. Sometimes, the insolvency proceedings neutralize the arbitration (A). Sometimes, the arbitration neutralizes the insolvency proceedings (B). It will be necessary on each occasion to distinguish between solutions which, in our humble opinion, are justified and reveal the legitimate supremacy of one body of rules over the other and, in our even humbler opinion and stressing the speculative and by definition questionable nature of our reflection, those which may be open to discussion.

A. When insolvency proceedings neutralize arbitration proceedings

a) Justifiably

52. It is quite logical for an arbitral tribunal to find that the conduct of an arbitration is neutralized by insolvency proceedings, insofar as the tribunal cannot hear a challenge against a respondent subject to insolvency proceedings until the declaration of the debt has been filed with the debtor's accredited representative. This is a straightforward application of the suspension and resumption of proceedings, the purpose of which is the coordination of the proceedings. 60 Only recently, the French Cour de cassation held that under French law an arbitral tribunal is deprived of jurisdiction during the debt verification process, i.e. until such time as the official receiver has acknowledged the arbitral tribunal's jurisdiction, as an exception to the Kompetenz-Kompetenz principle. 61[Page66:]

53. Similarly, an arbitration62 could not proceed against a party which, as a result of the insolvency proceedings to which it is subject and under the law applicable to it, 63 had no standing to sue or be sued. Despite the drawbacks of such a solution, it is inevitable: the importance of moving an arbitration forward cannot prevail over the absence or loss of a party's legal personality. 64 This echoes the Swiss solution in the Vivendi/Elektrim case, with the difference that where the EC Regulation does not apply, general private international law does not offer a means of resisting those national laws (Polish law, insofar as it neutralizes the arbitration clause, and Egyptian law, insofar as it neutralizes legal personality) which have the radical effect of placing an insolvent debtor beyond the operation of the law. Such solutions are technically indisputable.

54. They suggest that it would be wise, for the time being, to take the unexpected but necessary precaution of checking up on this aspect of the personal law of the other party to a contract before making a commitment of any consequence and, in the longer term, to seek to harmonize legislation in an appropriate context.

b) Less justifiably

55. Conversely, we would regard as questionable the same solution adopted in Switzerland65 notwithstanding the application of the EC Regulation, which is designed to harmonize business law and allow proceedings to continue, especially as the opposite solution exists in the position adopted by an arbitral tribunal and the courts in England, 66 which is very plausible and well argued with reference to the provisions of the EC Regulation. What in fact separates the Swiss reasoning and the English reasoning in this case is perhaps nothing more than a very old and traditional question of characterization. When Polish law says that a party can no longer honour the application of an arbitration clause, the arbitral tribunal seated in Switzerland and the Swiss Federal Tribunal see this as a matter of standing, whereas the arbitral tribunal seated in England and the English courts see it as a problem relating to the implementation of this dispute clause. This purely technical debate should be clarified by the context of the EC instrument, especially when its purpose is consistent with good faith, the legitimate expectations of the parties and the interests of international trade. 67

56. To take another example, no one would doubt that arbitrators cannot remain indifferent to the prospect of the enforcement of their awards, even if they do not always have the relevant factual information, 68 their powers and responsibilities do not directly cover this question, and the jurisdictio function they have is quite distinct from the imperium that prevails over enforcement. Nonetheless, the function of arbitrator includes, by definition, the search for a complete and lasting solution to the parties' [Page67:] dispute. Be this as it may, the arbitral tribunal should not let the prospect of enforcement supplant all other grounds for making a decision. Yet, this is what happened in one award, 69 in which the arbitral tribunal decided, in connection with a prior partial award disputed by the respondent on the grounds of its bankruptcy, that it was not empowered to rule on the question of whether the validity or effectiveness of the partial award was governed by a given law, since this question had to be answered by the courts of the country in which the bankruptcy had been commenced or the courts of any country where enforcement of the award might be sought. Here, the modesty of the arbitral tribunal and the arbitration's retreat in favour of the insolvency proceedings are no doubt somewhat excessive.

57. Looking more objectively at these few cases where the confrontation between the two bodies of rules results in arbitration being neutralized by the insolvency proceedings, it would seem that either the solution was perhaps not justified or at least was not the only solution possible, or, if it was justified, that it could have been avoided (late declaration) or could fairly easily have been corrected (personal status of debtor).

58. In short-and this summary conclusion may seem surprising-arbitration is, as a rule, perfectly able to appraise national differences in insolvency proceedings and embrace these without betraying the function it has to resolve the dispute for which it has been instituted. Although there is still some progress to be made, it is within the realm of possibility. In other words, the development of international arbitration practice does not seem jeopardized by insolvency proceedings-at least not in any significant or lasting way. At the very most, the enforcement of an award against an insolvent party will be frustrated, but this is due to economic (debtor's insolvency) rather than legal (insolvency proceedings) reasons. So, arbitration has no reason to fear insolvency proceedings. When, on the other hand, arbitration neutralizes insolvency proceedings, this is not always justified.

B. When arbitration neutralizes insolvency proceedings

a) Justifiably

59. We find an example of this in one of the aforementioned awards70 where, when faced with the repeated and consistent absence of the receiver representing a company subject to insolvency proceedings, the arbitral tribunal went ahead and rendered a decision against that company as if it were present. In literal terms, the arbitration procedure freed itself from the rules of representation peculiar to insolvency proceedings, which it thus neutralized, and did so on the basis of and pursuant to principles peculiar to arbitration, viz. the need to move the proceedings forward, a reasonable interpretation of the principle of an adversarial process, and the parties' legitimate expectation that their dispute will be resolved. We consider this solution to be justified, as would clearly be the case with any solution that avoids the risk of escalation or uncooperative behaviour or bad faith in the proceedings.

60. For the same reason, we believe this solution could extend to an award rendered against an insolvent respondent in its absence, subject to the customary conditions and guarantees applicable to arbitration proceedings conducted in a party's absence. [Page68:]

b) Less justifiably

61. Any arbitration that ignores insolvency proceedings without good reason lays itself open to question. Even the principle of pacta sunt servanda cannot justify this. On the contrary, this principle would require the insolvency proceedings to be taken into account. The explanation lies in the fact that insolvency proceedings derive their legitimacy from the principle of the universality of a person's assets. According to this traditional but highly topical principle, when an economic agent assumes a contractual obligation, he 'commits' all his present and future assets. All present and future rights answer all liabilities. The general claim a creditor has on the assets of his debtor mirrors the universality of any person's assets-whether a natural person or a legal entity-and guarantees the implementation of pacta sunt servanda. A debtor commits all his assets-no more than this, 71 but also no less than this. 72 The macro-economic criteria that are nowadays used to evaluate a company's financial difficulties continue along similar lines by referring again to the universality of the company's assets. The appraisal of a business's going-concern value is a valuable indication of the probability that the firm, or debtor, will be obliged to pass from the going-concern phase (where the application of the principle of the universality of the company's assets remains virtual) to the liquidation phase (where the implementation of the principle is very real). As for the notion of cessation of payments, which triggers the opening of insolvency proceedings, it reflects the debtor's inability to honour the principle of the universality of his assets. 73

62. In other words, the foundation and criteria for the opening of insolvency proceedings are part of the structure of business law and belong to 'nature of things' in business relations, be they domestic or international. International commercial arbitration, which owes its development and its increased legitimacy to its substantive rules and their suitability to the 'nature of things' in international trade, clearly cannot afford to disavow itself by unjustifiably undermining the essence of insolvency proceedings.

63. Hence, there is cause for concern when an award fails to identify the legal reason for which it makes arbitration prevail over the application of insolvency law. The case74 raised the question of an arbitral tribunal's jurisdiction over a dispute between a Dutch company and an Italian company relating to insolvency in light of the public policy nature of Italian insolvency proceedings. The award-albeit with a dissenting opinion-asserted that the arbitral tribunal had jurisdiction as the claims were of a financial nature, which amounts to saying that when a dispute is capable of being settled by arbitration, the arbitral tribunal necessarily has jurisdiction notwithstanding any other [Page69:] rules linked to a party's insolvency. Admittedly, the award showed signs of pragmatism when it said that the final award was likely to be performed in the Netherlands and that there was no prospect of enforcement being sought in Italy. 75 This was indeed an argument worthy of consideration, given the purpose of the arbitration and the legitimate expectation of the parties. However, the award added76 that 'reference may be made to the principle of pacta sunt servanda in favour of maintaining the validity of the arbitration agreement beyond the declaration of bankruptcy of one of the parties: In an international relationship as in the present matter, the parties very often agree on arbitration as the dispute settlement procedure in order to avoid that disputes have to be decided by the courts in the country of one of the two parties; by opting for arbitration, the parties express their willingness to submit any dispute to a neutral panel of which one member is normally designated by each party. There are no sufficiently strong reasons which could justify that a foreign contractual partner be frustrated in his reasonable expectations to see his case decided by such panel and be compelled to submit the dispute to the Bankruptcy Court of the State in which the opposing party has its place of business.' Such reasoning is clearly relevant, subject however to the reservation that, although it may be perfectly suited to defining the nature and purpose of arbitration, it does not help to define its scope in situations where a State court may have exclusive jurisdiction.

64. A more subtle variant is found in another award77 which, in a similar situation, stated that although the substantive rights of the parties were governed by the law of the country where the respondent's insolvency proceedings had been opened, the suspension of the proceedings was 'arguably' a matter governed by the lex arbitri. This reason verges on the hypothetical. Such hesitation probably points to negligence in the arbitral tribunal's handling of insolvency law.

65. To conclude, arbitration and insolvency proceedings cannot afford to overlook each other. Each must acknowledge the other's existence and become better acquainted with each other, so that the principle of pacta sunt servanda can be properly applied, the legitimate expectations of the parties fulfilled, and the interests of international commerce and the development of arbitration furthered.

1
D. Vidal, Droit des procédures collectives, 2d ed. (Gualino, 2009) 76, para. 117.

2
On the jurisdiction of arbitrators in relation to bankruptcy, see the models setting out generalized practices such as the IBA 1995 Cross-Border Insolvency Concordat. Also, G. Giorgini, Méthodes conflictuelles et règles matérielles dans l'application des « nouveaux instruments » de règlement de la faillite internationale, pref. D. Vidal (Dalloz, 2006) esp. 75ff, para. 135 et seq.

3
J.-B. Racine, L'arbitrage commercial international et l'ordre public, pref. Ph. Fouchard (LGDJ, 1999) 377-79, paras. 678-81.

4
D. Vidal, Droit français de l'arbitrage commercial international (Gualino, 2004) 221, para. 342 et seq. Arbitrators have a duty to apply public policy-admittedly, only international public policy (in international arbitration)-but to apply it in full. This gives arbitration sustainability and greater legitimacy and explains the need for caution when faced with over-restrictive interpretations of this obligation. If it were to become grotesquely reduced, this could jeopardize such legitimacy and undermine the foundations of this remarkable construction of substantive rules that have been rightly preferred to ill-fitting State rules and conflicting intentions amongst parties.

5
A professor who has experienced such misfortune does not teach these subjects in the same way after the event as he did before . . .

6
As recalled by Pope Benedict XVI in the encyclical letter Caritas in Veritate: 'there is nevertheless a growing conviction that business management cannot concern itself only with the interests of the proprietors, but must also assume responsibility for all the other stakeholders who contribute to the life of the business: the workers, the clients, the suppliers of various elements of production, the community of reference'.

7
Not to be confused with the amicable liquidation of a company, which raises a question of company law. Here, the relevant body (usually an extraordinary general meeting of partners) decides to dissolve the company (or to record that grounds for dissolution exist) and accordingly to proceed with the liquidation, whereby the company's creditors will recover the sums owed to them and the rest of the company's assets will be shared between the partners. The only possible overlap is when amicable liquidation finds that the company has ceased making payments or is insolvent. Under French law, when this happens, the company liquidator must immediately file a petition in bankruptcy.

8
Ph. Fouchard, 'Arbitrage et faillite' Rev. arb. 1998.471.

9
E. Jolivet, 'Chronique de jurisprudence arbitrale de la Chambre de commerce internationale (CCI) : quelques exemples de traitement du droit des procédures collectives dans l'arbitrage' Gaz. Pal., 13-14 Dec. 2006, 16.

10
Covering the judiciary and the public prosecution service, as well as their functional relations with bodies of a more administrative kind that deal with the prevention or settlement of companies' difficulties.

11
In such situations, would it not be better if there were specific legislation organizing relations between arbitration and insolvency proceedings? E.g. Italy's 2006 reforms concerning arbitration and bankruptcy, see International Law Office, Newsletter, 23 August 2007, <www.internationallawoffice.com>.

12
D. Moralis, L'arbitrage face aux procédures conduites en parallèle (thesis, Aix-en-Provence, Dec. 2008, dir. J. Mestre) esp. 389-421, paras. 471-521.

13
Extracts from which are published in this issue of the ICC International Court of Arbitration Bulletin.

14
Experience shows that such initial impressions at the hearing are often misleading and disproved by a closer look at the case and by the hearings and the final award.

15
ICC case 10507, para. 9.2 (see hereinafter).

16
The decision was attenuated by a dissenting opinion, set out in para. 10 of the award (see hereinafter).

17
Cited by Ph. Fouchard, see supra note 8, who opts (para. 9) for 'the supremacy of bankruptcy rules over those of arbitration, in both domestic and international matters. In the first case, they are characterized as mandatory and in the second as immediately applicable.'

18
Ph. Fouchard, ibid., noted that the Cour de cassation has stated that the rules belong to both domestic and international public policy, referring to three decisions of the 1st Civil Chamber (Cass. civ. 1re, 8 Mar. 1988, Thinet, Rev. arb. 1989.473, Annot. P. Ancel; Cass. civ. 1re, 5 Feb. 1991, Almira Films, Rev. arb. 1991.625, Annot. L. Idot; Cass. civ. 1re, 4 Feb. 1992, Rev. arb. 1992.663, Saret, Annot. H. Moitry; D. 1992.181, Annot. G. Cas) and two decisions of the Paris Court of Appeal (16 Feb. 1989, Rev. arb. 1989.711, Annot. L. Idot; Paris, 23 Mar. 1993, Rev. arb. 1998.541, Annot. Ph. Fouchard). Similarly and more recently, a decision was quashed by the Cour de cassation (Cass. civ. 1re, 6 May 2009 (08-10.281) on the grounds that it violated the rule of the suspension of individual lawsuits which is part of 'both domestic and international public policy'. On this decision, see also paras. 18 and 32 below.

19
Bankruptcy and Judicial Recovery Chamber of the Court of Appeals of São Paulo, 25 June 2008; Superior Court of Justice, Brazil, 9 June 2008, (2008) 26:4 ASA Bulletin 826-828.

20
Ph. Fouchard, supra note 8 at 484, para. 29, gave as an example a party's failure to disclosure the insolvency proceedings to which it is subject, adding that an arbitral tribunal or court 'could make the arbitration of a dispute prevail over an unfair or blind application of bankruptcy rules'.

21
The grounds for annulment referred to in Art. 1502 of the Code of Civil Procedure, to which Art. 1504 refers, concern the principle of an adversarial process on three occasions: expressly in Art. 1502(4), conceptually in Art. 1502(5) insofar as it concerns a breach of public policy (in this case, procedural public policy) and substantially in Art. 1502(3) referring to the arbitrator's mission which, due to its jurisdictional nature, is consubstantial with the observance of this principle.

22
D. Vidal, supra note 4 at 211, paras. 326-333.

23
ICC case 12805 (see hereinafter).

24
Cass. civ. 1re, 6 May 2009, appeal no. 08-10.281, SA Jean Lion et compagnie v. société International Company For Commercial Exchanges Incom; see also para. 32 below.

25
ICC case 10687 (see hereinafter).

26
ICC case 12452, paras. 44-47 (see hereinafter).

27
ICC case 10687 (see hereinafter). On the suspension and resumption of proceedings, see para. 43 et seq. below.

28
ICC case 13764 (see hereinafter).

29
ICC case 11519 (see hereinafter).

30
ICC case 12441 (see hereinafter).

31
In a configuration of comparative law that escaped the draconian limitations of French law . . .

32
See S. Walker & A. Garcia, 'Insolvency in International Arbitration: A Growing Concern', Lexology, PLC, 28 Jan 2009, <http://www.twobirds.com/English/NEWS/ ARTICLES/Pages/Insolvency_international_arbitration.Aspx>.

33
ICC case 10687 (see hereinafter).

34
ICC case 11123 (see hereinafter).

35
ICC case 11714, para. 17 (see hereinafter).

36
But where one of the parties, and a dissenting arbitrator, considered that the circumstances called for court-administered insolvency proceedings.

37
ICC case 10515 (see hereinafter).

38
Omission of the wording 'company in liquidation'.

39
Cass. civ. 1re, 6 May 2009, decision no. 509, appeal no. 08-10.281.

40
Somewhat comparable, for example, to applying the law of a criminal court to the merits.

41
This chronic uncertainty explains the emergence of other methods and instruments for settling international bankruptcies, such as the EC Regulation 1346/2000 of 29 May 2000 on insolvency proceedings, the 1993 OHADA Uniform Act organizing collective proceedings for wiping off debts, the 1997 UNCITRAL Model Law and the 1995 IBA Concordat. See C. Giorgini, supra note 2.

42
ICC case 10687 (see hereinafter).

43
The award mentioned additionally that 'the claims are unproven and must therefore also be dismissed for this reason'.

44
Thus, as an exception to Art. 4.

45
Art. 142 of the Polish law on insolvency proceedings.

46
Commercial Court, Mealey's International Arbitration Report, Vol. 23, 10 Oct 2008, 7; Arbitration Law Monthly, Feb. 2009, 11.

47
It would appear that, conversely, the decision reserves the application of Art. 4.2(e) to the arbitration clause before the commencement of the proceedings. See Mealey's International Arbitration Report, Vol. 23, 10 Oct. 2008, 8: 'however, he (the justice) noted that Article 4.2(e) will apply to the arbitration agreement insofar as it relates to any future, nonpending proceedings'. We consider this reservation to be inappropriate, as it could be used in bad faith as an escape route by a party whose insolvency proceedings are opened in a country which has a provision similar to that of the Polish law. However, this should not be very frequent, which reduces the danger of the reservation, but does not remove it.

48
International Law Office, Newsletter, 30 July 2009, <www.internationallawoffice.com>.

49
Supra note 8; see decisions cited therein.

50
ICC case 11876, partial award : 'We declare that Respondent is liable for the amount of . . .' (see hereinafter).

51
ICC case 10687 (see hereinafter).

52
As then worded, it referred to the mechanism of the suspension and resumption of the proceedings.

53
ICC case 11123 (see hereinafter).

54
ICC case 13845 (see hereinafter).

55
Cass. com., 22 Jan. 2008, Rev. arb. 2009.145, Annot. P. Ancel; JCP 2008, I, 164; D. 2008.478, Annot. A.Lienhard.

56
This was the text in force at the time. These provisions now form Art. R. 624-3 et seq. of the Commercial Code (subsection 2: admission of debts).

57
Cass. com., 2 June 2004, decision no. 873; JCP E June 2004, 1053, para. 975; Rev. arb. 2004.596, Annot. P. Ancel; D. 2004, A.J.1732, Annot. A.Lienhard; D. 2004, 3184, para. 44, Annot. Th. Clay; RTDCom 2004.439, Annot. E. Loquin & J.-C. Dubarry; JDI 2005.101, Annot. A. Mourre.

58
Same references as in preceding note, as the two decisions on the same day were commented on together.

59
ICC case 13845 (see hereinafter).

60
See para. 43 et seq. above.

61
See supra note 55.

62
ICC case 12907, para. 69 (see hereinafter).

63
Here, Egyptian law, see para. 65 of the award, hereinafter.

64
The preliminary award in ICC case 11123 (see hereinafter) discussed the question of whether, pursuant to French law, there had been a partial transfer of assets (in which case the debtor company was not dissolved), or whether it should be considered as 'total' within the meaning of Art. 1844-7(7) of the Commercial Code (which would constitute a ground for dissolving the company). Based on the circumstances of the case, the arbitrator opted for a partial transfer and accordingly for the continuation of the arbitration. It should be added that if the transfer had been total, it would have been necessary to enquire whether the survival of the legal personality of the dissolved company 'for the purposes of the liquidation' covered its participation in the said arbitration.

65
See para. 42 above.

66
See para. 41 above.

67
It has been observed (Philip Landolt, Global Arbitration Review, 29 May 2009) that the 'Supreme Court almost seems to be inviting Parliament to intervene'.

68
Through a combination of circumstances or . . . through the will of the parties!

69
ICC case 12421 (see hereinafter).

70
ICC case 12805, para. 17 (see hereinafter).

71
This gives rise to the problem of the possible commitment of another company in the group to which the debtor company belongs (D. Vidal, 'The Extension of Arbitration Agreements within Groups of Companies: the Alter Ego Doctrine in Arbitral And Court Decisions' (2005) 16:2 ICC ICArb. Bull. 62). It also gives rise to the bigger problem of the exclusion of certain assets in off-shore entities from the operation of the law, as they cease to answer the commitments of the person entitled to payment.

72
This logically explains the success in private international law of the theory of the universality of bankruptcy, which justifies the jurisdiction of a single forum, or at least a principal forum as in comparative law or the EC Regulation 1346/2000 of 29 May 2000 on insolvency proceedings, which distinguishes between principal (Arts. 1-26 and secondary (Arts. 27-38) insolvency proceedings.

73
This reflects a remarkable coherence between law and economics, which was first reinforced in French law by the position taken by the French Cour de cassation in decisions defining the notion of cessation of payments (a debt that is due but has not been claimed by the creditor cannot be taken into account) and then sanctioned by Ordinance No. 2008-1345 of 18 December 2008 amending the law on companies in difficulty. In Art. L.631-1, para. 1 in fine of the Commercial Code, it is stated that 'a debtor who establishes that the credit reserves or payment moratoria granted by his creditors enable him to cover his due debts with his available assets cannot be said to have ceased payments' (see D. Vidal, supra note 1, 207ff., paras 464-471).

74
ICC case 10507 (see hereinafter).

75
It should be added (cf. supra note 68) that an arbitral tribunal cannot be sure it has all up-to-date information on a particular issue.

76
Para. 9.3 (see hereinafter).

77
ICC case 12993, para. 103 (see hereinafter).