法学相关资料合集（20篇英文）：仲裁与破产进程

ARBITRATION AND INSOLVENCY PROCEEDINGS: CLAIMS OF ORDINARY BANKRUPTCY CREDITORS (1) Vesna Lazic (T.M.C. Asser Institut, The Hague) Readers are reminded that this work is protected by copyright. While they are free to use the ideas expressed in it, they may not copy, distribute or publish the work or part of it, in any form, printed, electronic or otherwise, except for reasonable quoting, clearly indicating the source. Readers are permitted to make copies, electronically or printed, for personal and classroom use. Contents 1. Introduction 2. Insolvency and arbitration: Main features and basic principles 2.1 Insolvency law 2.2 Arbitration 3. Binding effect of arbitration agreements concluded prior to the commencement of bankruptcy proceedings 3.1 France and the Netherlands 3.2 United States 4. Claims of ordinary bankruptcy creditors 4.1 Preclusion of individual actions by ordinary creditors 4.1.1 France 4.1.2 The Netherlands 4.1.3 United States 4.2 Applicability of the stay of individual actions in arbitration 4.3 Implications of the stay of individual actions in arbitration 4.3.1 Admitted claims 4.3.2 Contested claims 4.3.2.1 Pending arbitral proceedings 4.3.2.2 Non-pending arbitrations 4.3.2.2.1 Non-arbitrability of contested claims 4.3.2.2.2 Modalities of enforcement of arbitration agreements (France) 4.3.2.2.3 The discretion of the courts in bankruptcy (United States) 5. Conclusion Notes 1. Introduction Insolvency and arbitration are two different types of procedures, each having its own purpose, objectives and underlying policy. A very distinct nature of the two is probably the reason why the relationship between them is seldom scrutinized in the legal writings and often reduced to the mere statement that the bankruptcy issues are not arbitrable.(2) Yet, there are more points of interaction between these two fields of law. As rightly stated in the literature, '[l]egislation on insolvency is a crossroads where all the elements of the Legal system in question meet'.(3) Insolvency laws usually provide for some limitation of rights of the debtor and his creditors in order to efficiently pursue their basic principles. Furthermore, it may even limit the rights of third parties. It is outside the scope of this article to examine whether and to what extent insolvency law influences arbitration and to address various points of interaction between the two fields of law.(4) This article will rather concentrate on the claims of non-secured, non-preferred creditors against the debtor's estate. In particular, these are the claims arising from a contractual relationship between the debtor and another party concluded before the commencement of bankruptcy proceedings, where the contract provided for the settlement of disputes by arbitration.(5) In this article, an attempt will be made to determine whether an arbitration agreement, concluded prior to the commencement of insolvency proceedings, may be successfully invoked against the trustee in bankruptcy when the dispute relates to a monetary claim against the estate. In other words, the issue of the so-called 'indirect enforcement' will be addressed. The relevant provisions of the insolvency law relating to legal proceedings pending at the time of the commencement of insolvency will also be considered and an attempt will be made to determine their importance for pending arbitral proceedings. Accordingly, the emphasis will be on the nature of the claims of ordinary bankruptcy creditors, encompassing situations when arbitral proceedings with respect to such claims are pending and when arbitration has not yet been commenced at the time when the insolvency proceedings are embarked upon. These issues will be analysed taking into consideration the relevant provisions in Dutch, French and US arbitration and insolvency law. The purpose is to determine to what extent the solutions in these jurisdictions differ or converge. The relevant issues will be considered, in principle, in the context of the so-called 'straight bankruptcy' or bankruptcy liquidation, while the insolvency proceedings involving the arrangements with creditors (compositions, reorganizations) will be mentioned only when the provisions addressed apply to both bankruptcy liquidation and reorganization. This is particularly the case in France and the United States. The issues of cross-border insolvency will not be dealt with. They will be occasionally mentioned when the relevant case law involves such issues. 2. Insolvency and arbitration: Main features and basic principles 2.1 Insolvency law In the most general terms, one of the basic purposes of insolvency law is to provide a framework for dealing with the competing interests and claims within a given system of ranking. The manner in which the competing interests are balanced is not necessarily identical in all insolvency laws. It can be said that an insolvency statute is drafted in a manner which is, in a particular legal system, regarded as the most suitable to pursue effectively the underlying policy and the prevailing purpose of the insolvency law, be it the protection of the debtor(6) or his creditors or the preservation of employment.(7) Generally, and without reference to any particular legal system, it may be said that the insolvency laws provide for the following: the legislative framework for the collection and distribution of the property of the debtor comprised in the estate, in an orderly manner which maximizes payment to the creditors, and the statutory scheme for compositions and arrangements with creditors or for a reorganization of the debtor in financial difficulties. In pursuing the basic principles and aims, insolvency law contains the provisions of a substantive and procedural nature. An analysis of all the consequences of the commencement of the procedure for bankruptcy liquidation remains outside the scope of this work. Only the issue concerning the right of the management and disposal of the estate will be addressed briefly. One of the effects of the commencement of bankruptcy liquidation is that a debtor is deprived of the right to manage and to dispose of the estate. This right vests in the trustee. All insolvency statutes here considered provide for such legal effect in the case of bankruptcy liquidation.(8) The consequence of dispossession is that the debtor lacks the right to undertake legal actions concerning the property forming part of the estate. The debtor's obligations undertaken after the bankruptcy order has been made do not bind the estate. Also, the debtor loses the right to sue and to be sued (locus standi) in the legal proceedings concerning the estate.(9) These limitations of the debtor's rights are relevant only with respect to the estate. A bankrupt individual retains the right to exercise effectively his personal rights and obligations and to undertake legal actions with respect to the property not included in the estate. Consequently, after the commencement of bankruptcy liquidation, arbitral proceedings may be, in principle, initiated or continued only by or against the trustee, with respect to the property forming part of the estate. In the same vein, arbitration agreements entered into by the debtor prior to the commencement of the bankruptcy liquidation may be attempted to be invoked against the trustee, and not against the debtor. However, the proceedings aiming at the reorganization and the rehabilitation of business do not necessarily have to entail dispossession. For example, in the United States, the debtor in reorganization under Chapter 11 ('debtor-in-possession'),(10) in principle, retains the right of management and disposal of the estate and generally has all rights and duties of a trustee in proceedings for relief through liquidation under Chapter 7. Similarly, a commencement of the redressement judiciaire does not necessarily imply the dispossession of the debtor, who generally retains the right of management and disposal.(11) The provisions concerning the right of disposal and management in a reorganization procedure are addressed here because the provisions discussed below apply to both reorganization and bankruptcy liquidation in the United States and France. 2.2 Arbitration Modern arbitration laws generally recognize the right of parties to agree on arbitration. Party autonomy, the underlying principle of commercial arbitration, has been widely accepted. Recently enacted statutes have been drafted so as to provide for an 'arbitration friendly' legislative framework, whereby the possibility of judicial control and interference with arbitration is considerably limited. In other words, the role of the judiciary is mainly one of support and assistance to arbitration before, during and after the arbitral process, while the supervision and control over arbitration is exceptional and very limited. This is particularly so with respect to arbitrations involving international elements. These principles are incorporated also in the arbitration statutes and supported by the judiciary in the legal systems here considered. Thus, the 'policy of indirect enforcement' is widely accepted.(12) The provisions on the 'enforcement' of arbitration agreements form part of the generally favourable attitude towards arbitration, expressed in national arbitration laws(13) and in international treaties.(14) The possibilities of challenge are very limited. The application for annulment or an action for setting aside is the principal and often the only means of recourse against the arbitral award in civil-law countries. In principle, there is only a limited number of grounds for setting aside the award, expressly provided by the arbitration statute,(15) and a limited number of grounds for refusal of the enforcement of arbitral awards.(16) 3. Binding effect of arbitration agreements concluded prior to the commencement of bankruptcy proceedings Before addressing the claims of ordinary bankruptcy creditors, the effectiveness of arbitration agreements in the context of the proceedings for bankruptcy liquidation will be first briefly addressed. It will be examined whether the trustee in bankruptcy liquidation is generally considered to be bound by a previously concluded arbitration agreement of the debtor. In other words, it will be examined whether such an agreement may be successfully invoked by or against the trustee. 3.1 France and the Netherlands In legal theory and case law in France and the Netherlands, the commencement of bankruptcy proceedings is, generally, not considered to imply the invalidity of arbitration agreements concluded by the debtor in bonis. The prevailing view in Dutch literature is that the trustee is bound by an arbitration agreement entered into by the debtor prior to bankruptcy.(17) A similar view has been expressed in French literature. In general, arbitration agreements are considered to be enforceable (opposable) against the liquidateur, the administrateur or the debtor in a redressement judiciaire.(18) Also, the prevailing opinion in French literature is that the conditions provided in Arts. 33(1) and 158 of the Loi du 25 janvier 1985 do not apply with respect to arbitration agreements concluded prior to redressement judiciaire or liquidation judiciaire.(19) These provisions relate to the approval and authorization that the debtor or the administrateur in the redressement judiciaire (Art. 33(1)) and the liquidateur in the liquidation judiciaire (Art. 158) need to obtain in order to enter into new arbitration agreements after the commencement of insolvency proceedings. It is appropriate to conclude that the debtor's lack of the right to disposal and management imply the invalidity of the pre-petition arbitration agreements. The provisions relating to the powers of the trustee, as the successor of the debtor's interest, would be a moot point. However, there may be some exceptions to and limitations on the effectiveness of arbitration agreements (e.g., non-arbitrability of the subject matter). 3.2 United States In contrast to the situation in France and the Netherlands, where the question of the enforcement of arbitration agreements after the commencement of bankruptcy proceedings has not been much discussed, it has been a rather controversial issue in the United States. Abundant case law has quite often been addressed in the literature.(20) Frequently, the question of the enforcement of arbitration agreements after the commencement of bankruptcy liquidation or reorganization has been considered to have triggered the question of the 'conflict' or 'conflicting policies' between the Federal Arbitration Act and the United States Bankruptcy Code.(21) It exceeds the scope of this article to deal with this subject in detail. Instead, an attempt will be made to summarize the decisions of various bankruptcy, district and circuit courts in the United States. To the knowledge of this author, the United States Supreme Court has not yet ruled on the question of the enforcement of arbitration agreements in bankruptcy proceedings. The purpose of this summary is to present the source of the 'conflict', as the relationship between the two Acts has often been characterized in the literature and the US case law. The analysis of this issue in the following text is necessary for an understanding of the legal framework and the context in which the enforcement of arbitration agreements with respect to creditors' claims arises. Since the provisions on the jurisdiction of the bankruptcy courts have presented the main source of the 'conflict' between the Arbitration Act and the Bankruptcy Court, they need to be addressed briefly. The Bankruptcy Reform Act of 1978 further strengthened the traditional notion that bankruptcy courts relinquish their jurisdiction only exceptionally. The 1978 Act provided for a very broad jurisdiction of bankruptcy courts. The district court was conferred with original and exclusive jurisdiction over bankruptcy cases(22) and original, but not exclusive jurisdiction over all civil proceedings under, in or related to bankruptcy cases.(23) The bankruptcy courts were given the power to 'exercise all of the jurisdiction conferred . . . on the district courts'.(24) The reason for introducing such a jurisdictional framework was to overcome disadvantages that had existed under the previous bankruptcy statutory law,(25) so as to provide conditions for all matters arising in connection with a bankruptcy case to be dealt with in one proceeding.(26) Relying strongly on such a broad grant of jurisdiction and the Congressional intent expressed in the legislative history of the Bankruptcy Code, the vast majority of bankruptcy courts used to hold that they had discretion when deciding on the enforcement of arbitration agreements concluded by the debtor before the commencement of bankruptcy, liquidation or reorganization proceedings. When exercising their discretion, various US bankruptcy, district and circuit courts sometimes enforced such arbitration agreements, and sometimes refused to give effect to them. In deciding on this issue, they employed various approaches and different lines of reasoning. Some examples will be given. Some courts held that the claims on behalf of the estate should be distinguished from the claims against the estate, whereby in the former cases there was no competing bankruptcy policy.(27) Sometimes a number of factors were suggested for consideration when deciding on the enforcement of arbitration agreements, such as the degree to which a judicial forum was preferable to arbitration, the need for special expertise and the identity of persons comprising the arbitral tribunal.(28) Occasionally, the argument that a trustee is a different legal entity than the debtor was relied upon to deny the enforcement of arbitration agreements.(29) The 'conflict' between the two Acts was extensively discussed in Zimmerman v. Continental Airlines, Inc.,(30) where the relevant provisions and underlying policies of the two Acts were carefully examined. After such an examination, the Court concluded that the underlying purposes of the Bankruptcy Code 'impliedly modify' the policies of the Federal Arbitration Act and that the enforcement of arbitration agreements in a bankruptcy procedure was to be 'left to the sound discretion of the bankruptcy judge'.(31) This decision was often relied upon by the US courts when refusing to enforce arbitration agreements in the context of bankruptcy proceedings.(32) Even after the broad grant of jurisdiction to bankruptcy judges had been found to be unconstitutional in Northern Pipeline Construction Co. v. Marathon Pipe Line Co.,(33) the decision on the discretion of the bankruptcy courts remained the dominant rule for a number of years. The Bankruptcy Amendments and Federal Judgeship Act of 1984 was the response of Congress to the Supreme Court's decision in Marathon. A rather complicated set of rules was introduced in Section 1334, supplemented by Sections 157 and 158 (as codified in 28 U.S.C.A.), whereby the jurisdiction of the bankruptcy courts was considerably limited. The scope of jurisdiction of the district court remained virtually unchanged, so that the provisions contained in the newly enacted Section 1334(a) and (b) are identical to the repealed Section 1471(a) and (b). However, the provision conferring the power to bankruptcy courts to exercise all powers conferred upon the district court, previously contained in Section 1471(c), was omitted from the text of Section 1334. Instead, the provision in Section 157 was introduced, containing the non-exclusive list of the so-called 'core' matters - matters arising in or under bankruptcy cases (Sect. 157(b)(2)). The bankruptcy judges were competent to adjudicate bankruptcy cases and to issue final orders concerning the 'core' matters. However, their jurisdiction is limited in non-core or related matters: the bankruptcy courts are competent to hear these disputes and to issue findings of fact, but they lack the competence to enter final orders. These are to be issued by the district court, unless the agreement of the parties expressly provides for the jurisdiction of the bankruptcy court. In addition to that, deciding on personal injury and wrongful-death actions have remained outside the jurisdiction of bankruptcy courts.(34) After such an allocation of jurisdiction between the district courts and bankruptcy courts it seems to have been rather difficult to maintain the argument relying on the need to 'centralize' all disputes arising in bankruptcy before one court. Yet, the rule on the discretion of bankruptcy courts remained the prevailing one until the Court of Appeals for the Third Circuit in Hays and Co. v. Merrill Lynch, Pierce, Fenner and Smith, Inc.,(35) overruled its decision in Zimmerman. The Court in Hays, held, inter alia, that there was no discretion for the bankruptcy courts when deciding on the enforcement of arbitration agreements in non-core matters, unless it is proved that 'the text, legislative history, or the purpose of the Bankruptcy Code conflicts with the enforcement of an arbitration clause'.(36) Although often considered in the subsequent decisions of the US courts, it can hardly be said that a uniformity of approaches followed after the decision of the Third Circuit in Hays. The reasoning in Hays was subject to various interpretations(37) and does not seem to be accepted in all circuits. However, in more recent decisions it has been more frequently followed. In any case, although far from being abandoned, the rule on discretion has ceased to be absolute and the most prevailing one, at least with respect to the non-core matters, such as when a third party - a party outside the bankruptcy proceedings - has attempted to invoke an arbitration agreement. However, the discretion rule seems to have retained its importance with respect to creditors' claims, although it has been more often questioned in some recent decisions.(38) Indeed, the creditors' claims will always fall under the 'core' category: they will be considered either as a matter of allowance or disallowance of claims or as a cause for relief from an automatic stay under Sect. 362. Both issues are expressly indicated to be 'core' proceedings under Sect. 157 (Sect. 157(b)(2)(B) and Sect. 157(b)(2)(G) of the Bankruptcy Code). As will be seen, the enforcement of arbitration agreements with respect to creditors' claims have usually been decided within the lifting of the automatic stay. This issue will be addressed infra (see 4.3.2.2.3). 4. Claims of ordinary bankruptcy creditors It is almost undisputed in the legal literature that 'pure' bankruptcy issues are not arbitrable. Sometimes it is even considered that the question of arbitrability of insolvency matters has no or little practical relevance.(39) This is so when one thinks of issues such as the orders opening and closing the bankruptcy proceedings and other measures of conduct and surveillance, nominating the trustee, verification, inventorization, collection and distribution of the estate and reorganization of the business. These are so obviously issues of bankruptcy law, raising no doubts as to their non-arbitrability. It is, however, more difficult to determine the actual scope of (non-)arbitrable matters in insolvency. In other words, there are certain issues, such as a dispute arising from the contractual relationship between the parties, which might be considered to be a 'bankruptcy' matter after the commencement of insolvency proceedings under some laws. Non-monetary claims against the estate present an appropriate example for this and illustrate the complexity of the interaction between arbitration and insolvency law. It can well illustrate how the provisions of insolvency law might limit the domain of arbitration or might require it to be respected by the parties and arbitrators. It also illustrates the importance of the nature of claims arising in insolvency and how an ordinary contractual dispute, a kind of dispute that is most frequently decided in arbitration, might become a 'bankruptcy' issue after the commencement of an insolvency procedure. In some published arbitral awards,(40) it can be seen that arbitrators have decided on a claim of an ordinary creditor for payment against the debtor without raising the arbitrability issue, although the determination of these claims could be regarded as a typical bankruptcy issue. In the text that follows an attempt will be made to answer the question whether the claims of ordinary bankruptcy creditors are considered to be typical bankruptcy issues in all the legal systems analysed and, if so, whether they are consequently considered to be non-arbitrable and, as such, excluded from arbitration. Non-arbitrability may be a reason for refusing to give effect to an arbitration agreement and a reason for setting the award aside or for the refusal of its enforcement. If they are not considered to be outside the domain of arbitration, it will be examined whether the relevant provisions of the insolvency law may have any further influence on arbitration. In other words, are there some provisions of the insolvency law concerning this type of claim which require them to be respected by arbitrators in order not to jeopardize enforceability of the award and its acceptance in the bankruptcy liquidation. 4.1 Preclusion of individual actions by ordinary creditors One of the basic principles of the bankruptcy procedure is the preclusion of individual actions by creditors. After the commencement of bankruptcy liquidation, non-secured claims for payment against the estate may be pursued only by filing in bankruptcy proceedings. Any ordinary, non-secured, non-preferred creditor must file his claim for verification or proof if he wishes to participate in the distribution of the bankruptcy estate. The creditors, whose claims are not secured or preferred, obtain payments pro rata. The purpose is to deal with such claims in one, collective procedure,(41) in accordance with the provisions of the insolvency law. The insolvency statutes in all the jurisdictions here analysed contain the provisions on preclusion of individual actions of creditors, at least in the case of bankruptcy liquidation. The relevant provisions of the insolvency law in the United States and France apply both in the bankruptcy liquidation (liquidation judiciaire in France) and reorganization (redressement judiciaire in France).(42) 4.1.1. France In France the relevant provisions are contained in Arts. 47 and 48 of the Loi du 25 janvier 1885. The principle of preclusion of individual actions by creditors (arrêt des poursuites individuelles) is primarily expressed in Art. 47. Creditors are prevented from taking any legal action intended for condemning the debtor to pay an amount of money, with respect to the debts emanating prior to the order opening the redressement judiciaire or liquidation judiciaire.(43) The actions to terminate contracts due to the default in the payment of an amount of money are also suspended or precluded.(44) The same is true for all executions on the real estate and movable assets of the debtor.(45) The provision of Art. 47 is deemed to be a part of public policy.(46) If there are legal proceedings pending with respect to such claims, they will be suspended until the claim is declared in verification proceedings. They may be resumed without any authorization or approval,(47) provided that the representative of the creditors and, if necessary, the administrateur in redressement judiciaire are duly notified. However, the French judiciary seems to have developed the rule that the decisions rendered in such proceedings may not be of a condemnatory nature. In other words, the claim may be only declared and the amount determined in the decision, but without condemning the debtor to pay.(48) In addition to the provision contained in Art. 48 of the Loi du 25 janvier 1985, there is a provision on interruption of pending proceedings contained in Arts. 369-372 of the French Code of Civil Procedure. Article 369 provides that the pending proceedings are interrupted by the effect of an order opening insolvency proceedings when there is a dispossession of the debtor or when assistance to the debtor is needed. With the exception of employees, all the creditors have to submit their claims to the creditors' representatives within a period of two months from the day on which the opening order has been published.(49) The representative of the creditors establishes the list of declared claims, within the time limit determined by the court and after having considered the observations of the debtor. The list also includes the proposals to admit or reject a particular claim or to refer it to the competent authority (Art. 100). A juge-commissaire, to whom the list is submitted, decides whether to admit or to reject a particular claim or declares that there are proceedings pending with respect to it or that the claim is not within his competence (Art. 101(1)). If the juge-commissaire declares his incompetence, the claimant has to initiate proceedings before the competent authority within two months after the notification of the declaration of incompetence (Art. 101(3)). The provisions of Arts. 47, 48(50) and 101(51) also apply in the case of liquidation judiciaire. 4.1.2 The Netherlands The preclusion of individual actions by creditors is also incorporated in Dutch insolvency law. In accordance with Art. 26 of the Dutch Faillissementswet (Fw), after the commencement of bankruptcy proceedings all claims against the debtor for payment from the estate may only be asserted in verification proceedings. All claims concerning the rights and obligations of the estate must be filed by or against the trustee in bankruptcy (curator) after the bankruptcy order has been issued.(52) Claims submitted by or against the debtor will have no effect with regard to the estate.(53) The verification procedure is determined by Arts. 108-137 Fw (Chapter V). The claims admitted in verification are final in bankruptcy proceedings. Only in the case of fraud may the trustee assert the nullity of an admitted claim (Art. 121(4) Fw). If there are legal proceedings pending against the debtor for payment from the estate, such proceedings will be suspended after the commencement of the bankruptcy procedure and the claim will have to be filed for verification. If the claim is contested in the verification procedure, the pending legal proceedings will be continued against the party that has contested the claim, be it the trustee or a third-party creditor.(54) If a claim is contested in verification and no legal proceedings are pending at the time of the declaration of bankruptcy proceedings, the rechter-commissaris will refer the parties to the court if he is not able to reconcile the parties. The matter will be settled in the so-called 'renvooiprocedure' (claim validation proceedings), whereby no writ of summons is required to be served (Art. 122 Fw). The renvooiprocedure is, in principle, conducted in accordance with the general rules of civil procedure, with some exceptions. In Dutch literature,(55) it has been suggested that the court having jurisdiction in bankruptcy will be competent to adjudicate such contested claims even if the jurisdiction of another court or arbitrators was agreed prior to the declaration of bankruptcy.(56) 4.1.3 United States Filing a petition for relief in bankruptcy operates so as to prevent the execution and prosecution of almost all claims against the debtor or the estate under Sect. 362 of the Bankruptcy Code.(57) Such claims have to be filed before the court having jurisdiction over bankruptcy cases.(58) The Bankruptcy Code in Sect. 362(a) provides for an automatic stay of the commencement or continuation of any action or proceedings against the debtor and the estate that was or could have been initiated before the filing for a relief in bankruptcy procedure. The actions and proceedings to be stayed are listed in Sect. 362(a), whereby a 'judicial, administrative and other proceeding against the debtor' are included (Sect. 362(a)(1) of the Bankruptcy Code). In the legislative history to the Bankruptcy Code it is stated, inter alia, that '[a]ll proceedings are stayed, including arbitration' and the stay extends to 'all proceedings even if they are not before governmental tribunals'.(59) The automatic stay is considered to be the fundamental protection of the debtor and the estate provided by the Bankruptcy Code.(60) It is also said that it operates so as to protect creditors and to provide for their treatment in an orderly manner.(61) The stay is only temporary and may be either terminated automatically under Sect. 362(c) or lifted by the court at the request of the interested party, as provided in Sect. 362(d) to (g).(62) 4.2 Applicability of the stay of individual actions in arbitration From the analysis of the relevant provisions of the insolvency laws considered it can be concluded that they do not differ substantially with respect to the objective they intend to achieve. Notwithstanding the differences in the wording or the context in which they are placed in a particular legislative framework, they seem to have the same purpose: to centralize the competing monetary claims of individual creditors in one procedure which is collective and summary in nature. It is intended to avoid numerous separate litigations and other proceedings with different ordinary creditors for the settlement of their claims and to deal with them in one, collective proceeding. All the insolvency laws addressed require that the claims of ordinary bankruptcy creditors may only be pursued within bankruptcy proceedings in accordance with the provisions of the insolvency law, usually in a special summary procedure (procedure for the allowance or disallowance of claims, proof of claim, verification procedure), so that any kind of individual pursuit of such claims outside the bankruptcy is excluded. Accordingly, the claims of ordinary bankruptcy creditors may be considered to be typical bankruptcy issues or 'core' matters. These issues are essential for a bankruptcy case to proceed and are not issues merely related to it. The consequence of the operation of the relevant provisions discussed is that the national courts in the country where insolvency proceedings are commenced will declare their incompetence if an action is instituted with respect to such claims. Also, already pending litigation will be suspended until the claim is dealt with in the bankruptcy procedure. Accordingly, these provisions do influence the initiation and continuation of the court proceedings. However, the question is whether they have importance in arbitration, which is a non-judicial method of settling disputes. In other words, is there any reason, from the point of view of the insolvency law, to exempt arbitral proceedings from the reach of the stay of individual actions of creditors? The prevailing view in French literature is that the provisions on preclusion of individual actions are relevant with respect to arbitration.(63) Such a view has also been expressed by the judiciary, holding certain principles of insolvency law to form part of French public policy, both domestic and international. In particular, the provisions on dispossession of the debtor, interruption of proceedings,(64) the principle of the preclusion of individual actions(65) and the principle of equality among creditors(66) are considered to be part of French domestic and international public policy. In these decisions of the French courts, the violation of such principles was the reason for the annulment of an arbitral award. In the Netherlands, the provision of Art. 26 Fw states that claims for payment against the estate, thus the claims of ordinary bankruptcy creditors, may not be pursued in any other way than by filing the claim for verification in bankruptcy. It may be concluded that they may not be pursued in arbitration either. Such a view also seems to be taken in the literature. It has been suggested that if such a claim is submitted to arbitrators, they should declare the claim inadmissible.(67) The view has also been expressed that an award may be annulled if rendered in an arbitration conducted without filing the claim for verification in bankruptcy.(68) Also, the prevailing view is that the provision of Art. 29, relating to pending proceedings, also applies to arbitration and that the procedural acts undertaken after the suspension are null and void.(69) It may be said that the applicability of the provision on automatic stay under Sect. 362 has been almost undisputed in US case law. As already mentioned, the scope of Sect. 362(a)(1) is very broad, so that judicial, administrative and other proceedings against the debtor are stayed. Although arbitration is not expressly mentioned in Sect. 362, it has been indicated in the legislative history that the stay extends to all proceedings, 'including arbitration'. Accordingly, the enforcement of arbitration agreements will be addressed within the framework of the lifting of the automatic stay, if a creditor so requests, relying on the arbitration agreement concluded prior to the bankruptcy proceedings. As in the case of pending litigation, relief from automatic stay will be needed in order to resume arbitral proceedings pending at the moment of the initiation of the bankruptcy procedure. The provision on automatic stay will certainly be effective in the case of domestic arbitration and very likely in arbitrations involving a foreign claimant in arbitral proceedings within the United States.(70) For example, the American Arbitration Association has expressed a readiness to hold in abeyance arbitrations involving a bankrupt party and to await an order of the competent court concerning an automatic stay to the pending proceedings under Sect. 362.(71) Besides, there is the possibility of 'recovery of damages by an individual injured by the wilful violation of the automatic statutory stay'.(72) Taking into consideration the reasoning of the Court of Appeals for the Second Circuit in Fotochrome, Inc. v. Copal Co., Ltd.,(73) one may come to the conclusion that the United States would not expect an extraterritorial effect of the automatic stay in international arbitration conducted outside the United States. The Court held, inter alia, that the restraining order of the US bankruptcy court was not to have any effect abroad, unless a creditor had minimum contacts with the United States so as to be subject to the in personam jurisdiction of the bankruptcy court. The continuation of arbitration in spite of the restraining order of the bankruptcy court was not sufficient reason to refuse the enforcement of the award subsequently filed in bankruptcy by the creditor as a proof of claim. It should be mentioned, however, that the creditor in this particular case did not ignore the US bankruptcy proceedings. He had filed the claim in the bankruptcy proceeding and had requested an order which would permit its continuation, but the bankruptcy court refused the motion and issued a restraining order instead. Besides, the arbitral proceedings were almost completed and an award was to be rendered. It should also be mentioned that the effectiveness of the automatic stay was not directly addressed in this decision, as it was rendered under the previous 1898 Bankruptcy Act, subsequently repealed by the 1978 Bankruptcy Reform Act. It seems, however, that the US courts will take a different view if the bankruptcy procedure is entirely ignored by a creditor. Thus, enforcement of an award rendered in London in the ex parte arbitral proceedings commenced after the opening of a bankruptcy procedure in Sweden was denied. The claimant did not file his claim in the bankruptcy proceeding. The award in his favour was rendered and the claimant attempted to enforce it in the United States, where the defendant (the debtor who was subject to the bankruptcy procedure in Sweden) had assets. The trustee objected to the enforcement of the award and requested that effect be given to the Swedish bankruptcy procedure under Sect. 304 of the Bankruptcy Code. After recognition was granted to the Swedish bankruptcy on the basis of comity under Sect. 304, the Court refused the enforcement of the arbitral award as being contrary to public policy.(74) It may be expected that the US courts will do the same if US bankruptcy proceedings are ignored. In a similar vein, after the Scheme of Arrangement made in England was given effect in the United States, the court refused to refer the parties to arbitration before the creditor had complied with the terms of the Scheme of Arrangement.(75) It may be concluded that, from the point of view of insolvency law, the relevant provisions on the preclusion of individual actions of ordinary creditors also concern the creditors who entered into arbitration agreements with the debtor prior to the commencement of the bankruptcy procedure. The same is true with respect to already pending arbitral proceedings as regards this type of claim. It is difficult to find a reason why the creditors that have concluded arbitration agreements with the debtor should not be required to file their claims for verification, while all other creditors would be required to do so. Thus, it cannot be concluded that the creditor who previously agreed on arbitration with the debtor is exempted from the requirement to have his claim filed and dealt with in a verification procedure if he wishes to participate in the distribution of the debtor's estate. Should the award rendered in violation of the provisions on preclusion of individual actions be accepted in bankruptcy if subsequently submitted by the creditor in support of his claim? Violation of the principle of preclusion of individual actions may present the reason for non-acceptance of the award in the bankruptcy proceeding or the reason for setting the award aside. Indeed, the question of the acceptance of the award arises only if the award is rendered before the expiry of the time limit for submitting a claim for verification, and in any case before the actual distribution has taken place. In other words, a creditor who fails to assert his bankruptcy claim in good time runs the risk that the distribution of the estate will already have been completed and there are no assets available for the recovery of his claim. From the point of view of insolvency law, several reasons justifying the non-acceptance of an award rendered in violation of the preclusion of individual actions may be indicated. Only some of them will be mentioned here(76) A centralization of competing claims by ordinary bankruptcy creditors in collective, summary proceedings is one of the purposes intended to be achieved by the provisions on preclusion of individual actions. They ensure that all non-secured creditors are given the same opportunity to participate in the distribution of the estate. A creditor whose claim is supported by a judgment or any other executory title may have a stronger position in bankruptcy. Therefore, all the creditors should have the same opportunity to obtain such title. In addition, the admission of a claim in verification may render any further proceedings redundant because the dispute has already been settled for the purposes of the bankruptcy procedure. The strongest argument for the non-acceptance of the award, issued in violation of this principle, seems to be the collective nature of the verification procedure. Not only the trustee, but also other creditors and the debtor have the right to contest a claim in verification. The party that has disputed the claim becomes the party to the subsequent adversarial proceedings for the settlement of the verification dispute. Thus, at the moment of the commencement of the bankruptcy liquidation and before verification it may be uncertain against whom the proceedings should be resumed, if pending, or should be initiated. It should be mentioned, however, that a rendering of the award should not be precluded when the rendering of a judgment before national courts would also not be prevented by the provisions on the stay.(77) Accordingly, any violation of the stay of individual action by ordinary bankruptcy creditors may be considered to be a violation of one of the fundamental principles of insolvency law, which may disturb a balance of the competing interests provided by insolvency law. 4.3 Implications of the stay of individual actions in arbitration The conclusion that, from the perspective of insolvency law, the provisions on the stay extend to arbitration does not necessarily imply that arbitration is excluded with respect to this type of claim in all the legal systems analysed. It does not suggest either that it should be excluded. Whether and when it may be excluded and when it may only 'complicate'(78) arbitration will be addressed below. 4.3.1 Admitted claims The admittance of a claim in verification will render any other procedure redundant, thus also arbitration. In other words, there will be no dispute that needs to be settled, for the purposes of the bankruptcy procedure. Accordingly, no question of the so-called 'indirect enforcement' of an arbitration agreement would arise, nor would it be necessary to continue already pending arbitral proceedings. Any further proceedings would have no meaning and effect for the bankruptcy procedure. The issue whether a creditor may have an interest in having an arbitral award determine the obligations between the debtor and himself, will not be discussed here.(79) 4.3.2 Contested claims If the claim is contested in the verification, the need to resolve the dispute(80) will arise (if no proceedings with respect to these claims were initiated before the commencement of the bankruptcy procedure) or will revive (if there are proceedings already pending with respect to such claims). The following questions will be discussed in the following text: Will the pending arbitral proceedings be resumed when the claim is disputed in the verification (4.3.2.1) and will the creditor be able to invoke successfully an arbitration agreement against the party contesting the claim in order to settle the dispute, when no arbitration was pending at the moment of the commencement of bankruptcy (4.3.2.2)? 4.3.2.1 Pending arbitral proceedings Taking into consideration the relevant provisions of the insolvency statutes in France and the Netherlands, it may be concluded that they would not prevent already pending arbitral proceedings from being continued after the claim has been contested in bankruptcy. In other words, the provisions on the stay contained in the insolvency statutes in France and the Netherlands do not operate so as to deprive the authorities of the jurisdiction they already have over a case.(81) The relevant provisions in the French and Dutch insolvency statutes provide for suspension of pending proceedings and for their continuation without any further approval of the court having jurisdiction in bankruptcy. Thus, from the wording of Art. 48 of the Loi du 25 janvier 1985 it can be concluded that pending proceedings, thus also arbitrations, may be suspended until the declaration of the claim in bankruptcy and may be resumed without the need for an authorization of the court. It may be required that the creditors' representative and the administrateur in redressement judiciaire (if necessary) are duly notified, as the provision of Art. 48 is considered to be a part of public policy. Accordingly, the arbitration would not be excluded, but public-policy considerations and possible limitations concerning the conduct of arbitral proceedings and the content and form of the award may play an important role. In other words, even if the claim is filed in bankruptcy and arbitral proceedings are continued (or initiated) without violating the relevant provisions of insolvency law, an arbitral award may still be annulled as violating the principle of stay of individual actions. Thus, an award condemning the debtor to payment can be set aside because of a violation of the principle of preclusion of individual actions of creditors, which is considered to be a part of French domestic and international public policy.(82) As mentioned previously, besides the preclusion of individual actions of creditors, the principle of interruption of proceedings, the dispossession of the debtor and the principle of equal treatment of creditors are held to be part of French domestic and international public policy. In the Netherlands, the view has been expressed that, by applying of Art. 29 Fw, the pending arbitral proceedings will be suspended and may be continued if the claim is disputed in the verification procedure, either by the trustee or by another creditor.(83) Accordingly, the relevant provision on the suspension of the pending proceedings with respect to the claims of ordinary bankruptcy creditors contained in Art. 29 Fw does not operate so as to exclude or prevent the continuation of pending arbitral proceedings. Such a view seems to be appropriate if this provision does not preclude pending court proceedings from being resumed after the claim has been dealt with and contested in a verification procedure; then the arbitral proceedings should not be precluded from continuation either.(84) Unlike the relevant provisions of the insolvency statutes in France and in the Netherlands, the automatic stay under Sect. 362 of the United States Bankruptcy Code can, in theory, be lifted only by the decision of the court having jurisdiction in bankruptcy.(85) The decision lifting the automatic stay will be needed regardless of whether or not arbitral proceedings are pending at the time of the commencement of the bankruptcy procedure. The US court decisions treated this issue, in principle, as a matter of the enforcement of arbitration agreements and the lifting of the automatic stay, whereby the distinction between pending and non-pending arbitrations has rather seldom been made expressly.(86) The arguments and reasoning of the various US courts, when deciding on the enforcement of arbitration agreements with respect to creditors' claims contested in bankruptcy, will be addressed infra (4.3.2.2.3). 4.3.2.2 Non-pending arbitrations From the relevant provisions of the insolvency laws addressed it may be concluded that the claims of ordinary bankruptcy creditors can be regarded as typical bankruptcy matters. The obligation to pursue such claims by only filing in the bankruptcy procedure excludes any other jurisdiction until the claims are first dealt with in bankruptcy. However, the fact that they may be considered bankruptcy matters or 'core' issues does not necessarily imply that such matters are non-arbitrable and that arbitration is excluded in every legal system. In order to determine whether such issues are considered non-arbitrable in a certain jurisdiction, it is necessary to examine the issue of the arbitrability of contested claims - in other words, whether an arbitration agreement can be successfully invoked after the claim has been contested in verification, in order to settle the dispute by arbitration, as provided by the agreement of the parties before the commencement of the bankruptcy procedure. In general, the scope of arbitrable matters may differ among various legal systems. Even if applying the same basic approach concerning the domain of arbitration, the actual scope of arbitrable matters does not necessarily have to be the same in all legal systems. The provisions on subject-matter arbitrability contained in the arbitration statutes do not usually provide for a clear answer with respect to the scope of arbitrable matters. Therefore, it is a consideration of the relevant provisions of the other statutes and the guidelines from the judiciary are usually to be considered. It is outside the scope of this work to address the concepts of arbitrability in the legal systems analysed and also to examine the scope of arbitrable matters arising in the insolvency proceedings. Instead, the emphasis will be on the arbitrability of the claims by ordinary bankruptcy creditors. For the purposes of the present discussion it suffices to mention that the nature of claims in insolvency and the provisions on the jurisdiction of the courts in bankruptcy may play an important role in determining the scope of arbitrable matters. In other words, the scope of the matters falling under the jurisdiction of the courts in bankruptcy may be a relevant factor in determining the scope of the matters that are 'capable of settlement by arbitration'. This is particularly so in the following circumstances: (i) when the criterion of the 'exclusive jurisdiction' of the judiciary to adjudicate certain matters is accepted as an additional criterion in determining the scope of arbitrable matters. In such circumstances, the extent of the jurisdiction of the courts in bankruptcy may draw the lines of limitation to the domain of arbitration; (ii) when the jurisdiction of the courts in bankruptcy is broadly defined so as to encompass not only the adjudication of the bankruptcy case, but also all disputes related to insolvency proceedings (vis attractiva concursus). In such cases, the jurisdiction of the courts in bankruptcy may imply a significant limitation to arbitrability, excluding arbitration in a rather large number of cases. The provisions on jurisdiction play a less important role where the courts in bankruptcy are competent to adjudicate on some closely related disputes, whereby the usual rules on allocation of jurisdiction remain preserved to a great extent. 4.3.2.2.1 Non-arbitrability of contested claims Disputes concerning the claims contested in verification are classical bankruptcy disputes. With respect to such controversies, vis attractiva concursus may have its strongest expression, so as to 'attract' their adjudication within the jurisdiction of the courts in bankruptcy. This seems to be the case under US law and, to some extent, in Dutch law. Although the court in bankruptcy in the Netherlands has jurisdiction in all bankruptcy matters,(87) it is generally narrowly interpreted so as to limit vis attractiva concursus to the matters directly connected with the bankruptcy case.(88) However, from the provision of Art. 122 Fw it may be concluded that the jurisdiction of the court in bankruptcy does encompass the verification disputes.(89) Thus, if a claim aiming at payment from the estate is contested in verification, the court deciding on the bankruptcy will be competent to adjudicate the dispute if no proceedings are pending at the moment of the commencement of the bankruptcy. Accordingly, the wording of Art. 122 Fw seems to imply that an arbitration agreement concluded prior to the bankruptcy may not be successfully invoked by or against the trustee (or another party contesting the claim). After the claim is disputed, the rechter-commissaris will refer the parties to the court having jurisdiction in bankruptcy if he is not able to reconcile the position of the parties and if no proceedings are already pending. The matter will be decided in accordance with the so-called renvooiprocedure. Such an interpretation of Art. 122 Fw has often been given by the courts(90) and in the literature,(91) although such a result following from the wording of Art. 122 has frequently been the subject of criticism.(92) It should be mentioned, however, that a contrary interpretation can also be found in the Dutch literature on this issue. Some authors have expressed the view that the claims contested in bankruptcy verification may be arbitrated.(93) The interpretation of Art. 122, whereby the arbitration agreement would not be effective may lead to a division of jurisdictions if the controversies between the parties involve not only the verification disputes, but also other kinds of disputes (e.g., non-monetary claims). In such a situation, the resolution of certain issues will be referred to arbitration, while the claims for payment against the estate will be adjudicated by the court having jurisdiction in bankruptcy. In addition to that, the purpose of such a jurisdictional framework seems to have been to consolidate the adjudication of the verification disputes before the same court.(94) Yet, the court having jurisdiction in bankruptcy will not 'attract' all disputes of this kind (i.e., verification disputes): pending proceedings with respect to such claims will be continued and adjudicated by the competent authority already seized of the matter, in accordance with Art. 29 Fw. Further, it is argued that the concept of 'concentrating' the adjudication of verification disputes before the same court has been eroded by various exceptions to the rule.(95) The question of the scope of the bankruptcy courts' jurisdiction in the United States has already been addressed. The reasoning and the arguments given when deciding on the enforcement of arbitration agreements with respect to creditors' claims are addressed infra (4.3.2.2.3). 4.3.2.2.2 Modalities of enforcement of arbitration agreements (France) The provisions on the jurisdiction of the French courts in bankruptcy do not seem to have played a significant role with respect to the enforcement of arbitration agreements. Although the wording of Art. 174 of the Loi du 25 janvier 1985 implies broad jurisdiction of the courts in bankruptcy (Commercial Courts),(96) it has been rather restrictively interpreted by the French judiciary. Thus, this provision is interpreted so as to limit the exclusive jurisdiction only to the issues originating from (nées) insolvency proceedings,(97) or matters which have their source in the application of the provisions of the insolvency law, or where the insolvency law affects the resolution of the dispute.(98) The prevailing view in the French literature is that the claims of ordinary bankruptcy creditors with respect to which an arbitration agreement was concluded prior to the commencement of the insolvency procedure, will be referred to arbitration if contested and the juge-commissaire concludes that he has no jurisdiction. In accordance with Art. 102 of the Loi du 25 janvier 1985, the creditor will be required to commence arbitration within two months.(99) It has also been argued that the distinction between the claims on behalf of the estate and the claims against the estate is of no relevance because the competence of another authority is provided for adjudicating the contested claims.(100) In contrast to the abundant case law in the United States, the court decisions on the issue of the enforcement of arbitration agreements in the context of insolvency proceedings are rather rare in France. In other words, it does not seem to be a controversial issue there. The enforcement of arbitration agreements may rather be regarded as a question of the modalities of enforcement, raising no questions as to the preclusion or prevention of enforcement. However, there is a rather significant number of French court decisions in which it is reported that the arbitral awards rendered during the insolvency procedure were the subject of challenge before the French courts. As already mentioned, these court decisions have repeatedly stressed the importance of certain principles of insolvency law which form part of domestic and international public policy. Accordingly, it may be concluded that the provisions of the insolvency law do not 'exclude' arbitration with respect to the contested claims of ordinary creditors. However, the relevant provisions of insolvency law are to be considered and all the requirements of insolvency proceedings should be respected by the parties and the arbitrators, in particular those the violation of which represents a violation of the basic principles of insolvency law and, consequently, of public policy.(101) Otherwise, the enforceability of the award and its subsequent acceptance in the insolvency case may be jeopardized. A requirement to file a claim in insolvency proceedings seems to be absolute. If this is not respected, it may influence the validity of the arbitrators' decision on jurisdiction.(102) 4.3.2.2.3 The discretion of the courts in bankruptcy (United States) As already mentioned, in the United States a referral to arbitration and enforcement of arbitration agreements with respect to the creditors' claims have been decided in the context of lifting the automatic stay, irrespective of whether the arbitral proceedings were already pending or not. It seems rather appropriate to say that, with the exception of international cases, the creditors 'had an uphill battle'(103) to invoke arbitration agreements in the context of the bankruptcy procedure. The discussion of the 'conflict' between the two Acts already addressed(104) is fully applicable here as well. Whilst the discretion rule has no longer been universally accepted after the decision in Hays with respect to the claims on behalf of the estate against third parties, the rule on discretion has rarely been questioned by the US courts when deciding on the enforcement of arbitration agreements concerning creditors' claims. This has remained an almost indisputable rule even after the decision in Hays, which related to the claims on behalf of the estate against a third party. As already indicated, the Court in Hays limited its decision on the absence of discretion to non-core matters. If the reasoning is to be interpreted so as to retain discretion in the 'core' matters, it implies that it is always retained when deciding on the arbitration of creditors' claims. Such claims would always fall under the category of 'core' matters, particularly bearing in mind that deciding on the lifting of the automatic stay is expressly listed as a 'core' matter in Sect. 157(b)(2)(B). As mentioned previously, when exercising discretion the courts deciding in bankruptcy applied various approaches, whereby the parties were sometimes referred to arbitration(105) and sometimes arbitration agreements were refused effect.(106) However, recently some decisions can be found where the court has refused to base the 'conflict' between the Federal Arbitration Act and the Bankruptcy Code 'solely on the jurisdiction nature of a bankruptcy proceeding'.(107) Similarly, the rule on discretion seems to have been doubted In re Statewide Realty Co.,(108) where the Court held, inter alia, that 'inquiry regarding conflict between the statutes should not be as broad as to swallow the policies of the Arbitration Act'. Besides the provisions on jurisdiction as a 'source' of conflict between the relevant statutes, another issue has often been addressed in the context of the enforcement of arbitration agreements with respect to creditors' claims. In particular, it was the question whether the existence of an arbitration agreement constituted a 'cause' for granting relief from automatic stay under Sect. 362(d)(1) of the Bankruptcy Code. In the majority of decisions, a mere existence of an arbitration clause was not considered to present a 'cause' for relief, but the party moving for relief was required to 'demonstrate hardship in the event relief is not obtained'.(109) It should be reiterated that the US courts, generally, have not held arbitration agreements to be unenforceable in the context of bankruptcy proceedings, nor have the claims of ordinary bankruptcy creditors, in principle, been held to be generally non-arbitrable. Also, it should not be concluded that arbitration agreements have always been refused effect. However, no uniformity of approaches has been suggested by various US courts, which would provide for certainty and predictability of results. Rather, the enforcement of arbitration agreements in US bankruptcy proceedings seems to remain to be decided on a case-by-case basis. The US courts were, generally, more inclined to enforce arbitration agreements concerning international commercial transactions when exercising discretion,(110) often relying on the decisions of the Supreme Court favouring arbitration and expanding the scope of arbitrable matters.(111) The same is true with respect to creditors' claims: there are a number of decisions reported where a trustee or a debtor-in-possession was compelled to arbitrate disputes with foreign creditors.(112) In general, arbitration was exceptionally denied in cases involving international elements.(113) Yet, a violation of the preclusion of individual actions seems to present a reason for both denying effect to an arbitral award and refusal to refer the parties to arbitration. This seems to be so even when such a violation concerns a foreign insolvency procedure, provided that this procedure is given effect in the United States. This conclusion may be drawn from two decisions of the US courts. One is the decision taken in Victrix, which was already addressed: after effect had been given to the Swedish bankruptcy procedure under Sect. 304 of the Bankruptcy Code, the award, rendered in London against the bankrupt debtor in favour of the creditor who had ignored the bankruptcy procedure, was denied enforcement. Another example illustrating the relevance of this principle is the decision taken in Allstate Insurance Co. v. C.J. Hughes and I.D. Barker Bond.(114) Joint provisional liquidators for the group of companies that filed a winding-up petition in the High Court of Justice in London, negotiated a Scheme of Arrangement with the creditors. Allstate, one of the creditors, voted against the arrangement with respect to each of the companies. The Scheme provided that the creditors were precluded from instituting litigation or arbitration proceedings before complying with the procedures provided to establish the claim. The provisional liquidator applied for permanent injunctive relief to the United States Bankruptcy Court, seeking to enforce the Scheme in the United States. The permanent injunction was granted under Sect. 304 of the United States Bankruptcy Code. Allstate filed an appeal against the injunction, alleging a violation of the provisions of the Federal Arbitration Act and Art. II of the 1958 New York Convention. The District Court affirmed the decision of the Bankruptcy Court, holding that it had properly exercised its discretion to stay arbitration until certain procedural steps were complied with, as provided under the Scheme. It also stressed that the provision under the Scheme was not unique and that 'all bankruptcy regimes establish procedure to prove a claim'. It was also held that 'the purpose of the FAA was not to elevate arbitration rights over litigation rights'. 5. Conclusion From the relevant provisions of insolvency law analysed it can be concluded that the claims of ordinary, non-secured creditors are typical bankruptcy or 'core' issues. These are not matters which are only related to the bankruptcy case, but issues that are substantial for the bankruptcy case. All insolvency statutes considered provide that such claims may be pursued only by filing in the bankruptcy procedure. Such claims are intended to be centralized in one procedure before the court having jurisdiction over the bankruptcy case, in the procedure which is collective and usually summary in nature. The conclusion that such claims are pure bankruptcy matters does not necessarily mean that the claims contested in verification are non-arbitrable in all of the legal systems analysed. The scope of the jurisdiction of the courts in bankruptcy seems to influence the domain of arbitration: if very broadly defined, it may significantly limit the scope of the matters 'capable of settlement by arbitration'. An example of the importance of the provisions on jurisdiction can be found in the United States Bankruptcy Code. In particular, the provisions on jurisdiction have been considered to be the source of the 'conflict' between the two federal statutes - the Federal Arbitration Act and the Bankruptcy Code. In a rather large number of cases the US courts held that they had discretion when attempting to resolve the 'conflict'. The rule on the discretion of the bankruptcy courts has seldom been disputed in the context of the enforcement of arbitration agreements with respect to creditors' claims, regardless of whether or not arbitral proceedings are pending. However, the appropriateness of this rule has been questioned in some recent decisions, even with respect to 'core' matters. The non-arbitrability of the contested claims of ordinary bankruptcy creditors, when no arbitral proceedings are pending, seems to follow from the wording of Art. 122 of the Dutch Fw. In accordance with this provision, the verification disputes, when no proceedings are pending, will be resolved by the court having jurisdiction in bankruptcy in accordance with the so-called renvooiprocedure. It seems that such an interpretation prevails in the Dutch literature and court decisions, although different views have also been expressed. The provision of Art. 29 Fw does not seem to prevent already pending arbitrations from being resumed after the claims have been contested in the verification procedure. The relevant provisions of the insolvency law in France do not exclude arbitration with respect to the claims contested in insolvency. Rather, they may affect the modalities of the enforcement of arbitration agreements and provide certain limitations with respect to the conduct of arbitral proceedings and the form and content of the award. In other words, certain provisions of insolvency law must be respected in arbitration in order not to jeopardize the enforceability of the award. The principles of insolvency law are considered to be part of domestic and international public policy. Possible violations of or disregard for them would be examined after the completion of the arbitral proceedings, in the annulment and enforcement proceedings, probably both factually and legally. -------------------------------------------------------------------------------- Notes 1. This article is partly based on a previous publication, V. Lazic, Insolvency Proceedings and Commercial Arbitration (The Hague [etc.]: Kluwer Law International/ T.M.C. Asser Instituut, 1998), Chapter VI. 2. However, the interest in this subject seems to be growing. Besides, there is the abundant case law in the US which has rather often been discussed in the literature. 3. P. Didier, 'La Problématique du droit de la faillite internationale/The Problems Surrounding the Law of International Insolvency', 3 RDAI/IBLJ (1989), pp. 201-206, at p. 203. 4. For more particulars on the certain points of interaction between the two fields of law see Lazic, Insolvency Proceedings and Commercial Arbitration, supra note 1. 5. The claims of secured and preferred creditors will not be discussed as the provisions of insolvency law other than the provisions here addressed may need to be considered. 6. This seems to be the prevailing purpose in US bankruptcy law, for example. 7. The protection of the workforce seems to be the prevailing purpose in French insolvency law. 8. See Art. 152 of the Law of 25 January 1985 on Rehabilitation and Liquidation in Bankruptcy (La loi n. 85-98 du 25 janvier 1985 relative au redressement et à la liquidation judiciaire des entreprises, implemented by Décret n. 85-1388 du 27 décembre 1985, hereinafter: Loi du 25 janvier 1985); Arts. 24 and 68(1) of the Bankruptcy Act of the Netherlands (Faillissementswet 1896, Nederlandse Wetboeken - Suppl. 231 (oktober 1991) hereinafter: Fw). Sects. 323(a) and 541 of the United States Bankruptcy Code (Bankruptcy Reform Act of 1978, Pub. L. No. 95-598, 92 Stat. 2594, codified at 11 U.S.C.A. Sects. 101-1330 and 28 U.S.C.A., hereinafter: Bankruptcy Code). The trustee becomes the representative of the estate (Sect. 323(a)) and a successor to the debtor's interest under Sect. 541 in the case of bankruptcy liquidation. 9. See, e.g., Art. 25(1) Fw, which provides that the claims with respect to the rights and obligations of the estate have to be filed by or against the trustee (curator). Claims submitted by or against the bankrupt may not bind or affect the estate (Art. 25(2) Fw). 10. 11 U.S.C.A. Sects. 1107-1174. 11. Art. 32(1) of the Loi du 25 janvier 1985. Certain acts, however, may be subject to the necessary assistance or supervision by the administrateur or may be entirely conferred upon the administrateur, as may be determined by the opening decree. 12. A. Redfern/M. Hunter, Law and Practice of International Commercial Arbitration, 2nd edn. (London: Sweet & Maxwell, 1991), p. 5. 13. Art. 1458 of the French Nouveau Code de Procédure Civile (hereinafter: NCPC); Arts. 1022(1) and 1074(1) of the Netherlands Arbitration Act of 1986 - Book IV of the Code of Civil Procedure (Burgerlijke Rechtsvordering, Vierde Boek; hereinafter: BRv); Sects. 2, 3, 4 and 206 of the United States Federal Arbitration Act of 1925, Pub. L. No. 80.282, 61 Stat. 669 (codified as amended in 9 U.S.C.A. Sects. 1 et seq.) (West 1994) (hereinafter: FAA). 14. See, e.g. Art. VI of the Convention on International Commercial Arbitration, Geneva, 21 April 1961; Art. II of the Convention of the Recognition and Enforcement of Foreign Arbitral Awards, New York, 10 June 1958. 15. For the grounds for the annulment of the award, see Arts. 1484, 1504 and 1502 of the French NCPC; Art. 1065 of the Netherlands BRv; Sect. 10 of the US FAA. 16. A significant degree of uniformity with respect to the reasons for refusal of the recognition and enforcement of foreign arbitral awards has been achieved by the 1958 New York Convention (Art. V). 17. M. Ynzonides, 'De invloed van faillietverklaring op arbitrage', Weekblad voor privaatrecht, notariaat and registratie (WPNR), No. 6008, (1991), pp. 389-396; P. Sanders, 'Arbitrage en faillissement', Tijdschrift voor arbitrage (TvA) (1988) 6, pp. 167-170; W. van Rossem/R.P. Cleveringa, Verklaring van het Nederlands Wetboek van Burgerlijke Rechtsvordering, 4th edn. (Zwolle: W.E.J. Tjeenk Willink, 1972), Art. 620, No. 4, n. 22. p. 1327. See also the decisions Rb. Amsterdam, 24 November 1906, W 8561; Hof Den Haag, 28 mei 1915, NJ 1915, p. 1057; Rb. Amsterdam, 13 juni 1979, NJ 1980, p. 254, excerpt published in TvA (1980) 5, p. 141, Commentary by P. Sanders; Rb. Zwolle, 16 oktober 1987, upheld by Hof Arnhem, 3 maart 1987, excerpt published in TvA (1988) 2, pp. 47-48. 18. Société Soules c/ Société Henry - Maitre Texier, Syndic, Cass. com. 4 février 1986, Rev. Arb. (1988), p. 718; Société Technique d'avant-garde (T.A.G.) c/ Société Entertainment Media France Corp. (B.M.P.C.) et autres, Cass. com., 12 février 1985, Rev. Arb. (1985), p. 275, Note P. Ancel. See also, P. Ancel, 'Arbitrage et procédures collectives après la loi du 25 janvier 1985', Rev. Arb. (1987), pp. 127-132, at p. 128. 19. M. Boisséson, Le Droit fran?ais de l'arbitrage (Paris: GLN Joly Editions, 1990), p. 237; P. Ancel, 'Arbitrage et procédures collectives', Rev. Arb. (1983), pp. 256-279, pp. 265 and 268 (commenting on the previous insolvency law). 20. See, e.g., J.L. Westbrook, 'The Coming Encounter: International Arbitration and Bankruptcy', 67 Minn. Law Rev. (1983), pp. 595-644; W.E. Deitrick, 'The Conflicting Policies Between Arbitration and Bankruptcy', 40 Business Lawyer (1984), pp. 33-45; C.C. Markason, 'Arbitration Agreements in Bankruptcy Proceedings: The Clash Between Policies and the Proper Forum for Resolution - Zimmerman v. Continental Airlines, Inc.', 57 Temple Law Quarterly (1984), pp. 855-884; Note, 'Balancing Section 3 of the United States Arbitration Act and Section 1471 of the Bankruptcy Reform Act of 1978: A Bankruptcy Judge's Exercise of "Sound Discretion"', 53 U.Cinn.L.Rev. (1984), pp. 231-249; S.P. Bedell/L. Harrison/B. Grant, 'Arbitrability: Current Developments in the Interpretation and Enforceability of Arbitration Agreements', 13 Journal of Contemporary Law 1 (1987), pp. 1-29; V.M. Lang, 'The Effect of Bankruptcy Proceedings on Arbitration', 12 Lawyer's Arbitration Letter 1 (March 1988), pp. 1-11; M.D. Yochum, 'Arbitration Agreements in Bankruptcy: A Mutant is Loose (Again!), Symptoms are Showing, A Palliative is Suggested', 10 Stet. Law Rev. (1989), pp. 137-159; F. Neufeld, 'Enforcement of Contractual Arbitration Agreements under the Bankruptcy Code', 65 American Bankruptcy Law Journal (1991), pp. 525-558; R.F. Broude, 'The Effects of Insolvency Procedures on Arbitration: the United States Experience', paper presented at the IBA conference held on 19-20 September 1994 in Paris, unpublished; J.J.O. Harwood, 'Bankruptcy Arbitration and the Unwilling Debtor', 48 Dispute Resolution Journal 4 (December 1993), pp. 28-83; M.H. Kurth, 'An Unstoppable Mandate and an Immoveable Policy: the Arbitration Act and the Bankruptcy Code Collide', 43 UCLA Law Rev. 3 (1996), pp. 999-1035; J.D. Becker, 'Bankruptcy Courts and Arbitration: A Question of Competence', 7 Am. Rev. Int. Law (1996), pp. 259-265; R.M. Schwartz, 'The US Bankruptcy Courts' Failure to Interpret the New York Convention as a Treaty Obligation', 14 Arbitration International 2 (1998), pp. 231-234. 21. See, e.g., Société Nationale Algérienne v. Distrigas Corp., 80 B.R. 606, 610 (Bankr. D.Mass. 1987), stating, inter alia, that '[r]eaching a satisfactory reconciliation between the two is no simple matter especially when each statute advances clear and unassailable legislative policies and comes well-armed with strong judicial approval'. See also, Cross Electric Co. v. John Griggs Co. (In re Cross Electric Co.) 9 B.R. 408 (Bankr. W.W.D.Va. 1981); Braniff Airways, Inc. v. United Air Lines, Inc. (In re Braniff Airways, Inc.), 33 B.R. 33 (Bankr. N.D.Tex. 1983); Zimmerman v. Continental Airlines, Inc., 712 F.2d 55 (3rd Cir. 1983), cert. denied, 464 US 1038, 104 S.Ct. 699, 79 L.Ed.2d 165 (1984); In re Al-Cam Development Corp., 99 B.R. 573, 575 (Bankr. S.D.N.Y. 1989) (stating that the question 'whether or not a bankruptcy court should allow a dispute to be resolved by an arbitration forum to which the parties agreed implicates the clash of two federal statutes'). 22. 28 U.S.C.A. Sect. 1471 (a) (repealed 1984). 23. 28 U.S.C.A. Sect. 1471 (b) (repealed 1984). 24. 28 U.S.C.A. Sect. 1471 (c) (repealed 1984). 25. Jurisdiction in bankruptcy matters under the 1989 Bankruptcy Act was divided between the bankruptcy courts exercising summary jurisdiction and the federal courts having plenary jurisdiction. Such divided jurisdiction hindered an expeditious adjudication of bankruptcy cases, since lengthy and expensive litigation was frequently initiated in order to resolve jurisdictional matters. See, S. Rep.No. 95-989, 95th Cong., 2d Sess. 17-18, reprinted in 1978 U.S. Code Cong. & Ad. News 6006-07, stating, inter alia, that 'the most serious objection to the division of jurisdiction is the frequent time consuming and expensive litigation of the question whether the bankruptcy court has jurisdiction of a particular proceeding'. 26. H.Rep.No. 95-595, 95th Cong., 2nd Sess., reprinted in 1978 US Code Cong. and Ad. News 5963, 6007. 27. See, e.g., Bender Shipbuilding and Repair Co., Inc. v. H.B. Morgan, Jr. et al. (In re H.B. Morgan) 28 B.R. 3, 5 (9th Cir. BAP 1983). The same line of reasoning can already be found in the earlier decision in Schilling v. Canadian Foreign Steamship Co., 190 F. Supp. 462 (S.D.N.Y. 1961). It was followed in some subsequent decisions. See, e.g., In re Chorus Data Systems Inc., 122 B.R. 845, 852 (Bankr. D.N.H. 1990). 28. This has been termed the 'qualitative approach' in Harwood, 'Bankruptcy Arbitration and the Unwilling Debtor', supra note 20, p. 29. See, e.g., In re Cordova International, Inc., 77 B.R. 441, 450 (Bankr. D.N.J. 1987) (after the examination of the indicated factors, the arbitration agreement was enforced and the parties were referred to arbitration); Double TRL Inc., 65 B.R. 993, 998 (Bankr. E.D.N.Y. 1986) (after the same factors had been considered, the arbitration agreement was not enforced). 29. See, e.g., Braniff Airways, Inc. v. United Air Lines, Inc. (In re Braniff Airways, Inc.), 33 B.R. 33 (Bankr. N.D.Tex. 1983). 30. Zimmerman v. Continental Airlines, Inc., 712 F.2d 55 (3rd Cir. 1983), cert. denied, 464 US 1038, 104 S.Ct. 699, 79 L.Ed.2d 165 (1984). 31. The court relied upon the view of the US Supreme Court in Wilko v. Swan, 46 U.S. 427 (1954) relating to the arbitrability of issues arising under the 1933 Securities Act. 32. See, e.g., In re Double TRL, Inc., 65 B.R. 993, 998 (Bankr. E.D.N.Y. 1986); Meehan-Weinmann, Inc. v. Glen Eagle Square, Inc. (In re Glen Eagle Square) 1991 Bankr. Lexis 1856, p. 9. The reasoning of the Court in Zimmerman was also approved in earlier literature on this matter. See, e.g., Deitrick, 'The Conflicting Policies Between Arbitration and Bankruptcy', supra note 20; Markason, 'Arbitration Agreements in Bankruptcy Proceedings', supra note 20. Furthermore, in a more recent article it was considered to be a 'culmination of wisdom' on the interaction between the Bankruptcy Code and the Federal Arbitration Act in Yochum, 'Arbitration Agreements in Bankruptcy', supra note 20, p. 153. 33. Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 485 US 50 (1982). The Supreme Court invalidated the broad grant of jurisdiction to 'non-Article III bankruptcy judges'. They were 'non-Article III' due to the lack of, inter alia, lifetime appointments, which were provided for the judges under Article III of the US Constitution. 34. There was also the possibility of a discretionary abstention (Sect. 1334(c)(1)) and a mandatory abstention (Sect. 1334(c)(2)). 35. Hays and Co. v. Merrill Lynch, Pierce, Fenner and Smith, Inc., 885 F.2d 1149 (3rd Cir. 1989). 36. The Court relied on the decisions of the US Supreme Court favouring arbitration. In particular, it applied the 'test' suggested in Shearson/American Express, Inc. v. McMahon, 482 U.S. 220 (1987), according to which the party opposing arbitration had the burden of proof on the intention of Congress to exclude arbitration with respect to the claims arising under the 1934 Securities Exchange Act and under the 1961 RICO Act. Such an intention should be discernible from the text, history or purposes of the statute. 37. Some courts applied the criterion of the distinction between 'core' and 'non-core' matters, holding that the reasoning in Hays denied discretion in non-core matters, but implied that it was to be retained in disputes involving 'core' matters. See, e.g., Miller v. Dean Reynolds, Inc., 134 B.R. 640 (D.Minn. 1991) (holding that non-core matters involved no substantive rights created by the bankruptcy law and enforcing the arbitration agreement); In re James P. Brackman, Inc., 170 B.R. 321 (Bankr. E.D.Mich. 1994); United States Lines, Inc., v. American Steamship Owners Mutual Protection Association Inc., (In re United States Line, Inc.) 199 B.R. 465 (S.D.N.Y. 1997); In re FRG, 115 B.R.72, 74 (E.D.Pa. 1990) (holding that Hays did not apply to core proceedings); In re Chorus Data Systems, Inc., 122 B.R. 845 (Bankr. N.Hampsh. 1990); American Freight System, Inc. v. Consumer Products Associates (In re American Freight System, Inc.), 164 B.R. 341 (D.Kans. 1994); BNY Licensing Corp., et al. v. Isetan of America et al. (In re Barney's Inc., et al., Debtors), 206 B.R. 336, 343 (Bankr. S.D.N.Y. 1997). Some Courts held that discretion could be retained even in 'non-core' matters. See, e.g., In re Chorus Data Systems, Inc., 122 B.R. 845 (Bankr. N.Hampsh. 1990); After Six, Inc. v. Corestates Bank et al. (In re After Six) 1993 Bankr. Lexis 831; Midwest Communications Corp. v. Black Entertainment Television (In re Midwest Communications Corp.) 144 B.R. 354 (Bankr. E.D.Ken. 1992). In certain decisions, the reasoning in Hays was not even mentioned. See, e.g., In re Chas. P. Young Co., 111 B.R. 410 (Bankr. S.D.N.Y. 1990); Cart Beverages, Inc. v. The Coca-Cola Bottling Company of New York (In re Cart Beverages, Inc.) 1991 Bankr. Lexis 571. In WM. S. Newman Brewing Co., Inc. v. C. Schmidt & Sons, Inc., 115 B.R. 25 (N.D.N.Y. 1990) the court considered the Hays ruling to be a 'persuasive authority', but held that it was not a 'new controlling authority', being a case from another Circuit, not representing 'the majority position among the circuit courts'. 38. See, e.g., In re Statewide Realty Co., 159 B.R. 719 (Bankr. D.N.J. 1993); In re National Gypsum Co., 118 F.3d 1056 (5th Cir. 1997). 39. See, e.g., F. Mantilla-Serrano, 'International Arbitration and Insolvency Proceedings', 11 Arbitration International (1995), pp. 51-74, at p. 69 (Discussing the ICC cases involving an insolvent party, the author states that there were no cases among those considered where the arbitrators were requested to rule on insolvency issues.). 40. See, e.g., ICC award No. 4451 (1984), excerpt published in S. Jarvin/Y. Derains, Collection of ICC Arbitral Awards 1974-1985 (Paris/New York: ICC Publishing; Deventer/Boston: Kluwer Law and Taxation Publishers, 1990), pp. 530-536 (the insolvency proceedings were commenced in the country other than the country of the seat of arbitration); ICC award No. 2139 (1974), excerpt published in French in Jarvin/Derains, Collection of ICC Arbitral Awards 1974-1985, supra, pp. 236-241, and in English in P. Sanders (ed.), III Yearbook Comm. Arb. (Deventer: Kluwer, 1978), pp. 220-221 (arbitral proceedings were pending at the moment of commencement of bankruptcy proceedings). However, in ICC award No. 7205 (1993), published in 122 Journal du droit international 2 (1995), pp. 1031-1037, certain mandatory provisions of the French insolvency law were taken into consideration by the arbitrators. In particular, considered were those provisions which were part of French international public policy, such as the principle of suspension of individual actions, equality among creditors, the dispossession of the debtor and the exclusive jurisdiction of the juge-commissaire to admit or reject creditors' claims. The excerpt of the arbitral award is also published in J.-J. Arnaldez/Y. Derains/D. Hascher, Collection of ICC Arbitral Awards 1991-1995 (Paris/New York: ICC Publishing; The Hague [etc.]: Kluwer Law International,1997), pp. 622-628. 41. Bankruptcy procedure is sometimes referred to as the proceeding for collective or general execution. See H. van Houtte, Law of International Trade (London: Sweet & Maxwell, 1995), pp. 372-376. 42. The relevant provisions on the preclusion of individual actions of ordinary creditors do not necessarily apply to composition procedures under some insolvency statutes. An example can be found in the former German insolvency law: unlike in the case of bankruptcy liquidation, in the case of composition all execution proceedings were provisionally suspended, but other legal actions could have been continued. Dutch law concerning composition seems to provide for a similar result. 43. Prior to the amendments introduced by the Loi 94-475 du 10 juin 1994, the liquidation judiciaire could not have been pronounced without having issued a decree opening redressement judiciaire and estimating the chances for the reorganization and survival of the business. The Loi 94-475 du 10 juin 1994 introduced the possibility of pronouncing liquidation judiciaire without a period of observation when an enterprise has ceased all activities or when redressement judiciaire is manifestly impossible. 44. Art. 47(1) of the Loi du 25 janvier 1985. 45. Art. 47(2) of the Loi du 25 janvier 1985. 46. Bordeaux, 9 juill. 1987, Gaz. Pal. 1987.2.535; Trib. gr. inst. Fontainebleau, 8 avr. 1987, D. 1988, summ. 145, Code de Commerce, Code éditions (Paris: éditions Dalloz, 1994), p. 1110, sub. 1 (hereinafter: Dalloz Legislation). 47. For the possibility of continuation upon a request of an interested party, see Art. 68 of the Décret du 27 décembre 1985. 48. For the relevant court decisions, see Dalloz Legislation, supra note 46, Commentary, p. 1114 sub. 8. The conditions for a continuation of the proceedings pending against the debtor with respect to claims other than those commenced under Art. 47, are provided in Art. 49 of the Loi du 25 janvier 1985. 49. A.R. Houghton/N.D. Atkinson (eds.), Guide to Insolvency in Europe (Bicester, Oxon.: CCH Editions, 1993), p. 65. 50. See Art. 148-2 of the Loi no. 94-475 du 10 juin 1994, providing, inter alia, that the order opening liquidation judiciaire has the same effects as in the case of redressement judiciaire provided in Arts. 33(1) and (4), 47, 48, 50, 55, 57, 115-1 and 121. Before the provision of Art. 148-2 was introduced, the applicability of Arts. 47 and 48 also in liquidation judiciaire was accepted by the judiciary. On the relevant case law, see Dalloz Legislation, supra note 46, p. 1113 sub. 19 and p. 1115 sub. 19. 51. See Art. 153-4 of the Loi no. 94-475 du 10 juin 1994. 52. Art. 25 Fw. 53. Art. 25(2) Fw. 54. Art. 29 Fw. 55. A.M.J. van Buchem-Spapens, Faillissement en surséance van betaling: Naar huidig en komend recht (Zwolle: W.E.J. Tjeenk Willink, 1990), p. 105. Cf., HR 21 febr. 1964, NJ 1964, 208. 56. The rights of secured creditors to enforce their securities are, in principle, not affected by the preclusion of individual actions. However, the changes to the Faillissementswet in 1992 introduced the possibility for the debtor or the administrator to apply for a so-called 'cooling-off period' in Art. 63a. If a 'cooling-off period' is granted, secured and preferred creditors are precluded from executing their preferences of priorities without a prior authorization from the court of the rechter-commissaris, if appointed. For more particulars, see: W.F.Th. Corpeleijn/M. Herschdorfer, 'Corporate Insolvency in the Netherlands', in H. Rajak/P. Horrocks/J. Bannister (eds.), European Corporate Insolvency, 2nd edn. (Chichester [etc.]: John Wiley & Sons, 1995), pp. 445-477, at p. 469; T.A.W. Sterk, 'Faillissement', in Wegwijzer BW, Deel 5 (Zwolle: W.E.J. Tjeenk Willink, 1992), p. 69; Houghton/Atkinson, Guide to Insolvency in Europe, supra note 49, p. 214; N.J. Polak, Faillissementsrecht, Vierde Druk (Bewerkt door C.E. Polak) (Alphen a.d. Rijn: Samsom/H.D. Tjeenk Willink, 1989), p. 101 (commenting on the draft Art. 63a Fw). 57. Certain actions are exempted according to 11 U.S.C.A. Sect. 362(b). 58. 11 U.S.C.A. Sect. 501. 59. H.Rep.No. 95-595 to accompany H.R. 8200, 95th Cong., 1st Sess. (1977), p. 25. 60. H.Rep.No. 95-595 to accompany H.R. 8200, 95th Cong., 1st Sess. (1977), p. 25; see also R.S. Page, 'Arbitration Proceedings and the Automatic Stay in Bankruptcy', in Arbitration & the Law 1991-92 (Irvington-on-Hudson, NY: Transnational Juris Publications/Deventer: Kluwer Law and Taxation Publishers, 1992), pp. 37-41, at p. 37 (stating, inter alia, that '[t]he purpose of the stay is to protect the debtor, the estate of the debtor and the property in the possession of the debtor, and to facilitate reorganization'). 61. H.Rep.No. 95-595 to accompany H.R. 8200, 95th Cong., 1st Sess. (1977), p. 25. See also, Westbrook, 'The Coming Encounter', supra note 20, p. 598. For more particulars on the automatic stay in US law, see R. Charles, 'Section 362 - Automatic Stay', in W.L. Norton (ed.), 1995-1996 Annual Survey of Bankruptcy Law (Deerfield, Ill. [etc.]: Clark Boardman Callaghan, 1996), pp. 793-833. 62. Sect. 362(d) relates to the lifting of an automatic stay for cause, by annulling, modifying, terminating or conditioning the stay. Some of the causes for relief are, for example, a permission for an action to proceed in another tribunal or the lack of any connection with the bankruptcy case. 63. See, e.g., Ancel, 'Arbitrage et procédures collectives après la loi du 25 janvier 1985', supra note 18, p. 131; Ph. Fouchard, 'Arbitrage et faillite', Rev. Arb. (1998), pp. 471-494, at p. 476; P. Mayer, 'La Sentence contraire a l'ordre public au fond', Rev. Arb. (1994), pp. 615-652, at p. 641; Boisséson, Le Droit fran?ais de l'arbitrage, supra note 19, para. 320, p. 275; B. Hanotiau, 'La Loi applicable par l'arbitre en cas de faillite d'une des parties à la procédure', 1 RDAI/IBLJ (1996), pp. 29-49, at p. 45. 64. Société Thinet c/ Labrely ès-qualites, Cour de cassation (1re Ch.civ.) 8 mars 1988, Rev. Arb. (1989), pp. 473-474, Commentary P. Ancel, pp. 474-480. The provision on interruption, contained in Arts. 369-376 of the NCPC are incorporated in Art. 1465 of the same Act, which relates to arbitral proceedings. 65. Id.; Société Almira Films c/ Pierrel ès-qual., Cour d'appel de Paris (1re Ch.suppl.), 16 février 1989, Rev. Arb. (1989), pp. 711-715, Commentary L. Idot, pp. 715-722. 66. Société SARET c/ SBBM, Cour de cassation (Ch. commerciale), 4 février 1992, Rev. Arb. (1992), p. 663, Commentary J-H. Moitry. 67. Ynzonides, 'De invloed van faillietverklaring op arbitrage', supra note 17, p. 393. See also the arbitral award rendered in Amsterdam, 18 June 1930, Arbitrale Rechtspraak (AR), No. 144, p. 2. However, in some cases the arbitrators accepted jurisdiction and decided on the claims which had not been filed for verification in bankruptcy. See, e.g., the award of the Arbitration Tribunal of the Grain Trade Committee (Scheidsgerecht Comité van Graanhandelaren), Rotterdam, 14 July 1955, AR (1955), p. 323 and the arbitral award of the Scheidsgerecht Amsterdamse Handel, 5 July 1974, NJ (1975), p. 227. For the commentary on the two awards, see P. Sanders, Het nieuwe arbitragerecht (Deventer: Kluwer, 1996), pp. 35-36. 68. Sanders, Het nieuwe arbitragerecht, supra note 67, p. 36. 69. See, Ynzonides, 'De invloed van faillietverklaring op arbitrage', supra note 17, p. 392. It should be mentioned, however, that there will be no suspension as provided in Arts. 27, 28 and 29 if the pending proceedings are at a stage where a decision can be pronounced. See, Memorie van Toelichting with respect to Art. 30 Fw, in G.W. van der Feltz (ed.), Geschiedenis van de Wet op het Faillissement en de Surséance van Betaling, Part I (Haarlem: Erven F. Bohn, 1896), p. 386; Ynzonides, 'De invloed van faillietverklaring op arbitrage', supra note 17, p. 393. 70. See also Westbrook, 'The Coming Encounter', supra note 20, p. 601, n. 31. (The author stated that '[t]here is no indication that Congress intended to exempt transnational arbitrations taking place in this country from the operation of automatic stay'.) 71. See Page, 'Arbitration Proceedings and the Automatic Stay in Bankruptcy', supra note 60, p. 38. See also Coar v. Brown, 29 B.R. 806 (N.D. Ill 1983) (Eastern Div.). (The Court stated that 'the American Arbitration Association informed the parties that due to the filing of a bankruptcy petition . . . arbitration proceedings were stayed'.) 72. Page, 'Arbitration Proceedings and the Automatic Stay in Bankruptcy', supra note 60, pp. 37-38 (referring to Sect. 362(h) of the Bankruptcy Code). See also Ph.R. Wood, Principles of International Insolvency (London: Sweet & Maxwell, 1995), p. 189 (stating that '[i]n the United States, violations of the stay result in contempt of court fines and damages, but only if wilful'). 73. Fotochrome, Inc. v. Copal Co., Ltd., 517 F.2d 512 (2nd Cir. 1975), excerpt published in I YCA (1976), p. 202 (USA No. 3). 74. Victrix S.S. Co. v. Salen Dry Cargo A.B., 825 F.2d 709 (2nd Cir. 1987). See also, S.G. Hutchinson, 'Non-Recognition of Post-Bankruptcy Arbitration: Victrix Steamship Co. v. Salen Dry Cargo A.B.', 22 International Lawyer 4 (1988), pp. 1183-1196. 75. Allstate Insurance Co. v. C.J. Hughes and I.D. Barker Bond, as Joint Scheme Administrator of Kingscroft Insurance Co., Ltd., et al., 174 B.R. 884 (S.D.N.Y. 1994). For more particulars see, infra 4.3.2.2.3. 76. For more particulars on the possible reasons for non-acceptance of the award in bankruptcy, see Lazic, Insolvency Proceedings and Commercial Arbitration, supra note 1, pp. 257-258. 77. See, e.g., Art. 30 of the Dutch Fw and Memorie van Toelichting to Art. 30, which were already addressed. According to this provision, the suspension will not prevent the rendering of the decision if oral hearings have already been completed. 78. H. van Houtte, 'Arbitration and Insolvency under Belgian and Dutch Law', unpublished paper presented at the Annual Meeting of the ASA on 6 September 1996 in Neuchatel, p. 2. 79. For more particulars on this issue, see Lazic, Insolvency Proceedings and Commercial Arbitration, supra note 1, pp. 259-260. 80. Such disputes are sometimes referred to as 'verification disputes'. 81. For France, see, e.g., Paris, 2 mai 1990, D. 1990, Summary, Note Honorat, referred to in Dalloz Legislation, supra note 46, p. 1114 sub. 7, n. to Art. 48 (stating that the provisions of Articles 47 and 48 of the Loi du 25 janvier 1985 are not intended to deprive the authorities of the jurisdiction they already have over the case). 82. Société Thinet c/ Labrely ès-qualites, Cour de cassation (1re Ch.civ.) 8 mars 1988, Rev. Arb. 3 (1989), pp. 473-474, Note P. Ancel. The Cour de cassation affirmed the decision of the Cour d'appel, which annulled the award condemning the debtor to payment. The arbitrators set off mutual obligations of the parties and condemned the debtor to paying the difference that remained after the set-off. The Court held that the condemnatory character of the award violated the principle of preclusion of individual actions of creditors. Although the arbitration was between the French parties, it was considered 'international' in nature, as the performance of the contract was to take place abroad. See also, Sohm, ès-qual. c/ Société Simex, Cour d'appel de Paris (1re Ch.suppl) 27 février 1992, Rev. Arb., (1992), p. 590, Note P. Ancel. 83. Ynzonides, 'De invloed van faillietverklaring op arbitrage', supra note 17, p. 392; Sanders, Het nieuwe arbitragerecht, supra note 67, p. 33. 84. However, a different view on this matter can be found in some court decisions and in some legal literature. Thus, it has been suggested that even if arbitral proceedings are pending at the moment of opening the bankruptcy procedure, they will not be resumed after the suspension. Instead, the claims contested in verification should be adjudicated by the district court in accordance with Art. 122 Fw. See, e.g., W.L.P.A. Molengraaff, Faillissementswet (Zwolle: W.E.J. Tjeenk Willink, 1951), p. 388. See also, Rechtbank Rotterdam, 13 april 1926, W 11694. 85. However, there is the possibility of terminating the automatic stay after the expiry of a certain time after the request for relief from automatic stay has been submitted (Sect. 362(e) of the Bankruptcy Code). 86. See, e.g., In re Allen & Hein, Inc., 59 B.R. 733 (Bankr. S.D.Cal. 1986). (The Court allowed arbitral proceedings to continue, holding that 'a substantial sum of money has already been expended in the arbitration proceedings' and 'were this court to deny the relief requested, those monies would have been wasted'.) 87. Art. 126(13) BRv. 88. J.H. Dalhuisen, Dalhuisen on International Insolvency and Bankruptcy (New York: Matthew Bender & Co.,1986) 2.04[4], p. 3-256. 89. Id. 90. See, e.g., Rb. Rotterdam, 29 mei 1919, NJ 1913, p. 896; Rb. Amsterdam, 16 februari 1937, NJ 1937, p. 1004. 91. See, e.g., Sanders, 'Arbitrage en faillissement', supra note 17, pp. 167-170; Sanders, Het nieuwe arbitragerecht, supra note 67, p. 33: A.J. van den Berg/R. van Delden/H.R. Snijders, The Netherlands Arbitration Law (Deventer/Boston]: Kluwer Law and Taxation Publishers, 1993), p. 33; Van Buchem-Spapens, Faillissement en surséance van betaling, supra note 55, pp. 105-106. 92. See, e.g., Sanders, 'Arbitrage en faillissement', supra note 17, p. 169. (The author proposes changes to Art. 122(1) Fw so as to include the possibility of arbitrating the disputed claims); Ynzonides, 'De invloed van faillietverklaring op arbitrage', supra note 17. (The author expresses the view that the parties should be referred to arbitration in the case of the claim contested in verification. Further, it is suggested that the arbitral procedure should be adjusted to the renvooiprocedure for the purpose of solving such disputes.) 93. H.J. Snijders/T.A.W Sterk, 'Vierde boek: Arbitrage', in B.C. Punt/H.L. Wedeven (eds.), Burgerlijke Rechtsvordering, Suppl. 230, Book IV, (Deventer: Kluwer, 1994), pp. 48-49; H.J. Snijders/S.L. Buruma, Bouwarbitrage en civiele rechter (Deventer: Kluwer, 1995; Publikatie van de Vereniging voor Bouwrecht Nr. 23), pp. 50-51. 94. Art. 126(13) BRv and the Commentary of F.M.J. Jansen, Art. 126 no. 14. 95. Ynzonides, 'De invloed van faillietverklaring op arbitrage', supra note 17, p. 393. 96. Art. 174 provides that the commercial courts are competent to adjudicate 'tout ce qui concerne le redressement et la liquidation judiciaire'. 97. Cass. Com. 4 février 1986, Rev. Arb. (1988), p. 718; Boisséson, Le Droit fran?ais de l'arbitrage, supra note 19, p. 272. 98. Cass. com. 19 mai 1987, Rev. Arb. (1988), p. 144. 99. See also Boisséson, Le Droit fran?ais de l'arbitrage, supra note 19, p. 278; Ancel, 'Arbitrage et procédures collectives après la loi du 25 janvier 1985', supra note 18 , p. 132. 100. Ancel, 'Arbitrage et procédures collectives', supra note 19, p. 279, n. 65. (Commenting on previous French insolvency law, the author states that it may be implied from Art. 56 of the 1967 Décret, although this has never been expressly admitted by the judiciary.) 101. See Mayer, 'La Sentence contraire a l'ordre public au fond', supra note 63, p. 641 (stating, inter alia, that 'l'organisation fran?aise de la faillite doit être respectée, dans tout ses éléments'); P. Ancel, Commentary to the Sohm ès-qual. c/ Société Simex, Cour d'appel de Paris (1re Ch. suppl.) 27 février 1992, Rev. Arb. (1992), p. 596; Y. Derains/R.E. Goodman-Everard, 'France', Int. Handbook Comm. Arb., Suppl. 26 (February 1998), pp. 1-70, at p. 16 (stating that 'case law has now established that all principles of French law on this subject are matters of international public policy'). 102. See, e.g., Sohm ès-qual. c/ Société Simex, Cour d'appel de Paris (1re Ch. suppl.) 27 février 1992, Rev. Arb. (1992), p. 590. 103. Non-Ferrous Metals (U.S.A.) Inc. v. Vantage Steel Corp. (In re Vantage Steel Corp.) 125 B.R. 880, 887 (Bankr. S.D.N.Y. 1991). 104. See supra, under 3.2. 105. See, e.g., Edgerton v. Shearson Lehman Bros., Inc. (In re Edgerton), 98 B.R. 392 (Bankr. N.D.Ill. 1989). (In order to determine whether to allow arbitration, the Court examined several factors, such as the extent to which a judicial forum was preferable to arbitration in the circumstances given, the identity of the persons constituting the arbitration panel and whether a special expertise was needed. The Court then concluded that 'even if there is the discretion suggested in the Zimmerman case, this Court will modify the automatic stay and allow arbitration to go forward'.) 106. See, e.g., Double TRL, Inc. v. F.S. Leasing, 65 B.R. 993 (Bankr. E.D.N.Y. 1986); In re Guild Music Corp., 100 B.R. 624, 628 (Bankr. D.R.I. 1989) (The Court did not refer the parties to arbitration holding that non-core matters might have been referred to arbitration, whilst core matters 'are exclusive subject matter of the bankruptcy court'.); In re FRG, 115 B.R. 72 (E.D.Penn. 1990); Selcke v. New Englands Ins. Co., 995 f.2d 668, 691(7th Cir. 1993) (The Court held that '[e]ven broadly worded arbitration clauses are not assumed to extend to claims that arise out of the provisions of the bankruptcy law itself'.); In re Spectrum Information Technologies, Inc., 183 B.R. 360, 363 (Bankr. E.D.N.Y. 1995) (The Court held that 'notwithstanding the strong federal policy favoring arbitration, the District Court and the Bankruptcy Courts within the Second Circuit have historically found, especially with respect to core proceedings, that arbitration should not triumph over the specific jurisdiction bestowed upon the bankruptcy courts under the Bankruptcy Code'.). 107. In re National Gypsum Co., 118 F.3d 1056 (5th Cir. 1997). 108. In re Statewide Realty Co., 159. B.R. 719 (Bankr. D.N.J. 1993). 109. In re FRG, 115 B.R. 72, 75 (E.D.Penn. 1990). See also, Double TRL, Inc. v. F.S. Leasing, 65 B.R. 993, 998 (Bankr. E.D.N.Y. 1986). But see, In re Drexel Burnham Lambert Group Inc., 113 B.R. 830, 838 (Bankr. S.D.N.Y 1990). (The Court held that the 'cause' was demonstrated when, inter alia, the claim was subject to an arbitration agreement.) 110. See, e.g., Paul G. Quinn v. CGR, 48 B.R. 367 (D.Col. 1982); Mor-Ben Insurance Markets Corp. v. Excess Insurance Co. (In re Mor-Ben Insurance Markets Corp.) 73 B.R. 644 (9th Cir. BAP 1987); O. Mustad and Sons, A/S v. Seawest Industries, Inc. (In re Seawest Industries, Inc.) 73 B.R. 946 (Distr. W.D.Wash. 1987); In re Bicoastal Corp., 111 B.R. 999 (Bankr. M.D.Flo. 1990); Dollar Corporation v. Hyundai Motor Company, 139 B.R. 192 (1992); In re Hupp Industries, 157 B.R. 360 (Bankr. N.D.Ohio 1993). 111. See, e.g., Société Nationale Algérienne v. Distrigas Corp., 80 B.R. 606, 610 (Bankr. D.Mass. 1987); O. Mustad and Sons, A/S v. Seawest Industries, Inc. (In re Seawest Industries, Inc.) 73 B.R. 946 (Distr. W.D.Wash. 1987); In re Hupp Industries, 157 B.R. 360 (Bankr. N.D.Ohio 1993). 112. See, e.g., Hart Ski Manufacturing Co. v. Maschinenfabrik Hennecke (In re Hart Ski Mfg. Co.), 711 F2d 845 (8th Cir. 1983); Société Nationale Algérienne v. Distrigas Corp., 80 B.R. 606, 610 (Bankr. D.Mass. 1987); In re Cordova International, Inc., 77 B.R. 441, 450 (Bankr. D.N.J. 1987). 113. See, e.g., Braniff Airways, Inc. v. United Air Lines, Inc. (In re Braniff Airways, Inc.), 33 B.R. 33 (Bankr. N.D.Tex. 1983). (The Court held, inter alia, that the congressional policy intending to centralize all disputes in the bankruptcy court 'overrides the provisions of the Arbitration Act', in particular concerning the rights of creditors. It stated further that the priority status and set-off rights were beyond the scope of the arbitration agreement.) The creditor's claim was not referred to arbitration either In re Springer Penguin, Inc., 74 B.R. 879 (Bankr. S.D.N.Y. 1987). 114. Allstate Insurance Co. v. C.J. Hughes and I.D. Barker Bond, as Joint Scheme Administrator of Kingscroft Insurance Co., Ltd., et al., 174 B.R. 884 (S.D.N.Y. 1994).