Enforceability Of Arbitration Clauses In Bankruptcy: Insights From Leading Practitioners From Russia, Ukraine, England, France, Germany, Singapore And Hong Kong

• Published date: 26 July 2021
• Subject Matter: Litigation, Mediation & Arbitration, Insolvency/Bankruptcy/Re-structuring, Insolvency/Bankruptcy, Arbitration & Dispute Resolution
• Law Firm: Dentons
• Author: Konstantin Kroll

On June 25, 2021, global law firm Dentons, with support from Legal Academy, Legal Insight magazine and Interfax Group, held an online conference on the enforceability of arbitration clauses in bankruptcy. Dentons partner and esteemed international arbitrator, Konstantin Kroll, moderated the conference, in which leading arbitration and bankruptcy practitioners from seven countries took part.

Dentons partners Roman Zaitsev (Russia), Natalia Selyakova (Ukraine), Dominic Pellew (England), Anna Crevon-Tarassova (France), Lawrence Teh (Singapore), Heiko Heppner (Germany), and Robert Rhoda (Hong Kong) shared their insights about what can happen with arbitration in their jurisdiction if bankruptcy is instituted against a claimant or respondent.

Russia:

Roman Zaitsev, Head of the Litigation and Dispute Resolution practice in Russia, Moscow

The number of bankruptcy petitions in Russia is growing. Total bankruptcy petitions hit a record 191,604 in 2020, while there were 146,482 in 2019. In Russia, the arbitration clause is generally no longer enforceable in most cases of a respondent's bankruptcy. The arbitration clause usually continues to be effective if the claimant goes bankrupt, but only if the bankrupt company has enough money to fund the arbitration proceedings.

Ukraine:

Natalia Selyakova, Head of the Banking and Finance, Restructuring and Insolvency practices in Ukraine, Kyiv

The number of bankruptcy petitions is growing in Ukraine. Disputes should generally be considered by a commercial arbitration court if the respondent is insolvent. Where the claimant is the insolvent party, the enforceability of the arbitration clause is dubious, as Ukraine's bankruptcy code and the commercial litigation rules contain no specific constrains to proceed with arbitration. However, Ukrainian bankruptcy courts may take the other view in light of the well-established approach in respect of bankruptcy courts' jurisdiction for disputes in bankruptcy proceedings. In this case, there is no uniform practice and everything depends on the specific situation.

England:

Dominic Pellew, International Arbitration Partner, London

Claims for the setting aside of transactions under Russian insolvency law must, in the eyes of the English courts, be brought by way of arbitration proceeding if the contract contains an arbitration clause. This is despite the fact that under Russian law, such claims can only be brought in the Russian court.

France:

Anna Crevon-Tarassova, International...