European Insolvency And Pending Arbitration

In Syska v Vivendi [2008] EWHC 2155, the Commercial

Court had to consider the effect of a Polish company's

insolvency on pending LCIA arbitration in London, in which it was a

party.

The arbitration proceedings had been brought against the Polish

company in August 2003. In August 2007 it was declared bankrupt in

Poland and in October 2007 the tribunal held that it still had

jurisdiction and made an award against the company.

Under Polish insolvency law, an arbitration clause concluded by

a bankrupt loses its legal effect as of the date of bankruptcy and

any pending arbitration proceedings shall be discontinued.

However, the European Insolvency Regulation provides at article

4(2)(e) that the law of the state of the opening insolvency

proceedings shall determine the effects of insolvency proceedings

on current contracts to which the debtor is a party. However,

article 4(2)(f) provides an exception for "lawsuits

pending", and article 15 provides that the effect of

insolvency proceedings on a lawsuit pending shall be governed

solely by the law of the member state in which that lawsuit is

pending.

The English court held that "lawsuit" would include

arbitration...