Article
Reference
The Survival of the Arbitration Agreement and Arbitration Proceedings in Cases of Cross-Border Insolvency: An Analysis from the Swiss
Perspective
KAUFMANN-KOHLER, Gabrielle, LAURENT, Lévy, SABINA, Sacco
KAUFMANN-KOHLER, Gabrielle, LAURENT, Lévy, SABINA, Sacco. The Survival of the Arbitration Agreement and Arbitration Proceedings in Cases of Cross-Border Insolvency: An Analysis from the Swiss Perspective. Les cahiers de l'arbitrage , 2010, p. 371-390
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The Survival of The Arbitration
Agreement and Arbitration Proceedings in Cases of Cross-Border lnsolvency:
An Analysis from the Swiss Perspective
Gabrielle KAUFMANN-KOHLER. Partner at Lévy Kaufmann-Kohler, Geneva
Laurent LÉVY
Partner at Lévy Kaufmann-Kohler, Geneva
Sabina SACCO
Senior associate at Lévy Kaufmann-Kohler, Geneva
RÉSUMÉ
Le présent article porte sur /'approche à suivre par un tribunal arbitral dont le siège est en Suisse lorsqu'il doit se prononcer sur l'impact des dispositions d'un droit étranger en matière de faillite prévoyant /'invalidité d'une convention d'arbitrage ou /'interruption d'une procédure arbitrale. Suite à une analyse des différentes solutions données, respectivement, par le Tribunal fédéral suisse et la High Court anglaise; dans les procédures arbitrales parallèles engagées dans /'affaire Vivendi v. Elektrim, l'article souligne /'importance des questions de qualification dans /'application des normes de conflit de lois pour déterminer l'effet de telles dispositions en matière de faillite. L'article soutient que ces dispositions soulèvent normalement des questions de validité de la convention d'arbitrage, de procédure ou d'arbitrabilité, mais non pas de capacité.
Conformément aux dispositions de la Loi fédérale sur le droit international privé (LDIP) que l'arbitre peut utiliser per analogiam, le droit suisse sera en principe applicable, ce qui aura pour effet la validité de la convention d'arbitrage et la continuation de la procédure arbitrale. L'article analyse par la suite si de telles dispositions en matière de faillite constituent des lois d'application immédiate ou
d'ordre public international qui devraient tout de même être appliquées par le
tribunal arbitral. La réponse à cette question dépendra de savoir si /'objectif d'un tel droit étranger est conforme aux principes internationalement reconnus en matière de droit de la faillite. En dernière analyse, lorsqu'une telle disposition
• Gabrielle Kaufmann-Kohler is a Professorat Geneva University, partner al Lévy Kaufmann-Kohler, Geneva, and Director of the Geneva Master in International Dispute Settlement (MIOS). Laurent Lévy is partner at Lévy Kaufmann-Kohler, Gcncva, and a Visiting Professorat the Centre for Commercial Law Studies, Queen Mary University of London. Sabina Sacco is a senior associate at Lévy Kaufmann-Kohler, Geneva.
Les Cahiers de I' Arbitrage 2010-2 371
d'une !ex concursus étrangère ne fait pas partie de l'ordre pub/;c international, son application sera laissée à la discrétion de l'arbitre.
ABSTRACT
The fol/owing article discusses the approach that should be fol/owed by international arbitration tribunals seated in Svvitzerland when facecl with provisions of Foreign insolvency /aws that seek ta invalidate the arbitration agreement and/or discontinue the arbitration proceedings. After reviewing the contrasting decisions of the Swiss Federal Supreme Court and the English High Court in the parai/el
Vivendi v. Elektrim arbitrations,the article highlights the
importance of a proper conflict of laws analysis (in particular of an accurate characterization) to determine the effect of such foreign insolvency provisions./t submits that such provisions will usually raise issues of substantive va!idity of the arbitration agreement
1of procedure of arbitrability, but not issues of capacity.
Pursuant ta the choice of law ru/es of the Swiss Priva te International Law Act (PILA) which the arbitrators may wish to apply
per analogiam,the applicable /aw will generally be Swiss law, which will tend to uphold the validity of the arbitration agreement and the continuation of the arbitration proceedings. The article then examines whether such Foreign insolvency provisions may constitute mandatory ru/es
(lois d'application immédiate)or ru/es of international public policy that should nonetheless be applied by the arbitral tribunal. This will depend on whether the underlying aim of the foreign insolvency /aw is compliant with international/y recognized principles of insolvency law. Ultimately. the application of a provision of a Foreign /ex concursus is /eft ta the discretion of the arbitrator if thatprovision does notconstitute a rule of international public policy.
1. Introduction
1. The insolvency 1 of a party may have important substantive and procedural effects on ongoing or future arbitration proceedings. Among the key questions that arise are whether the arbitration agreement survives the dec!aration of bankruptcy and whether pending arbitration proceedings must be stayed or terminated. The answer to these questions becomes more complex when the insolvency proceedings are governed by a law different from the law applicable to the arbitration, throwing con fi ict of !aw issues înto the equation.
2. These diffîculties have been underscored by the recent decision of the Swiss Federal Tribunal (the Swiss "Supreme Court") in Vivendi et al v. Elektrim S.A. 2 (E/ektrim"). An arbitral tribunal seated in Switzerland discontinued arbitration proceedings agaînst a Polish party which had been declared bankrupt in Po!and after
1. For the purposes of this article, the terms "insolvency11 and "bankruptcy" are used indistinctly to refer to ail proceedings directed to the liquidation of assets of an in sol vent party in favor of its creditors.
2. Vivendi et al v. Deutsche Telekom et al., DFT 4A-428/2008, Decision of the First Civil Law Court of the Swiss Federal Supreme Court of 31 March 2009 (" Elektrim11), ASA Bull. 1/2010, p. 104. The original decision is in German. An unofficial translation is available at http://www.practor.ch/docs/31'%
2 Omars''!o202009 ''!o204A 0/o2042 8°/0202008.pdf.
372 The Paris Journal of International Arbitration 2010-2
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the initiation of the arbitral proceedings. Applying Chapter 12 of the Swiss Private International Law Act (PJLA) 3 which constitutes the Swiss Arbitration Act, and provisions fron1 another chapter of the PILA, the arbitral tribunal found that the discontlnuance depended on the Polish party's capacity to arbitrate. The arbitral tribunal then determined that this capacity to arbitrate was governed by Polish law, with the resu lt that the Pol ish party had lost its capacity to a1·bi trate. The Supreme Court upheld lhe award.
3. The Elektrîm decision has sparked much controversy. The Supreme Court's conflict of laws analysis - in particular its characterization of the issue as one of capacity - has gencrated a heated debate. Jt has also given rise to speculation \.vith respect to the implications which the decision could have on S\,vitzerlancl as a seat for international arbitrations. Also troubling is that the English High Court reached a raclically different conclusion when ru!ing on the challenge to another arbitral award involving the same Po!ish bankrupt party. These observations reflect a more general concern: how should international arbitral tribunals reactto provisions offorcign lavv that purport to rencler arbitration agreements ineffcctive or to terminatc pencling arbitrations?
4. This article attempts to answer that question from the Swiss perspective, using the Elektrîm decîsion as frame of reference. After clescribi ng the E!ektrim clecîsion and the contrasting decision in the parai le! case in Englancl (Il), it discusses conflîct of laws issues that may arise when an arbitra! trlbunal is faced with a provision of the /ex concursus su ch as the Pol ish law at issue in Elektrim (111). lt then acldresses the potentia!
applicability of such a provision in the context of mandatory rules (also called lois d'application immédiate or lois de police) (IV). The article conc!ucles by briefly touchîng on certain points that may be considerecl by international arbitral tribunals when dealîng with issues of cross-border inso!vency (V).
11. The Contrasting flektrim Decisions
A. The Swiss Dedsion
5. ln 2006, Vivendi and certain of its subsidiaries initîated arb!tration under the ICC Ru les against Deutsche Telekom AG and other entities, including Elektrim S.A., a Pol ish corn pan y. 4
3. Swiss Federal Private International Law Act of 18 December 1987, RS 291.
4. The Elcktrim decision is unusually short and docs not give much insight on the facts or the parties' positions. However, both have bcen described in articles published by counscl or other persans with knowledge of the proceedings. See, e.g., G. Naegeli, The impact of a bankruptcy in a pendinr; arbitration proceeding - comments on a recent decision of the Swiss Federal Supreme Court, IBA Arbitration Newsletter (Septembcr 2009)1 p. 57-61; D. Baizeau, "Arbitration and lnsolvency:
Issues of Applicable Law"1 in C. Müller, A. Rigozzi (Eds.)1 New Developments in International Commercial Arbitration, 2009, p. 97-120; M. Aebi and H. Frey, "Impact of 13ankruptcy on International Arbitration Proceedings: A Specîal Case Does Not Make a General Rule", 28ASA Bull 1120-10 (March), p. 113-126; P. A. Karrer, Views on the decision by the Swiss Supreme Court of March 311 2009, in re Vivendi et al. v. Deutsche Telekom et al., 28 ASA Bull 1/2010 (March), p.111--112.
Les Cahiers de !'Arbitrage 2010-2 373
The seat of the arbitration was Geneva. ln August 2007, Elektrim was declared bankrupt in Poland. Based on Article 142 of the Polish Bankruptcy Law (PBL), it requested that the arbitration proceedings pending against it be discontinued. Art. 142 of the PBL provides: "Any arbitration clause concluded by the bankrupt shall /ose its legal effect as at the date bankruptcy is declared and any pending arbitration proceedings shall be discontinued." 5
6. The arbitral tribunal characterized this provision as affecting Elektrim's standing to arbitrale. lt held that, accordingto Art. 142 PBL, if a Polish party is declared bankrupt it loses its "subjective capacity" to be a party in arbitration proceedings. 6 Because this was an issue of capacity or standing to act in a Swiss arbitration, the arbitral tribunal held that it should be determined according to the general rules on conflict of laws of the PILA. According to Arts. 154 and 155 PILA, the capacity of a legal entity is governed by the law of its place of incorporation. Because Elektrim had been incorporated in Poland, its capacity was governed by Polish law. As a result, on 21July2008 the arbitral tribunal discontinued the arbitration proceedings against Elektrim.
7. ln a majority decision rendered on 31 March 2009, the Swiss Federal Supreme Court agreed with the arbitral tribunal's rationale and confirmed the award. ln particular, it held that there was no reason to doubtthe validity of the arbitral tribunal's legal finding, namely, that under Polish law Elektrim had lost its standing to participate in arbitral proceedings as a result of its bankruptcy.
8. Having framed the issue as one of standing to arbitrale, the Supreme Court then turned to the PILA's general rules on conflict of laws. Noting that the PILA is silent regarding the standing to arbitrale of non-state parties, 7 the Supreme Court held that such standing depends on a party's legal capacity. According to the Supreme Court, this capacity should be determined according to the persona! law applicable to the persan or legal entity. For legal entities this is the law of their place of incorporation (Arts. 154 and 155(c) PILA), in this case, Polish law. As the arbitral tribunal had found that under Art. 142 PBL a Polish party that has been declared bankrupt loses its standing to participate in arbitral proceedings, the Supreme Court concluded that the arbitral tribunal had rightly discontinued the arbitration with respectto Elektrim.
B. The English decision
9. The controversy surrounding the Elektrim decision has been heightened by the fact that an LCIA tribunal and the English High Court adopted a radically different approach in an arbitration involving some of the same parties (to avoid confusion, we
S. Translation agreed by the Parlies and used in the decision itself. Elektrim, para. B.b.
6. Elektrim, para. B.c.
7. The PILA contains an express rule for lcgal entities that are state-owned or state-operated at Art. 177(2) PILA, which provides: "[a} state, or an enterprise held by, or an organization controlled by a state, which is party to an arbitration agreement, cannai invoke ils own /aw in order to contes!
its capacity to arbitrale or the arbitrability of a dispute covered by the arbitration agreement."
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will referto it as "the English decision"). 8 ln 2003, Vivendi had commenced an LCIA arbitration with its seat in London against Elektrim and others. When Elektrim was declared bankrupt in August 2007, it invoked Art. 142 PBL and objected to the tribunal's jurisdiction (although apparently it did not expressly allege that it lacked capacity). 9 ln stark contras! with the Swiss approach, in March 2008 the arbitral tribunal held that English law governed the issue, and that under English law it had jurisdiction over Elektrim despite its bankruptcy. The English High Court confirmed this finding and upheld the award.
10. The clifference between the Swiss and English approaches rests largely on the fact that they resorted to different ru les on conflict of laws. Because both the seat of the LCIA arbitration and the place where the insolvency proceedings were filed were within the EU, the LCIA tribunal and the English High Court applied the EC Regulation on Cross-Border lnsolvency (the "EC Regulation"), 10 which contains specific conflict of law rules. The guiding principle is set forth in Art. 4 of the EC Regulation, which provides that, with a few exceptions, the law applicable to insolvency proceedings and their effects is that of the State where such proceedings are opened (i.e., the /ex concursus). This includes the effects of insolvency proceedings on current contracts to which the debtor is a party (Art. 4.2(e)) and on proceedings brought by individual creditors, with the exception of lawsuits pending (Art. 4.2(f)). The lawsuit pending exception is further articulated in Art. 15 of the EC Regulation, which provides: "The effects of insolvency proceedings on a lawsuit pending concerning an asset or a right of which the debtor has been divested shal/ be governed sole/y by the law of the Member State in which that lawsuit is pending."
11. The English High Court confirmed that the term "lawsuit pending" included pending arbitral proceedings (not enforcement actions), and th us the arbitral tribunal had correctly appl ied English law to determine the effect of Elektrim's bankruptcy over the pending arbitration. lt also clarified that arbitration agreements that relate to future, non pending arbitral proceedings constitute "current contracts" for purposes of Art. 4.2(e} of the EC Regulation and are thus governed by the /ex concursus, while arbitration agreements that relate to existing, pending arbitration proceedings are covered by the exception in Arts. 4.2(f) and 15 of the EC Regulation. 11
12. Notably, the English High Court did not characterize the issue as one of capacity, or as anything else for that matter. lt merely determined that the effects of
8. Syska and another v. Vivendi Universal SA and others [2008] EWHC 2155 (Comm.). This decision was upheld by the English Court of Appeal on 9 July 2009: see Syska v. Vivendi Universal SA 120091 EWCA Civ. 677 (Court of Appeals). Syska acted as administrator of Elektrim's bankruptcy.
For a detailed description of this case, see Baizeau, p. 107-111; M. Robertson, Cross-Border insolvency and international commercial arbitration: characterization and choice of law issues in light of Elektrim S.A. v. Vivendi S.A. and analysis of the European insolvency regulation, 12(6) lnt'I Arb. L.R., 2009, p. 125-135.
9. See Baizeau, p. 113, n° 68; Robertson, p. 127.
1 O. EC Regulation 1346/2000 on Cross-Border lnsolvency.
11 . Syska and another v. Vivendi Universal SA and others [20081 EWHC 21 55 (Comm.), paras.
1OO-103. See also Baizeau, p. 11 o.
Les Cahiers de !'Arbitrage 2010-2 375
Elektrim's insolvency on the pending arbitration - whatever they were - should be determined pursuant to Engl ish law. 12
Ill. lnsolvency and Conflict of Laws from the Swiss Perspective
13. The diverging Swiss and English approaches to Art. 142 PBL call for a reconsideration of the analysis that arbitral tribu nais must engage in when confronted with provisions of "foreign" 13 insolvency laws that cou Id result in the invalidation of the arbitration agreement and/or the termination of ongoing arbitration proceedings.
14. The most common approach is a choice of law analysis, 14 which usually involves three steps. First, the tribunal must characterize the issue subject toits review (known as the process of characterization in English and qualification in French), that is, it must define the legal question posed and classify it within a category of private international law. Once the issue has been characterized, the tribunal can select the choice of law ru le that applies to that category. This choice of law rule will then lead the tribunal to the applicable law. 15
15. The LCIA tribunal and the English High Court applied the EC Regulation, i ncluding its ru les on conflict of laws. This led to the application of English law under Art. 15 of the EC Regulation. Although it is unclear whether an arbitral tribunal as opposed to a court is bound by the ru les on conflict of laws of the EC Regulation, 16 some authors have argued that failure to apply these rules cou Id be considered as a violation of public policy by state courts within the EU and lead to an annulment of the award. 17
16. The Swiss Federal Supreme Court, on the other hand, was not bound by the EC Regulation, but by the Swiss Arbitration Actwhich contains express choiceof law ru les in matters of arbitration. 18 The arbitral tribunal and the Supreme Court characterized the issue as one of standing or capacity to arbitrate. As the Swiss Arbitration Act does not conta in specific ru les on standing for private parties, the arbitral tribunal and the Supreme Court resorted to the PILA's general rules on conflict of laws, which are
12. Robertson, p. 127.
13. By "foreign" we refer to laws that are neither the law applicable to the arbitration agreement, the /ex arbitri nor the law applicable to the merits of the dispute (/ex causae).
14. lt must be noted that an arbitral tribunal is not necessarily bound to apply a traditional choice of law approach: the tribunal cou Id have decided on the applicable law using other methods, such as, for example, the substantive rules method. Sec, e.g., Fouchard, Gaillard, Goldman, International Commercial Arbitration, E. Gaillard and J. Savage (Eds.), Kluwer Law International, 1999, p. 247-248.
15. P. Mayer and V. Heuzé, Droit International Privé, 8'h ed., 2004, at p. 116-126; H. Batiffol and P. Lagarde, 8'hed. 1993, p. 477-490; Robertson, p. 127-129.
16. Robertson, p. 131-135; Baizeau, p. 108.
17. Baizeau, p. 108.
18. On the determination of the law governing the merits of the dispute in Art. 187(1 ), and on the law governing the arbitration agreement in Art. 178(2).
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designed for application in court. This ultimately led to the application of Elektrim's persona! law (i.e., Polish law), which also happened to be the /ex concursus.
17. The Supreme Court's choice of law analysis deserves several comments. First, the Supreme Court's automatic application of the PILA's general rules of conflict of laws must be rejected: the Supreme Court has held that the Swiss Arbitration Act is self- standing and the PILA's remaining provisions are not binding on international arbitral tribunals seated in Switzerland, although they may be applied by analogy. 19 More importantly, it is not at all clear that the issue raised by Art. 142 PBL is one of capacity. 20 This highlights the importance of a proper characterization of the issues for the se[ection of the relevant choice of law rule.
18. The following sections address the relevance of an adequate characterization in a choice of law analysis (A below) and the potential characterizations of Art. 142 PBL (and their effects) under the framework of the Swiss Arbitration Act (B below).
A. Relevance of Characterization
19. A proper characterization of the issue is critical for a correct choice of law analysis. Characterizing an issue one way or another may lead to the application of different laws and, accordingly, to different results. To cite a classic example, the question presented by the marriage of a minor without parental consent could be characterized as one of capacity (in which case the persona! law of the minor would apply) or one of formai validity (which will generally lead to the application of the law of the place of the marriage). 21
20. The same is true with respect to matters of insolvency. As discussed below, a provision that seeks to render arbitration agreements ineffcctive or terminate pending arbitration proceedings (such as Art. 142 PBL) cou Id be characterized as affecting the capacity of the insolvent party, the substantive validity of the arbitration agreement, the objective arbitrability of the dispute, or the arbitration procedure. Characterizing the issue one way or another may ultimately lead to the application of different laws.
21. lt is generally accepted that state courts characterize an issue by reference to the notions of the /ex fori. 22 The same is not true in international arbitration. Arbitral tribunals have no forum, only a seat, which implies a much looser connection to the state. Hence, arbitral tribunals should not resort to the Rules on conflict of laws applicable in the courts of the state of the seat. 23 This sa id, the international arbitration
19. DTF 4P.154/99 of 8 Dec. 1999, para. 2.b)bb, ASA Bull. 3/2000, p. 546. G. Kaufmann-Kohler and A. Rigozzi, Arbitrage international: Droit et pratique à la lumière de la LDIP, 2nd ed., 2010, p. 21, 402. See also P.-Y. Tschanz and 1. Fellrath, Chronique de jurisprudence étrangère, Rev. arb., 2009, p. 856-857; Aebi and Frey, p. 118; BAIZEAU, p. 114.
20. See, e.g., Nacgeli, p. 58-59, Baizeau, p. 114-115, Aebi and Frey, p. 116; Robertson, p. 129- 130.
21. Mayer and Heuzé, p. 115; Dicey & Morris, The Conflict of Laws, 131h ed., 2000, p. 33-34.
22. See, e.g., Batiffol and Lagarde, p. 477-480; Mayer and Heuzé, p. 117-121; Dicey & Morris, p. 35; A. Bucher and A. Bonomi, Droit International Privé, 2001, p. 139.
23. Thercfore, arbitral tribunals resort to a variery of melhods to determine the relevant applicable laws. Kaufmann-Kohler and Rgozzi, p. 402-404; Bucher and Bonomi, p. 332-335. This is so even
Les Cahiers de I' Arbitrage 2010-2 377
law of the seat, the !ex arbitri, may have conflict ru les which may provide conflict categories for purposes of characterizat!on by arbitrators. ln their absence, the arbitra!
tribunal must classify the issue according to the categories of the /ex arbitri but it must look to the foreign law to establish the nature and e!ements of the legal issue beîng classified. 24
22. ln the case of Elektrim, this meant inquirîng înto the nature of Art. 142 PBL under Polish law and classîfying it according to the conflict of lavv ru les contained in the Swiss Arbitration Act Both the Arbitral Tribunal and the Supreme Court characterized the issue raised by Art. 142 PBL as one of capacity or subjective arbitrability. This characterization, however, is debatable.
B. Possible characterizations of Art. 142 PBl and their effect on the applicable law
23. As anticipated above, Art. 142 PBL could be characterized as affecting the capacity to arbitrate of the însolvent party, the substantive valîdity of the arbîtration agreement, the objective arbi trabi 1 ity of the dispute, or the procedure of the arbitration proceedings.
1. Capacity to Arbitrate or Subjective Arbitrability
24. The capacity to arbi trate- sometimes ca!!ed subjective arbitrabi 1 ity- has been defined as the ability of a person or a !egal entity to conclude and be a party to an arbitration agreement. 25 lt embraces both the capacity to have rights and the capacity to exercise rights, whether alone or through !egal representatives. 26 The capacity to arbitrate must not be confused with the authority or power to agree to arbitration in the na111e and on behalf of another, whîch is a matter of agency, nor with the authority to represent a party in arbitral proceedings by virtue of a specific power of attorney. 27
25. ls the issue raised by Art. 142 PBL one of capacity, as held by the Swiss Federal Supreme Court? Art. 142 PBL provides that 11[a]ny arbitration clause concluded by the bankrupt shall !ose its !egal effect as at the date bankruptcy is declared and any pending arbîtration proceedîngs shal! be discontinued. fi This provision refers to the effect of the declaration of bankruptcy on the arbitration clause and the contînuance of pendi ng arbitration proceedings. Nowhere does it refer to the bankrupt's capacity to arbitrate, or to the capacity of the esta te to arbitrate. However, re!ying on the testimony of Polish legal experts. the arbitral tribunal found that "the aim of Art. 142 [PBL] was
under Swiss !ex arbitri which contains a general rule of conflict in Art. 187(1), which rule must be further specified for tribunals to determine the applicable law. Id.
24. Baliffol and Lagarde, p.480-482; Mayer and Heuzé1 p. 117; Bucher and Bonomi, p.140- 142; Dicey & Morris, p. 42.
25. j.-F. Poudret and S. Besson, Comparative Law of International Arbitration, 2nd ed. 2007, p. 262, p. 232; Kaufmann-Kohler and Rigozzi, p. ·130.
26. Poudre! and Besson, p. 232.
27. Poudret and Besson, p. 232; Fouchard, Gaillard and Goldman, p. 242; Kaufmann-Kohler and Rigozzi, p. 131-133.
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to exclude the jurisdiction of arbitral tribunals for însolvent Polish parties." 28 lt then concl uded that the issue was one of the bankrupt's capacity to arbitrate.
26. This reasoning is a
non sequitur.
Even if the aim of Art. 142 PBL had been to exclude the jurisdiction of arbitral tribunals for insolvent Polish parties (which is debatabl e), it cloes not fol !ow that the issue is one of capacîty. lt cou Id j ust as easily be an issue of val idity of the arbitratlon agreement or of subject matter arbitrabi li ty. ln th is latter respect, we could conclude that Polish law considers that disputes involvîng a bankrupt party are not arbitrable for reasons of public pol icy, in particular for reasons of equa 1 treatment of creditors.27. Po!ish law itse!f appears to refute that the aim of the provision vvas to exclude arbitral jur!sdiction over insolvent Polish parties. 29 According to a different provision of the PBL, a bankrupt party (which cou Id possibly be understood to include the estate in bankruptcy) îs able to inîtiatc ncvv arbitral proceedings vvith the consent of the creditors' committee. 30 !t follows that the aim of Art. 142 PBL cannot have been to exclude insolvent Polish parties from arbitral jurisd!ction, but rather !o impose certain restrictions to the cxercise of such jurisdlction. Further, Polish law confîrms that the issue is not one of general capacity: pursuant to Art. 185(2) PBL, /1[t]he dec/aration of bankruptcy sha!I not affect the bankrupt party's legal capacity or its capacity to perform legal acts. /!
28. Once the issue is characterîzed as one of capacity to arbitrate, hovvever, the application of the personal lavv of the bankrupt party is less controversial. The Swiss Arbitration Act does not contain specîfic rules on capacity to arbitrate for private parties. ln the absence of a specific rule, the arbitral tribunal and the Supreme Court turned to the PILA's general conflict of law rules concerning the capacity of legal entities. Under Art. 154 and 1 SS(c) PILA, capacity is ruled by the personal law of the corporation involved, that is the !aw of its place of incorporation. Although this approach has been criticized from a doctrinal standpoint, 31 most authors agree that arbitral tribu nais may apply the general ru les of the PILA by analogy. 32 ln addition, it is wide!y accepted in international arbitration that issues of capacity to arbitrate are governed by the persona! law of the party involved. _B This is the approach adopted by
28. Elektrim, para. B.c.
29. One author has noted that there was no predominanl doctrine in Poland on this issue, and thus the Supreme Court would have bcen free to fully review the question according lo its own standards. Naegeli, p. 59.
30. Naegeli, p. 58; Baizeau, p. 74.
31. See n.19 above.
32. Kaufmann-Kohler and Rigozzi, p.21, 130-131; Poudret and Besson, p.234. 01her commentators favor the application of the law of the closest conneclion pursuant to Art. 187(1) PILA, noting however that this criterion can be further defined by consulting the general choice of law ru les of PILA. See, e.g.1 W. Wenger, Art. 178, in International Arbitration in Switzerland, Stephen V. Serti et al (Eds.) (2000), p. 340.
33. Born, p. 556. ("Commenwry is almost unanimous in adopting the persona! !aw of the party with regard to issues of capacity. 'l F. Mantilla Serrano, "International Arbitration and lnsolvency Proceedings"1 11 Arb. lnt'I 51, p. 63 (1995) ("Regarding matters concerning the capacity of the insolvent party (or its representatives) ta pursuc the arbitration, the arbitrators consistent/y refer such issues ta the persona/ law of the party, which for corporations is generally the law of the place of incorporation.'); Poudret and Besson, p. 233.
Les Cahiers de 11 Arbitrage 201 0-2 379
Art. V(1 )(c) of the New York Convention, which is often consiclered to be a gcneral rule referring to the personal law governing capacity. 34
29. Another solution woulcl be to extend to private parties the ru le provided under Art. 177(2) PILA, according to vvhich a State party to an arbitration agreement cannot re!y on its own !aw in order to challenge its capacityto be a party. A similar ru!e exists under Art. 158 PILA, a provision outs ide Chapter 12 and th us not applicable as such in arbitrat!on, with respect to the representation of corporations. 3-' An arbitra! tribunal cou Id arguably apply this rule by analogy.
30. This analysis does not ignore that there may be provisions of the /ex concursus that may raise real issues of capacity. For instance, vvhether the estate in bankruptcy cloes or does not have legal personality is an issue of capacîty that wou!d have to be rcsolved by the /ex concursus (\vhich in this case would coi ne ide vvith the applicable persona! !avv).
2. Substantive validity of the arbitra lion agreement
31. Art. 142 PBL addresses the effects of the declaration of bankruptcy on an existing arbitration clause and on pending arbitration proceedings. Specîfîcally, Art.
142 PBL provîdes that (i) arbitration clauses concluded by the bankrupt party become ineffective as of the date of the declaration of bankruptcy, and (iî) pending arbitrations to which the bankrupt debtor is a party must be discontinued. This points to issues of substantive validity of t·he arbitration agreement (addressed in this section) 36 and the conduct of the arbitration proceedings, i.e. to matters of procedure before the arbitral tribunal (addressed in Section 3 below).
32. Under Swiss arbitration law, the substantive validity of the arbitration agreement is governed by Art. 178(2) PILA. 37 According to this provision, the arbitration agreement shall be val id if it conforms to either (i) the law chosen by the parties (to govern the arbitratîon agreement); (ii) the law governing the subject matter of the dispute (in particular the law governing the contract itself); or (iii) Swiss law.
Hence, the arbitration agreement will be val id if it conforms to the least demanding of thesethree laws 38 . ln many cases this will be Swiss !aw, which is alsothe !ex arbitri. 39 Art. 178(2) is an expression of the validation principle (in favorem validitatis), vvhich
34. W. Laurence Craig, W. W. Park and J. Pau Isson, International Chamber of Commerce Arbitration, 3rd ed. 2000; p. 44; Poudre! and Besson, p. 233.
35. Art. 158 PILA provides: "A company may not invoke restrictions on the representative power of an organ or reprcscntative that are unknown under the /aw of the place of business or habituai rcsidence of the other party unless the other party i<new or shou/d have known of such restrictions."
36. This approach has been endorsed by several authors. See1 e.g. Baizcau at 116, Robertson p. 129-130.
37. Poudret and Besson, p. 322.
38. See, e.g. l<aufmann-Kohler and Rigozzi, p.124-126; Poudret and Besson, p.260; Wenger, 339-341.
39. ln practice, it is usua!ly sufficient to determine that the arbitration clause is valid under Swiss law. If il is, there îs no need for further inquiry. Only if the arbitration clause is not valid under Swiss law will an arbitral tribunal look to the law chosen by the parties or the /ex causac.
Kaufmann-Kohler and Rigozzi, p. 125.
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seeks to promote the validity of arbitration agreements by providing an alternative ru le of conflict, whether the parties have agreed on an applicable law or not. 40
33. Art. 178(2) governs issues referring to the formation of the arbitralion agreement, its Interprelation, performance, scope and extinguishn1ent. 41 This includes determining whether a declaration of bankruptcy causes the termination, învalidity or inoperabîlity of an arbitration agreement. 42
34. Accordi ngly, given that Art. 142 PBL mandates the termination of the effects of arbitration agreements concluded by a party 1,vho is declared bankrupt, it would be more accurate to characterize the legal issue as one of continued validîty or terminatîon of the arbitratîon agreement with respect to the bankrupt party. This characterization would lead to the application of Art 178121 PILA. Art 178(2) PILA in turn provîdes that an arbitratlon agreement shall be val id if it complies \..vith the least clemanding of three possible laws (the law chosen by the parties, the law governing the subject matter of the dispute, or Swiss law). Hence, if the bankrupt party's arbitration clause is val id under any of those laws, the validity of the clause should be upheld.
35. Under Svviss law, the survival of the arbitration agreement is considered an issue of legal succession: arbitration agreements concluded by a bankrupt party survive the declaration of bankruptcy and are transferred to the trustee. 43 As a resull, assuming that the other two possibly applicable laws were to result in the termination of the arbitration agreement, an arbitral tribunal seated in Switzerland should apply Svviss law, uphold the arbitration agreement, and continue the proceeclings with respect to the bankrupt party. 44 This was the position adopted by the minority of the Suprcme Court in Elektrim. 4r,
3. Procedure
36. Another alternative would be to characterize the issue as one of proceclure. 46 Art. 142 PBL states that the arbitration agreement shall lose its legal effect and that pending arbitration proceeclings shall be discontinued. lt does not say that the arbitration agreement is null and voici with retroactive effect; the Issue raised by the
40. Poudre! and Besson, p. 260; Born, p. 439; Kaufmann-Kohler and Rigozzi, pp. 124-126;
Poudret and Besson, p. 260.; Wengcr, 339-341.
41. Wcnger, p. 339; Kaufmann-Kohler and Rigozzi, p.125. lt does not cover issues of formai validity (addressed by Art. 178(1 )) nor issues of capacity to arbitrate (addrcsscd by PILA's general rulcs on conflict of laws or by the law of the closest connection pursuant to Art. 187(1) Pll.A, as discussed abovc). Id.
42. L. Lévy, 11lnsolvency in Arbitration (Swiss Law)", 8 lnt'I A. L. R., Issue 1 (2005), p. 23-33, at p. 25.
43_ G. l<aufmann-Kohler and L. l.évy, 11lnsolvcncy and International Arbitration", in The Challenges of lnsolvency Law Reform in the 2 F1 Century, Henry Peter e! al (cds.), 20061 p. 257- 284, at p. 267. Not ail authors agree with this position; F. Perret, "Faillite et Arbitrage International", 25 ASA Bull. n° 1/2007 (March), p. 36-47, al p. 43.
44. As one of the authors has stated elsewhere, "an arbitrator sitting in Switzerfand woufd lack any legal basis to allow an insolvent party to rcnege on an arbitration clause." Lévy, p. 25.
45. Naegeli, p. 58. The Elektrim decision does not include the position of the minority1 but that position was made known during the public deliberations. Id.
46. For a similar position, see Naegeli, p. 59.
Les Cahiers de l'Arbitrage 2010-2 381
Polish provision is whether the arbitration proceedings can proceed in spite of the bankruptcy. As noted above, the bankrupt party may initiate new proceedings with the creditors' consent. Although much may depend on the accuracy of the available translation, this suggests that the aim of Art. 142 PBL may be to
stay
arbitral proceedings rather than terminate them, presurnably to allow the trustee to analyze the debtor's assets and liabilities, the liquid assets available and the prospects for the estate liquidation proceedings, and thus ensure due process. 47 A similar analysis has been proposed with respect to Art. 51 of the ltalian lnsolvency Law: although this provision provides that from the date of the declaration of bankruptcy no individual actions may be initiated or continued, 48 this has been interpreted as a temporary suspension of the arbitration agreement and notas affecting its validity. 4937. If the issue is characterized as one of procedure, for an arbitral tribunal with its seat in Switzerland it is governed by Art. 182 PILA. According to this provision, the procedure shall be governed by the procedural rules and the procedural law agreed by the parties or, in the absence of agreement, by the rules and law determined by the tribunal. 50 ln either case these rules are subject to compliance with fundamental principles of procedure (the right to equal treatment and the right to be heard in adversarial proceedings) and international public policy. 51
38. ln the exercise of their procedural powers, international arbitration tribu nais Sitting in Switzerland have often favored the application of the law of the seat, whether rightly so is a different question. 52 ln Switzerland, domestic civil proceedings
(including domestic arbitrations) must be temporarily stayed after the declaration of
bankruptcy (Art. 207 of the Swiss Bankruptcy Law or "SBL"). ln international arbitrations with their seat in Switzerland, it is in the discretion of the arbitrators whether to stay the proceedings or not. 53 lt is submitted that stays should only be granted when considerations of public policy or due process require it (for instance, if the refusai of a stay would deny the trustee adequate time to prepare his case, thus affecting the equality of the parties or the trustee's right to a proper hearing), or if the provision of the /ex concursusordering a stay is deemed to constitute a mandatory rule of a foreign legal system (discussed in Section IV below). 54
4. Objective or Subject Matter Arbitrability
39. A final option would be to consider the issue posed by a provision such as Art.
142 PBL as one of objective or subject matter arbitrability. Subject matter arbitrability
47. lndeed, in Elektrim the Supreme Court noted that the arbitral tribunal held that "ongoing proccedings againsl IEleklrim] were therefore to be staycd." Elektrim, para. B.c (emphasis added).
48. See Perret, p. 44-45, discussing Art. 51 of the ltalian lnsolvency Law, R.D. 16 March 1942 No. 267, as amendcd.
49. Perre!, p. 44-45 (citing P. Fusai, "L'arbitrato nel diritto fallimentare", in L'arbitrato,
C. Cecchella (2005), p. 543; A. Berlinguer, "L'arbitrato nel diritto fallimentare", in La compromettabilità pcr arbitri, studio di diritto italiano e comparato (1999), vol. 2, p. 151).
50. Kaufmann-Kohler and Lévy, p. 269.
51. Kaufmann-Kohler and Lévy, p. 269.
52. Naegeli, p. 59.
53. Kaufmann-Kohler and Lévy, p. 269.
54. Lévy, p. 31-32; O. Brown-Berset and L. Lévy, « Faillite et Arbitrage•, ASA Bull. 4/1998, p. 676.
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refers to the ability of a subject matterto be submitted to arbitration. 55 As noted above, it could be argued that Art. 142 PBL decrees the invalidity of arbitration clauses concluded by the bankrupt party and the termination of its arbitration proceedings because it considers that disputes involving a bankrupt party are not arbitrable.
40. Although arbitrabi lity is a condition of the val idity of the arbitration agreement and of the jurisdiction of the tribunal, it may be subject to a different legal regime than that applicable to the material validity of the arbitration agreement. ln Switzerlana, arbitrability is governed by Art. 177(1) PILA, which provides that a malter is arbitrable if it involves an economic interest. ln this respect, Swiss law contains a substantive rule of private international law that makes it unnecessary to determine which national law governs the subject matter. 56 Thus, if the matter before an arbitral tribunal seated in Switzerland involves an economic interest, it is required to apply Art. 177(1) PILA and consider the matter arbitrable, regardless of stricter criteria of arbitrability under any applicable foreign laws. 57
41. ln Switzerland, disputes of a substantive nature that are linked with insolvency proceedings (other than those strictly relating to the subject matter of the bankruptcy, such as the determination of the priorities among the creditors) are generally arbitrable. 58 Likewise, current comparative law shows that i nsolvency is general ly not considered a bar to arbitrability, except with respect to matters strictly pertaining to collective enforcement. 59
42. ln any event, itdoes not appearthat Art. 142 PBL rai ses a matter of arbitrability.
lt has been noted that another provision of the PBL allows the bankrupt party to initiate new arbitral proceedings with the consent of the creditors. 60 This confirms that Polish law considers claims involving bankrupt parties arbitrable.
IV. The Lex Concursus as a Mandatory Rule or Loi d' Application Immédiate
43. The above conflict of laws analysis suggests that a provision of a foreign insolvency law such as Art. 142 PBL that purports to invalidate arbitration agreements or terminate/suspend arbitration proceedings to which the bankrupt debtor is a party should be characterized as raising issues of substantive validity of the arbitration agreement or issues of procedure. Depending on the language of the provision, its interrelationship with other provisions of the relevant bankruptcy law and, more
55. Kaufmann-Kohler and Lévy, p. 260; Poudrel and Besson, p. 281. 56. Kaufmann-Kohler and Lévy, p. 260. See also Poudret and Besson, p. 284.
57. Poudret and Besson, p. 289; DFT 118 Il 193, c.5 c aa).
58. Poudret and Besson, p. 307. More controversial is the situation of disputes related to the voidability or unenforceability of legal acts detrimental to ail creditors, actions challenging the schedule of daims, actions seeking to include or exclude assets from the estate based on rights in rem, and the application in summary proceedings for lifting an objection to a payment order.
Kaufmann-Kohler and Lévy, p. 262-266; Poudre! and Besson, p. 307.
59. Kaufmann-Kohler and Lévy, p. 260-261.
60. Naegeli, p. 58; Baizeau, p. 74.
Les Cahiers de I' Arbitrage 2010-2 383
significantly, its actual nature, it cou Id also rai se a matter of arbitrabi 1 ity. As discussed above, the Swiss Arbitration Act contains specific ru!es of conf!ict or substantive choîce of law ru les which govern each of these possible characterizations.
44. A conflict of laws analysis is, hovvever, only the first step in the process. An arbitra! tribunal faced with a provision of the /ex concursus su ch as Art. 142 PB L must also assess whether su ch provision constîtutes a ru!e of international public pol icy or a mandatory rule of the !ex concursus (also called a "foi
d
1application immédiate" or11/oi de police"). 61
This section discusses the application by an arbitral tribunal of manclatory laws or lois d'application immédiate. Although these 111ay sometin1es over!ap with rules of international public po!icy, this îs not necessarily the case. And vvhile it is generally accepted that an arbitral tribunal may apply rules of international public policy directly (whether by applying a mandatory rule that fulfills lhis definition or by refraining from applying a law that would violate international public policy), 62 national laws provide specific gui del i nes for the application of olher manclatory ru les.
A. Concept and application of mandalory ru les
45. States may enact certain laws whose purpose is to govern international situations regardless of the appllcable law. These ru!es are called 11/ois d'application immédiate" ("laws of îmmediate application"), 11/ois de police" ("police laws") or
"mandatory rules.11 The key feature of these laws is that the State that issues them wants these laws to apply regardless of the law designated by the relevant choice of law rule.
These ru les may be a part of the State's (international) public policy (ordre public), but do not necessarily need to be so. They generally caver the follovving categories: social po!icy ru les that tend to protect weak parties (such as employment law and consumer protection)1 economic policy rules (such as antitrust and securities laws)1 and ru les di rected to specific objectives (su ch as the protection of the envîronment or health). 63
46. Astate court may apply threetypes of lois d'application immédiate: (i) those of the !ex causae, as the law applicable to the merits of the dispute should be applied in its entirety (pursuant to Art. 13 PILA); (ii) those of the !ex fori (pursuantto Art. 18 PILA);
and (i i i) possibly th ose of th ird States (in accordance wi th the ru les of Art. 19 PILA). 64
47. The application of lois d'application immédiate by international arbitration tribuna!s is more controversial. One point appears to be wide!y accepted: because an arbitration has no forum, the lois d'application immédiate of the seat do not have any particular vocation to intervene. Thus, the arbitral tribunal may arguably apply only two types of laws of îmmediate application: (i) those of the /ex causae (for the same
61. Poudret and Besson, p. 607-616.
62. Poudret and Besson, p. 608-609.
63. Kaufmann-Kohler and Rigozzi1 p. 423-424; Poudret and Besson, p. 608-609.
64. Kaufmann-Kohler and Rigozzi, p. 424.
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reasons as the si-ate court), and (ii) possibly those of lhird States (applying Art. 19 PILA by analogy). 65
48. Art. 19 PILA provides:
11(7) Where, pursuant ta the Swiss conception of the /aw, the legitimate and manifestfy preponderant interests of a party so require1 a mandatory provision of a law other than that designated by this Act may be ta ken into account if the circumstances of the case are close/y connected with that law.
(2) ln deciding whether such a provision must be taken intoaccount1 its purpose is ta be consiclered as well as whether its application would result in an adequate decision under Swiss concepts of favv. 11
49. An arbitral tribunal seated in Switzerland would only apply the lois d'application immédiate of third States if such laws meet the requirements set forth in Art. 19 PILA and provided these requ!rement-s (which are designed for disputes brought before courts) arc adapted to the specifics of international arbitration. These requirements are: 66
i. Will or intention. Theforeign lavvs must imperativelyseek to applyto the relevant situation. This is one of the essential elements of a loi d1application immédiate and it is analyzed from the perspective of the foreign law itse!f (in other word\ the tribunal must look to the scope of application of the foreign law in its own context). If the foreign law does not imperatively seek to apply, the analysis stops here.
ii. Close connection. The !aw must have a sufficiently close connection with the issue before the tri buna!. This condition must be assessed from the perspective of the arbi tration tribunal, and th us does not overlap with the fi rst condition.
iii. Compatibility with international standards. Because the arbitrator on!y has a formai connection to Switzerland as the seat,- the requirement that there exist
"legitimate and h ighly predomi nant interests accord!ng to the Swiss conception of the law" contained in Art. 19 PILA is misplaced in the contextof international arbitration.
lt has been subm!tted that for international arbitration this requirement must be understood as compatibility with commonly admitted international standards. 67
50. International arbitrators have w!de discretion in the application of foreign laws pursuanttoArt. 19 PILA a pp lied by analogy. An arbitrator may for instance decide to adapta contract to comply with the foreign loi d'application immédiate instead of dec!aring the contract invalidas that law would mandate. 68
51. lt must be noted thatfailure by an arbitral trîbuiial to take into consideration a loi d'application immédiate under the criteria of Art. 19 PILA is not grounds for a chai lenge of the award before Swiss courts, un less the fai lure amounts to a violation of international public po!icy. 69
65. Kaufmann-Kohler and Rigozzi, p. 424-425.
66. Kaufmann-Kohler and Rigozzi, p. 425-426.
67. Kaufmann-Kohler and Rigozzi, p. 425-426.
68. Kaufmann-Kohler and Rigozzi, p. 426-427.
69. Kaufmann-Kohler and Rigozzi, p.427 (ciling DFT 132 111389, 391).
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B. Do provisions such as Art. 142 PBL qualify as a loi d'application immédiate?
52. Applying these ru les, cou Id a provision of a foreign insolvency law that seeks to invalidate an arbitration clause and/or terminate or stay pending arbitral proceedings be considered a loi d'application immédiate by an arbitral tribunal seated in Switzerland?
53. The answer to that question will depend on whether the foreign law that seeks to be applied meets the requirements of Art. 19 PILA. First it must be determined if the foreign law imperatively seeks to apply to proceedings outside of its territorial scope, and whether it has a sufficiently close connection to the issue before the tribunal. If the answer to both of these questions is yes, the arbitral tribunal must then determine if there is a legitimate and predominant interest that justifies the application of the foreign law according to commonly admitted international standards.
54. For the hypothesis under analysis, the crucial issue will be the third step:
determining whether the invalidation or extinguishment of an arbitration agreement and/or the termination or suspension of ongoing arbitral proceedings reflect a legitimate or preponderant interest according to international standards of insolvency law. ln order to determine this, an arbitral tribunal should make a comparative assessment of insolvency laws to establish whether there is an international consensus with respect to the effect of insolvency on arbitration agreements and/or the continuation of arbitration proceedings. If there is a consensus that insolvency results in the invalidation or termination of arbitration agreements, or in the termination or stay of ongoing arbitration proceedings, then the foreign law would qualify as a loi d'application immédiate. If there is no consensus, it wi 11 not.
55. Given the geographical breadth of its application, the EC lnsolvency Regulation may provide significant guidance. Art. 15 of the EC Regulation provides that the effects of a bankruptcy on pending actions are governed exclusively by the law of the Member State in which the lawsuit is pending, not by the /ex concursus. As discussed above, the English High Court has also confirmed that arbitration agreements that relate to pending proceedings fall under Art. 15 and are th us also ruled by the law of the seat. This suggests that EU law does not consider that the termination or stay of pending arbitration proceedings - or the invalidation or termination of the arbitration agreements that serve as basis for the arbitral tribu nais' jurisdiction in such proceedings-raise su ch strong concerns that they must give ri se to mandatory ru les in the sense of lois d'application immédiate.
56. The EC Regulation's approach is different, however, with respectto arbitration agreements that have not yet given rise to pending arbitration proceedings. According to the English High Court in the English Elektrim decision, these agreements should be considered "current contracts" under Art. 4.2(e) of the EC Regulation, and are thus subject to the /ex concursus. ln practice, this issue will arise if a creditor initiates arbitration proceedings after the declaration of bankruptcy or insolvency, and the arbitrator will have to determine whether to accept or decline jurisdiction.
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57. Ultimately, for an arbitral tribunal seated in Switzerland the answer will depend on a comparative assessment of insolvency laws. ln addition to EU law, domestic insolvency laws in Europe show no consensus pursuant to which a declaration of bankruptcy would invalidate or extinguish arbitration agreements that relate to substantive legal actions (other than those strictly relating to the subject matter of the bankruptcy). Rather, bankruptcy usually constitutes a case of universal succession whereby the arbitration clause becomes binding on the syndic or trustee and/or the assignees of the bankrupt's estate. 70
58. A few European legal systems, such as Pol and and ltaly, appear to require the termination of pending arbitral proceedings (although in the case of ltaly this has been interpreted as requiring a stay rather than termination). 71 ln France, the stay of individual actions (but not their termination) is considered a rule of domestic and international public policy. 72 ln Switzerland, a mandatory stay of pending actions is required for domestic arbitrations (Art. 207 SBL), but not for international arbitrations. 73 This diversity in national legislations makes it difficult to establish corn mon ru les and suggests that there is no principle imposing a mandatory stay on the arbitrators. 74 lndeed, arbitrators have tended to refuse requests for stays of arbitral proceedings despite the existence of national rules providing for stays in the event of bankruptcy. 75
59. The survival of the arbitration agreement after the onset of insolvency is consistent with the validation principle embodied in Art. 178(2) PILA. At the international level, this principle has been confirmed by a 1989 Resolution of the International Law lnstitute 7r, and appears to be increasingly applied by international arbitral tribunals. One author has noted that, where different potentially applicable national laws would have produced different results with regard to the existence or val idity of an arbitration agreement, a number of arbitral tribunals have applied the law that upheld the agreement. 77 Thus, although this principle belongs to international arbitration and not to insolvency, it may also serve as guidance to an arbitral tribunal resolving on this issue.
60. This is especially true if the arbitration proceedings have already been initiated when the issue of (continuing) validity of the arbitration agreement arises. As noted by one author in the context of the Elektrim debate, "(o]nce made, a contract to arbitrate remains val id." 78 Otherwise, the principle of perpetuatio fori would be
70. This is the case of Belgium, France, Germany, England, Sweden and Switzerland. Poudre!
and Besson, p. 253.
71. See n. 49 abovc.
72. Kaufmann-Kohler and Lévy, p. 270.
73. Kaufmann-Kohler and Lévy, p. 270-271. lndeed, the Swiss Supreme Court has left open the question of whether a dcclaration of bankruptcy in Switzerland rcquires a stay of actions pending abroad (DFT 93 Ill 84, 89), and this hesitation confirms that this issue is not in the realm of public policy. ln addition, even for domestic arbitrations the mandatory stay imposed by Art. 207 SBL allows some exceptions. Sec also Brown-Berset and Lévy, p. 676.
74. Poudret and Besson, p. 505-506; Brown-Berset and Lévy, p. 676-677.
75. Poudret and Besson, p. 505; Mantilla Serrano, p. 56-58.
76. Born, p. 500, 503.
77. Born, p. 501-502.
78. Karrer, p. 111.
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