Insolvency and Party Autonomy in International Arbitration

Abstract

The effect of insolvency on arbitral proceedings is a highly contentious issue in the international commercial arbitration sphere. This paper argues that the inability to resolve this issue stems in part from the literature’s framing of the debate as one of two diametrically opposed regimes. It is suggested that considering the issue from the perspective of case management principles will allow the tribunal to fully consider the practical effects of insolvency, in particular the effects such proceedings have on the insolvent party. If a party to arbitration is disabled in the arbitration due to the insolvency proceedings, then the principles of due process and equal treatment of parties would suggest a stay of arbitration. The paper concludes that there may therefore be situations in which the principle of party autonomy in fact calls for a stay of proceedings, rather than a continuation.