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 dingly, 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 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
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 gislative 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 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 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 part arbitral proceedings commenced after the opening of a bankruptcy procedure in Sweden w 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
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