Capturing the Benefits of Arbitration for Cross Border Insolvency Disputes

Contemporary Issues in International Arbitration and Mediation, Arthur Rovine, ed., Martinus Nijhoff, 2013

19 Pages Posted: 28 Dec 2013 Last revised: 17 Aug 2016

See all articles by Edna Sussman

Edna Sussman

SussmanADR LLC

Jennifer Permesly

Skadden Arps Slate Meagher & Flom LLP

Date Written: October 15, 2013

Abstract

Insolvency proceedings are often lauded for providing a relatively quick and efficient means of resolving disputes among insolvent debtors and their creditors. Historically, insolvency courts have adhered to the principle of “territoriality,” which posits that bankruptcy proceedings should be brought in the jurisdiction where property or assets of the debtor are located, and that the courts in that forum have jurisdiction and priority over those assets. Based on this principle, in a typical domestic insolvency proceeding, one forum will exercise jurisdiction over the debtor and all of its assets; the adjudicator can thus make decisions that will bind all of the creditors seeking a piece of those assets. The principle of territoriality has become difficult to apply in our increasingly globalized world. Today’s multinational corporations operate in multiple countries and hold assets across the globe. Thus a debtor and its affiliate entities may be subject to multiple insolvency proceedings in various jurisdictions. The efficiency gains of a single-forum insolvency process no longer exist, and instead debtors can find themselves in intractable disputes or subject to inconsistent decisions issued by multiple courts. Over the last two decades, there have been various proposals to address the complications inherent in cross-border insolvency proceedings. In the aftermath of the recent financial crisis, which brought a wake of insolvent debtors with massive international presence, the issue has received increased attention. This paper Recently explores several ways in which international arbitration can be used to bring efficiency and consistency to cross-border insolvency proceedings.

Keywords: insolvency, cross border insolvency, bankruptcy, arbitration, mediation, territoriality, universality, COMI, Model Law on Cross-Border Insolvency

Suggested Citation

Sussman, Edna and Permesly, Jennifer, Capturing the Benefits of Arbitration for Cross Border Insolvency Disputes (October 15, 2013). Contemporary Issues in International Arbitration and Mediation, Arthur Rovine, ed., Martinus Nijhoff, 2013, Available at SSRN: https://ssrn.com/abstract=2372344

Edna Sussman (Contact Author)

SussmanADR LLC ( email )

20 Oak Lane
Scarsdale, NY 10583
United States

HOME PAGE: http://www.hnrklaw.com

Jennifer Permesly

Skadden Arps Slate Meagher & Flom LLP ( email )

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