NEWSLETTER-2020-metin

227 ARBITRATION LAW A Tale of Two Proceedings: Arbitration and Insolvency* Att. Ayca Bengü Köksal Introduction The COVID-19 pandemic has forced businesses to adapt to a new world order. Businesses are trying to survive the COVID 19-caused disruption in the economy by radically changing their operations, while the sword of Damocles hangs over their heads; the risk of going bankrupt, as well as dealing with an insolvent counterparty. International arbitration often collides with public policies of states. While arbitral tribunals insist on defending parties’ freedom and intent to resolve their disputes at arbitration, states have a tendency to refrain from opting out of their territorial sovereignty and public poli- cies. This tale of two proceedings is one that we might hear even more frequently as the COVID-19 pandemic triggers force majeure clauses and events of default more than ever. Arbitrability of Insolvency Related Issues When we discuss parallel proceedings in arbitration, we must tackle the arbitrability of insolvency related matters as a preliminary issue. Arbitrability refers to the question of whether a particular dispute may or may not be settled through arbitration 1 . National laws often restrict the parties from submitting their dispute to arbitration when the dispute involves a public policy issue. When the arbitral tribunals do not take into account such policy concerns, it is very likely for the arbitral awards to face ‘the inarbitrability challenge’ while seeking enforcement. * Article of August, 2020 1 Kleiman, Elie; Pauly, Claire: Arbitrability and Public Policy Challenges, Global Arbitration Review, The Guide to Challenging and Enforcing Arbitration Awards, First Edition.