NEWSLETTER-2020-metin

229 ARBITRATION LAW As for the matters concerning the capacity of the insolvent party, the arbitrators consistently refer such issues to the personal law of such party, which for corporations is generally the law of the place of incorporation 3 . Most of these national laws prohibit the debtor from disposing of and managing the estate once the insolvency proceedings have commenced or once the bankruptcy declaration has been issued. Since national laws have a tendency to strip the debtor of its rights over the bankrupt estate, the same rationale may be adopted for the capacity to arbitrate just because the outcome of the arbitration would eventually affect the bankrupt estate. Nevertheless, one may disagree with this approach by simply referring to the continuation of the com- pany’s legal existence under national laws. In other words, if a party is entitled to be a party to the arbitration proceedings, that is sufficient for such capacity, and the fact that the party is in liquidation does not affect this ability nor the validity of the arbitration proceedings 4 . As for the second part of the question as to whether the trustee/ administrator is bound by the arbitration agreement, decisions and awards have been issued in both directions. One of these directions refers to the bankrupt estate as the proper party to all post-bankruptcy legal proceedings since it has assumed, by universal succession, all rights and obligations of the debtor and, therefore, is bound by the arbitration agreement. The opposite direction leans towards the fact that the trustee/administrator’s existence, rights, and obligations arise exclusively from the bankruptcy legislations of the states and, as a consequence, the trustee/administrator is not bound by the arbitration agreement. Impact of the Insolvency Proceedings to Ongoing Arbitration Some of the national laws of insolvency provide for a stay of ongoing proceedings in the event a company enters into insolvency or bankruptcy, so that the trustee/administrator may consolidate the debts and assets of the insolvent company. There is an ongoing discussion as to whether arbitration is one those proceedings. Arbitral tribunals also 3 Dreyzina, Anna: Insolvency Proceedings and International Commercial Arbitra- tion, Central European University eTD Colelction, 2009, p. 11. 4 Dreyzina: p.12.