Arbitration and insolvency

In insolvency matters, Italian law does not favour arbitration. On the one hand, the vis attractiva concorsus principle pursuant to article 24(1) of the Italian Insolvency Law states that “the Court which opens the insolvency proceedings shall have jurisdiction on all the civil actions resulting from such proceedings.” On the other hand, Article 83/bis of the Italian Insolvency Law notes that “if a contract containing an arbitration clause is terminated in accordance with the provisions of this Section, the pending arbitration proceedings shall not continue." The interaction between both Articles results in a significant reduction of the scope of the arbitrability of the disputes a party to which is subject to insolvency proceedings. And this reduction also interferes with the principle of separability of the arbitration clause.  Indeed, the explanatory memorandum to the decree introducing the comprehensive reform of the Italian Insolvency Law states that "(…) the already pending arbitration proceedings shall not continue if the contract containing the arbitration clause is terminated pursuant to the provisions of section IV. The purpose is to prevent that the arbitration proceedings survives the agreement, terminated as a consequence of the bankruptcy, which contained the arbitration clause.” 

A recent order of the Supreme Court sitting en banc (order no. 10800 of 26 May 2015, Italian text available here) concerns the relationship between arbitration (in the case at hand, international arbitration) and insolvency proceedings.

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