The conflict between Insolvency and Arbitration is almost of near polar extremes. The difference in focus of the two was well illustrated in Re United States Lines Inc as a:
“… conflict of near polar extremes: bankruptcy policy exerts an inexorable pull towards centralization while arbitration policy advocates a decentralized approach towards dispute resolution”.
Thus, while insolvency/ bankruptcy aims to centralise all the proceedings against a debtor to one jurisdiction and give rise to a proceeding in rem (against the world at large) thereby creating third party rights for all creditors of the debtor, arbitration on the other hand advocates a decentralised approach and promotes party autonomy in dispute resolution resulting in a proceeding in personam (against a particular person).
Continue Reading Does NCLT has power to refer parties to Arbitration in an in rem insolvency proceeding?