A&C Legal Guides Guide To Litigation and Arbitration in The UAE 2021 PART 2: Offshore Courts Guide to Litigation and Arbitration in the UAE 2021 www.alsuwaidi.ae 2 Preface This guide has been written as an aid to provide users and potential users of legal services with an overview of the legal processes within the United Arab Emirates (UAE) which may be available in any given situation.

The interplay between an arbitration clause and a creditor’s winding up petition is a vexed question which has given rise to a string of cases, including Lasmos Ltd v Southwest Pacific Bauxite (HK) Ltd [2018] 2 HKLRD 449, Re Asia Master Logistics Ltd [2020] 2 HKLRD 423 and But Ka Chon v Interactive Brokers LLC [2019] 4 HKLRD 873.

The Insolvency & Bankruptcy Code, 2017 (‘Code’) was,inter alia, enacted for the resolution or liquidation of companies defaulting on their debts. These debts may include claims subject to an arbitration or sums determined in the form of an award. In the present article, we identify some potential scenarios where parties to an arbitration agreement must be conscious of the interplay between arbitration and the Code.

1.Initiating Insolvency Proceedings for contractual defaults

In a recent opinion, the Bankruptcy Court for the District of Maryland dealt with a conflict between the strong presumption in favor of enforcing arbitration agreements and the Bankruptcy Code’s emphasis on centralization of claims. Based on an analysis of the two statutory schemes and their underlying policies and concerns, the Court decided to lift the automatic stay to allow the prepetition arbitration proceeding to go forward with respect to non-core claims.

Background

I. Introduction

INTRODUCTION:

The Supreme Court in a recent judgment of Indus Biotech Pvt. Ltd. vs. Kotak India Venture (Offshore) Fund [AIR 2021 SC 1638] has settled an important question of law: ‘whetheran application filed under Section 8 of Arbitration & Conciliation Act, 1996 (‘A&C Act’) can be said to be maintainable in a proceeding initiated under Insolvency and Bankruptcy Code, 2016 (‘IBC’)’.

In Decision 5A_910/2019, the Swiss Supreme Court considered that an award rendered in a foreign arbitration may be recognised and enforced in Switzerland, even if the award was rendered after a party went bankrupt. The subject matter of the arbitration does not become non-arbitrable following a party's bankruptcy, if the arbitration was initiated before bankruptcy.

In a recently published decision, the Swiss Supreme Court dismissed an appeal against a lower court judgment recognising and enforcing an LCIA award.

The financial loss and the uncertainty caused by the pandemic continues to affect business globally, and an increase in corporate insolvency is widely anticipated. Arbitration is an effective dispute resolution mechanism, but a counterparty entering insolvency proceedings can be disruptive. We recently wrote about insolvency being one of the key trends in international arbitration in 2021.

Timeliness:

Ohio Farmers Insurance Co. v. City of Akron, Case Nos. 25642, 25725 (Ohio Ct. App. July 20, 2011) (affirming confirmation of award; panel properly found “good cause” for delay in seeking confirmation; rule providing one year to seek confirmation deemed not a statute of limitations).

Partiality: