10.5937/zrpfns48-5807 = Serbian law on bankruptcy and arbitration

Abstract

The paper identifies gaps existing in the current Bankruptcy Act of the Republic of Serbia with respect to arbitration, and proposes ways to bridge them by literal and teleological interpretation. Gaps are identified as regards the validity and enforceability of the arbitral agreement subsequent to the opening of the bankruptcy proceedings, the effects of opening of the bankruptcy proceedings on the pending arbitral proceeding, and the effects of an arbitral award in bankruptcy proceedings. In the authors view, these gaps may be bridged by appropriate statutory interpretation. For example, arbitration agreement should not become automatically inoperative by the fact of opening of the bankruptcy proceedings over one of the parties to the agreement. Although the court has exclusive jurisdiction for conducting the bankruptcy procedure, this exclusive jurisdiction does not extend to disputes on contested claims of bankruptcy creditors, nor to claims of third parties related to the right of exclusion of things from the bankruptcy estate. The author advocates a broad interpretation of the term 'litigation' used in the Act, so that it may include also the arbitral proceedings. Arbitral proceedings that are pending will need to be stayed as a result of opening of the bankruptcy procedure over the debtor, until the bankruptcy administrator has been appointed and after he has had sufficient time to get acquainted with the claims. The proceedings may be continued when these conditions are met, provided that the claim was contested, without arbitral tribunal having to wait for the bankruptcy court to order the claimant to resume the proceedings. After opening of the bankruptcy proceedings, however, the bankruptcy creditor may no more seek condemnatory relief against the bankruptcy debtor in the arbitral proceedings, and should consequently rephrase its claims as declaratory claims. Arbitral award deciding on the contested claim will have effect towards the bankruptcy debtor, but also towards all other creditors of the bankruptcy debtor, since it should confer the bankruptcy creditor with the entitlement to seek an amendment of the final list of ascertained claims.