Arbitration And Insolvency

The effects of COVID-19 on the global economy are well-documented and need not be discussed in detail here. Austria's economy was certainly not spared and there is little doubt that corporate insolvencies will increase across most sectors. In light of a recent publication by colleagues at Skadden Arps Slate Meagher & Flom LLP, answering several questions about arbitration and insolvency in Germany, this article seeks to address some of those questions in the Austrian context.

Is an insolvency administrator bound by an arbitration agreement entered into by the insolvent party?

In Austria, insolvency administrators are bound by arbitration agreements that the insolvent party has entered into with third parties prior to the commencement of insolvency proceedings. In recent landmark decisions by the Austrian Supreme Court (Oberste Gerichtshof, OGH) regarding insolvency and arbitration, the Court did not question this but took it for granted in its obiter.¹