Ruling On The Impact Of Insolvency On Enforcing Arbitral Awards

The French Supreme Court has ruled that arbitration proceedings involving a French company will be suspended if that company becomes subject to insolvency proceedings. Although the arbitration may resume under certain circumstances, any arbitration award will be unenforceable in France for the duration of the insolvency proceedings.¹

Introduction

French insolvency law provides that the commencement of insolvency brings about a "suspension" of all ongoing legal proceedings.

The suspension of proceedings has two purposes: (1) to allow creditors who are party to a dispute with the company to register their claim to monies owed before the appointed magistrate; and (2) to allow the administrator, once appointed, to step into the shoes of the company and resume the proceedings on the company's behalf.