Binding Effect of Arbitration Agreements on Insolvency Administrators

Arbitration agreements have been increasingly popular in commercial law for years. An inevitable consequence of this is that insolvency administrators are also increasingly confronted with arbitration agreements entered into by the debtor before insolvency. It is settled case law of the German Federal Court of Justice that the insolvency administrator is, in principle, bound by an arbitration agreement concluded by the debtor.

In the case of the collection of claims assigned as security, the Senate of the German Federal Court of Justice expressly clarified this point. However, the Senate also pointed out that the position is different where a right of the insolvency administrator is affected that is withdrawn from the debtor’s power of disposition. Accordingly, where the matter concerns insolvency avoidance proceedings (Sections 129 et seq. InsO) or the administrator’s right of election under Section 103 InsO, the binding effect does not apply.

(Federal Court of Justice, judgment of 25 April 2013 – IX ZR 49/12 = BeckRS 2013, 12813, from NJW Spezial, 19/2013)