Lack of jurisdiction of an arbitral tribunal to review the admission of a claim made in insolvency proceedings

Civ. 1ère 11 september 2013, n°11-17201

By judgment n°11-17201 of 11 September 2013, the French Cour de cassation completed its case law regarding the articulation between arbitration law and bankruptcy law. It found that recourses against the bankruptcy judge’s decision on the admission of a claim in an insolvency procedure pertained to public policy, which excluded the arbitral tribunal’s jurisdiction.

The facts of the case were as follows: a plan for the assignment of three companies to a subsidiary of ITM had been established when company X filed for bankruptcy.  ITM then filed a declaration of claim in the insolvency proceedings against company X.

The bankruptcy judge admitted ITM’s claim by order of 13 November 2006.

The companies’ liquidator then initiated arbitral proceedings on their behalf, requesting the tribunal to decide upon the admission of ITM’s claim and its amount.

The liquidator asserted mainly that the assignment plan set up to the benefice of the ITM group rendered its claim causeless and “without facts”.  Alternatively, he alleged that ITM had committed a fault by declaring its claim, which gave company X a right to compensation.  Finally, the liquidator also submitted that the claim’s amount should be reduced.

By award dated 19 October 2009, the arbitral tribunal declined jurisdiction over the liquidator’s main claim, but accepted the others on the condition that the liquidator be joined to the cause.

ITM challenged the award of 19 October 2009 and the Paris Court of Appeal annulled it on 13 January 2011.  In turn, the liquidator challenged this decision before the Cour de cassation.

In its decision of 11 September 2013, the Cour de cassation confirmed the Paris Court of Appeal’s decision, finding that the award, by upholding “the arbitrators’ jurisdiction to decide upon claims pertaining to the existence and the amount of said claim, violated rules of public policy governing recourses in insolvency proceedings”.

The decision, in French, is available here.

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