Professor Bufford urges U.N. to consider arbitration in international insolvency cases

UNIVERSITY PARK, Pa. – The United Nations Commission on International Trade Law (UNCITRAL) should “give more serious consideration to whether international arbitration can provide useful assistance in international insolvency cases,” according to an article in the Norton Journal of Bankruptcy Law & Practice (23.5) by The Hon. Samuel  L. Bufford, distinguished scholar in residence at Penn State Law.

Bufford’s article was published this month as the precursor to a formal proposal he will be making to UNCITRAL in summer 2015 about the relationship between international arbitration and insolvency. 

UNICITRAL is a branch of the United Nations that manages international trade issues. It includes 60 nation members, and its working groups deal with law areas such as international insolvency, security law, and international arbitration. While Bufford has served with a number of UNCITRAL working groups, he is currently an active participant of the international arbitration working group.

Bufford says that the objective of the proposal is to formulate a strategy to use international arbitration as a supplement to the international regime on bankruptcy law.  Currently, The New York Convention on Arbitration is in force in some 150 countries, including essentially every country with a significant amount of international trade, while the international bankruptcy regime has only been adopted by about 40 countries. In addition, the international enforcement of arbitration awards under the New York Convention is mandatory, while the international enforcement of insolvency decisions is discretionary.

“It is clear that there is a role for international arbitration in the international insolvency process,” Bufford writes. “Parties and their counsel on both the arbitration and the insolvency side need to develop an understanding of the applicable law in both areas to use them effectively.”

Bufford, a former judge of the U.S. Bankruptcy Court for the Central District of California, is one of the foremost scholars in the realm of bankruptcy law and international insolvency. He has presided over more than 130,000 cases and has taught seminars for foreign judges and other insolvency professionals and consulted with foreign governments 42 times in 22 countries. He also serves as a representative of the International Insolvency Institute, a group of some 300 of the world’s greatest bankruptcy experts.