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United Nations commission to discuss proposal from Penn State Law professor

UNIVERSITY PARK, Pa. – A proposal from the Honorable Samuel L. Bufford, distinguished scholar in residence at Penn State Law, has been scheduled for discussion at the United Nations Commission on International Trade Law (UNCITRAL) this July, making it likely that Bufford’s recommendations to the commission will became a central part of its work in the coming years.

Bufford’s proposal—“Impact of Opening an Insolvency Case for a Party to a Pending International Arbitration Case,” written with input from members of the International Insolvency Institute—will be discussed at the UNCITRAL Congress the afternoon of July 5. As UNCITRAL only schedules such a Congress roughly once every ten years, Bufford’s proposal is shaping up to have an important influence on the future of international arbitration and insolvency law.

The proposal examines the relationship between the commencement of an insolvency case and the ability to continue a pending international arbitration. Because arbitration is often entered into as a debt collection activity, it is not uncommon for a party in arbitration to also be involved in an insolvency case. However, insolvency cases typically impose a moratorium on creditors to collect debts outside of the country where the insolvency case is pending, even though the United Nations rules on arbitration have been adopted more widely than uniform laws on insolvency proceedings.

“In these kinds of situations, arbitrators frequently do not learn of the insolvency case, and tend to disregard it if they do learn of it, even though it may be illegal under applicable law,” Bufford said. “In addition, the details of the moratorium law vary from country to country, and may not apply to an arbitration in another country. This is what needs UNCITRAL clarification.”

The next step is for Bufford and his colleagues to expand the proposal’s abstract into a full article for publication by UNCITRAL. This will likely be discussed at the next UNCITRAL Congress in Vienna in July 2017, which Bufford plans to attend. The meeting in Vienna will determine the focus of UNCITRAL for roughly the next decade.

UNCITRAL, the branch of the United Nations that manages international trade issues, includes 72 member nations and six working groups on different aspects of trade law. Bufford has served with several of these working groups, and currently works with the international arbitration working group.

Bufford, a former United States Bankruptcy Judge in the Central District of California and internationally recognized expert on insolvency law, previously wrote about a similar topic in a 2014 article in the Norton Journal of Bankruptcy Law and Practice, which served as a precursor to his UNCITRAL proposal.

Bufford is one the world’s leading scholars on 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 foremost bankruptcy experts. He spent the fall 2016 semester at the University of Bucharest in Romania on a Fulbright grant to teach and conduct research on Romanian insolvency law.

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