I was pleased to attend a panel session at Norton Rose Fulbright on 15 October 2025 – Breaking bread: slicing through the ‘inherent tension’ between cross-border insolvency and arbitration in the Asia-Pacific.
Panelists were the Hon James Allsop AC, Scott Atkins (Norton Rose), Emily Tillett (Burford Capital), and Kei-Jin Chew (Ascendant Legal Singapore), chaired by Ananya Mitra (Norton Rose).
The tension or connection between insolvency and arbitration
Without any attempt to do justice to the topic and the panel discussions of its varied intersections, and their expertise, the tension or connection between insolvency and arbitration arises from the public interest nature of collective insolvency processes, and the role of the courts, even if determining private claims of creditors and others. In contrast, arbitration involves the parties deciding upon private dispute resolution before a commercially minded arbitrator.
Insolvency requires publicity, warning all against continued dealings with the insolvent, and calling for creditors to come forward with their claims.
“The liquidation of an insolvent company can affect many thousands, even tens of thousands, of innocent people. … An insolvent liquidation cannot be dismissed as ‘just a case about money’”: In re Barlow Clowes Ltd [1992] Ch 208.
All creditors should be informed of the claims of others, and the bases of their admission to proof – a creditor may challenge another creditor’s proof.
Voidable transaction claims are not arbitrable.
In contrast, arbitration is a process where the parties seek privacy in the determination of their dispute.
Nevertheless, efficient resolution of claims of creditors, if that is what arbitration achieves, on terms between the parties, is to be supported.
The division is therefore not absolute, with an arbitrated commercial claim against the company capable of founding a proof of debt.
Note also that a trustee in bankruptcy has specific authority to refer a dispute to arbitration: s 134(1)(ia) Bankruptcy Act.
An article by Sylvia Tee and Andy Lau – “The insolvency and arbitration intersection – a review of recent regional approaches to the question of arbitrability” (2021) 40(1) The Arbitrator & Mediator 51, usefully seeks to “revisit the common misconception that insolvency-related disputes are non-arbitrable”.
Winding up
But the winding up process does belong solely with the courts, in which are placed public interest discretions absent from the minds of arbitrators.
So, an arbitration clause in a joint venture agreement was held to be null and void insofar as it purported to subject the parties to an arbitration with respect to the winding up of a company.
A “winding up application strikes at the very heart of the corporation structure enshrined in the [then] Corporations Law. The arbitration clause in the joint venture agreement is null and void insofar as it purports to subject the parties to an arbitration with respect to the dissolution or winding up of the company. The provision is null and void because it has the effect of obviating the statutory regime for the winding up of a company. Moreso, the arbitration clause, if adhered to, would frustrate the contributory … in its efforts to seek relief from the court under the winding up provisions of the Law. In essence, the arbitration clause in the joint venture agreement is contrary to the provisions of the Corporations Law and cannot be applied”.
WDR Delaware Corporation v Hydrox Holdings Pty Ltd [2016] FCA 1164. Cited in Tesseract International Pty Ltd v Pascale Construction Pty Ltd [2024] HCA 24.
A petitioning creditor’s arbitrable debt
A recent decision of significance is that of the Privy Council in Sian Participation Corporation (In Liquidation) v Halimeda International Ltd [2024] UKPC 16, that a petitioning creditor’s debt must be the subject of a genuine dispute on substantial grounds for the court to stay or dismiss the creditor’s winding up petition in favour of arbitration.
The earlier EWCA decision in Salford Estates (No 2) Ltd v Altomart Ltd (No 2) [2014] EWCA Civ 1575, that a debt subject to an arbitration agreement should be arbitrated with the petition stayed or dismissed, was held to have been wrongly decided.
While, as Norton Rose explains, Insolvency and arbitration: A landmark judgment in Sian Participation Corp v Halimeda International Ltd [2024] UKPC 16 | Global law firm | Norton Rose Fulbright there has been no formal consideration in Australia of Salford Estates or of relevant decisions in Singapore, Malaysia, and Hong Kong,
“comments in several decisions concerning the setting aside of statutory demands suggests that the Australian approach is more likely to follow that set out in Sian Participation”.
New Zealand
The issue has arisen in New Zealand in the context of a statutory demand: Manchester Securities Limited v Body Corporate 172108 [2019] NZCA 408.
Before the 2014 decision in Salford Estates, the New Zealand Supreme Court in Zurich Australian Insurance Ltd v Cognition Education Ltd [2014] NZSC 188, [2015] 1 NZLR 383 at [52] had held that in relation to a summary judgment application, a stay application based on the existence of an arbitration agreement should be determined first.
New Zealand courts have since followed Salford Estates.
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