As arbitration agreements become more common, bankruptcy courts increasingly encounter arbitration agreements to which a bankruptcy debtor is a party. Bankruptcy judges must then determine whether to enforce an otherwise valid arbitration clause or to refuse enforcement and decide the underlying dispute themselves. To date, bankruptcy judges facing these issues have tended to see arbitration as a competing, quasi-judicial forum. They typically refuse to enforce arbitration agreements when they find that bankruptcy policy would favor resolution in the bankruptcy proceeding instead of in some other adjudicative forum. Building on previous work, I contend in this article that arbitration is best understood not as a type of quasi-adjudication, but as a species of contract, with the award equivalent to a contract term agreed upon by the parties ex ante. I argue that arbitration agreements should be enforced by bankruptcy courts unless enforcement would prevent a party from vindicating its statutory bankruptcy rights, and that bankruptcy courts should then decide whether to enforce the award by considering whether the award would contravene the policy of bankruptcy law if it had been a contract term.
Paul F. Kirgis #SSRN on "Arbitration, Bankruptcy and Public Policy: A Contractarian Analysis"
Paul F. Kirgis (St. John’s University School of Law) has posted a new working paper on SSRN entitled: Arbitration, Bankruptcy, and Public Policy: A Contractarian Analysis. Here is the abstract: