This paper aims at analyzing the impact of the bankruptcy of a foreign party to an international arbitration seated in Switzerland. After having rendered a first decision (known as the "Vivendi Case"), which has been hotly debated among arbitration practitioners, the Swiss Federal Supreme Court rendered a new decision narrowing down the possible application of the Vivendi reasoning. While not overruling its Vivendi reasoning, the Swiss Federal Supreme Court however emphasized the peculiarity of the Vivendi Case and insisted on the necessity to adopt a distinguishing approach.
After briefly describing those both landmark decisions, the authors present a critical view on their outcome insisting on the preeminent role of the correct characterization of the issue at stake when dealing with the effect of bankruptcy on arbitration proceedings. They further discuss alternative paths to solve the issue and rely on various legal principles and/or provisions to demonstrate that when having to deal with a bankrupt entity, the arbitrators benefit from various tools existing under Swiss law to solve the matter in favorable way to privilege the validity of the arbitration clause, be it an issue of legal capacity or not.ASA Bulletin