1) Jozef Syska Acting as the Administrator of Elektrim S.A. (in Bankruptcy) 2) Elektrim S.A. (in Bankruptcy) v 1) Vivendi Universal S.A. 2) Vivendi Telecom International S.A. and Others

JurisdictionEngland & Wales
JudgeLord Justice Longmore,Lord Justice Patten,Lord Justice Mummery
Judgment Date09 July 2009
Neutral Citation[2009] EWCA Civ 677
Date09 July 2009
CourtCourt of Appeal (Civil Division)
Docket NumberCase No: A2/2008/2435

[2009] EWCA Civ 677

[2008] EWHC 2155 (Comm)







Before: The Right Honourable Lord Justice Mummery

The Right Honourable Lord Justice Longmore


The Right Honourable Lord Justice Patten

Case No: A2/2008/2435

1) Jozef Syska Acting as the Administrator of Elektrim S.A. (in Bankruptcy)
2) Elektrim S.A. (in Bankruptcy)
1) Vivendi Universal S.A.
2) Vivendi Telecom International S.A.
3) Elektrim Telekomunikacja Sp Z O.O.
4) Carcom Warszawa Sp Z O.O.

Mr Gabriel Moss QC, Mr Richard Millett QC and Mr Julian Kenny (instructed by Barlow Lyde & Gilbert LLP) for the Appellant

Mr Toby Landau QC and Mr Ricky Diwan (instructed by O'Melveny & Myers LLP) for the Respondents

Hearing dates: 25 th June 2009

Lord Justice Longmore

Lord Justice Longmore:



This is an appeal from the judgment of Christopher Clarke J sitting in the Commercial Court [2008] EWHC 2155(Comm) now reported at [2008] 2 Lloyd's Rep. 636 and it raises the following question: where an arbitration is proceeding in one Member State of the European Union and one of the parties to the reference becomes insolvent in another Member State, are the consequences of that insolvency, in so far as they affect the arbitration, to be determined by the law of the Member State where the insolvency proceedings have been instituted or the law of the Member State in which the reference is taking place?


Since 31 st May 2002 that question has to be answered by reference to Council Regulation (EU) No. 1346/2000 of 29 th May 2000 on Insolvency Proceedings (“the Regulation”). Article 4 of the Regulation provides:—

“1. Save as otherwise provided in this Regulation, the law applicable to insolvency proceedings and their effects shall be that of the Member State within the territory of which such proceedings are opened, hereafter referred to as the “State of the opening of proceedings”.

2. The law of the State of the opening of proceedings shall determine the conditions for the opening of those proceedings, their conduct and their closure……”

Article 4.2 then gives a non-exclusive list of examples of matters which the law of the state of the opening of proceedings is to determine. Two of those examples are:—

“(e) the effects of insolvency proceedings on current contracts to which the debtor is party;

(f) the effects of insolvency proceedings on proceedings brought by individual creditors, with the exception of lawsuits pending.”


Articles 5 to 15 of the Regulation then identify the cases which come within the words “save as otherwise provided” at the beginning of Article 4.1. They include

i) Third parties' rights in rem (Article 5);

ii) Set-off (Article 6);

iii) Reservations of title (Article 7);

iv) Contracts relating to immovable property (Article 8); and

most relevantly

v) Effects of insolvency proceedings on lawsuits pending (Article 15).

The judge has held (and the appellants do not for the purposes of this appeal dispute) that a pending reference to arbitration is included in the phrase “lawsuits pending.” Article 15 itself provides:—

Effects of insolvency proceedings on lawsuits pending

The effects of insolvency proceedings on a lawsuit pending concerning an asset or right of which the debtor has been divested shall be governed solely by the law of the Member State in which that lawsuit is pending.”


Once insolvency proceedings had been opened in Poland, the arbitrators had to determine whether the arbitration against the insolvent respondent should proceed. They applied the law of England and Wales to determine that question and decided that the arbitration should proceed. They then made an Award. The Polish Administrator of the insolvent company has submitted that the arbitrators have exceeded their jurisdiction because Article 142 of the Polish Bankruptcy and Reorganisation Law provides:—

“Any arbitration clause concluded by the bankrupt shall lose its legal effect as at the date bankruptcy is declared and any pending arbitration proceedings shall be discontinued.”

The Administrator accordingly initiated proceedings under section 67 of the Arbitration Act 1996 for a declaration that the arbitrators had exceeded their jurisdiction but the judge held that the arbitrators were correct to apply English law to the question whether the arbitration should be continued or discontinued; he gave the Administrator permission to appeal to this court.

Background facts


Elektrim S.A., the second claimant and appellant (“Elektrim”) is a Polish company. It at one time owned a substantial shareholding in PTC, a Polish mobile telephone company. On 3 rd September 2001 Elektrim entered into an agreement known as the Third Investment Agreement (“TIA”) with Vivendi Universal S.A. and Vivendi Telecom International S.A., the first and second defendants and respondents, (together “Vivendi”). This was one of a series of agreements by which Vivendi was intended to acquire an interest in PTC.


Article 5.11(c) of the TIA contained an agreement to arbitrate (“the arbitration agreement”), which provided for arbitration in London under LCIA rules. It is common ground that the arbitration agreement is governed by English Law (although the rest of the TIA is governed by Polish Law).


Disputes arose and on 22 nd August 2003 Vivendi commenced an arbitration pursuant to the arbitration agreement. In the arbitration Vivendi advanced claims that Elektrim had breached its obligations under the TIA by interfering with, or failing to secure, the interest that Vivendi was supposed to obtain in PTC. In early 2007, the LCIA arbitral tribunal (Dr Wolfgang Peter, Professor Jerzy Rajski and Mr Alan Redfern, hereafter (“the Tribunal”)) fixed a hearing on liability issues for 15–19 October 2007. The claims made are of the order of €1.9 billion.


On 21 st August 2007, Elektrim was declared bankrupt by an order of the Warsaw District Court pursuant to its own petition of 9 th August 2007. As a result of that order, Elektrim became “a bankrupt” for the purposes of Polish Law.


The order of 21 st August 2007 of the Warsaw District Court (a) declared Elektrim bankrupt; (b) appointed Jozef Syska, the first claimant, as Court Supervisor; and (c) provided for Elektrim's own management to retain control of all of Elektrim's assets and to take any actions within the ordinary scope of its business. On 5 th February 2008, the Warsaw Court revoked Elektrim's self-administration, and appointed Mr Syska as the administrator over Elektrim's assets.


On 22 nd August 2007, Elektrim wrote to the Tribunal and Vivendi saying that, as a result of the Bankruptcy, the arbitration agreement had been annulled.


On 15 th October 2007, the scheduled arbitration hearing began in London. At that hearing, the Tribunal heard argument from both parties as to whether the arbitration agreement had been annulled and from Vivendi on the liability issues. On 20 th March 2008, the Tribunal issued its Interim Partial Award (“the Award”) on these issues. The Tribunal by a majority (Dr Wolfgang Peter and Mr Alan Redfern, Professor Rajski dissenting) rejected Elektrim's objections to their jurisdiction and declared that Elektrim had breached the terms of the TIA. Questions relating to remedy were left for later consideration.


Since the judge's judgment, the Tribunal has rendered a final award dated 12 th February 2009 (also by majority) by which it has awarded (1) damages to the first respondent in amounts of €1,670,180,000 and €38,971,000 and (2) damages to the second respondent in amounts of €166,871,000 and €600,000 (the “Final Award”).

The Judgment and submissions of the appellant


The judge held that there was a conflict between the general provision of Article 4 declaring that the law of the state of the opening of the proceedings (sometimes called by private international lawyers “the lex concursus”) was the law applicable to insolvency proceedings and their effects on the one hand and the particular or 'special' provision that the effects of insolvency proceedings on pending lawsuits or references to arbitration should be governed solely by the law of the Member State in which that lawsuit or reference was pending on the other hand. He then held that the particular provision should prevail over the general provision so that English law was to determine the effect of the Polish insolvency on the arbitration. There was no provision of English law annulling the arbitration agreement or the reference and the arbitrators were right to decide that the arbitration could and should proceed. The fact that Article 4(2)(e) would apply Polish law to “current contracts” (including the agreement to arbitrate) made no difference because it was only an example of the general provision and had to yield to the specific provision of Article 15 applying to pending lawsuits.


Mr Gabriel Moss QC contended that the judge was wrong to say that Article 4 and Article 15 were in conflict and submitted

i) Article 4 was the primary article both chronologically and as a matter of construction of the Regulation;

ii) it particularly applied to current contracts and that must include current agreements to arbitrate;

iii) the lex concursus therefore determined the effects of the insolvency proceedings on the agreement to arbitrate;

iv) the agreement to arbitrate must, therefore, be regarded as annulled (or void) from the date of the...

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7 cases
3 firm's commentaries
  • Policy-Related Complexities In Parallel, Cross-Border Insolvency And Arbitration Proceedings
    • United Kingdom
    • JD Supra United Kingdom
    • 19 June 2020
    ...Tribunal, March 31, 2009, Vivendi v 4A, 428/2008; English Court of Appeal, July 9, 2009, Syska & Anor v Vivendi Universal SA & Ors, [2009] EWCA Civ 677; Warsaw Regional Court, August 20, 2009, file ref No VII Co 388/08; November 16, 2009 decision, file ref No I ACz 1883/09 and November 18, ......
  • 1/3LY: Insolvency Law v Arbitration
    • United Kingdom
    • Mondaq UK
    • 23 June 2016
    ...of or on behalf of the company ((s161(1)(a) and para 4, part II, schedule 4 IA86)). Case law (Syska (Elektrim) v Vivendi Universal SA [2009] EWCA Civ 677 and more recently Philpott v Lycee Francais Charles de Gaulle School [2015] EWHC 1065) has confirmed that the appointment of a liquidator......
  • International Comparative Legal Guide to International Arbitration 2019 - Chapter Thirty Two: England & Wales
    • United Kingdom
    • JD Supra United Kingdom
    • 29 August 2019
    ...arbitration (Recast Regulation on Insolvency Proceedings 2015/848, article 18). Thus, in Syska (Elektrim SA) v Vivendi Universal SA [2009] EWCA Civ 677, the Court of Appeal rejected the argument of a Polish party in administration that an arbitral tribunal in England and Wales no longer had......
3 books & journal articles
    • Singapore
    • Singapore Academy of Law Journal No. 2014, December 2014
    • 1 December 2014
    ...and in Mantilla-Serano at p 70 (seat in Paris, insolvency proceedings filed in France). 10Syska (Elektrim SA) v Vivendi Universal SA[2009] EWCA Civ 677. 11Syska (Elektrim SA) v Vivendi Universal SA[2009] EWCA Civ 677 at [13]. Specifically, Art 142 of the Polish Bankruptcy and Reorganisation......
  • Die Effek van Likwidasie op Arbitrasies
    • South Africa
    • Juta Stellenbosch Law Review No. , August 2019
    • 16 August 2019
    ...hangende gedinge bepa al), nie toepassing vind a s daar ’n buitelandse likwid asie153 is nie.154 Die Engelse hof 151 [2009] 28 EG 84, [2009] EWCA Civ 677 Sien vn 71 hierb o152 Want die lex (fori) processus geld Die st aat waar die arbit rasie hangende is, bepaal of d ie arbitrasie opgeskort......
  • Polina Kushelev, an International Approach to Breaking the Core of the Bankruptcy Code and Faa Conflict
    • United States
    • Emory University School of Law Emory Bankruptcy Developments Journal No. 28-2, June 2012
    • Invalid date
    ...INT’L ARB. REP., Oct. 2008, at 7, 7; see also Syska v. Vivendi Universal S.A., [2008] EWHC 2155 (Comm) 677, [1]–[2] (Eng.),aff’d, [2009] EWCA Civ 677.Id. (noting that the breach of contract claim was premised on Elektrim’s purported interference or failure to acquire an interest for Vivendi......

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