Vivendi SA v. Deutsche Telecom

Vivendi SA and other associated entities (plaintiffs) alleged that Deutsche Telecom and other associated entities, including the Polish company Elektrim SA (defendants), entered into a settlement agreement that contained an arbitration clause, compelling arbitration before the International Chamber of Commerce (ICC) in Switzerland. The settlement agreement was never signed. Vivendi and the other plaintiffs initiated arbitration proceedings before the ICC. Deutsche Telecom and the other defendants challenged the ICC’s jurisdiction, but the arbitral tribunal determined that it had prima facie jurisdiction to arbitrate the matter, and the proceeding continued. [Ed's note: The basis for the initial challenge to jurisdiction is not noted in the opinion, but it is presumed to be the lack of signatures to the settlement agreement.] Thereafter, Elektrim notified the arbitral tribunal that the Warsaw bankruptcy court had declared Elektrim bankrupt. Under Polish law, a declaration of bankruptcy resulted in the automatic cancellation of any ongoing arbitration proceedings to which the bankrupt entity was a party. The arbitral tribunal applied Polish law to determine Elektrim’s capacity to participate as a party in the arbitration proceedings, and it stayed the arbitration proceedings as to Elektrim. Vivendi and the other plaintiffs appealed to Swiss federal court, arguing that the proceedings before a Swiss court or arbitral tribunal sitting in Switzerland should not be terminated on account of Polish law, and that the proceedings against Elektrim should therefore continue.