Q: Describe insolvency in arbitration ?

Ans: In India, insolvency disputes are considered non-arbitrable because the resolution of an insolvency dispute involves the rights of third parties. This position has been created through many judicial decisions like Swiss Ribbons Private Limited v. Union of India, P. Anand Gajapati Raju v. PVG Raju and Booz Allen and Hamilton v. SBI Home Finance Limited where the courts have made a distinction between the right in rem and right in personam and decided that insolvency disputes are non-arbitrable.
The interplay between insolvency and the arbitration proceedings became more prominent in recent times. This is mainly because of the enactment of the new Insolvency & Bankruptcy Code in 2016 (IBC) which changed the entire regime of insolvency disputes in India.

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