King & Wood Mallesons review the interplay between the insolvency regimes in Australia and the USA and their impact on arbitration proceedings an awards. The authors conclude that:
“The commencement of a formal insolvency process can upset the best laid plans at the time of framing contractual obligations or commencing an arbitration process. Ultimately, the ability to enforce obligations against an Australian counterparty or to enforce an arbitral award obtained as the result of an expensive arbitration process will always depend upon the solvency of that counterparty. This reinforces the importance of conducting ongoing due diligence on counterparties during the life of a contract and during the course of any arbitration process to continually assess the prospects of a formal insolvency process disrupting the status quo”.