Wellness: Is Consent the Cure?

Alston & Bird

In Wellness Int’l Network Ltd. v. Sharif, the U.S. Supreme Court has added another piece of the puzzle needed to resolve the long-discussed issue of bankruptcy court authority. This issue stems from the structure of the Constitution, which provides in Article I that Congress can establish “uniform bankruptcy laws.” However, Article I does not provide specific guidance on what courts will interpret and enforce those laws. Article III then addresses the “judicial power of the United States,” but does not refer to the “uniform bankruptcy laws” provided for in Article I.

As a result, the Constitution places bankruptcy law under the province of Congress and the “judicial power” under the province of the judiciary. This structural division in the Constitution has led to tension, causing some jurists to view the authority of bankruptcy courts, as passed by Congress, as encroaching upon the “judicial power” reserved for the judiciary in Article III. As a result, from the recent decision of Wellness back through the Supreme Court’s 1982 decision in Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., courts have struggled to define the extent to which Article III limits the authority of bankruptcy courts.

Originally published in ABI Journal, Vol. XXXIV, No. 8, in August 2015.

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