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Is Russia an arbitration-friendly jurisdiction?

3 августа : ru 2 en 52 августа : ru 2 en 311 августа : ru 1 en 1 всего: 6130.07.18

International arbitration development has given rise to the theory of delocalizing international commercial arbitration, i.e. its international legal nature and supranational scope of activities which detach it from state control and supervision, while the state should only assist and facilitate foreign entities functioning at its own territory. However, today global practice not always confirms such theory. Many countries do not even provide the laws on arbitration proceedings and thus do not recognize international commercial arbitration itself, while some other states restrict essentially arbitration tribunal activities.

Therefore, under such criteria, we may classify all jurisdictions as arbitration friendly, from one hand, and unfriendly, from the other hand, while each legal institution determines quite an unambiguous tendency as acting in one direction or another.

Administered arbitration

International arbitration forms are largely diversified. There are three distinct forms of international commercial arbitration:

  1. a) permanent arbitration tribunal;
  2. b) the arbitration tribunal created for consideration and settlement of a specific dispute ad hoc;
  3. c) administered arbitration tribunal, as a specific arbitration form, i.e. intermediate arbitration between ad hoc arbitration and permanent arbitration as arbitration institution, since permanent arbitration tribunal or any other private commercial organization, acting under conditions prescribed by special rules, administers ad hoc arbitration functioning.

However, some authors, in particular native ones, do not treat the latter form of international commercial arbitration as an independent one. They treat administrative arbitration as a type of ad hoc arbitration, while others, on the contrary, treat is as a special type of permanent arbitration. According to the latter opinion, international commercial arbitration is divided into administered and non-administered one. Non-administered arbitration is certainly ad hoc arbitration, while administered arbitration proceedings combine all the arbitration forms into a single category.

In fact, there may be many classifications of international commercial arbitration, while a keystone in this regard means that quite clear classification criteria include nature or degree of administering arbitration. Recently relations aimed at administering arbitration in the Russian Federation were governed by the Order of the Government of the Russian Federation dd. 25.06.2016 which approved the Rules for granting the right to act as permanent arbitration institution. According to the Order, as of 01.11.2017 only four arbitration institutions are entitled to act as permanent arbitration institutions and to administer arbitration proceedings.

Decisions of organizations having no right to administer arbitration may be recognized as to be canceled or may cause such legal effects as a rejection to issue an enforcement order. We may assume that such restrictions provide a negative tendency.

Instead of conclusion

Recently there have emerged and intensified tendencies which cast doubt on the Russian Federation as an international arbitration-friendly state. If previously there were no problems on administering arbitration or enforcement of foreign arbitration awards in Russia, today such problems occur, in particular, with regard to recognition and enforcement of foreign arbitration awards.

In general, since Russia is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards dd. 1958, enforcement of arbitration awards in Russia is maintained at the sufficient level. Recently the North Caucasus District Arbitration Court made a decision dd. 21.09.2017 under case No. A32-1593/2016 upon recognition and enforcement of the GAFTA Arbitration Award No. 15-190 dd. 28.09.2015 made at the territory of the United Kingdom at the request of Grain Export LLS, Seychelles.

Published at http://forwarderlaw.com

Author: Arthur Nitsevych