Download ARBITRATION AGREEMENT

INTERBATIONAL
COMMERCIAL
ARBITRATION
© Vinogradova Elena
Lapland University
October 30, 2007
INTRODUCTORY PART:
ICA in the CONTEMPORARY
WORLD
© Vinogradova Elena
Lapland University
October 29, 2007
International Commercial Arbitration

What is
International Commercial Arbitration?
1.
What is “Arbitration”?
2.
What is “Commercial”?
3.
What is “International”?
International Commercial Arbitration

What is
International Commercial Arbitration?
1.
What is “Arbitration”?
2.
What is “Commercial”?
3.
What is “International”?
International Commercial Arbitration





ARBITRATION – is one of the ADR methods of
disputes resolution
(ARBITRATION v. COURT)
ARBITRATION – is PRIVATE (NOT PUBLIC
like COURT)
ARBITRATION – is CONTRACTUAL by nature
(NO ARBITRATION AGREEMENT
- NO ARBITRATION)
ARBITRATION - generally is
a CONTRACTUAL
PROCEDURE
ARBITRATION – render an ARBITRAL AWARD
(FINAL and BINDING upon the parties
to the disputes)
International Commercial Arbitration

The term "commercial" should be given
a wide interpretation so as to cover
matters arising from all relationships
of a commercial nature, whether
contractual or not. Relationships of a
commercial nature …
International Commercial Arbitration

An arbitration is international if:

(a) the parties to an arbitration agreement have, at the time of the
conclusion of that agreement, their places of business in different States; or

(b) one of the following places is situated outside the State in which the
parties have their places of business:

(i) the place of arbitration if determined in, or pursuant to, the
arbitration agreement;

(ii) any place where a substantial part of the obligations of the
commercial relationship is to be performed or the place with which the
subject-matter of the dispute is most closely connected; or

(c) the parties have expressly agreed that the subject-matter of the
arbitration agreement relates to more than one country.
Article 1 UNCITRAL Model Law “On International Commercial Arbitration”
(1985)
International Commercial Arbitration

Is one of the integral indicators of
the foreign investments climate
International Commercial Arbitration

IS NOT SO EASY
IN USE

AS in LAWYERS
ANECDOTICAL
TALES
International Commercial Arbitration

“How could one become a good
international arbitration?”
(Yong lawyer asked)

“Oh, that’s no problem, you just
have to survive the first thirty
years”
(An experienced practitioner answered)
International Commercial Arbitration

Basic dilemma of international arbitration:

A sound knowledge and comparative attitude
is not enough







Success requires a GOOD MIXTURE of:
Legal knowledge
Long practical experience
Common sense
Commercial thinking
Reputation
Natural procedural skill
Klaus Peter Berger
Arbitration Interactive 2002
(www.peterlang.de)
International Commercial Arbitration
Introduction
 Arbitration Agreement
 Arbitral Proceeding
 Arbitration Hearing
 Arbitral Award
 Setting Aside and Enforcement of the ICA
award

International Commercial Arbitration

Arbitration procedure v. Judicial Procedure

Impact of the legal system and cultures
traditions
International Commercial Arbitration

UNINTED NATIONAS COMMISSION
ON INTENATIONAL TRADE
(UNCITAL)
WWW.UNCITRAL.ORG
International Commercial Arbitration




-
INSTITUTIONS
ICAC AT THE CCI RF www.tpprf.ru
ICA AT THE ICC www.iccwbo.org
Deutsche Institution für Schiedsgerichtsbarkeit e. V. (DIS)
http://www.dis-arb.de
LCIA – www.lcia.co.uk
Arbitration Institute of the Stockholm Chamber Of
Commerce – www.chamber.se
International Arbitration Court at the ICC –
www.iccarbitration.org
International Arbitration Court of the Austrian Federal
Chamber of Commerce – wko.at/arbitration
International Commercial Arbitration
International Commercial
Arbitration: Locating the Resources
- Revised
 http://www.llrx.com/


http://www.eisil.org/
International Commercial Arbitration
 Basic
Trends
 Possible Development
International Commercial Arbitration
 Basic
 Arbitration
Trends
follows Litigation
 Changes in Litigation (Aim,
Procedure, Case-Management,
Time-limits, etc.) are
determinative for similar changes
in Arbitration
The dimension of truth:
rectitude of decision
In all systems of procedure doing justice
means arriving at decisions which give the
parties before the court what is legally due to them.
In order to do justice, then, the court has to determine
the true facts and then correctly apply the law to them.
In Bentham’s terminology, the purpose of procedure is
rectitude of decision, which requires the correct
application of law to the true facts.
ADRIAN A.S. ZUCKERMAN
“Civil Justice in Crisis
Comparative Perspectives of Civil Procedure”
ADRIAN A.S. ZUCKERMAN
on Civil Procedure.
2d ed. Sweet&Maxwell.2006.

“The court is under the duty to decide the case
according to the law and facts, but the court is
not infallible. No system can guarantee the
factual correctness of each and every judgment.
Furthermore, we do not have a meta-test for
judging the conformity of individual judgment to
the truth; if we had independent means of
ascertaining the truth, we would be using them
rather than the present procedure.”
International Commercial Arbitration
Basic Trends
Globalozation in
Arbitration means more
garmonization beween
different Cultures and
Different llegal system
(Common law v. Civil Law)

1.
BASIC TRENDS:
2. National Legislation ON ICA mostly
based on and generally consistent with




the NYC (1958),
The UNCITRAL Model Law “On ICA” (1985)
almost literally was repeated
For instance, in the Law of the RF “ON ICA” (1993)
and it’s provisions on setting aside and enforcement
were incorporated in
the new Russian procedural legislation (since 2002)
BASIC TRENDS:
3. Critical Issues in ICA:


Multi-parties arbitration (representation or principalagent relationship; third party beneficiaries or
assignees; universal or individual transfer; etc.)
More Efficient and Speedy Procedure (more
Institutional Control on arbitral procedure, inc.
composition of the arbitral tribunals, elements of casemanagement, scrutiny of the award “BUT NOT ON
THE MERIT”), more power for arbitrators to
determine the arbitral procedural rules, etc. V. Parties
Autonomy in Private Arbitration).
BASIC TRENDS:
3. Critical Issues in ICA:
Arbitration agreement “in Writing”???
 Mixed Role of Arbitrator in Med-Arb
Finality of the Award and the scope of the RES
JUDICATA Effect.


Possible development
1.
2.
Further development oF the “res
judicata” concept preventing as much
as possible appearance of the
conflicting awards/ awards and
judicial acts
Improving the national arbitration
laws “on ica” and practice on the basis
of the UNCITRAL 39th session
resolutions reflecting new trends of
the “arbitration in writing
interpretation and implementation”
and dealing with the “draFt
legislative provisions on Interim
measures and preliminary orders”
UNCITRAL MLA 2006
Thirty-ninth session
New York, 19 June-7 July 2006
United
Nations A/CN.9/605
United
Nations A/CN.9/606
United
Nations A/CN.9/607
ARBITRATION AGREEMENT
Vinogradova Elena
Lapland University
October 30, 2007
Definition
of arbitration agreement:



TYPES of Arbitration Agreements:
MANDATORY arbitration agreements:
Bilateral Investment Treaties,
other International Agreements
(Treaties)
Arbitration agreements concluded by
contracting parties (VOLUNTARY)
Definition
of VOLUNTARY CONCLUDED
arbitration agreement:
1)International Conventions:
New-York Convention, 1958 (Art. II),

Model UNCITRAL Law, 1985 (Art. 7)

2)Domestic law –
 Russian Law on ICA, 1993 (Art.7)
Definition
of arbitration agreement:

New-York Convention 1958 (Art. II.1):
“Each Contracting States
shall recognize
an agreement in writing
under which the parties undertake to submit to arbitration
all or any differences which have arisen OR which may arise
between them in respect of a defined legal relationship,
whether contractual or not, concerning a subject matter
capable of settlement by arbitration”.
Definition
of arbitration agreement:

New-York Convention 1958 (art. II.2):
“The term “AGREEMENT IN WRITING” shall include
an arbitration clause in a contract OR
an arbitration agreement, signed by the
parties OR contained in an exchange of
letters or telegrams”.
Definition
of arbitration agreement:

New-York Convention 1958 (art. II.2):
United Nations A/CN.9/607
General Assembly
13 April 2006


Draft declaration regarding the interpretation of article II, paragraph (2), and
article VII, paragraph (1), of the New York Convention
… Taking the view that
guidance on interpretation of article II, paragraph (2) would be useful in
achieving
the objective of ensuring uniform interpretation that responded to the
needs of
international trade, the Working Group decided that a declaration,
resolution or
statement addressing the interpretation of the New York Convention that
would
reflect a broad understanding of the form requirement could be further
studied to
determine the optimal approach.14 …..
Definition
of arbitration agreement:


UNCITRAL MLA 1985 (Art.7)
= RF LAW “On ICA” (1993):
“DEFINITION AND FORM OF
ARBITRATION AGREEMENT”
Definition
of arbitration agreement:


UNCITRAL MLA 1985 (Art.7)
= RF LAW “On ICA” (1993):
“DEFINITION AND FORM OF
ARBITRATION AGREEMENT”
“1. Arbitration agreement”
is an agreement by the parties
to submit to arbitration
all OR certain disputes which have arisen OR which may arise
between them in respect of a defined legal relationship, whether
contractual or not. Arbitration agreement may be in a form of an
arbitration clause in a contract or in a form of a separate
agreement.
Definition
of arbitration agreement:


UNCITRAL MLA 1985 (Art.7)
= RF LAW “On ICA” (1993):
“DEFINITION AND FORM OF
ARBITRATION AGREEMENT”
“2. The arbitration agreement SHALL BE IN WRITING.
An ARBITRATION AGREEMENT IS IN WRITING IF

It is contained a a document signed be the parties OR in exchange
of letters, telex, telegrams or other means of telecommunication
which provide a record
of the agreement, OR in an exchange of statement of claim and
defence in which the existence of an agreement is alleged by one
party and not denied by another.
Definition
of arbitration agreement:


UNCITRAL MLA 1985 (Art.7)
= RF LAW “On ICA” (1993):
“DEFINITION AND FORM OF
ARBITRATION AGREEMENT”
“The reference in a contract to a document containing
an arbitration clause constitutes an arbitration agreement
provided that the contract is in writing
and the reference is such as to make that clause part of
the contract”
Definition
of arbitration agreement:


UNCITRAL MLA 1985 (Art.7)
= RF LAW “On ICA” (1993):
“DEFINITION AND FORM OF
ARBITRATION AGREEMENT”

In exchange of statements of claim and defense
in which the existence of an agreement is alleged by one
party and not denied by another.
United Nations A/CN.9/592
United Nations Commission
on International Trade Law
Thirty-ninth session
New York, 19 June-7 July 2006
UNCITRAL MLA 2006 (Art.7, revised)
“DEFINITION AND FORM OF
ARBITRATION AGREEMENT”

(1) ‘Arbitration agreement’ is an agreement by the
parties to submit to arbitration all or certain disputes
which have arisen or which may arise between them
in respect of a defined legal relationship, whether
contractual or not. An arbitration agreement may be
in the form of an arbitration clause in a contract or in
the form of a separate agreement. (NO REVISION)
United Nations A/CN.9/592
United Nations Commission
on International Trade Law
Thirty-ninth session
New York, 19 June-7 July 2006
UNCITRAL MLA 2006 (Art.7,
revised)
“DEFINITION AND FORM OF
ARBITRATION
AGREEMENT”

(2) The arbitration agreement shall be in
writing. (NO REVISION)
United Nations A/CN.9/592
United Nations Commission
on International Trade Law
Thirty-ninth session
New York, 19 June-7 July 2006
UNCITRAL MLA 2006 (Art.7, revised)
“DEFINITION AND FORM OF
ARBITRATION AGREEMENT”

(3) An arbitration agreement is in writing if
its [terms are] [content is] recorded in any
form, whether or not the arbitration
agreement or contract has been concluded
orally, by conduct, or by other means. (NEW)
United Nations A/CN.9/592
United Nations Commission
on International Trade Law
Thirty-ninth session
New York, 19 June-7 July 2006
UNCITRAL MLA 2006 (Art.7, revised)
“DEFINITION AND FORM OF
ARBITRATION AGREEMENT”

(4) The requirement that an arbitration agreement be in
writing is met by an electronic communication if the
information contained therein is accessible so as to be
useable for subsequent reference; “Electronic
communication” means any communication that the parties
make by means of data messages; “Data message” means
information generated, sent, received or stored by
electronic, magnetic, optical or similar means, including,
but not limited to, electronic data interchange (EDI),
electronic mail, telegram, telex or telecopy .
(NEW)
United Nations A/CN.9/592
United Nations Commission
on International Trade Law
Thirty-ninth session
New York, 19 June-7 July 2006
UNCITRAL MLA 2006 (Art.7, revised)
“DEFINITION AND FORM OF
ARBITRATION AGREEMENT”

(5) Furthermore, an arbitration agreement is in
writing if it is contained in an exchange of
statements of claim and defence in which
the existence of an agreement is alleged by
one party and not denied by the other. (NO
REVISION)
United Nations A/CN.9/592
United Nations Commission
on International Trade Law
Thirty-ninth session
New York, 19 June-7 July 2006
UNCITRAL MLA 2006 (Art.7, revised)
“DEFINITION AND FORM OF
ARBITRATION AGREEMENT”

(6) The reference in a contract to any
document containing an arbitration clause
constitutes an arbitration agreement in
writing, provided that the reference is such
as to make that clause part of the contract.
(NO REVISION)
Definition
of arbitration agreement:

TYPES of Arbitration Agreements:
1.
ARBITRATION CLAUSE
SUBMISSION
2.
Definition
of arbitration agreement:

TYPES of Arbitration Agreements:
1.
ARBITRATION CLAUSE


About disputes which may arise in the future
Included in a document (contract, usually) signed by
the parties
Definition
of arbitration agreement:

TYPES of Arbitration Agreements:
2. SUBMISSION
-
An agreement about disputes which have been already
arisen
AFTER the dispute occurred is not easy to conclude
Definition
of arbitration agreement:
TYPES of Arbitration Agreements
ARBITRATION CLAUSE
Example 1

“All disputes, controversy or claim which may arise out of or in
connection with the present contract (agreement), or the execution,
breach, termination or invalidity thereof, shall be settled by ICAC at
the CCI of the Russian Federation”
(ICAC Arbitration clause recommended
for insertion in foreign contracts)
Definition
of arbitration agreement:

TYPES of Arbitration Agreements
1.
ARBITRATION CLAUSE
Example 2
“All disputes arising out of or in connection with the present
contract shall be finally settled under the Rules of
Arbitration of the International Chamber of Commerce by
one or more arbitrators appointed in accordance with
these Rules”
(ICC Arbitration clause – STANDART)
Definition
of arbitration agreement:

TYPES of Arbitration Agreements
1.
ARBITRATION CLAUSE
“
Example 3
Any dispute arising out of or in connection with this contract, Including
any question regarding its existence, validity or termination, shall be
referred to and finally resolved by arbitration under the LCIA Rules,
which Rules are deemed to be incorporated by reference into this clause.
The number of arbitrators shall be [one/three].
The seat, or legal place, of arbitration shall be [
The language to be used in the arbitral proceedings shall be [
The governing law of the contract shall be substantive law of [
“.
(LCIA Recommended Clause – Future Disputes)
Effective 1 January 1998
Definition
of arbitration agreement:

TYPES of Arbitration Agreements
2. SUBMISSION
Example 1
“If a dispute has arisen, but there is no agreement between the parties
to arbitrate, or if the parties wish to vary a dispute resolution clause to
provide the LCIA arbitration, the following clause is recommended.
Words/spaces in square brackets should be deleted\completed as appropriate.
A dispute having arisen between the parties concerning [ ], the parties
hereby agree that the dispute shall be referred to and finally resolved by
arbitration under the LCIA Rules. …”
(LCIA Recommended Clause – Future Disputes)
Effective 1 January 1998
Definition
of arbitration agreement:

TYPES of Arbitration Agreements
1.
ARBITRATION CLAUSE
Examples:
Definition
of arbitration agreement:

TYPES of Arbitration Agreements
1.
ARBITRATION CLAUSE
Example #1
INFORMATION LETTER
OF THE PRESIDIUM OF THE SUPREME ARBITRAZH COURT
OF THE RUSSIAN FEDERATION
NO. 29 OF FEBRUARY 16, 1998
THE JUDICIAL AND ARBITRATION OVERVIEW OF SETTLEMENT
OF DISPUTES
IN CASES INVOLVING FOREIGN PERSONS (Para.13)
Definition
of arbitration agreement:

TYPES of Arbitration Agreements
1.
ARBITRATION CLAUSE
Example #1
The foreign economic contract for
international purchase and sale contained
an arbitration clause to the effect that all
the differences that may arise out of
obligations under the contract shall be
considered "at the Paris institute".

Definition
of arbitration agreement:

TYPES of Arbitration Agreements
1.
ARBITRATION CLAUSE
Example #1
The arbitration court established that the claimant the
same as the respondent was in no position to specify the
content of the given clause: failed to give an accurate
name of an international institutional arbitration, to
supply explanations thereabout and denied the validity
of declaration of its will regarding the arbitration
arrangement in the given foreign economic contract.
Definition
of arbitration agreement:

TYPES of Arbitration Agreements
1.
ARBITRATION CLAUSE
Example #1
In other words, the court established that the given
arbitration arrangement could not be specified and
consequently, implemented by the parties to the
foreign economic contract.
Definition
of arbitration agreement:

TYPES of Arbitration Agreements
1.
ARBITRATION CLAUSE
Example #2
The Arbitrazh Court recognized that arbitration
clause is exist and valid, when there was no exact
name of the institutional arbitration in Austria.
Definition
of arbitration agreement:

TYPES of Arbitration Agreements
1.
ARBITRATION CLAUSE
Example #2
There was such wording of the arbitration clause:
“Disputes, which shall arise beween the contracting
parties will be resolved in the Arbitration Court at
the CCI of Austria, in Viena”
Definition
of arbitration agreement:

TYPES of Arbitration Agreements
1.
ARBITRATION CLAUSE
Example #2
Arbitrators interpreted the given wording and stated
that “International Arbitration Court of Austria in
translation into Russian sounds like ARBITRATION
COURT at the CCI in Austria”.
Decision of the Feferal Arbitrazh Court
Of the VOLGO-VJATSKIJ CIRCUIT of April 24, 2003
# 13260/02-15-28 isp.
Definition
of arbitration agreement:

TYPES of Arbitration Agreements
2. SUBMISSION
Example #1
INFORMATION LETTER
OF THE PRESIDIUM OF THE SUPREME ARBITRAZH COURT
OF THE RUSSIAN FEDERATION
NO. 29 OF FEBRUARY 16, 1998
THE JUDICIAL AND ARBITRATION OVERVIEW JUDICIAL
PRACTICE
IN CASES INVOLVING FOREIGN PERSONS (Para.14)
Definition
of arbitration agreement:

TYPES of Arbitration Agreements
2. SUBMISSION


Example #1
The foreign trade contract for international
purchase and sale contained an arbitration clause
to the effect that all the differences arising out of
obligations under the given contract shall be
resolved by an ad hoc arbitration.
Russia and France are the parties to the European
Convention on Foreign Trade Arbitration (Geneva,
1961).
Definition
of arbitration agreement:

TYPES of Arbitration Agreements
2. SUBMISSION



Example #1
Under Item 2 of Article 1 of the Convention the term "arbitration"
means the resolution of disputes by arbitrators appointed for each
individual case (ad hoc arbitration).
Item 3 of Article IV of the Convention prescribes that the procedure
for composition an ad hoc arbitration in the event the parties have
failed to agree in the arbitration clause about the appointment of
an arbitrator (arbitrators) and to designate a place of arbitration.
In such a situation, the court shall solve the issue of it’s
competence as regards the consideration of a dispute under a
foreign economic contract containing an arbitration clause in
accordance with the provisions of the Convention and the national
law.
Definition
of arbitration agreement:

TYPES of Arbitration Agreements
1.
ARBITRATION CLAUSE
Example #3
INFORMATION LETTER
OF THE PRESIDIUM OF THE SUPREME ARBITRAZH COURT
OF THE RUSSIAN FEDERATION
NO. 29 OF FEBRUARY 16, 1998
THE JUDICIAL AND ARBITRATION OVERVIEW OF Judicial Practice
IN CASES INVOLVING FOREIGN PERSONS (Para.15)
Definition
of arbitration agreement:

TYPES of Arbitration Agreements
1.
ARBITRATION CLAUSE
Examples
Under the Arbitrazh Procedural Code of the Russian
Federation the arbitrazh court shall neglect a claim in the
event the parties concerned have agreed about the reference
of the given dispute for settlement to a court of arbitration and
the possibility to refer the dispute to a court of arbitration has
not been lost and if the respondent objecting against the
resolution of a case by an arbitrazh (state) court has made an
application not later than its first statement as to the merits of
the dispute for reference the dispute for resolution to a court
of arbitration.
Definition
of arbitration agreement:

TYPES of Arbitration Agreements
1.
ARBITRATION CLAUSE
Example #3
The arbitration court shall neglect a claim
on the basis the Arbitrazh Procedural Code
of the Russian Federation related to a
cession in the event that the principle
contract of assignment of a claim contained
an arbitration clause about the referring of
disputes under the deal to the international
commercial arbitration.
Definition
of arbitration agreement:

TYPES of Arbitration Agreements
1.
ARBITRATION CLAUSE
Example #3
Belgian and USA companies made in 1996 a contract of
assignment of action, claim and payment under which the first
company assigned to the other company the right of claim
against a Russian stock company for the return of moneys
received by the latter from the Belgian company under a loan
agreement.
The American company opened in Russia its representative
office and filed a claim to the arbitration court of the Russian
Federation against the Russian stock company for the
recovery of the debt under the loan issued by the Belgian
company.


Definition
of arbitration agreement:

TYPES of Arbitration Agreements
1.
ARBITRATION CLAUSE
Example #3
The parties specified in the loan agreement that
any disputes and differences that may arise
therefrom shall be settled through negotiations
and in case points at issue cannot be settled
amicably, - at the Arbitration Institute under the
chamber of commerce in the city of Stockholm in
accordance with the rules of procedure of the said
Arbitration Institute.

Definition
of arbitration agreement:

TYPES of Arbitration Agreements
1.
ARBITRATION CLAUSE
Example #3
By lodging a claim to the (state) arbitrazh court of the
Russian Federation the assignee maintained that the
arbitration clause as an arrangement between the parties
represents an independent condition apart from the
principle contract and lacks any material and legal
nature, but rather has a procedural character, therefore it
could not been assigned to it under a contract of cession.

Definition
of arbitration agreement:

TYPES of Arbitration Agreements
1.
ARBITRATION CLAUSE
Example #3
Under Article 384 of the Civil Code of the
Russian Federation the right of prior
creditor shall pass over to a new creditor in
the scope and under the conditions that
existed at the moment of such transfer,
unless otherwise is specified under the law
or a contract.

Definition
of arbitration agreement:

TYPES of Arbitration Agreements
1.
ARBITRATION CLAUSE
Example #3
The analysis of the said rule and the contract of
cession signed between the parties providing also
for the assignment of right of action made it
possible to make the following conclusions:
the lodging of claim to protect the infringed rights
constitutes one of the components of the content of
the right of claim transferred to another creditor;


Definition
of arbitration agreement:

TYPES of Arbitration Agreements
1.
ARBITRATION CLAUSE
Example #3
the preservation by the parties of the
previously established procedure for
settling disputes does not impair the rights
of the assignee and makes it possible to
ensure the proper protection of the debtor's
interests.

Definition
of arbitration agreement:

TYPES of Arbitration Agreements
1.
ARBITRATION CLAUSE
Example #3
In view of the above, the (state) arbitrazh court
made a justified conclusion that the conditions
mentioned under Article 384 of Civil Code of the
Russian Federation under which the rights of a
prior creditor are transferred to a new creditor may
also include the condition of choosing a certain
arbitration to resolve eventual disputes between the
parties to the contract.

Concequences
of arbitration agreement:

“KOMPETENZ-KOMPETENZ”

Severability of arbitration
agreement
Concequences
of arbitration agreement:

“KOMPETENZ-KOMPETENZ”
Arbitral tribunal is authorized to
decide issue of it’s own competence
Art. 16(1) UNCITRAL MLA,
Art.16 (1) RF LAW “On ICA”
Concequences
of arbitration agreement:

“KOMPETENZ-KOMPETENZ”
The arbitral Tribunal may rule on it’s
own jurisdiction, including any
objections with respect to the existence
and validity of the arbitration agreement
Art. 16(1) UNCITRAL MLA,
Art.16 (1) RF LAW “On ICA”
Concequences
of arbitration agreement:
2. (AUTONOMY) Severability of Arbitration
Agreement
For THAT PURPOSE, an arbitration
clause which forms part of a contract
shall be treated as an agreement
independent of the other terms of the
contract.
Art. 16(1) UNCITRAL MLA,
Art.16 (1) RF LAW “On ICA”
Concequences
of arbitration agreement:
2. (AUTONOMY) Severability of
Arbitration Agreement
A decision by the arbitral tribunal
that the contract is null and void
shall not entail ipso jure the validity
of the arbitration clause
Art. 16(1) UNCITRAL MLA,
Art.16 (1) RF LAW “On ICA”
Concequences
of arbitration agreement:
2. Autonomy (Severability) of
arbitration agreement –
establishment the principle in a
case-flow. EXAMPLE.
V/O SOJUZNEFTEEXPORT (USSR)
V.
“JOC OIL” COMPZNY (Bermuda)
Concequences
of arbitration agreement:
V/O SOJUZNEFTEEXPORT (USSR)
V.
“JOC OIL” COMPZNY (Bermuda)
“The doctrine of separability is at the heart of the case. It
has loomed large at all stages because it goes to the
issue of the validity of the arbitration agreement, i.e.,
it relates to the defence under Sect. 5(2)(b) of the
1976 Act. Joc Oil's argument throughout has been
that the arbitration agreement is invalid because the
contract in which it is imbedded is invalid under
Soviet law. In short, the invalidity of the main
agreement taints the arbitration clause. …
[3 Court of Appeal of Bermuda, 7 July 1989]
Concequences
of arbitration agreement:
V/O SOJUZNEFTEEXPORT (USSR)
V.
“JOC OIL” COMPZNY (Bermuda)
“It would appear that logically the question of whether the
arbitration clause is itself a 'transaction in foreign trade'
within the meaning of the 1935 Signature Decree (as Joc Oil
contends) so as to require the signatures of two authorized
persons should be considered before one embarks upon an
examination of the doctrine of separability, for if Joc Oil is
right in their contention, and there is no valid arbitration
agreement and that is an end of the matter and the
question of the existence of the doctrine of separability in
Soviet law would become an academic issue. The FTAC
Arbitrators held that the 1935 Signature Decree had no
application. …
[3 Court of Appeal of Bermuda, 7 July 1989]
Concequences
of arbitration agreement:
V/O SOJUZNEFTEEXPORT (USSR)
V.
“JOC OIL” COMPZNY (Bermuda)
“Having considered the arguments advanced by
both SNE and Joc Oil, I can see no reason to
doubt the correctness of the conclusion
reached by three of the experts on Soviet
law, by the FTAC Arbitrators and by the
learned Judge, that the 1935 Signature
Decree has no application to an arbitration
clause. …
[3 Court of Appeal of Bermuda, 7 July 1989]
Concequences
of arbitration agreement:

“KOMPETENZ-KOMPETENZ”
A plea that the tribunal does not have
jurisdiction shall be raised not later than
the submission of the statement of
defence.
Art. 16(2) UNCITRAL MLA,
Art.16 (2) RF LAW “On ICA”
Concequences
of arbitration agreement:
PRACTICE
INFORMATION LETTER
OF THE PRESIDIUM OF THE HIGHER
ARBITRATION COURT
OF THE RUSSIAN FEDERATION
NO. 10 OF DECEMBER 25, 1996
"REVIEW OF THE PRACTICE OF SETTLEMENT OF
DISPUTES RELATED TO CASES
INVOLVING FOREIGN PERSONS“ (Para. 2)
Concequences
of arbitration agreement:
The state arbitrazh court shall have the right to
examine a dispute subject to its respective
jurisdiction and involving a foreign person given
the agreement between the parties to the dispute on
referring the differences for settlement to an
arbitration provided always that a claim has been
lodged with a relevant state arbitrazh court of of the
subject of the Russian Federation; the respondent
has not applied for referring a dispute to arbitration
prior to its first statement as to the essence of the
dispute or prior to the first award made by the state
arbitrazh court.
Concequences
of arbitration agreement:



The court of arbitration received a claim
lodged by a Russian foreign trade
association against a British commercial
company.
The dispute has resulted from a foreign
trade transaction that was to be executed,
basically, in the territory of the Russian
Federation.
The foreign trade contract signed by the
parties contained an arbitration clause.
Concequences
of arbitration agreement:


Meanwhile, the claim was filed to the state arbitrazh
court in the Russian Federation, the respondent
(the British company) presented its objections
against the claim, the evidence to substantiate them
as well as participated in the court sessions as the
dispute was considered by the trial and appeals
authorities.
Only in the exercise of the right of appeal by
cassation did the respondent make a reference to
the fact that the claim had been lodged in breach of
the arbitration agreement related to the transaction
and the state arbitraz court had no right to consider
the dispute arising from the said contract.
Concequences
of arbitration agreement:
Nature of Arbitration Agreement
1.
2.
3.
Contractual concept
Procedural concept
Sui generis concept
Concequences
of arbitration agreement:
Nature of Arbitration Agreement
Contractual concept

All matters in arbitration have to be
decided on the basis of civil law
It coursed oversimplification in the modern state
arbtrazh courts practice:
“Arbitration agreement is an ordinary transaction
(contract) which is of civil law nature”
Concequences
of arbitration agreement:
Nature of Arbitration Agreement
Procedural concept
1.
All matters in arbitration have to be decided
on the basis of law on civil procedure
It is criticized for impossibility to explain why all questions
concerning
parties capability to conclude arbitration agreement, it’s form
and it’s validity
are to be decided on the basis of the contract (civil law)
Concequences
of arbitration agreement:
Nature of Arbitration Agreement
Sui generis concept (Swissair-Hall, 1952)
1.
2.




Arbitration is based on the agreement
(“contract”) autonomous from the other provisions
of main contract.
General provisions of Civil (Contact) Law are applied to
the arbitration agreement:
Concerning the parties capability to conclude;
About the form of the arbitration agreement;
In deciding on it’s validity;
On it’s availability (substantial arbitrability).
Concequences
of arbitration agreement:
Nature of Arbitration Agreement
Sui generis concept (Swissair-Hall, 1952)
Arbitration is based on the agreement (“contract”) autonomous
from the other provisions of main contract.
1.
After the Arbitration Agreement is concluded it has procedural
consequences:
“KOMPETENZ-KOMPETENZ”

SEVERABILITY
Impossibility of non-contractal -one-side waiver of the concluded
arbitration agreement

Exclusion of the State court jurisdiction

Relative state court absence of jurisdiction (possessing
jurisdiction when there is no prima facie existing, valid,
enforcable arbitration agreement).


Concequences
of arbitration agreement:
Nature of Arbitration Agreement
Russian special practice
1. Filing claims to the state courts for
invalidation of arbitration clauses
OR
2. For the cancellation of the arbitration
clause
Concequences
of arbitration agreement:
Nature of Arbitration Agreement
1.
Russian special practice
Filing claims to the state courts for
invalidation of arbitration clauses
EXAMPLE:
Concequences
of arbitration agreement:
1.
Nature of Arbitration Agreement
Russian special practice
Filing claims to the state courts for invalidation of arbitration
clauses
EXAMPLE:
State Arbitrazh Court in the first instance decided that
arbitration agreement – the only provision of the additional
agreement to the main contract - is invalid. The reasoning of
this decision was – to qualify the arbitration agreement as an
ordinary transaction and apply the provisions of the Civil Code
of the RF on the invalidity of civil contracts.
Concequences
of arbitration agreement:
1.
Nature of Arbitration Agreement
Russian special practice
Filing claims to the state courts for invalidation of arbitration
clauses
EXAMPLE:
North-West Circuit State Arbirazh Court as a court of cassation
overruled this decision because of the wrong qualification in
accordance with Article 153 of the RF Civil Code.
It was stated that arbitration agreement have not to be qualified
as an ordinary transaction. It is not caused civil rights and
obligations in accordance with Article 153 of the RF Civil Code.
Decree of the NW Circuit State Arbitrazh Court
Of May 16, 2005, case # A56-2109/04.
Concequences
of arbitration agreement:
Nature of Arbitration Agreement
Russian special practice
2. For the cancellation of the arbitration clause
EXAMPLE:
The state arbitrazh Courts in Krasnodar Region in 20002001 formed local practice – to cancel to this agreement
agreements because of the objections of one party to
the arbitration agreement (usually – defendant) against
based on this valid arbitration agreement arbitration
proceeding.
Concequences
of arbitration agreement:
Nature of Arbitration Agreement
Russian special practice
2. For the cancellation of the arbitration clause
EXAMPLE:
The Supreme Arbitrazh Court stated that the reasoning
behind such practice is erroneous. This resoning
is
inconsistent with the established rule of law
allowed arbitration agreements and
recognized principles:


Impossibility of non-contractal -one-side waiver of the concluded
arbitration agreement

Exclusion of the State court jurisdiction
Relative state court absence of jurisdiction (possessing jurisdictiom
when there is no prima facie existing, valid, enforcable arbitration
agreement).
ARBITRATION AGREEMENT
CHECK-LIST
•






CHECK-LIST
Types of Arbitration Agreement (mandatory and Voluntary, Arbitration
Clause and Submission)
Form of Arbitration Agreement (in writing) [Art.7 in the UNCITRAL
Model Law 1985 and Art.7 text revised by UNCITRAL in 2006)
Conclusion of Arbitration Agreement (5 methods)
Wording of Arbitration Agreement (Recommended Arbitration Clauses)
Procedural Consequences of concluding valid, enforceable, permissible by
Rule of Law Arbitration Agreement [Irrevocability of an arbitration
Clause in general, exceptions; “Kompetenz-Kompetenz”, Autonomy
(Severability of Arbitration Agreement).
Nature of Arbitration Agreement (3 basic Concept). Erroneous and
Correct Interpretation and Implementation in Russian Judicial Practice.
ARBITRATION
PROCEDURE
Vinogradova Elena
Lapland University
October 31, 2007
PROCEDURAL MATTERS
CHECKLIST
Determination of Rules of procedure
(Art.19 MLA, 1985)
 Place (Seat) of Arbitration (Art.20 MLA,
1985)
 Language (Art.22 MLA, 1985)

PROCEDURAL MATTERS
CHECKLIST

Procedures Applicable Prior the
Hearing
1.
Taking a Discovery
Presentation of Written Evidence
Number of Fact Witnesses
2.
3.
PROCEDURAL MATTERS
CHECKLIST

Procedures Applicable at a Hearing
1.
Oral Testimony
Use of Documents at a Hearing
Order of Presentation of Proof
Administering of an Oath
2.
3.
4.
PROCEDURAL MATTERS
CHECKLIST

Timing of Proceeding
Tools and tactics – ICAC
Commencement of the Arbitral Proceeding (Art.21,
MLA-1985):






Filing a Claim
Content of the Statement of Claim
Rectification of the Statement of Claim
Request for the dispute is received by the
respondent (unless otherwise agreed by the parties)
Composition of Arbitral Tribunal
Arbitration Fees
Tools and tactics – ICAC
Mechanism and period of time for an Arbitral Tribunal
Composition
Nationality and knowledge of Arbitrators:
Foreign or National?
Most appropriate qualification of arbitrators
Challenge: Ground and Procedure
Tools and tactics – ICAC
Hearing of the case: § 27 – 37 ICAC Rules





Equal treatment of Parties (MLA, 1985 –
Art.18)
Participation of the Parties
Alteration or addition to Claim or Defense –
without undue delay
Counter-claim and Claim for Set-Off
Third parties – conditions and consequences
Tools and tactics – ICAC
The Final Award
 No scrutiny -??? Limited scrunity by the
Secretariat\Board\Presidium
 Time for making arbitral award in writing.
Signature’s procedure.
 Correction of the Award – on the Party’s
Request submitted within 30 Days of Receipt
of the Arbitral Award
 Any error in computation, clerical or
typographical errors
 Arbitration and Legal Costs - Schedule on
Arbitration Fees and costs
Improvement of the Arbitral
Procedural Rules in the
Leading Arbitral Institutions
Basic Trends
Reflect the global trend towards increasingly complex
transactions involving multiple parties;
The appointment procedure by the Institutions complies (?)
with any requirements of due process which may give each
party an equal right to appoint an arbitrator, in line with the
practice of most institutions, ensures efficiency, and
respects the agreement of the parties.
Provide an effective and flexible system for conducting both
domestic and international arbitrations;





ARBITRAL AWARD
© Vinogradova Elena
Lapland University
November 1st, 200
INTERBATIONAL
COMMERCIAL
ARBITRATION
Arbitral Awards:
 Final and Binding (on the substance)
 Partial (on the substance)
 Default (on the substance)
 Ex parte (on the substance)
 On agreed terms (on the substance)
INTERBATIONAL
COMMERCIAL
ARBITRATION
Arbitral Awards:
 Interlocutory order Award
(procedural)
 Order (procedural)
 Decision (on the jurisdiction)
 Decision (both meanings are
possible)
INTERBATIONAL
COMMERCIAL
ARBITRATION
Arbitral Awards: CHECK-LIST
Content, Completeness of the Award
 Drafting
 Reasoning
 Dissents and Concurrences
 Correction, Omission. Clarification
 Confidentially

INTERBATIONAL
COMMERCIAL
ARBITRATION
Arbitral Awards:
CHALLENGING/SETTING ASIDE
Time-limits
 Grounds (two groups)
1. To be proved by the party
Applied EX OFFICIO by the Courts

2.
INTERBATIONAL
COMMERCIAL
ARBITRATION
Arbitral Awards:
CHALLENGING/SETTING ASIDE
1.
Grounds
To be proved by the party (Art. 34
UNCITRAL MLA):
(i) a party to the arbitration agreement referred to in article 7 was
under some incapacity; or the said agreement is not valid under the law
to which the parties have subjected it or, failing any indication thereon,
under the law of this State; or
(ii) the party making the application was not given proper notice of the
appointment of an arbitrator or of the arbitral proceedings or was
otherwise unable to present his case; or

INTERBATIONAL
COMMERCIAL
ARBITRATION
Arbitral Awards:
CHALLENGING/SETTING ASIDE
1.
Grounds
To be proved by the party (Art. 34 UNCITRAL MLA):
(iii) the award deals with a dispute not contemplated by or not falling
within the terms of the submission to arbitration, or contains decisions on
matters beyond the scope of the submission to arbitration, provided that, if
the decisions on matters submitted to arbitration can be separated from
those not so submitted, only that part of the award which contains
decisions on matters not submitted to arbitration may be set aside; or
(iv) the composition of the arbitral tribunal or the arbitral procedure was
not in accordance with the agreement of the parties, unless such
agreement was in conflict with a provision of this Law from which the
parties cannot derogate, or, failing such agreement, was not in accordance
with this Law; or
INTERBATIONAL
COMMERCIAL
ARBITRATION
Arbitral Awards:
CHALLENGING/SETTING ASIDE


Grounds

Applied EX OFFICIO by the Courts:
(i) the subject-matter of the dispute is not
capable of settlement by arbitration under the
law of this State; or
(ii) the award is in conflict with the public
policy of this State.
INTERBATIONAL
COMMERCIAL
ARBITRATION
Arbitral Awards:
Grounds (two groups)
1. To be proved by the party
2. Applied EX OFFICIO by the Courts
[Art. 36 UNCITRAL MLA (1985),
Art. Y New York Convention (1958)]

INTERBATIONAL
COMMERCIAL
ARBITRATION
Arbitral Awards:
GROUNDS to Refuse in Recognition and/or
enforcement):
2. Applied EX OFFICIO by the Courts
[Art. 36 UNCITRAL MLA (1985),
Art. Y New York Convention (1958)]
INTERBATIONAL
COMMERCIAL
ARBITRATION
The Conflict
of Arbitral Awards
and
Judicial Decisions.
The Conflict of Arbitral Awards
and Judicial Decisions.

Why do the Conflicts Exist?

How to Eliminate the Conflicts?
The Conflict of Arbitral Awards
and Judicial Decisions.
Typical Example of the Conflict:
Rendering the Arbitral Award and Judicial
Decision (Judgment)
on the Same Dispute
The Conflict of Arbitral Awards
and Judicial Decisions.
What is the “Same Dispute”?
THE GENERAL DOCTRINE:
RES JUDICATA
The Conflict of Arbitral Awards
and Judicial Decisions.
What is the “RES JUDICATA”?
The “TRIPLE-IDENTITY CRITERIA”:
 The same subject-mater OR Releif
 The same legal grounds
 The same parties
THE ILA Arbitration Commission
Interim Report, 2004 (Berlin)
The Conflict of Arbitral Awards
and Judicial Decisions.
The “TRIPLE-IDENTITY CRITERIA”:

Is to be said a clear example of General
Principle of Law Recognized by Civilized
Nations.
THE ILA Arbitration Commission
Interim Report, 2004 (Berlin)
The Conflict of Arbitral Awards
and Judicial Decisions.
“RES JUDICATA” has two Effects:
The Positive Effect
 The Negative Effect

THE ILA Arbitration Commission
Interim Report, 2004 (Berlin)
The Conflict of Arbitral Awards
and Judicial Decisions.
“RES JUDICATA” / The Positive Effect
A Judgment or Award is Final and Binding
Between the Parties and should be Implemented
(Subject to any Available Appeal or Challenge)
THE ILA Arbitration Commission
Interim Report, 2004 (Berlin)
The Conflict of Arbitral Awards
and Judicial Decisions.
“RES JUDICATA” has two Effects:
The Negative Effect:
Subject-Matter of the Judgment or Award
cannot be re-litigated a Second Time (ne
bis in idem)
THE ILA Arbitration Commission
Interim Report, 2004 (Berlin)
The Conflict of Arbitral Awards
and Judicial Decisions.

The Positive Effect
IS LARGELY UNCONTROVERSIAL
THE ILA Arbitration Commission
Interim Report, 2004 (Berlin)
The Conflict of Arbitral Awards
and Judicial Decisions.
“RES JUDICATA” has two Effects:
The Positive Effect
 The Negative Effect

THE ILA Arbitration Commission
Interim Report, 2004 (Berlin)
The Conflict of Arbitral Awards
and Judicial Decisions.
“RES JUDICATA” has two Effects:
The Negative Effect
Finds expression in
TWO LATIN MAXIMAS:
THE ILA Arbitration Commission
Interim Report, 2004 (Berlin)
The Conflict of Arbitral Awards
and Judicial Decisions.
“RES JUDICATA” - The Negative Effect
TWO LATIN MAXIMAS:
1. It is the Public Interest that there should be
An End of the Litigation
2. No One Should Be Proceeded Twice for the Same Course
THE ILA Arbitration Commission
Interim Report, 2004 (Berlin)
The Conflict of Arbitral Awards
and Judicial Decisions.
“RES JUDICATA” - The Negative Effect
TWO LATIN MAXIMAS:
1. It is the Public Interest that there should be
An End of the Litigation
It is the Matter of Private Justice
THE ILA Arbitration Commission
Interim Report, 2004 (Berlin)
The Conflict of Arbitral Awards
and Judicial Decisions.
“RES JUDICATA” - The Negative Effect
TWO LATIN MAXIMAS:
No One Should Be Proceeded Twice for the Same Course
It is a Matter of PUBLIC POLICY
THE ILA Arbitration Commission
Interim Report, 2004 (Berlin)
The Conflict of Arbitral Awards
and Judicial Decisions.

WHEN
RES JUDUCATA
MIGHT ARISE?
The Conflict of Arbitral Awards
and Judicial Decisions.
EXAMPLES
When RES JUDICATA MIGHT ARISE in ICA:




A Partial Award AND Final Award
Two Abitral Tribunals
A STATE COURT and AN ARBITRAL TRIBUNAL
A Supra-National Court AND COURT or an ARBITRAL
TRIBUNAL
THE ILA Arbitration Commission
Interim Report, 2004 (Berlin)
The Conflict of Arbitral Awards
and Judicial Decisions.
A STATE COURT
and
AN ARBITRAL TRIBUNAL
Seem to Appear Much More Frequently because of the
PARALLEL PROCCEDINGS
THE ILA Arbitration Commission
Interim Report, 2004 (Berlin)
The Conflict of Arbitral Awards
and Judicial Decisions.
“RES JUDICATA” IS RECOGNIZED BY THE
LEGAL DOCRTINE in RUSSIA
2. IS ESTABLISHED IN THE RF LEGISLATION
(THE RF LAW “ON ICA” (1993), Art. 35(1); The
RF Procedural Codes (2002) (Art. 150 Part 3
Point 1 of the APC RF 2002).
3. Stated in the New York Convention (1958),
Art. III (On the Recognition and Enforcement
of Arbitral Awards)
1.
“Enforcement of the Arbitral
Awards and Interim
Arbitral in
of the Measures
“Enforcement
Russia Measures
Awards and Interim
in Russia
Basic Trend,
Current Practice
Trend,Development”.
Basic
 Possible
Current Practice
 Possible Development”.
© Prof. Vinogradova Elena
Lapland University
November 1st, 2007
BASIC TRENDS:
Judicial Practice on arbitral awards
enforcement based on and generally
consistent with




the NYC (1958),
The UNCITRAL Model Law “On ICA” (1985)
almost literally was repeated
in the Law of the RF “ON ICA” (1993) and it’s
provisions on setting aside and enforcement were
incorporated in
the new Russian procedural legislation (since 2002)
BASIC TRENDS:
Judicial Practice on arbitral awards
enforcement based on and generally
consistent with the most important
characteristics:

A party resisting the ICA arbitral award
recognition and enforcement has a burden of
proof of one or several so-called
“procedural” grounds for refusal
BASIC TRENDS:
Judicial Practice on arbitral awards
enforcement based on and generally
consistent with the most important
characteristics:

No scrutiny of the ICA arbitral
award by the state court is allowed
 (with exception of arbitrability and nonconsistency with public policy )
BASIC TRENDS:
Judicial Practice on arbitral awards enforcement based on and
generally consistent with the most important characteristics:

No Court control the merits of the award – is a most
important element of the civil law concept of arbitration

“… There is, however, an exception to this rule. If the award on the merits or
of the manner in which it was made, would violate rules of public policy, the
award may be set aside and enforcement of the award may be refused.
PIETER SANDERS
“Quo vadis arbitration?” (1999. p.33).
BASIC TRENDS:
Judicial Practice on arbitral awards enforcement based on
and generally consistent with the most important
characteristics:

“ … WE SAW thE ExtEnt of thiS control grAduAlly

furthEr hArmoniSAtion on thiS importAnt iSSuE …
SEEmS not to bE ExcludEd.”
bEing morE And morE rEStrictEd. …
PIETER SANDERS
“QUO VADIS ARBITRATION?” (1999. Pp.33-38).
CURRENT PRACTICE

1.
2.
3.
4.
MYTHS:
The Lack of uniform and consistent judicial practice
The outcome of court cases is often contradictory and
unpredictable
The Russian courts carry out review on the merits
Public policy is the Mirror of the ATTITUDE of state courts
to arbitration because the RF Supreme Arbitrazh Court
requires the courts to play an active role in reviewing the
case on the merits
5. Russian Courts do not trust international commercial
arbitration
CURRENT PRACTICE

1.
Myths 1-2:
The Lack of uniform
and consistent
judicial practice

ANTI-MYTH #1
“in overcoming … “hurdles” …
russia is not alone. …
The success of the New York
Convention itself has not been
accompanied by the same degree
of success internationally in
its harmonious application by
the local courts…”
Eric A. Swarts
“leboeF lamb” cited
CURRENT PRACTICE
1.
 Myths 1-2:
The Lack of
uniform and
consistent
judicial practice

ANTI-MYTH #1
“there has been
DEVELOPMENT
TOWARDS A MORE
UNIVERSALLY
ACCEPTED
approach. … that
is likely to
continue.”
Eric A. Swarts
“leboeF lamb” cited
Vladimir Khvalei
(Beker&McKenzie)
CURRENT PRACTICE

MYTH #2:

ANTI-MYTH #2
Official statistics in 2006-2007:
The outcome of court cases
are often
contradictory
and
unpredictable
In six months of 2006 and in six
months of 2007 state arbitrazh
courts granted:
some 80% of requests for
the enforcement of domestic
arbitral awards and awards of
international commercial arbitration
Consequently,
– 694 /572 (83.70%),
www.arbitr.ru/
Supreme
Arbitrazh
Court
In 2007the
– RF
581
/550
(81,8%)
statistical reports
In 2006
CURRENT PRACTICE


The general trend in enforcement practice
Most often
state arbitrazh courts
deny the requests for the arbitral award
(both domestic and international)
enforcement on the so-called procedural grounds
to be proven by an applicant:
MYTH #3
The Russian
courts
carry out
review on the merits
ANTI-MYTH # 3-1




The party making an application was not given
proper notice ….or was otherwise unable to present
his case;
The arbitration agreement is not valid;
The arbitral award is against non-party to an
arbitration agreement or dispute not failing within
the terms the arbitration agreement;
The composition of the arbitral tribunal or arbitral
procedure was not in accordance with the
agreement of the parties.
CURRENT PRACTICE

ANTI-MYTH # 3-1
Recent Cases for anti-myth #3.1 (Example #1)

MYTH #3
The Russian
courts
carry out
review on the merits
“… the (state) arbitrazh court does
not re-establish facts established
by the arbitral tribunal in the
award…”
Para. 20 of the Information Letter
of the Supreme Arbitrazh Court #96
dated December 22, 2005 approved
“An Overview of the Practice of
Arbitrazh Courts in Considering Cases
of the Recognition and Enforcement
of Foreign Courts Decisions, or on
Challenging of Arbitral Awards and on
Arbitral Awards Enforcement”
CURRENT PRACTICE

ANTI-MYTH # 3-1
Recent Cases for anti-myth #3.1 (Example #2)

MYTH #3
The Russian
courts
carried out
a review on the
merits
“…the (state) arbitrazh court does not review
the international commercial arbitral award,
inc. the foreign arbitral award on the
merits…”
On September 12, 2006
The presidium of the Supreme arbitrazh
court
annulled 5 lower courts decisions
By which 5 ICA arbitral awards had been
setting aside because of the violation of
Article 809 of the Russian Civil Code
and, thereFore, “the Fundamental
principles oF law”.
The SAC presidium decisions on the cases:
4495/06, 4438/06, 4485/06, 4486/06, 4488/06
CURRENT PRACTICE

ANTI-MYTH # 3-1
Recent Cases for anti-myth #3.1 (Example #3)

MYTH #3
The Russian
courts
carried out
a review on the merits
“… the (state) arbitrazh court does not review the
international commercial arbitral award, inc. the
Foreign arbitral award on the merits…”
The SAC presidium annulled the decisions of the state
arbitrazh couRts in Belgorod Region By which the
arbitral award rendered is Sweden had been setting
aside because that “the arbitral tribunal (in
Sweden) erroneously applied Russian substantive
law”.
It was re-confirmed that such a revision of the (foreign)
arbitral award is out of the state arbitrazh court
jurisdiction and stated that the artilce 230(5) of
the ARC RF is not applicable to the foreign arbitral
award on the merits
The SAC presidium decision
of March 30, 2004,
#15359/03
CURRENT PRACTICE

ANTI-MYTH # 4
Recent Cases for anti-myth #4.1 (Example )
“…the (state) arbitrazh court sets aside and reFuses an arbitral award enForcement iF such award should be in conFlict
with the public policy (public order) oF the russian Federation…”

MYTH #4
Public policy is the Mirror of the
relationship of the state courts to
arbitration
because the Supreme Arbitrazh Court
requirement the courts to play an
active role in reviewing the case on the
merit
at least In 10 cases of 59
The FEderal arbitrazh Court of the Moscow district (Court of cassation – “Fas mo”)
has reFused to apply “public policy (public order) as a ground
for ICA award setting aside or non-enforcement
the “Fas mo” decisions in cases:
#KG -A40-31813/05-69-286; #KG -A40-9192/05; KG -A40-10275/04; KG -A40-10375-04;
KG -A40-9998-04; KG -A40-7948/04; KG -A40-16874/03-40-169; KG -A40-2399/04-П;
KG -A40-2527/04;
KG -A40-2002/04; KG -A40-37557/03-25-143; KG -A40-4926/03;
the speaker’s research result
in the data-base “ consultan plus”
(September 17, 2007 – online free access between 08:00 p.m. – 24:00 p.m., Moscow time)
CURRENT PRACTICE

MYTH #5
ANTI-MYTH # 5
HAS NO substantial
fact BASIS
In the light,
Russian Courts
do not trust
to international
commercial
arbitration
inter-alia,
of the information
Given
In
ANTI-MYTHS 1-4
MYTHS BASIS

Too formalistic approach applied by the Russian state courts, partly explained
by non-awareness of already established worldwide practice

(requirement of the original copy of the award only,
absence of the concrete name of the arbitral institution as a ground for setting aside or
enforcement refusal,
confusion of the hearing place with the “place of arbitration”, etc.)

Non-compliance with the basically established judicial practice in the very
russian “special cases”
(for instance, this summer the Federal Arbitrazh Court of the Moscow District (Court of
cassation – “FAS MO”) set aside the ICAC at the CCI arbitral award in two cases:
”ROSNEFT” v. “JUGANSKNEFTEGAZ” because two of three arbitrators did not
disclose information about making their presentations at the international conference
partly sponsored by the law firm representing the “JUGANSKNEFTEGAZ” in
arbitration (Cases: #KG-A40/6616-07; #KG-A40/6775-07).

Some unreasonable legislative deviations in favor of double-standards for
setting aside and enforcement refusal of domestic and international arbitral
awards (for instance, questionable substitution in domestic arbitration legislation the
term “public policy (public order)” for ICA and foreign awards for the “fundamental
principles of the Russian law”.
MYTHS BASIS

In accordance with not uniform Current judicial practice
Articles 90 and 99 of the APC RF on the preliminary
(Provisional) measures
in ICA not always available through the Russian (state)
arbitrazh courts
if the further arbitral proceedings
are to be conducted outside the territory of the Russian
Federation.
MYTHS BASIS

The problems to be resolved everywhere (not typical
Russian problems):

Duplicate proceedings and conflicting arbitral or
arbitral and judicial awards (See: ILA 2006 Resolutions
and Final reports on “res judcata and arbitration”
and “lis pendens and arbitration”);

establishing modern approach to the “arbitration
agreement in writing”

Making judicially enforceable an interim measure
issued by an arbitral tribunal irrespective of the
country in which is was issued.
Possible development
1.
2.
Further development oF the “res
judicata” concept preventing as much
as possible appearance of the
conflicting awards/ awards and
judicial acts
Improving the national arbitration
laws “on ica” and practice on the basis
of the UNCITRAL 39th session
resolutions reflecting new trends of
the “arbitration in writing
interpretation and implementation”
and dealing with the “draFt
legislative provisions on Interim
measures and preliminary orders”