Happy to share my first contribution to Yearbook on Commercial Arbitration. Brandford LLC v. SL Graphika LLC (А31-3491/2014) might be interesting to those who seeks the enforcement and recognition of an arbitral award rendered in a CIS country. Russian courts reminded that the 1992 Kiev Treaty on the Manner of Resolving Disputes in the Area of Commercial Activity does not apply to the recognition and enforcement of foreign arbitral awards.
The issue of a unilateral (optional, alternative, hybrid) arbitration clause is highly controversial in commercial arbitration. The approach to these clauses varies from jurisdiction to jurisdiction. In 2012, the Supreme Arbitration Court of Russia (a state court), in Russian Telephone Company v. Sony Ericsson, declared a unilateral arbitration clause invalid. The decision attracted attention of arbitration participants both in Russia and abroad.
On 7 May 2015 the Russian Government proposed a draft new law, the law on domestic arbitration in Russian Federation (the draft law), to the State Duma (the lower house of the Federal Assembly of Russia (legislature)). Domestic Arbitration is defined as an arbitration relating to a dispute arising out of legal relationship whether contractual or not, where none of the parties is:
- an in individual who is a nationality of, or habitually resident in, any country other than Russia; or
- a body corporate which is incorporated in, or whose central control and management is exercised in, a state other than Russia, and
- the seat of the arbitration is in the Russian Federation.
Since the 60s. of the last century the Union of Soviet Socialist Republics (USSR) was a member of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) but on December 26, 1991 the Soviet Union collapsed.
Almost immediately after of the dissolution of USSR this fact was used as an attempt to object to the enforcement and recognition of several arbitration awards rendered by arbitration against a company domiciled the Russian Federation.
Although judges in Russia are generally immune from criminal prosecution, the law allows their prosecution for bribery. And each year, the Investigation Committee of the Russian Federation opens multiple criminal investigations against judges for alleged bribe taking, with some cases resulting in convictions and punishment.
The lower house of Russia’s national legislature — the State Duma — has been considering draft amendments to the law on the criminal liability of a legal entity.
The main purpose of the amendments is compliance the Russian Criminal Code with international treaties (e.g. international obligations of Russia on combating corruption).Several international treaties including the United National Conventions against Corruption determine that some sorts of legal entities behavior should be treated as crimes, which is already the case in the U.S. and UK.
On 22 April 2015, the Supreme Court of Russia published the decision on the issue whether the Russian commercial courts apply the Agreement between the Government of the Russian Federation and the Government of the Republic of Bulgaria on the Promotion and Reciprocal Protection of Investments. The issue arose out the case regarding the dispute on transaction of a transfer of stakes in a foreign company.
The public policy exception to the enforcement of arbitral awards has traditionally been applied very narrowly, for example, where a failure to vacate the award would violate the due process rights of the participants. However a recent case illustrates the contrasting approaches of the Swedish and Russian courts in this regard. In a recently published article I discuss both the Swedish and Russian court rulings and consider the implications for both freedom of contract and arbitration as a method of dispute resolution in each jurisdiction.