17.05.2012
Russian businessmen, when they enter into contracts with foreign counterparties, often include a provision saying that disputes arising out of the contract are to be settled by the Russian state court of arbitration. If a counterparty against which an arbitral award has been made has no property in Russia, this raises the issue of enforcement of the award.
Russian businessmen, when they enter into contracts with foreign counterparties, often include a provision saying that disputes arising out of the contract are to be settled by the Russian state court of arbitration. If a counterparty against which an arbitral award has been made has no property in Russia, this raises the issue of enforcement of the award.
Decisions made by international commercial arbitration in Russia cannot be appealed on merits in Russian courts and are enforceable in more than 130 countries pursuant to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958. By contrast, decisions on commercial disputes made by a national court of one country, in the absence of a suitable international agreement, are usually unenforceable in another country.
In this situation, a claimant may still attempt to achieve the desired outcome through retrial on the merits in a court of the country of the respondent or its property.
If a dispute arises out of a foreign economic transaction, in the absence of an arbitration agreement, a party to the transaction has a right to apply to an ordinary or specialized (arbitration, economic, or trade) court in a country where that court is competent under the national procedural law. As a general rule, this will also be the respective national court in the country of the respondent or its property.
In a foreign national court, which is guided by national law (lex fori), usually involves considerable costs for the claimant. Moreover, a claimant, who is often unfamiliar with details of foreign legislation, may face far more adverse consequences, e.g., failure to recognize the validity of the applicable law chosen by the parties to the contract or invalidation of material terms of the contract. The result may be either denial of action or dismissal of the claim.
Another advantage of having an international commercial arbitral tribunal rather than a national court to adjudicate your dispute is that the contesting parties have much freedom in forming the bench. They have a right to agree on a sole arbitrator or to choose one arbitrator each so that these arbitrators will elect a third one to chair the bench. Arbitrators, except for the sole arbitrator and the chairperson of the bench, can be chosen from, or outside of, the List of ICAC Arbitrators; this applies to foreign experts as well. This mechanism ensures impartiality and enables the parties to pick out the most competent specialists in a particular contestable field.
The hearing of a case, by agreement of the parties, can be conducted in either Russian or a foreign language in Moscow or another city of the Russian Federation. The ICAC trial procedure is streamlined but adequate. The confidentiality of dispute resolution is an important advantage; in contrast to national courts of law, where hearings are typically open to the public and their rulings may be published, the ICAC examines cases in camera and its awards can only be published without reference to the litigants or to other information disclosing the litigants’ identities, to avoid the disclosure of commercial secrets.
Frequently enough Russian parties to a foreign economic contract will choose to submit to a foreign arbitration court. It must be understood, however, that hearing a case outside Russia entails high arbitration and attorney’s fees, as well as numerous extra expenses, which may not be readily recoverable.
To make sure that possible disputes arising out of one’s contract will be settled at the ICAC, it is advisable that a corresponding clause be included in one’s contract when it is prepared for signing. Using the wording of the arbitration agreement recommended by the ICAC Rules will impart legal predictability to parties’ obligations because their disputes will be resolved by known rules.
Advantages of the ICAC
Russian businessmen, when they enter into contracts with foreign counterparties, often include a provision saying that disputes arising out of the contract are to be settled by the Russian state court of arbitration. If a counterparty against which an arbitral award has been made has no property in Russia, this raises the issue of enforcement of the award.
Russian businessmen, when they enter into contracts with foreign counterparties, often include a provision saying that disputes arising out of the contract are to be settled by the Russian state court of arbitration. If a counterparty against which an arbitral award has been made has no property in Russia, this raises the issue of enforcement of the award.
Decisions made by international commercial arbitration in Russia cannot be appealed on merits in Russian courts and are enforceable in more than 130 countries pursuant to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958. By contrast, decisions on commercial disputes made by a national court of one country, in the absence of a suitable international agreement, are usually unenforceable in another country.
In this situation, a claimant may still attempt to achieve the desired outcome through retrial on the merits in a court of the country of the respondent or its property.
If a dispute arises out of a foreign economic transaction, in the absence of an arbitration agreement, a party to the transaction has a right to apply to an ordinary or specialized (arbitration, economic, or trade) court in a country where that court is competent under the national procedural law. As a general rule, this will also be the respective national court in the country of the respondent or its property.
In a foreign national court, which is guided by national law (lex fori), usually involves considerable costs for the claimant. Moreover, a claimant, who is often unfamiliar with details of foreign legislation, may face far more adverse consequences, e.g., failure to recognize the validity of the applicable law chosen by the parties to the contract or invalidation of material terms of the contract. The result may be either denial of action or dismissal of the claim.
Another advantage of having an international commercial arbitral tribunal rather than a national court to adjudicate your dispute is that the contesting parties have much freedom in forming the bench. They have a right to agree on a sole arbitrator or to choose one arbitrator each so that these arbitrators will elect a third one to chair the bench. Arbitrators, except for the sole arbitrator and the chairperson of the bench, can be chosen from, or outside of, the List of ICAC Arbitrators; this applies to foreign experts as well. This mechanism ensures impartiality and enables the parties to pick out the most competent specialists in a particular contestable field.
The hearing of a case, by agreement of the parties, can be conducted in either Russian or a foreign language in Moscow or another city of the Russian Federation. The ICAC trial procedure is streamlined but adequate. The confidentiality of dispute resolution is an important advantage; in contrast to national courts of law, where hearings are typically open to the public and their rulings may be published, the ICAC examines cases in camera and its awards can only be published without reference to the litigants or to other information disclosing the litigants’ identities, to avoid the disclosure of commercial secrets.
Frequently enough Russian parties to a foreign economic contract will choose to submit to a foreign arbitration court. It must be understood, however, that hearing a case outside Russia entails high arbitration and attorney’s fees, as well as numerous extra expenses, which may not be readily recoverable.
To make sure that possible disputes arising out of one’s contract will be settled at the ICAC, it is advisable that a corresponding clause be included in one’s contract when it is prepared for signing. Using the wording of the arbitration agreement recommended by the ICAC Rules will impart legal predictability to parties’ obligations because their disputes will be resolved by known rules.
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