On the 1st of August a regular issue of the International Commercial Arbitration Review Issue No. 3 for 2011

On the 1st of August a regular issue of the International Commercial Arbitration Review Issue No. 3 for 2011, published with participation of the Chamber of Commerce and Industry of Russian Federation and International Commercial Arbitration Court, came out.

This issue contains a number of articles devoted to different problems arising while considering international commercial disputes in arbitral tribunals.

SUMMARY of Articles

V.V. Veeder. Chancellor Wirth and the Mologoles Concession 1923-1927: the German-speaking Origins of the 1965 ICSID Convention

The author considers the early German-Soviet treaties concluded in 1918-1927, including the concession agreements and, particularly, the agreement on the biggest Mologoles concession, which provided for the resolution of disputes between the Soviet parties and the German concessionaires by means of arbitration. On the basis of analysis of the dispute resolution clauses and the history of those agreements the author notes how far advanced were the respective provisions thereof and concludes that those agreements and present-day international arbitration, especially the treaty-based form of investor-state arbitration under the ICSID Convention, are all rooted in the same fertile soil. In its original version the article was first published in: International Investment Law for the 21st Century: Essays in Honour of Christoph Schreuer, Binder et al. eds., Oxford University Press, 2009.

A.S. Komarov. The Revised UNCITRAL Arbitration Rules in the Context of Modern Practice of International Arbitration

This article by Prof. A.S. Komarov contains a detailed analysis of the most important innovative provisions of the UNCITRAL Arbitration Rules as revised in 2010. Particular emphasis is made on provisions dealing with disclosures by and challenge of arbitrators, replacement of an arbitrator, interim measures, evidence, form and effect of an award, applicable law, designating and appointing authorities, and exclusion of liability. The author also considers the analogous provisions as contained in the ICAC Rules as well as the need for improving the current Russian legislation on international commercial arbitration.

V. Plekhanov, S.V. Usoskin. Law Applicable to a Contract in International Commercial Arbitration: Selected Issues as Raised in Practice

This article addresses a range of issues that arose in recent litigation before the Russian courts on an unsuccessful application for setting aside of an ICAC award. The application for setting aside was based on an allegation that arbitrators failed to follow the choice of substantive law made by the parties. The article first addressed the floating (optional) choice of law clause (which was included in the underlying contract) and its enforceability under Russian law, looking at various types of such clauses and potential approaches to their interpretation. The authors advocate the approach that where parties have agreed that the choice of law would be made at a later stage by one of the parties or depending upon some condition, such agreement of the parties should be respected and may be enforced. Then the article turns to two grounds for annulment of the award invoked before the Russian courts and based on an allegedly incorrect choice of substantive law. The authors first consider the notion of procedural public policy and conclude that, choice of law not being a procedural matter and the alleged mistake in choice of law not leading to any substantial injustice to the parties, this ground was not applicable in the case. The article then addresses the second ground for annulment invoked: failure by the arbitrators to honor the parties’ agreement on arbitral procedure. It is argued in the article that the notion of arbitral procedure as used in the New York Convention of 1958 and in Russian law is limited to the matters relating to the conduct of proceedings and is aimed at regulating the forms of those procedures rather than issues of the substantive law as applied by the tribunal. On this basis the article proceeds to the conclusion that the mistake in the choice of law by the tribunal may not constitute a breach of arbitral procedure, unless the arbitrators expressly and deliberately and without any reasons refuse to follow the agreement of the parties on the choice of substantive law. Decisions of courts of all instances that are discussed in this article are published in this issue of the journal in the section “From the Practice of Courts of Various States on Enforcement and Setting Aside of Foreign Arbitral Awards”.

E.A. Korableva. The Interrelationship Between the Validity of an Arbitration Agreement and Arbitrability

The practice of Russian state courts demonstrates that the problem of the interrelationship between the validity of an arbitration agreement and the arbitrability of the subject-matter of the dispute is not always approached correctly. On the basis of an analysis of the provisions of the UNCITRAL Model Law, the New York Convention of 1958 and foreign and Russian legal writings, the author critically considers the practice of the Russian arbitrazh courts and attempts to draw a clear dividing line between the indicated notions.

U.A. Panarina. Granting Interim Relief by Russian Courts in Connection with International Arbitration Granting interim orders is one of the forms of the state court’s assistance to international arbitration. In this article the author considers sources of interim relief regulation in Russian law and adduces case law on the granting of interim measures in support of international arbitration at two stages: before communication of the statement of claim to the arbitration (preliminary interim measures) and during the arbitral proceedings. The author analyzes the problems which the applicants encounter in Russian courts, and considers the prospects for further development of the interim relief institution in international arbitration in view of the latest amendments to the UNCITRAL Model Law and the UNCITRAL Arbitration Rules.

A.A. Berezin. On the Issue of Arbitrability of Corporate Disputes Under Russian Law

This article examines the possibility of considering corporate disputes in arbitration under Russian law. The author notes that Russian law does not limit the jurisdiction of arbitration in considering corporate disputes. Moreover, the nature of corporate relationships entails their inclusion in the civil law, which also confirms the arbitrability of corporate disputes. The author focuses on the analysis of court decisions in cases relating to shareholders’ agreements which include an arbitration clause and on the need to develop recommendations for this type of agreement in judicial practice.

B.R. Karabelnikov. Dispute Resolution under the LCIA Rules

In this article the author considers various aspects of resolving disputes under the LCIA Rules and at the same time explains the growing popularity of LCIA among parties seeking efficient resolution of their commercial disputes.

Jérôme Barbet, Peter Rosher. Optional Dispute Resolution Clauses: French/English Law Perspectives

The authors examine the main types of optional dispute resolution clauses that are being used in practice, as well as their implementation. The issue of the validity of optional dispute resolution clauses is considered from the perspectives of French and English international arbitration law and the rules on international jurisdiction, recognition and execution of foreign judgments. The article syntheses the key points from a longer article by the same authors which was published in the French language in Revue de l'Arbitrage, 2010, Issue 1, pp. 45-84.

Neil Andrews. Probing the Arbitration Tribunal’s Jurisdictional Decision that a Resisting Party is a Party to an Arbitration Agreement: Problematic Awards Under the New York Convention (1958)

On the basis of decisions of the English courts in Dallah Real Estate & Tourism Holding Co v Pakistan (2010), the author analyzes the issue of whether the enforcing court can re-open and re-examine in full and afresh the disputed issues of law and fact on the question of whether the resisting party was truly a party to the relevant arbitration agreement. This article is published in English.

Christian Tietje, Emily Sipiorski. Evidence in International Investment Arbitration

This article considers the issue of evidence in investment arbitration, particularly in light of recent ICSID decisions that have been grounded in part on the admission of certain evidence by tribunals. The article also highlights the emergence of standards for evidence within arbitration as well as customary international law, noting how investment arbitration tribunals have applied these standards as a means of bringing internationally-recognized norms to the use and consideration of evidence by the tribunals. This article is published in English.

E.V. Kudryashova. List of Circumstances Which do not Preclude Acting as an Arbitrator and Should not be Disclosed: a Commentary

The article is a commentary on Art. 8 of the Rules on Impartiality and Independence of Arbitrators, issued by the Chamber of Commerce and Industry of the Russian Federation. Analyzing the indicated provision of the Rules the author consults the IBA Guidelines on Conflicts of Interests in International Arbitration, commentaries on them and the relevant court cases.

A.I. Muranov. An Attempt to Implant the Term “Evasion of Law” in the Russian Civil Code and International Commercial Arbitration in Russia

The modern Russian Civil Code, adopted in four parts respectively in 1994, 1996, 2001 and 2006, is now under serious revision. A draft amended Code was submitted for final discussions at the end of 2010. One of the most important basic articles in Part 1 of this Code is Article 10, “Limits of Exercise of Civil-Law Rights”, devoted to abuse of a legal right, reasonableness and good faith. The draft revisions propose the amendment of Article 10 to implant in it, inter alia, the term “evasion of law”. It is highly important that the rule on “evasion of law” in the draft amended Code is intended to be applied by both state courts and arbitral tribunals. The author comments on different approaches to the term “evasion of law” and highlights the characteristics of this term in the proposed new version of Article 10. He stresses that this term is to be interpreted as a form of abuse of a legal right, namely a private act performed not with respect to private persons, but as regards the law per se, as a disruption of its aim, reasons, and spirit, however legal that act may be formally. Then the author focuses on possible consequences for international commercial arbitration in Russia and underlines the risks that arbitrators may face in the light of this proposed new term in the Code. The general conclusion of the article is that the term “evasion of law” is hardly desirable for further development of international commercial arbitration in Russia.

Documents and Commentaries

A.V. Asoskov. Commentary on the Rules of Impartiality and Independence of Arbitrators

This article provides a detailed commentary on the Rules of Impartiality and Independence of Arbitrators which were approved by the President of the Chamber of Commerce and Industry of the Russian Federation on August 27, 2010.

The Hague Principles on Ethical Standards for Counsel Appearing before International Courts and Tribunals

This document was prepared by the Study Group of the International Law Association on the Practice and Procedure of International Courts and Tribunals and was first published in October 2010. The Russian translation of the Hague Principles on Ethical Standards as prepared by V.V. Dumler is published with the kind permission of the Study Group. The text of the document is preceded by a short introductory commentary.

Arbitral Awards

A.V. Asoskov, A.N. Zhiltsov. Possibility of Reimbursement of Expenses that Arose in the Course of Already Completed Arbitration Proceedings. (Commentary to ICAC Ruling on Termination of Arbitral Proceedings of April 7, 2010 in Case No. 76/2009 and ICAC Award of January 26, 2011 in Case No. 101/2010)

Rules on reimbursement of the parties’ expenses are contained in §§ 9 and 10 of the Schedule of Arbitration Fees and Costs. No problem arises when the parties submit their claims for reimbursement timely in the course of the proceedings. But difficulties may arise if prior to the completion of the proceedings no claim for reimbursement is made and at the same time the respective party does not renounce its right to reimbursement. In this article the authors consider whether such a claim may be made after the completion of the proceedings and the possible procedural forms of such requests. The article is based on the analysis of the ICAC Ruling on Termination of Arbitral Proceedings of April 7, 2010 in Case No. 76/2009 and the ICAC Award of January 26, 2011 in Case No. 101/2010 in which the ICAC had to deal with the indicated problem in practice. These ICAC cases are published after the text of the article.

ICAC Ruling on Termination of Arbitral Proceedings of September 20, 2010. Case No. 74/2010

ICAC Ruling on Termination of Arbitral Proceedings of December 20, 2010. Case No. 174/2009

These two rulings on termination of arbitral proceedings illustrate the approach of the ICAC to situations when bankruptcy proceedings are initiated against the defendant prior to the claim being filed at the ICAC.

S.N. Lebedev. Publication of Awards is a Long Lasting Tradition of the Maritime Arbitration Commission at the Chamber of Commerce and Industry of the Russian Federation. (Introduction to the Publication of Two MAC Awards in English)

The Maritime Arbitration Commission (MAC), which was established at the Chamber of Commerce in Moscow in 1930, is one of the oldest Russian arbitration institutions competent to resolve disputes to which both Russian and foreign entities can be a party and, at the same time, it is one of the oldest maritime arbitration institutions in the world. In his introductory article to the published MAC awards Prof. Lebedev, the President of the MAC, not only briefly outlines the history of this arbitration institution, but also explains the reasons behind a long-lasting tradition of publishing its awards. The article is published in both Russian and English and is followed by the English-language translations of the following two MAC awards:

Award of the Maritime Arbitration Commission of 26 January 2001. Case No. 21/2000

Award of the Maritime Arbitration Commission of 24 June 2003. Case No. 2/2003

Court Decisions

Ruling of the Arbitrazh Court of the City of Moscow of April 7, 2010. Case No. А40-16431/10-25-137

Resolution of the Federal Arbitrazh Court of the City of Moscow of June 18, 2010, No КГ-А40/5326-10-2. Case No. А40-16431/10-25-137

Ruling of the Panel of Judges of the High Arbitrazh Court of the Russian Federation of October 11, 2010 No. ВАС-11861/10 on Handing Over the Case to the Presidium of the High Arbitrazh Court of the Russian Federation

Ruling of the Presidium of the High Arbitrazh Court of the Russian Federation of January 13, 2011, No. 11861/10

These judicial acts of Russian courts of various instances were rendered on application of a Ukrainian company for the setting aside of the ICAC award of November 11, 2009, Case No. 130/2008. These proceedings involved several legal issues, including the enforceability of the optional choice of law clause under Russian law, and the possibility of considering arbitrators’ mistake in choice of applicable law as being the violation of procedural public policy. The facts and legal issues of these cases are analyzed in an article by V. Plekhanov, S.V. Usoskin. Law Applicable to a Contract in International Commercial Arbitration: Selected Issues as Raised in Practice, published in the current issue of the Journal.

Decision of the Paris Court of Appeals of November 18, 2010, in the case Gouvernement de la Region de Kaliningrad c/ La Republique de Lituanie (Cour d'Appel de Paris, 18 novembre 2010)

In a decision of November 18, 2010 the Paris Court of Appeals dismissed an application for a setting aside of the ICC award of January 28, 2009 that was rendered in a dispute between the Government of the Kaliningrad Region and Lithuanian Republic and by which the arbitral tribunal found that it has no competence to hear the substance of the claim. The Paris Court of Appeals held that, taking into account the rules of interpretation of international treaties, the sphere of application of a particular bilateral investment protection treaty cannot cover the liability of a State for acts committed in compliance with its international obligations under the New York Convention of 1958. The Court of Appeals also noted that a bilateral investment protection treaty cannot be regarded as an additional mechanism for challenging international arbitral awards.

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