On the 23st of January 2012.The new issue of the International Commercial Arbitration Review Issue No. 2(4) for 2011.

Articles

A.V. Asoskov. Do Provisions of a Bilateral Mutual Legal Assistance Treaty Affect Arbitral Proceedings Conducted in a State that is a Member of such a Treaty?

A number of bilateral treaties on legal assistance in civil matters to which Russia is a party contain provisions on issues of recognition and enforcement of arbitral awards. Bilateral treaties that provide for such international legal assistance have been concluded by Russia (USSR) with India, Iraq, Algeria, Yemen, Poland and Egypt. In the practice of Russian courts a question arose as to whether other provisions of such bilateral treaties may also apply to arbitral proceedings conducted on the territory of a State that is member of the respective treaty. In particular, is it necessary to follow the procedures for the service of documents through diplomatic channels or justice authorities as provided by such treaties? In this article Dr. A.V. Asoskov analyzes these issues in reference to Russian judicial and arbitral practice.

Giuditta Cordero Moss. Form of Arbitration Agreements: Current Developments within UNCITRAL and the Writing Requirement of the New York Convention

In this article the author considers modern trends towards broader interpretation of the writing requirement for arbitration agreements as established in the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Having noted the liberal position taken on the form of arbitration agreements in some recent legislation and the revised UNCITRAL Model Law, the author concludes that in the circumstances of the written requirement not being abolished completely the parties still need to be cautious where non-written arbitration agreements are concerned. In its original version the article was first published in the ICC International Court of Arbitration Bulletin, Vol. 18, No. 2, 2007, pp. 51-63.

D.V. Marenkov. Recognition and Enforcement in Germany of Arbitral Awards of the ICAC at the Russian Chamber of Commerce and Industry, the ICAC at the Ukrainian Chamber of Commerce and Industry and the IAC of the Belarusian Chamber of Commerce and Industry

According to statistical data, companies from Germany are very often taking part in arbitral proceedings before the ICAC at the RF CCI, the ICAC at the Ukrainian CCI and the IAC of the Belarusian CCI. In 2010, German companies were in first place as foreign claimants and third place as foreign defendants before the ICAC at the RF CCI. In this article D.V. Marenkov not only considers the general legislative framework and conditions for enforcement in Germany, but also analyzes the enforcement practice of German courts.

Lauri Railas. Incoterms ® 2010 and Contracts of Transport and Insurance

In this article the author, who was a member of the Incoterms ® 2010 Drafting Group, analyses the new Incoterms ® 2010 rules as relating to contracts of carriage and transport insurance and considers the reasons for the adoption of the new rules. The article is published in English.

A.K. Bairamkulov. Interpretation of Contracts Under the 1980 Vienna Convention on Contracts for the International Sale of Goods

In this article the author considers doctrinal and practical issues with regard to interpretation of contracts under Article 8 of the 1980 Vienna Convention on Contracts for the International Sale of Goods (CISG). The author focuses on the development of the principles and methods of interpretation of contract in European private law to expose the theoretical background of Article 8 of the CISG. The author also examines the scope of Article 8 of the CISG, subjective and objective approaches to interpretation and relevant circumstances of the case that should be taken into account when the court or tribunal construes the contract.

G.K. Zukova. Reform of Foreign Arbitration Laws

It is a truism that arbitration is a common way of settlement of commercial disputes, both domestic and international. In response to this reality, states revise their arbitration laws not only with a view towards improving the regulation of private dispute settlement, but also in order to facilitate international trade and attract foreign investment. This article gives an overview of the main changes introduced in 2011 to the arbitration laws in France, Switzerland and Spain. The reforms touch upon important issues such as the form of the arbitration agreement, multi-party and multi-contract arbitration, the power of arbitral tribunals to adopt conservatory and interim measures, the assistance of state courts, as well as the enforcement of foreign arbitral awards, to name just a few.

Spiros V. Bazinas. Law applicable to security rights in movable assets under the UNCITRAL Legislative Guide on Secured Transactions

This article deals with the law applicable to security rights in movable assets under the UNCITRAL Legislative Guide on Secured Transactions (2007), and the Supplement on Security Rights in Intellectual Property (2010). The Guide includes a complete set of legislative recommendations on all issues that should be addressed in a law on security rights in movable assets and commentary explaining the recommendations and other approaches to the policy issues discussed. The Guide also includes a complete set of legislative recommendations on the law applicable to the creation, third-party effectiveness, priority and enforcement of a security right, and also to the security agreement between the secured creditor and the person granting the security right ("the grantor").

Under the Guide, the law applicable to the creation, third-party effectiveness and priority of a security right in a tangible movable asset is the law of the State in which the asset is located, while the law applicable to all these issues in the case of a security right in an intangible asset is the law of the State in which the grantor is located (the State of the grantor's place of business or, in the case of places of business in multiple States, the State of the grantor's central administration or, in the case of no place of business, the State of the grantor's habitual residence). Also, the law applicable to the enforcement of a security right in a movable asset is, in the case of a tangible asset, the law of the State in which enforcement is sought and, in the case of an intangible asset, the law governing priority (that is, the law of the State of the grantor's location). Different rules apply to security rights in bank accounts, letters of credit and intellectual property.

A.V. Egorov. Evasion of Law: The Use of a Form Allowed by Law, for Achieving a Purpose Prohibited by Law

This article addresses the criticism of the doctrine of evasion of law that was expressed by A.I. Muranov in his article “An attempt to implant the term ‘evasion of law’ in the Russian Civil Code and international commercial arbitration in Russia” which was published in the previous issue of this journal (No. 1, 2011, p. 188). A.V. Egorov explains the reasons behind the approach of the drafters of the new amendments to the Russian Civil Code according to which a direct rule prohibiting the evasion of law is to be included in the Code. The author states that there is a lack of a direct relationship between the doctrine of the evasion of law as applied in the civil law and the doctrine of evasion of law as applied in private international law. The author notes that the doctrine of evasion of law is becoming increasingly popular in Russian judicial practice (the most recent practice interpretation by the High Arbitrazh Court that mentions the evasion of law doctrine was issued in September 2011). The author generally supports the approach of the German civil law which, laying stress on interpretation of the law in accordance with its purpose, does not need an express rule on evasion of law. At the same time the author considers that the realities of the Russian legal system dictate the adoption of an express rule on evasion of law according to the French legal tradition as such a rule would show the courts the need to interpret legal rules according to their purpose.

Documents and Commentaries

The International Bar Association Guidelines for Drafting International Arbitration Clauses

The purpose of the IBA Guidelines for Drafting International Arbitration Clauses is to help the parties to draft effective arbitration clauses that would not only be valid under the applicable law, but would also unambiguously embody all of the parties’ wishes. The Guidelines reflect the best current international practices and contain detailed provisions that the drafters of international arbitration clauses should take into account. The Russian language translation of the Guidelines is meant to inform Russian-speaking participants in international arbitral proceedings of the most modern techniques in drafting international arbitration clauses. The translation of the Guidelines into Russian was prepared with permission of the IBA by White and Case LLC.

Arbitral Awards

ICAC Award of 6 July 2011. Case No. 221/2010

This arbitral award is of interest mainly because of the specific choice of law methodology that was applied by the arbitral tribunal. The contract contained no choice of law provision and the parties also expressed different views on the issue of the applicable law. In such a situation the traditional approach of ICAC arbitrators is to apply the Russian conflict of laws rules, despite the fact that Article 28 (2) of the Russian Law “On International Commercial Arbitration” provides for the right of the tribunal to apply the conflict of laws rules that it deems appropriate. In this award the arbitrators departed from the traditional approach and determined the applicable law on the basis of cumulative application of conflict of laws rules of all the legal systems that were closely related to the dispute. The arbitrators applied the conflict of laws rules of the Austrian Federal Law on Private International Law of 1978, the 1980 Rome Convention on the Law Applicable to Contractual Obligations (the EC Regulation of 17 June 2008 No. 593/2008 was not yet in force at the time of conclusion of the contract) and those of Division VI of the Russian Civil Code.

The award also addressed interesting substantive law issues. The arbitrators found that the time period of rendition of services is not an essential term in a contract of rendition of services and lack of indication of such a term in a contract does not lead to the contract being regarded as not concluded. In such a case a reasonable time period shall be applied. The arbitrators also concluded that rescission of a contract under which one party has performed its obligations leads to unjust enrichment of another party for the amount of performance.

ICAC Award of 31 August 2011. Case No. 252/2010

This is a typical case from the practice of the ICAC relating to disputes arising out of contracts for the international sale of goods. But the particularly interesting aspect that arose before the arbitral tribunal concerned the validity of an alternative arbitration clause as contained in the contract. The respective clause provided as follows: “All disputes, controversies and claims arising out of the present contract or related thereto, including those concerning its performance, violation, termination or invalidity, unless settled amicably, are to be resolved at the option of the claimant in accordance with the CIS Agreement ‘On the Procedure for the Resolution of Disputes Relating to the Exercise of Economic Activity’ of 20 March 1992 or by the International Commercial Arbitration Court at the Chamber of Commerce in Kiev, in accordance with its Rules and under the applicable substantive law of Ukraine, or by the International Commercial Arbitration Court at the Russian Chamber of Commerce and Industry, in accordance with its Rules and under the applicable substantive law of the Russian Federation”. The defendant argued that the text of the arbitration agreement was vague and the agreement could not be performed and, therefore, it had to be considered as unconcluded. The arbitral tribunal considered the arguments of the defendant as unfounded. The arbitrators noted that the right of the claimant to choose the arbitration institution or the framework for dispute resolution generally as provided in the arbitration agreement did not make this agreement vague. To the contrary, the respective right of the claimant made the arbitration agreement complete on the basis of the act of volition of the claimant, i.e. on the basis of its choice of the respective arbitral institution. Alternative arbitration agreements may be regarded as being based on the principle of party autonomy, the essence of which is not only to allow the parties to determine unambiguously in advance their relations, but also to make such relations determinable on the basis of criteria which the parties themselves have agreed upon. This approach achieves greater flexibility in defining the future mechanism of dispute resolution. The arbitration agreement was held valid.

Court Decisions

The Resolution of the Constitutional Court of the Russian Federation dated 26 May 2011 No. 10-P "In the case opened to determine the constitutionality of Article 11.1 of the Civil Code of the Russian Federation, Article 1.2 of the Federal Law ‘On Arbitral Tribunals in the Russian Federation’, Article 28 of the Federal Law ‘On the State Registration of Rights to Real Estate and Related Transactions’, and Articles 33.1 and 51 of the Federal Law ‘On Mortgages (Pledge of Real Estate)’ in connection with a challenge from the High Arbitrazh Court of the Russian Federation"

Opinion by Judge K.V. Aranovsky of the Constitutional Court of the Russian Federation Regarding Resolution No. 10-P by the Constitutional Court of the Russian Federation, dated 26 May 2011

The Resolution of the Constitutional Court of the Russian Federation dated 26 May 2011 No. 10-P represents the first comprehensive and detailed act in the history of Russian constitutional litigation dedicated to issues of arbitration proceedings. Despite the fact that the Resolution addresses a rather narrow problem, i.e. the arbitrability of disputes in connection with real estate, the Constitutional Court of the Russian Federation has drawn into it quite significant general conclusions of theoretic and applied importance with respect to the essence of the arbitration proceedings, the functions thereof and their place in the Russian legal system. It would not be a mistake to state that the content of the Resolution exceeded expectations even of the most optimistic supporters of the development of arbitral institutions and alternative dispute resolution in general. It explicitly criticizes the restrictive approach to the issue of the competence of arbitral tribunals that is conventionally assumed by state arbitrazh courts. Respectively, it recognizes the previous practice of the High Arbitrazh Court of the Russian Federation in terms of arbitrability of disputes in connection with real estate to be ill-founded.

The Resolution of the Constitutional Court of the Russian Federation is published together with a separate opinion to this Resolution from Constitutional Court Judge K.V. Aranovsky. While generally supporting the conclusions of the Constitutional Court, Judge Aranovsky suggests an even more liberal approach to arbitration basing it on a very interesting theoretical analysis of the role of justice and its correlation with non-state methods of dispute resolution.

Both the Resolution of the Constitutional Court of the Russian Federation and the separate opinion from Constitutional Court Judge K.V. Aranovsky are published here in English. The publication of these documents is followed by two analytical articles in Russian.

B.R. Karabelnikov. The Constitutional Court has Explained What is Arbitrability and Public Policy. But Arbitrazh Courts Still Fail to Hear that Explanation

A.I. Muranov. Legal Effect of the Resolution of the Constitutional Court of the Russian Federation dated 26 May 2011 No. 10-P in the Light of Legal Incorrectness of the Request of the High Arbitrazh Court to Determine the Constitutionality of a Number of Provisions of Russian Laws on Arbitration Proceedings

Ruling of the Panel of Judges of the High Arbitrazh Court of the Russian Federation of 25 July 2011, No. ВАС-6857/11 on Refusal of handing over the Case to the Presidium of the High Arbitrazh Court of the Russian Federation

Resolution of the Presidium of the High Arbitrazh Court of the Russian Federation of 14 June 2011 No. 1787/11

Resolution of the Presidium of the High Arbitrazh Court of the Russian Federation of 13 September 2011 No. 9899/09

A.A. Panov. The Decision of the UK Supreme Court in Case Jivraj v Hashwani – A Long-awaited Judgment by the Arbitration Community

In this issue, we offer our readers a translation of the famous UK Supreme Court decision in the case of Jivraj v Hashwani [2011] UKSC 40 which is accompanied by a short commentary on the judgment.

Jivraj attracted the attention of the arbitration community when the Court of Appeal held that UK and EU anti-discrimination legislation whereby the employer is prohibited from discriminating against the prospective employees on the basis of their religion and beliefs was applicable to the choice of arbitrators by the parties ([2010] EWCA Civ 712). Having found that the arbitrators should be considered employees, that the case did not fall within the exception from the general rule provided for in the legislation and that this requirement could not be separated from the rest of the clause, the Court of Appeal held that the arbitration clause was void in its entirety. This judgment placed under risk not only ad hoc arbitration clauses, but also many institutional rules that contain certain requirements with respect to the arbitrators’ nationality. The UK Supreme Court overruled the Court of Appeal judgment.

This case not only involves the interesting question of true construction of the EU and UK anti-discrimination legislation, but also recalls the older argument between those favoring the contractual theory of the arbitrator’s powers and those advocating the so-called status theory. Moreover, the Supreme Court seemed to have learned from its past experience with the European Court of Justice (lately, in the West Tankers case) and preferred to deal with the important issue without the involvement of the European judges. Overall, the UK Supreme Court rendered a very welcomed judgment that seems to have settled the law in this regard (at least until one of the courts in another EU jurisdiction refers a similar question for preliminary ruling of the ECJ).

Decision of the United Kingdom Supreme Court of 27 July 2011. Case of Jivraj v Hashwani, [2011] UKSC 40