with Dr. Prof. Kaj Hober and Dr. Prof. Anton V. Asoskov Main Theme

38 Pages·2015·1.99 MB·English

Newsletter
Russian Arbitration Association Issue 5 // May 2015
www.arbitra(cid:415)ons.ru
Main Theme – Interviews – with Events –
11 20 33
Choosing Dr. Prof. Kaj Hober Sixth Moscow
an Arbitrator and Dr. Prof. Willem C. Vis
Anton V. Asoskov Pre-moot
Table of Contents
Welcome from Co-Chairs 3
Courts and Arbitra(cid:415)on in Russia 4
Overview of Key Court Decisions (January–May 2015) 4

Op(cid:415)onal Dispute Resolu(cid:415)on Clause is Valid and Enforceable 6
Cases to Watch in Russia and Abroad 7
Courts and Arbitra(cid:415)on Abroad 8
Sweden 8
Court of Jus(cid:415)ce of the European Union 9
Main Theme 11
Choosing an Arbitrator: Factors and Strategies To Consider 11
Securing Witnesses and Documents in Interna(cid:415)onal Arbitra(cid:415)on – Use of the English Courts 17
Interview with Dr. Prof. Kaj Hober 20
Interview with Dr. Prof. Anton Asoskov 26
Arbitra(cid:415)on Events to A(cid:425)end 31
RAA40 Events 33
Arbitra(cid:415)on in Singapore Seminar – 19 January 2015 33
Women in Arbitra(cid:415)on – 6 March 2015 34
Emergency Proceedings Discussion – 13 March 2015 35
Moscow Willem C. Vis Pre-moot – 14-15 March 2015 36

Become a Member of RAA40 38
Acknowledgements 39
02
Welcome from Co-Chairs
Dear friends and colleagues,
We are pleased to present to you the fi(cid:332)h issue of the RAA40 Newsle(cid:425)er, which is being released at the
Russian Arbitra(cid:415)on Day conference.
This Newsle(cid:425)er focuses on arbitrators. In this issue you will find interviews with Dr. Prof. Kaj Hober, a dis(cid:415)n-
guished Swedish arbitrator with vast experience in disputes coming from the CIS region, and with
Dr. Prof. Anton V. Asoskov, an academic and a dis(cid:415)nguished Russian arbitrator. They discuss their career
paths, their experience as arbitrators, their views on various issues in arbitra(cid:415)on from the tribunal’s bench,
and certainly reveal their outstanding personali(cid:415)es. Ryan Bull and Izabella Sarkisyan of Baker Bo(cid:425)s share with
us a comprehensive set of strategies and factors to consider in nomina(cid:415)ng arbitrators.
In 2015 RAA40 kept organizing and contribu(cid:415)ng to various events (both professional and networking) and we
refer you to the notes about the Arbitra(cid:415)on in Singapore seminar (p.33), Women in Arbitra(cid:415)on mee(cid:415)ng
(p.34), the Sixth Moscow Willem C. Vis Pre-moot and Emergency Proceedings Discussion held on the eve of
the Pre-moot (pp.35-36).
You will also find in the Newsle(cid:425)er our regular columns – essen(cid:415)al cases decided in Russia and abroad, cases
to watch, case notes from our colleagues abroad and a list of arbitra(cid:415)on events to a(cid:425)end.
We would like to use this opportunity to announce a change in the RAA40 leadership. Ivan Chuprunov was
recently succeeded by Egor Chilikov as a co-chair of RAA40. Egor is an arbitra(cid:415)on prac(cid:415)(cid:415)oner, formerly an
associate at Baker Bo(cid:425)s and currently at A Group, an arbitra(cid:415)on and li(cid:415)ga(cid:415)on investment fund. We are grate-
ful to Ivan for being with us since the very launch of the RAA40 and certainly warmly welcome Egor.
As always, please, do not hesitate to contact us at raa40@arbitra(cid:415)ons.ru should you have any queries about
the ac(cid:415)vi(cid:415)es of RAA40, wish to share with us your ideas or submit a contribu(cid:415)on to the Newsle(cid:425)er.
Yours sincerely,
RAA40 Co-Chairs

Sergey Usoskin Olesya Petrol Egor Chilikov Anna Shumilova
03
Courts
and Arbitration
in Russia
Overview of Key Court Decisions: January-May 2015

By Sergey Usoskin, Advocate, RAA40 Co-Chair
1. Non-Arbitrability of Public Procurement Disputes Does Not Create Cons(cid:415)tu(cid:415)onal Issues
Applica(cid:415)on of City Clinical Hospital No. 15 of the Moscow Department of Health
(Ruling of the Cons(cid:415)tu(cid:415)onal Court No. 233-O/2015 dated 5 February 2015)
The Cons(cid:415)tu(cid:415)onal Court held that se(cid:427)ng aside an arbitral award does not affect the cons(cid:415)tu(cid:415)onal rights of
the award-creditor. The applicant relied primarily on the right of access to court. The Cons(cid:415)tu(cid:415)onal Court
noted that the applicant may s(cid:415)ll bring its claims before state courts, even if the award is set aside due to
non-arbitrability of the subject ma(cid:425)er. Accordingly, the Cons(cid:415)tu(cid:415)onal Court held that the se(cid:427)ng aside itself
does not affect the applicant’s rights. It went on to observe that the Cons(cid:415)tu(cid:415)onal Court has no jurisdic(cid:415)on
to review the commercial courts’ finding that the underlying dispute arising out of a public procurement
contract is a public one and therefore not arbitrable.
2. A Link Between an Arbitral Ins(cid:415)tu(cid:415)on and a Party to Arbitra(cid:415)on Not Necessarily a Problem
LLC Realty Agency Apartments Shop v. JSC TsentrEnergoMontazh
(Case No. А62-171/2014, Economic Disputes Panel of the Supreme Court, Ruling No. 310-ЭС14-4786 dated
19 March 2015)
The Supreme Court held that the fact that the claimant was a member of a regional Chamber of Commerce
and Industry did not jus(cid:415)fy a refusal to enforce an arbitral award against a non-member rendered by an
arbitral ins(cid:415)tu(cid:415)on the chamber had created. The court relied heavily on the respondent’s failure to challenge
the validity of the arbitra(cid:415)on clause, jurisdic(cid:415)on of the arbitral tribunal or independence of the tribunal’s
members at any point before the tribunal rendered the award.
Following earlier decisions of the Cons(cid:415)tu(cid:415)onal Court, the Supreme Court explained that the existence of a
link between an arbitral ins(cid:415)tu(cid:415)on and one of the par(cid:415)es to arbitra(cid:415)on the ins(cid:415)tu(cid:415)on administers does not
create the issue by itself. Rather an issue arises if the other party had been forced to agree to arbitra(cid:415)on
administered by the ins(cid:415)tu(cid:415)on or where the relevant link affects the independence of the arbitral tribunal.
If a party had been forced to agree to arbitra(cid:415)on or agreed to arbitra(cid:415)on due to mistake or fraud, the proper
remedy is for the party to challenge the validity of the arbitra(cid:415)on agreement. Such a challenge can be brought
before either a state court or the arbitral tribunal. A party which knows about a link between the arbitral
ins(cid:415)tu(cid:415)on and the other party, but fails to raise such a challenge is precluded from relying on the link in
enforcement proceedings or proceedings to have an award set aside.
04
If a party considers that the link between the other party and the arbitral ins(cid:415)tu(cid:415)on affects the independence
of a member of the tribunal, the party should challenge the arbitrator. Again, failure to submit such a
challenge may prevent the party from relying on the relevant circumstances before a state court in
enforcement proceedings or proceedings to have the award set aside.
3. Par(cid:415)al Annulment Possible Where Only a Part of the Award is Contrary to the Public Policy
Corradino Corpora(cid:415)on Ltd. v. JSC Russian Insurance Center
(Case No. А40-274/2014, Economic Disputes Panel of the Supreme Court, Ruling No. 310-ЭС14-2110 dated 24
February 2015)
The Supreme Court ruled that an arbitral award should be par(cid:415)ally set aside, since the arbitral tribunal failed
to apply deduc(cid:415)ble (franchise) provided for in the insurance contract. The court faced a unique situa(cid:415)on in
which the arbitral tribunal itself had acknowledged the mistake in an addi(cid:415)onal award, but the addi(cid:415)onal
award was set aside for procedural reasons.
The Supreme Court held that an award which completely fails to apply a contractual provision without giving
any reasons for this failure is contrary to Russian public policy. However, the court noted the need to maintain
a balance between the rights of the par(cid:415)es to arbitra(cid:415)on in determining an applica(cid:415)on to set aside an award.
Applying this principle, it ruled that where a court may separate the offending part of the award from the
other parts the court should only set aside the offending part.
4. Russian Court Unwilling to Grant An(cid:415)-Enforcement Injunc(cid:415)ons
Kyrgyzstan et al. v. Stans Energy et al.
(Case No A40-64831/2014, Moscow Commercial Court, Ruling dated 25 February 2015)
In proceedings before the Moscow Commercial Court Kyrgyzstan sought to set aside an over USD 100 mln
arbitral award in Stans favour. In parallel Stans sought to enforce the award in Canada against shares in a
Canadian company held by a Kyrgyz state-owned company. Kyrgyzstan asked the Moscow Commercial Court
to order Stans, its officers and external counsel to cease any a(cid:425)empts to enforce the award and to take all
measures to remove asset freezes secured in support of such enforcement pending the Moscow Commercial
Court’s decision on the applica(cid:415)on to set aside the award.
The court refused to make such an order relying on three grounds. Firstly, Kyrgyzstan failed to prove that it
would be impossible or much harder to enforce the decision of the court in the proceedings to set aside the
award unless the court orders the interim measures that Kyrgyzstan sought. Secondly, the court doubted its
jurisdic(cid:415)on to make the requested order. Finally, the court observed that Kyrgyzstan may bring the
proceedings to set aside the award to the a(cid:425)en(cid:415)on of the Canadian courts, which apparently the Moscow
Commercial Court considered to be a more appropriate remedy available to Kyrgyzstan.
05
Optional Dispute Resolution Clause is Valid and Enforceable
By Maria Kiskachi, PhD Student, Lomonosov Moscow State University
Deutsche Bank AG (London) v. LLC Agrofirma “Razdolye”, LLC Rassvet and LLC Razvilenskoye
(Case No. А53-17338/2014, Ruling of the Rostov Region Commercial Court dated 27 November 2014,
Judgment of the Fi(cid:332)eenth Commercial Appellate Court dated 12 March 2015)
On 12 March 2015 a Russian appellate court overruled the lower court's decision invalida(cid:415)ng the op(cid:415)onal
part (the “Lender’s Op(cid:415)on”) of a complex dispute resolu(cid:415)on clause and referring par(cid:415)es to arbitra(cid:415)on.
In July 2014 Deutsche Bank AG (London) commenced proceedings against three Russian companies - Agro-
firma “Razdolye” Ltd, Rassvet Ltd and Razvilenskoye Ltd – before the Rostov Court to collect debt in the
amount of approximately 500 million US dollars. Deutsche Bank relied on the op(cid:415)onal clause in the facility
agreement between the par(cid:415)es. The clause conferred jurisdic(cid:415)on on the English courts, but permi(cid:425)ed
Deutsche Bank (as the facility agent) to sue the guarantor in any competent na(cid:415)onal court. The contract also
provided for an alterna(cid:415)ve dispute resolu(cid:415)on mechanism: arbitra(cid:415)on under LCIA Rules.
Since Agrofirma “Razdolye” Ltd, Rassvet Ltd and Razvilenskoye Ltd are incorporated and domiciled in Rostov,
Russia, Deutsche Bank opted for the Rostov Commercial Court and submi(cid:425)ed its claim there. The respond-
ents in turn submi(cid:425)ed a mo(cid:415)on to stay proceedings and refer par(cid:415)es to arbitra(cid:415)on.
The Rostov Region Commercial Court found the Lender’s Op(cid:415)on incompa(cid:415)ble with the principle of equality
of arms, as interpreted in the several judgments of the Cons(cid:415)tu(cid:415)onal Court of the Russian Federa(cid:415)on and the
ECtHR case Batsanina v. Russia (App.no. 3932/02). In view of this finding, and emphasizing that the “valid
part” of the dispute resolu(cid:415)on clause provides for LCIA arbitra(cid:415)on, the Rostov Court refused to hear the case.
Unlike the court of first instance, the Appellate Court concluded that the Lender’s Op(cid:415)on must be enforced,
since it is consistent with both Russian and English law. The appellate panel of three judges relied solely on
the text of the agreement and did not discuss any procedural guarantees. In support of its posi(cid:415)on, the Appel-
late Court also cited jurisprudence of the Federal Commercial Court of Moscow Circuit, where in similar
circumstances a Lender’s Op(cid:415)on clause was upheld. Finally, the higher court remanded the case to the Rostov
Court for reconsidera(cid:415)on.
06
Cases to Watch
in Russia and Abroad
Case: State Corpora(cid:415)on Russian Automobile Roads v. LLC United Tolls Systems (A40-15622/15)
Forum: Ninth Appellate Commercial Court
Significance of the Case: (1) Russian law provides for the applica(cid:415)on of an interna(cid:415)onal as opposed
to a domes(cid:415)c arbitra(cid:415)on regime in rela(cid:415)on to disputes between two Russian companies, where one
of them is foreign-owned. The Moscow Commercial Court ruled that this rule con(cid:415)nues to apply
even if the relevant party ceased to be foreign-owned a(cid:332)er the par(cid:415)es entered into the arbitra(cid:415)on
agreement; (2) the first instance court’s decision suggests that when assessing enforceability of an
arbitra(cid:415)on clause in the context of a mo(cid:415)on to refer par(cid:415)es to arbitra(cid:415)on, the courts should apply a
lower standard deferring to arbitrators.
Case: Czech Export Bank v. Mezhtopenergobank (A40-83447/2014)
Forum: Moscow Commercial Court/Supreme Court
Significance of the Case: Czech Export Bank seeks to enforce an arbitral award in Russia, which
related to a contractual dispute between the par(cid:415)es. The respondent opposed enforcement arguing
that the underlying contract is void, had been procured by corrupt means and the claimant’s
commencement of arbitra(cid:415)on cons(cid:415)tutes an abuse of rights. The first instance court refused to
enforce the award, however the Commercial Court for the Moscow Circuit quashed the decision and
remanded the case poin(cid:415)ng out that the arbitral tribunal had already considered and dismissed
some of the respondent’s arguments.
Case: Victor Melnik v. Omnilightstar Limited (А40-135118/13)
Forum: Moscow Commercial Court
Significance of the Case: The court is to decide the scope of corporate disputes with respect to
Russian companies that are not arbitrable. Mr Melnik seeks to enforce an arbitral award rendered in
a dispute arising out of a shareholders agreement between the shareholders in a Russian joint-stock
company. The tribunal ordered the respondent to pay RUR 150'000'000 in compensa(cid:415)on for a
breach of the agreement. The Moscow Commercial Court’s decision refusing to enforce the award
on the basis of non-arbitrability has been reversed by the Commercial Court for the Moscow Circuit.
Case: Kyrgyzstan v. Lee John Beck, Central Asian Corpora(cid:415)on for Development Corpora(cid:415)on
(А40-19518/14), Kyrgyzstan v. Stans Energy (A40-64831/2014, A40-127910/2014), Kyrgyzstan v.
OKVV (A40-25942/2014)
Forum: Moscow Commercial Court/Commercial Court for the Moscow Circuit
Significance of the Case: Kyrgyzstan seeks the annulment of awards rendered by tribunals si(cid:427)ng
under the rules of the Arbitra(cid:415)on Court at the Moscow Chamber of Commerce and Industry. The
main issue in all disputes is whether either (i) Ar(cid:415)cle 11 of the Conven(cid:415)on on the Protec(cid:415)on of
Investor's Rights or (ii) Kyrgyzstan’s law on Foreign Investments contain Kyrgyzstan’s consent to
arbitra(cid:415)on of disputes with any foreign investor.
07
Courts
and Arbitration
Abroad
Sweden
By Fredrik Ringquist and Anna Alriksson (Mannheimer Swartling Moscow and Stockholm, respec(cid:415)vely)
Award upheld against the Russian Federa(cid:415)on
Judgment of the Svea Court of Appeal (Stockholm), 23 January 2015, case No. T 2454-14 (the Government
of the Russian Federa(cid:415)on (the “Government”) vs. I.M. Badprim (“Badprim”).
Facts
In July 2007, Badprim, a Moldavian construc(cid:415)on company, concluded a turnkey agreement with the Federal
Customs Service of the Russian Federa(cid:415)on (“Federal Customs Service”) for the design and construc(cid:415)on of a
border sta(cid:415)on between Poland and Russia the (the “Turnkey Agreement”). In November 2010, Badprim com-
menced arbitra(cid:415)on against the Federal Customs Service and the Government under the arbitra(cid:415)on clause in
the Turnkey Agreement. Following a jurisdic(cid:415)onal objec(cid:415)on by the Government, the Tribunal decided to try
the Government’s objec(cid:415)on as a preliminary and separate ma(cid:425)er.
The Tribunal rejected the Government’s jurisdic(cid:415)onal objec(cid:415)ons in a par(cid:415)al award on jurisdic(cid:415)on rendered in
July 2012. In the final award, issued in October 2013, the Tribunal rejected Badprim’s request for damages
vis-à-vis the Federal Customs Service but ordered the Government to pay EUR 1,8 million, together with inter-
est, to Badprim.
The Government subsequently challenged the award with the Svea Court of Appeal, arguing that it should be
set aside on three separate grounds. First, the Government claimed that there was no arbitra(cid:415)on agreement
between the Government and Badprim since the Government was not party to the Turnkey Agreement.
Second, the Government argued that the arbitra(cid:415)on agreement in any event was invalid since it provided that
the SCC was to administer the arbitra(cid:415)on under the ICC Rules. Finally, the Government claimed that the Tribu-
nal in any case had departed from the par(cid:415)es’ joint instruc(cid:415)ons by not applying the ICC Rules.
Held
In a judgment dated 23 January 2015, the Svea Court of Appeal rejected the Government’s challenge applica-
(cid:415)on. As to the Government’s first claim, the Svea Court of Appeal held that the Government’s inten(cid:415)on must
have been that the Federal Customs Service would act on its behalf and that the Federal Customs Service also
had signed the agreement as an intra vires act on behalf of the Government. In this respect, the Svea Court
of Appeal relied on expert tes(cid:415)mony regarding the status of the Federal Customs Service under Russian law.
Hence, the Svea Court of Appeal concluded that Badprim had proved that the award against the Government
was rendered on the basis of an arbitra(cid:415)on agreement between the Government and Badprim. One of the
three judges dissented with the majority and wanted to set aside the award due to the absence of an arbitra-
(cid:415)on agreement.
08
As to the Government’s second claim, the Svea Court of Appeal noted that although the arbitra(cid:415)on clause
was contradictory in that it provided that the SCC was to administer an arbitra(cid:415)on under the ICC Rules , the
clause had to be understood to mean that the par(cid:415)es’ intent was to have disputes resolved through arbitra-
(cid:415)on and that such arbitra(cid:415)on was to take place in Stockholm at the SCC. In this connec(cid:415)on, the Svea Court of
Appeal noted that nothing indicated that there was a par(cid:415)cular reason why the ICC Rules had been chosen.
Nor was there any evidence to the effect that the Government had informed Badprim that the applica(cid:415)on of
the ICC Rules was important for the Government. The Svea Court of Appeal went on to conclude that since
the SCC also had successfully administered the case, the arbitra(cid:415)on agreement was executable, and therefore
it was also valid.
Finally, as regards the Government’s third claim, the Svea Court of Appeal held that even though the Tribunal
had adjusted the ICC Rules to fit with the SCC organiza(cid:415)onal structure, this did not cons(cid:415)tute a departure
from the joint instruc(cid:415)ons given by the par(cid:415)es to the Tribunal.
Review of challenges to Swedish arbitral awards
Former Swedish Supreme Court Jus(cid:415)ce Johan Munck, who leads a commi(cid:425)ee tasked with modernizing the
Swedish Arbitra(cid:415)on Act, has reviewed all challenges to awards filed with Swedish courts between 2004 and
2014. The study relates to ac(cid:415)ons under Sec(cid:415)ons 33, 34 and 36 of the Swedish Arbitra(cid:415)on Act. Jus(cid:415)ce
Munck’s review, published in the most recent issue of Svensk Juris(cid:427)dning, confirms the results of previous
studies showing a low percentage of successful challenges.
Jus(cid:415)ce Munck found that Swedish courts registered 191 challenges to awards during the (cid:415)me in ques(cid:415)on.
Only 6% of those challenges have resulted in the award being set aside, declared invalid or adjusted. The
review also showed that the average dura(cid:415)on of challenge proceedings has dras(cid:415)cally decreased during the
ten-year period studied. In 2004, the average (cid:415)me between the filing of a challenge and the issuance of a
judgment was 20 months, whereas in 2014 it was only 7 months.

Court of Justice of the European Union
By Robert Dougans and Tatyana Talyanskaya, Bryan Cave LLP
Case C 536/13, ‘Gazprom’ OAO (Request for a preliminary ruling) 13 May 2015
Further to the opinion of Advocate General Wathelet (reported in the last RAA40 newsle(cid:425)er) the Court of
Jus(cid:415)ce of the European Union (“CJEU”) has delivered its decision in this case rela(cid:415)ng to the grant of an(cid:415)-suit
injunc(cid:415)ons by the Courts of EU Member States.
In this case, an arbitral tribunal made an award holding that declared that certain Lithuanian court proceed-
ings had been commenced in breach of the relevant arbitra(cid:415)on agreement. The tribunal went on to order
that the party bringing those proceedings withdraw certain requests and limit the scope of requests to
avoid breaching the arbitra(cid:415)on agreement. Upon applica(cid:415)ons being made to the Courts to enforce the
award, the Lithuanian courts sought a preliminary reference from the CJEU as to whether the tribunal was
able under EU law to deny the par(cid:415)es the right to apply to a court of an EU Member State.
Advocate General Wathelet had suggested in his opinion to the CJEU that the well-known decision in West
Tankers was wrong and that an(cid:415)-suit injunc(cid:415)ons might be available in rela(cid:415)on to arbitra(cid:415)on proceedings
under the new Brussels Regula(cid:415)on, as they would be considered proceedings ancillary to arbitra(cid:415)on and be
thereby excluded from the scope of the recast regula(cid:415)on.
09
The CJEU held that proceedings for the recogni(cid:415)on and enforcement of an arbitral award are covered by the
na(cid:415)onal and interna(cid:415)onal law applicable in the Member State in which recogni(cid:415)on and enforcement are
sought. They are not covered by the Brussels Regula(cid:415)on. The CJEU accordingly concluded that EU law did not
prevent a Member State from enforcing, or refusing to enforce, an arbitral award which contained an an(cid:415)-suit
injunc(cid:415)on as EU law did not govern the recogni(cid:415)on and enforcement of arbitral awards by the courts of
Member States.
The CJEU declined to set aside the West Tankers case , no(cid:415)ng that the Gazprom case did not involve an injunc-
(cid:415)on issued by a court of a Member State, but rather concerned the ques(cid:415)on of whether EU law allowed a
court to recognize and enforce an arbitral award making some sort of an(cid:415)-suit injunc(cid:415)on.
10