Anton Imennov’s commentary on the Supreme Court’s judgement on rulings of arbitration tribunals
The Supreme Court of the RF issued clarification on cases concerning enforcement or appeal of arbitration tribunal rulings. This is the first judgement at the level of the Plenary Session of the Supreme Court explaining how to apply the law on arbitration within the framework of the arbitration reform. On the whole the document is pro-arbitration and is aimed at arbitration development in Russia and ousting of fraudulent arbitration tribunals from the market. But lawyers stress that the definition of public order, contrariety to which may constitute grounds for cancellation of an arbitration ruling, is too blurry and leaves much to the discretion of public courts.
The Supreme Court approved the Plenary Session’s judgement on enforcement and appeal of rulings of arbitration tribunals. The document primarily regulates interaction of public and arbitration courts, setting rules and restrictions for them.
There are two key ideas in the judgement. First, the provisions aimed against arbitration tribunals which have not obtained operating permits. Specifically, against the ones which are trying to disguise themselves as ad hoc courts (established for settlement of a specific dispute). Thus, the Supreme Court stresses that concealment of a permanent (institutional) arbitration tribunal under the disguise of an ad hoc settlement will be qualified as evasion of the law on arbitration. Therefore such rulings will be cancelled. According to the Supreme Court, signs of concealment include, for example, joining of arbitrators into colleges or lists, proprietary rules of arbitration, a single person responsible for facilitating arbitration hearings with the participation of different arbitrators. An arbitration agreement providing for a choice of a court which has no right to settle the dispute under the new law will be considered unenforceable.
The most important idea in the Plenary Session’s judgement concerns cancellation of arbitration tribunal rulings by public courts.
The Supreme Court notes that the competence of a public court does not include re-evaluation of circumstances identified by an arbitration tribunal or revision of the case on the merits; it can only perform a check as to existence of grounds for cancellation. One of such grounds is contrariety of an arbitration ruling to public order of the RF. In order to cancel an arbitration ruling on such grounds a public court has to identify violation of fundamental principles of the rule of law, a risk of detriment to sovereignty, impingement upon interests of large social groups or violation of constitutional rights of physical or legal persons.
According to Counsellor of Norton Rose Fullbright Andrey Panov, on the whole the document guides the courts towards support of arbitration, whereas currently the situation with the attitude of Russian public courts to arbitration tribunals is critical. ‘In 2018 courts satisfied a quarter of petitions to cancel rulings of arbitration tribunals and denied issue of enforcement orders for a third of them,’ he explains. According to Partner of Ivanyan and Partners Legal Bureau Andrey Gorlenko, the Supreme Court’s judgement further develops the March amendments to the law aimed against the use of ad hoc arbitration for various kinds of abusive practices. The lawyer hopes that the document will lead to establishment of a ‘truly consistent pro-arbitration approach in judicial practice.’ Head of Vegas Lex Arbitration Practice Viktor Petrov doubts that the judgement will solve all the problems with ad hoc courts, but ‘the very fact of its adoption indicates attention of public courts to arbitration tribunals, which is the right direction to move in.’
Provisions concerning cancellation of arbitration rulings on grounds of contrariety to public order are, according to Andrey Gorlenko, appropriate. In his opinion, court may resort to these grounds for cancellation of arbitration rulings only in truly extraordinary cases. But Andrey Panov objects that in the final edition of the document the definition of public order is exceptionally broad, which will allow public courts to largely use these grounds for cancellation of arbitration rulings. Managing Partner of Moscow office of Pen & Paper Attorneys at Law Anton Imennov agrees with Mr. Panov. He presumes that the final definition ‘may provide additional space for the courts and facilitate a broader application of public order.’ Viktor Petrov also thinks that the document ‘leaves much room for judicial discretion in this part.’ As a result, Mr. Imennov stresses, the judgement seems controversial: there are provisions which are likely to worsen the situation for arbitration tribunals, as well as those changing the practice towards a more flexible approach.