Recognition and Enforcement of a DIS Arbitral Award

Oct 24, 2018

Mansors represented a German claimant in the recognition and enforcement proceedings of a DIS arbitral award in Russia. 

The dispute arose out of a consultancy agreement in the textile industry leading to a DIS arbitral award of approximately EUR 1,5 mln.

The application for the recognition and enforcement of the award was brought before the Commercial Arbitrazh Court of St. Petersburg and consequently appealed to the Federal Arbitrazh Court of the North Western District.

In the end, the debtor agreed to settle the case. In consideration for the settlement and release the defendant agreed to pay our client the full amount of principal debt, arbitraion and legal costs and interest.


General Overview of the Recognition and Enforcement of Foreign Arbitral Awards in Russia

Legal framework

Russia, as the successor of the USSR, is a party to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the "New York Convention").

The procedure for the recognition and enforcement of foreign arbitral awards is laid out in detail in the Russian national legislation.

-        The Law on International Commercial Arbitration (No. 5338-1 dated 7 July 1993 as amended on 29 December 2015);

-        The Arbitrazh (Commercial) Procedure Code.

Russia is a Model Law jurisdiction, which means that the Law on International Commercial Arbitration is based on the UNCITRAL Model Law. The law regulates most of the aspects of international commercial arbitration when the seat of arbitration is in Russia. In addition, the law regulates general issues related to the recognition and enforcement of foreign arbitral awards, such as the grounds for refusing the recognition and enforcement.

The Arbitrazh (Commercial) Procedure Code governs the procedural aspects of the recognition and enforcement process. It defines the filing procedure and the documents required by state courts for granting the recognition and enforcement of foreign arbitral awards.

Arbitration Agreement

Arbitration agreement is an agreement under which the parties undertake to submit to arbitration all or any differences which have arisen, or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration.

Russian law requires that arbitration agreements shall be done in writing. By the term "agreement in writing" shall include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams. Arbitration agreements can also be concluded by reference to standard forms, such as terms of business, professional rules etc. Arbitration agreements can be included in statutory documents of companies and shareholders’ agreements.

Jurisdiction and procedure

Applications for the recognition and enforcement of foreign arbitral awards in commercial disputes are submitted by a party to arbitration to the state Arbitrazh court of first instance at the location of a debtor or its assets. The application for the recognition and enforcement shall be accompanied by the certified copies of the arbitral award and arbitration agreement.

A sole judge shall rule on the application within one month from the filing. The ruling can be appealed in the cassation instance within one month. Ultimately, the matter can be brought before the Supreme Court for the final resolution.

Statistics

On average, there are 50 applications for the recognition and enforcement of the foreign arbitral awards filed every year. Even though some several years ago only a small portion of foreign awards were recognized in Russia, the latest statistics show that Russian courts have improved substantially. In 2013, only 24 out of 43 foreign arbitral awards were recognized and enforced by Russian state commercial courts. Whereas, already in 2014, 43 out of 55 foreign arbitral awards were recognized and enforced. Similarly, in 2015, 42 out of 54 foreign arbitral awards were recognized and enforced by Russian state commercial courts, which brings the ratio of successful applications up to 80%.

The average case duration from the moment a party files its application to the date when the final ruling is issued by Russian courts comprises less than 5 months. In 2013 the average duration of proceedings was 4,6 months, in 2014 – 3 months, and in 2015 – 4,5 months.