Russia: Arbitration

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This country-specific Q&A provides an overview of the legal framework and key issues surrounding arbitration law in the Russia.

This Q&A is part of the global guide to Arbitration.

For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/arbitration/

  1. What legislation applies to arbitration in your country? Are there any mandatory laws?

    The Federal Law “On International Commercial Arbitration” of 1993 (as amended in 2015) (“ICA”) governs international arbitrations seated in Russia.

    The Federal Law “On Arbitration (Arbitration Proceedings) in the Russian Federation” of 2015 (“DAA”) governs domestic arbitrations. Some of the DAA’s provisions equally apply to international arbitrations seated in Russia (on requirements to arbitrators, retention of case materials, establishment of permanent arbitral institutions and admission of foreign arbitral institutions, arbitration-mediation relations, and arbitrators’ and arbitral institutions’ liability).

    The Code of Commercial Procedure and Code of Civil Procedure govern recognition and enforcement of foreign arbitral awards and ancillary proceedings, as well as a list of non-arbitrable disputes.

  2. Is your country a signatory to the New York Convention? Are there any reservations to the general obligations of the Convention?

    As a successor state to the USSR, Russia is a member of the New York Convention. Upon ratification, the USSR appended a declaration stating that it will apply the Convention in respect of arbitral awards made in the territories of non-parties on a reciprocal basis only.

  3. What other arbitration-related treaties and conventions is your country a party to?

    Russia is also a member of the 1961 European Convention on International Commercial Arbitration (“Geneva Convention”) and the 1972 Moscow Convention on the Settlement by Arbitration of Civil Law Disputes Arising from Relations of Economic, Scientific, and Technical Cooperation. Russia has signed but not ratified the 1992 Convention on the Settlement of Investment Disputes between States and Nationals of Other States. According to the UNCTAD database, Russia is currently a party to 64 bilateral investment treaties in force.

  4. Is the law governing international arbitration in your country based on the UNCITRAL Model Law? Are there significant differences between the two?

    Although the ICA generally follows the language of the UNCITRAL Model Law, there exist some differences between the two. For example, the ICA provisions on interim measures are far less detailed than those in the Model Law and the opposite is true for the provisions on arbitral agreements. Furthermore, the ICA allows parties to an institutional arbitration to opt out of its provisions on judicial assistance to and supervision over arbitral proceedings, as well as the right to seek to have the award set aside.

  5. Are there any impending plans to reform the arbitration laws in your country?

    Russian arbitration laws have already been the subject of a comprehensive reform in 2015–2016, which essentially overhauled the regulation of arbitral institutions, set out lists of non-arbitrable disputes, established special rules for arbitration of corporate disputes, and substantially harmonised Russian arbitration legislation with the UNCITRAL 2006 Model Law.

  6. What arbitral institutions (if any) exist in your country? Have there been any amendments to their rules or are there any being considered?

    There are currently four arbitral institutions in Russia that received an authorisation from the Russian Government: the International Commercial Arbitration Court (“ICAC”) and Maritime Arbitration Commission (“MAC”) at the Chamber of Commerce and Industry of the Russian Federation, the Arbitration Center at the Russian Union of Industrialists and Entrepreneurs, the Russian Arbitration Center at the Russian Institute of Modern Arbitration (“RIMA”). All of them, with the exception of the MAC, have opened branches in various regions of Russia. Moreover, all the arbitral institutions have amended their rules in 2017–2018 to reflect the recent legislative developments.

    The Russian Arbitration Association currently awaits government authorisation to administer disputes.

  7. What are the validity requirements for an arbitration agreement under the laws of your country?

    An arbitration agreement must be made in writing, whether as a separate agreement or an arbitration clause incorporated into the main contract, and specify types of existing or future disputes it covers. Аn arbitration agreement can also be concluded by way of the exchange of letters, faxes, emails, and other electronic means or by the exchange of claim and response in which the existence of an agreement is alleged by one party and not denied by another. A reference to another document which contains an arbitration agreement is also sufficient if the nature of the reference makes the arbitration agreement part of the main agreement. In addition, there is contradictory case law, in which some courts required that an arbitration agreement must also clearly and accurately designate an arbitral institution.

  8. Are arbitration clauses considered separable from the main contract?

    The principle of separability of arbitration clauses is expressly recognised in both the ICA and DAA.

  9. Is there anything particular to note in your jurisdiction with regard to multi-party or multi-contract arbitration?

    Russian law does not specifically address either multi-party or multi-contract arbitration, although rules of the arbitral institutions typically govern some of the related issues, like the appointment of arbitrators or joinder.

  10. How is the law applicable to the substance determined? Is there a specific set of choice of law rules in your country?

    A tribunal shall apply the substantive law chosen by the parties and in the absence of their agreement — the law it deems applicable in accordance with the conflict of laws rules. A reference to the law of a state shall be construed as not implying its conflict of laws rules. For domestic arbitration Russian law is the default governing law, and the tribunal can apply foreign law only to the extent it is permitted under Russian conflict of laws rules enshrined in the third part of the Russian Civil Code.

  11. Are any types of dispute considered non-arbitrable? Has there been any evolution in this regard in recent years?

    The Code of Commercial Procedure and Code of Civil Procedure, amended in 2015, list non-arbitrable disputes, including, in particular, those relating to insolvency, registration of legal entities or sole proprietors, intellectual property (partially), administrative and other public law issues, privatisation, public procurement, labour and employment, inheritance, consumer protection, etc.

    Furthermore, as part of the 2015 reform, most corporate disputes became arbitrable subject to the condition that they may be referred only to arbitral institutions that have obtained a special authorisation from the Russian Government and adopted the rules on arbitration of corporate disputes; and the seat of arbitration of corporate disputes must be in Russia. However, a number of corporate disputes remain non-arbitrable (e.g., disputes on convocation of the general annual meetings or disputes arising out of buy-backs).

    Russian courts have recently taken a stand that disputes involving “public element” — e.g., concluded for public purposes or involving state budget funding — may be non-arbitrable even though the legislation is silent in this respect.

  12. In your country, are there any restrictions in the appointment of arbitrators?

    Except as described below, parties are free to select arbitrators and agree on their number and method of appointment. Unless the parties have agreed otherwise, either the sole arbitrator or at least one of the tribunal members shall be a lawyer qualified in Russia or another jurisdiction. Moreover, regardless of the parties’ agreement an arbitrator must be more than 25 years old, have the full legal capacity, not have any effective criminal or disciplinary record (within the legal profession), and not be barred from acting as an arbitrator by federal law.

  13. Are there any default requirements as to the selection of a tribunal?

    In the absence of the parties’ agreement as to the number of arbitrators, a three-member tribunal shall be constituted. Further, failing the agreement of the parties on a procedure for appointment of a tribunal, each party appoints an arbitrator; two arbitrators so appointed select the third arbitrator. Should any of the parties fail to select an arbitrator within the period of thirty days after it receives a request to that end from the other party, or should the two arbitrators fail to reach an agreement as to the person of the third arbitrator, they shall be appointed — at the request of either party — by the competent court. In case, parties have not agreed on the sole arbitrator, the competent court shall likewise act as an appointing authority.

  14. Can the local courts intervene in the selection of arbitrators? If so, how?

    Should the parties’ chosen method for selecting arbitrators fail, they may apply to the competent court for the appointment of arbitrators in accordance with such a method. This is the case, in particular, when one of the parties fails to comply with the procedure agreed between them, or parties or arbitrators fail to reach an agreement in accordance with such procedure, or a third party (usually, an arbitral institution acting as an appointing authority) fails to perform actions requisite to appoint the tribunal.

    When acting as an appointing authority the competent court shall take cognisance of any requirements to arbitrators agreed to by the parties along with such considerations that it might deem relevant for appointing an independent and impartial arbitrator.

    If the dispute is administered by an arbitral institution having received a governmental authorisation, the parties may expressly exclude the option of the arbitrators’ appointment by the court. In such case, a failure of the parties to agree on the appointment of arbitrators would lead to termination of the arbitral proceedings, and the dispute might be submitted to a court.

  15. Can the appointment of an arbitrator be challenged? What are the grounds for such challenge? What is the procedure for such challenge? Has there been an increase in number of challenges in your jurisdiction?

    A party, who has reasonable doubts as to an arbitrator’s impartiality and independence or as to their compliance with statutory requirements or the arbitration agreement, may seek removal of the arbitrator. A party may challenge an arbitrator appointed by them only if the grounds for challenge came to their knowledge after the appointment. Furthermore, an arbitrator’s mandate terminates if an arbitrator becomes legally or factually unable to perform their functions or does not fulfil their duties for an unreasonably long period of time.

    Unless otherwise agreed by the parties, an application for the removal must, first, be submitted to the tribunal itself which will rule on the matter unless the parties agree on the recusal or the challenged arbitrator recuses themselves. Should, however, a challenge fail before the tribunal, the losing party may apply to the competent court for the removal, although this by no means prevents the tribunal from going forward with the case. The parties to an institutional arbitration may expressly waive recourse to courts.

  16. What happens in the case of a truncated tribunal? Is the tribunal able to continue with the proceedings?

    Under the ICA, in case an arbitrator is removed, a new arbitrator shall be appointed in accordance with the rules governing the original appointment, although the rules of some institutions delegate this power to the institution itself. Case law of Russian courts demonstrates that a truncated tribunal is entitled to proceed with a case only on an exceptional basis (for instance, when at a post-hearing stage an arbitrator is no longer able to take part in the proceedings, yet they have taken part in the deliberations and have made their position on the case known to the other arbitrators).

  17. Are arbitrators immune from liability?

    The DAA excludes the civil liability of an arbitrator except in cases when they have been found guilty of a crime. Arbitral institutions, however, are entitled to reduce an arbitrator’s fees should they fail in the proper performance of their duties.

  18. Is the principle of competence-competence recognised in your country?

    Both the ICA and DAA recognise the competence-competence principle in line with the wording of Article 16 of the UNCITRAL Model Law.

  19. What is the approach of local courts towards a party commencing litigation in apparent breach of an arbitration agreement?

    Under both the Code of Commercial Procedure and Code of Civil Procedure a court shall dismiss a case without prejudice should a party raise an objection to the court’s jurisdiction and invoke an arbitration agreement prior to its first submission on the merits. The court proceedings, however, will continue if the court finds that the arbitration agreement is invalid, ineffective, or unenforceable.

  20. How are arbitral proceedings commenced in your country? Are there any key provisions under the arbitration laws relating to limitation periods or time bars of which the parties should be aware?

    Subject to the parties’ agreement to the contrary, arbitral proceedings are commenced when a statement of claim is received by a respondent. Whereas under the rules of some arbitral institutions a request for arbitration is sufficient to commence arbitral proceedings, others provide for filing the statement of claim. Under Russian law, limitation periods are a part of the substantive law and, thus, would depend on the applicable law. In particular, the Russian Civil Code sets out a general three-year statute of limitations, starting from the date when the claimant became aware or should have become aware of the violation of their rights. Although the statute of limitations is extendable, it cannot exceed ten years from the date of the violation.

  21. What happens when a respondent fails to participate in the arbitration? Can the local courts compel parties to arbitrate?

    Even if a duly served respondent fails or refuses to participate in the arbitration, this does not prevent a tribunal from considering a case and making an award. Russian courts do not have the power to compel a party to arbitrate.

  22. In what circumstances is it possible for a state or state entity to invoke state immunity in connection with the commencement of arbitration proceedings?

    In 2015, Russia adopted a federal law effectively implementing the 2004 United Nations Convention on Jurisdictional Immunities of States and Their Property. Jurisdictional immunity, which encompasses immunity of states and state entities from court (or arbitral) proceedings, interim measures, and enforcement, is extended on a reciprocal basis to acts performed in the exercise of sovereign state authority. A state generally cannot rely on state immunity in disputes arising out of its commercial activity, labour disputes, disputes concerning participation in companies, disputes concerning a state’s rights or interests in real estate and other property situated in Russia, tort disputes, intellectual property disputes, and disputes concerning commercial vessels. Further, a state is deemed have waived its immunity if, inter alia, it enters into an arbitration agreement.

  23. In what instances can third parties or non-signatories be bound by an arbitration agreement or award? Can local courts order third parties to participate in arbitration proceedings in your country?

    A tribunal generally has no jurisdiction over non-parties to an arbitration agreement, except for cases involving assignment of or succession to claims or obligations, or when other shareholders or participants of a legal entity join a corporate dispute. Russian courts do not have the power to compel third parties to arbitrate.

  24. What interim measures are available? Will local courts issue interim measures pending the constitution of the tribunal?

    Unless otherwise agreed by the parties, a tribunal may grant such interim relief it considers necessary. Interim measures ordered by a tribunal, however, do not bind third parties and cannot be enforced through bailiffs. In light of that in most cases parties apply to a court to obtain interim measures.

    Pending the constitution of the tribunal, a party may request a court or — had the parties so agreed — the arbitral institution to grant interim measures.

  25. Are there particular rules governing evidentiary matters in arbitration? Will the local courts in your jurisdiction play any role in the obtaining of evidence?

    Although Russian law does not provide for disclosure/discovery, a tribunal may at the request of one of the parties or at its own discretion ask for additional evidence from the parties.

    Except when otherwise agreed by the parties or the rules of a relevant arbitral institution so provide, all matters regarding evidence disclosure, privilege, use of witness statements, as well as admissibility, relevance, and weight of the evidence are decided by the arbitrators at their discretion.

    The courts are entitled to assist in evidence-gathering only to an arbitration administered by an arbitral institution that has received a governmental authorisation. A request for judicial assistance may be filed by either the tribunal itself or a party acting with the tribunal’s consent. However, the scope of judicial assistance is limited to written (documentary), physical evidence or other documents/materials, and does not cover witness testimony. Furthermore, a request for judicial assistance will be refused if it seeks the gathering of inadmissible evidence, information that constitutes а state secret, or confidential or privileged information relating to non-parties, granting of the requested evidence may violate the non-parties’ rights, or а dispute at hand is non-arbitrable.

  26. What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your country?

    Although there are no ethical codes or other professional standards specifically applicable to arbitration, counsel and arbitrators who have been barred are required to abide by the Federal Law “On Advocates Activity and Advocates” of 2002, as well as the Code of Professional Advocate Ethics of 2003. However, bar membership is not mandatory in Russia, and thus non-barred lawyers may serve as counsel or arbitrators.

  27. How are the costs of arbitration proceedings estimated and allocated?

    The ICA provides that an arbitral award must state all costs and expenses of the case and their allocation between the parties. In practice, in the absence of the parties’ agreement to the contrary, costs tend to follow the event, although tribunals retain broad discretion in this matter.

  28. Can pre- and post-award interest be included on the principal claim and costs incurred?

    Neither the ICA nor DAA addresses this issue, and it is considered an issue of governing substantive law.

  29. What legal requirements are there in your country for the recognition of an award?

    The grounds for refusal of the recognition or enforcement of foreign arbitral awards and enforcement of domestic arbitral awards are essentially identical, and they mirror Article V of the New York Convention. Furthermore, Article IX of the Geneva Convention limits the grounds for refusal of recognition or enforcement of international arbitral awards covered by it.

    While the debtors often invoke the public policy ground to oppose the enforcement of arbitral awards in Russia, in practice Russian courts generally do not refuse enforcement on this ground, although in some instances courts give an expansive reading to this exception.

    Foreign arbitral awards that do not require enforcement are recognised by default, although the party against whom such award was made has the right to dispute the recognition of such award within one month since they have become aware of it.

  30. What is the estimated timeframe for the recognition and enforcement of an award? May a party bring a motion for the recognition and enforcement of an award on an ex parte basis?

    A motion for the recognition and enforcement of an award must be considered within one month from the date of filing. At the hearing, the judge declares only the operative part of the decision and has another five days to state the reasons for it. The decision immediately serves as a basis for issuing a writ of execution.

    Under the Code of Commercial Procedure, the decision on the recognition and enforcement of an award may be appealed within one month to a cassation court, which has two months to rule on the appeal, and then — within two months — to the Supreme Court, which has up to three months to rule on the appeal. Under the Code of Civil Procedure, such a decision may be appealed within fifteen days to an appellate court, which has two months to rule on the appeal, and then — within six months — to the Supreme Court, which has up to three months to rule on the appeal.

    Although the recognition and enforcement proceedings cannot be initiated on an ex parte basis, if a duly served respondent fails or refuses to participate, this does not prevent an enforcing court from hearing a case and rendering a decision.

  31. Does the arbitration law of your country provide a different standard of review for recognition and enforcement of a foreign award compared with a domestic award?

    No, the grounds for recognition and enforcement both foreign and enforcement and set aside of domestic arbitral awards are essentially identical, and they reflect those that are set out in the New York Convention.

  32. Does the law impose limits on the available remedies? Are some remedies not enforceable by the local courts?

    Available relief is determined in accordance with the applicable substantive law and the arbitration agreement. Under Russian law, there are no explicit limits as to the type of civil-law remedies that a tribunal may award. However, the courts generally will not enforce punitive damages if the amount awarded appears excessive and not corresponding to the actual consequences of a breach.

  33. Can arbitration proceedings and awards be appealed or challenged in local courts? What are the grounds and procedure?

    An arbitral award cannot be appealed but may be challenged before local courts with the grounds for challenge being identical to those provided in the New York Convention. An application for setting aside an award should be made within three months from the date on which the party making the application received an award. The procedure is similar to that of the recognition and enforcement of awards (see question 31 above). Upon request of a party, the court may suspend the annulment proceedings to let the tribunal resume the arbitration proceedings and remedy the grounds for challenge.

  34. Can the parties waive any rights of appeal or challenge to an award by agreement before the dispute arises (such as in the arbitration clause)?

    Parties to an institutional arbitration may expressly agree in writing to waive the right to challenge an award and stipulate that it will be final.

  35. To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?

    Under the 2015 Federal Law “On Jurisdictional Immunities of Foreign States and Property of Foreign States in the Russian Federation”, a state or state entity cannot rely on immunity at the enforcement state if it has expressly consented to enforcement, allocated or earmarked property for the satisfaction of the claim which is the object of proceedings, or the property has been established to be specifically in use or intended for use by the state for other than government non-commercial purposes (see also question 22 above). According to recent case law, however, the state’s consent to arbitration also implies its consent to enforcement.

  36. To what extent might a third party challenge the recognition of an award?

    If an arbitral award affects the rights or obligations of a third party, for example in bankruptcy proceedings, that party may challenge the award. In accordance with the case law of Russian courts, a party to the arbitration proceedings may object to such challenge.

  37. Have there been any significant developments with regard to third party funding in your jurisdiction recently?

    Although third-party funding is in a rather nascent state when it comes to legal regulation, it is increasingly gaining interest amongst the Russian arbitration community. Moreover, several funders and third-party funding service already operate on the Russian market.

  38. Is emergency arbitrator relief available in your country? Is this frequently used?

    Neither the ICA nor DAA offers any rules on emergency arbitration. This is somewhat remedied by the fact that pending the constitution of the tribunal a party request a court or — had the parties so agreed — the arbitral institution to grant interim relief.

  39. Are there arbitral laws or arbitration institutional rules in your country providing for simplified or expedited procedures for claims under a certain value? Are they often used?

    Both MAC and RIMA rules contain an expedited procedure, designed for disputes with the amount under USD 15 000 (under MAC rules), RUB 30 000 000 (for a domestic dispute under RIMA rules), or USD 500 000 (for an international dispute under RIMA rules). The sole arbitrator will generally decide a dispute on the basis of written submissions and documents. RIMA reported that the expedited procedure was or is being used in 12 out of 105 cases that it has administered during the 2017–2018 period.

  40. Have there been any mass (arbitration) claims in your jurisdiction?

    There have not been any (publicly known) mass arbitration claims in Russia.

  41. Have measures been taken by arbitral institutions in your country to promote transparency in arbitration?

    Russian arbitral institutions generally elude taking active measures to promote transparency. After the 2015 reform, however, Russian law imposes a number of transparency-related obligations on arbitral institutions. In particular, an arbitral institution must publish in its website information about its owners, a list of potential arbitrators recommended by it, consisting of no less than thirty persons. Further, in the context of arbitration of corporate disputes, an arbitral institution is obliged to publish information about a statement of claim within three days after it was filed.

  42. Is diversity in the choice of arbitrators and counsel (e.g. gender, age, origin) actively promoted in your country? If so, how?

    When arbitral institutions act as appointing authority, they actively appoint women and/or younger practitioners as both tribunal members and sole arbitrators.

  43. Have there been any developments regarding mediation in your jurisdiction?

    Since the law on mediation was enacted in 2010, there have been no new developments regarding mediation in Russia.

  44. Have there been any recent court decisions in your country considering the setting aside of an award that has been enforced in another jurisdiction or vice versa?

    In 2009 the Amsterdam Court of Appeal enforced the four Yukos v. Rosneft awards that had been set aside in Russia in 2007, finding that the Russian courts lacked sufficient independence and impartiality.

    In addition, in the case No. А27-781/2011, Russian courts initially enforced — referring to Article IX of the Geneva Convention — an award that had been set aside in Turkey in 2011 on the grounds that the tribunal breached the deadline for rendering the award, went beyond the scope of its mandate in considering the case and violated Turkish public policy. However, subsequently, the decision on enforcement was overturned on the basis that the contract that was the subject of the arbitral proceedings had been voided by a final and binding Russian court judgment.

  45. Is corruption an issue that is regularly raised in your jurisdiction? What standard do local courts apply for proving of corruption?

    Given that corruption constitutes a criminal offence, the courts normally require that it has to be established by a final verdict. Due to such standard, this issue is seldom raised in Russia as the ground for challenging an award or refusing its recognition and enforcement.