Commercial Court of Astrakhan Region enforces award rendered by Russian seated SCC tribunal
Maxim Kulkov (Managing Partner), Anna Chepurnaya (Paralegal), KK&P
In Case No. А06-2352/2020, the Commercial Court of the Astrakhan Region has ruled in favour of enforcing an arbitral award rendered by a Russian seated arbitral tribunal acting under the arbitration rules of a foreign institution that does not have the status of a permanent arbitration institution (PAI).
In 2014, Caspian Energy Projects LLC and Siemens LLC entered into a service agreement, which contained an arbitration clause providing that disputes between the parties be resolved by a panel of three arbitrators under the SCC rules in Moscow, Russia.
In 2019, Caspian Energy Projects initiated arbitration against Siemens. During the proceedings, the parties concluded a procedural agreement confirming that the SCC had the right to administer their dispute and that such administration complied with Russia’s Arbitration Law. During the hearing the parties also confirmed that they had no claims or objections regarding the arbitral procedure. The tribunal denied the claim and ordered that Caspian Energy Projects reimburse Siemens its costs.
The Commercial Court of the Astrakhan Region refused to enforce the award pointing out that the arbitration had been administered by the SCC, which does not have the status of PAI as required by article 44(20) of the Russian Arbitration Law, and so was prohibited from carrying out its arbitration activities.
On appeal, the Cassation Court remitted the case to the first instance court pointing out that it had applied the law incorrectly.
In reconsidering the case, the Commercial Court of the Astrakhan Region enforced the award. The court stated that if a foreign arbitral institution does not have PAI status, this means that an award rendered in Russia and administered by that institution under its rules will be deemed to be an ad hoc award under article 44(3) of the Arbitration Law. This does not lead to unenforceability of such award. Article 44(20) of the Arbitration Law was applied incorrectly as it prohibits Russian arbitral institutions from supporting ad hoc arbitration without obtaining PAI status.
Case: Case No. А06-2352/2020 (3 December 2020).
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Reproduced from Practical Law Arbitration with the permission of the publishers. For further information visit www.practicallaw.com or call 020 7542 6664.