The Commercial Court of Kemerovo region confirms validity of hybrid dispute resolution clause under Russian law

Maxim Kulkov (Managing Partner) and Elena Zaltser (Associate), KK&P.

On 15 March 2015, the Commercial Court of Kemerovo region confirmed the validity of an arbitration agreement and issued a writ of execution for an arbitral award.

The dispute arose between several oil companies and a bank. The parties’ dispute resolution clause provided for the submission of disputes either to the Commercial Court of Kemerovo region or to a local arbitration centre, at the claimant’s choosing. The claimant chose the arbitration centre and an award was rendered in its favour.

The award debtors argued in court, among other things, that the hybrid dispute resolution clause was invalid and had not been concluded. First, the parties did not agree on a specific forum and therefore, the agreement was vague and uncertain. Second, the claimant’s unilateral choice of forum led to an imbalance in the parties’ rights.

The court dismissed the claim and issued a writ of execution for the arbitral award reasoning that the agreement, which provided that the claimant could choose the forum for its dispute, was neither uncertain nor asymmetric, because the venues were quite specific and either party to the contract could have been the claimant.

This case can be distinguished from Case No. А40-49223/2011 (RTK v Sony Ericsson) where the Russian Supreme Commercial Court held in 2012 that asymmetric dispute resolution clauses were invalid because they violated the principle of equity of the parties. However, the parties’ agreement in that case provided that only one party (Sony Ericsson) could choose the forum for the dispute, while the other party was deprived of this right.

This decision provides more certainty for the parties’ right to use hybrid dispute resolution clauses providing for the forum to be chosen by the claimant.

Case А27-25441/2015 (Commercial Court of Kemerovo region).

This article has been published by Practical Law Arbitration on 30 March 2016.