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España
España – Revisión de laudos arbitrales y orden público
17 marzo 2021
- Arbitraje
El arbitraje es un procedimiento para resolver los conflictos entre las partes que tiene gran éxito en el sistema legal anglosajón. Y bastante menos en nuestro país.
Tiene ventajas e inconvenientes; es más caro que los Tribunales, pero es mucho más rápido; y la velocidad es esencial para que la justicia sea tal.
Típicamente un arbitraje dura seis meses más un par de ellos para el nombramiento del árbitro; en total, en 8 meses puede estar definitivamente resuelto un conflicto, por importante y difícil que pueda ser.
Por comparar con los Tribunales, en España hoy debemos contar con unos 18 meses de media para tener sentencia en primera instancia y otro tanto para el recurso de apelación; sin contar con posible recurso ante el Tribunal Supremo.
La piedra angular sobre la que descansa el arbitraje es que el laudo del árbitro es final y definitivo y no admite revisión ni recurso; esta afirmación tiene determinadas excepciones fundamentalmente de carácter formal o procedimental: básicamente, la legalidad del convenio arbitral, la arbitrabilidad de la materia y la regularidad procedimental en el desarrollo del procedimiento arbitral. Estos vicios o defectos pueden ser atacados a través de un recurso de anulación del que si entiende la jurisdicción ordinaria.
Pero además de los posibles defectos “formales”, la acción de anulación del laudo puede apoyarse en la denuncia de una infracción del “orden público” que el Tribunal Constitucional ha definido y perfilado como “aquellos principios jurídicos públicos y privados, políticos, morales y económicos que son absolutamente obligatorios para la conservación de la sociedad en un pueblo y en una época determinada”.
Como esta definición de “orden público” es, indudablemente, amplia e inconcreta, el recurso a la vulneración del orden público como herramienta para declarar la nulidad de los laudos por la jurisdicción ordinaria, ha producido un efecto de “desbordamiento” que ha exigido, en palabras del Tribunal Constitucional “llevar a cabo una interpretación restrictiva del misma so pena de vulnerar la autonomía de la voluntad de las partes y su renuncia a la tutela jurisdiccional”.
Así lo ha proclamado dicho Tribunal en la muy importante sentencia de 15 de febrero pasado que motiva esta nota.
En estos últimos años el Tribunal Superior de Justicia de Madrid ha recurrido al argumento del “orden público” de manera extensiva y “desbordada” para anular laudos y “suplir al tribunal arbitral en su función de aplicar el derecho”, convirtiéndose en “una segunda instancia revisora de los hechos y derechos aplicados en el laudo, un mecanismo de control de la correcta aplicación de la jurisprudencia”.
Y esta interpretación del orden público expansiva y “desbordada” como herramienta para anular laudos por parte del TSJM se había convertido en un grave problema para la institución arbitral y para la confianza de los contratantes a la hora de incluir convenios arbitrales en sus contratos; el principio de que el laudo era la solución definitiva y final al conflicto que pretende resolver, salvo por infracciones procedimentales o infracción del orden publico limitado a aquellos casos en los que el laudo fuera arbitrario, ilógico, absurdo o irracional, quedaba en entredicho y suponía un elemento claramente disuasorio a la hora de que los contratantes decidieran resolver sus discrepancias por medio de arbitraje.
Pues bien, el Tribunal Constitucional de manera rotunda y explicita, repitiendo lo que ya adelantó en su sentencia de junio del año pasado, confirma que la necesidad de que el laudo no contravenga el orden público, no puede traer como consecuencia que el órgano judicial supla al árbitro en su función de aplicación del derecho, ni puede convertirse en una segunda instancia revisora de los hechos y de los fundamentos de derecho aplicados en el laudo ni un mecanismo de control de la correcta aplicación de la jurisprudencia.
Prima el principio de la autonomía de la voluntad de las partes; y ello significa que cuando existe sometimiento a arbitraje, las partes han convenido que debe ser a través de ese cauce como han de resolverse las controversias entre ellas, mediante la decisión del arbitro que solo podrá ser anulada a través de los estrictos cauces que la propia Ley de Arbitraje regula; insistimos, por razones procedimentales o por vulnerar el orden público en la interpretación restringida que explica la sentencia que comentamos; pero en ningún caso, a modo de una segunda instancia donde se re -evalúen de nuevo los hechos y los fundamentos de derecho aplicados.
En suma, el arbitraje español está de enhorabuena, y podrá recuperar el impulso que le hizo perder, en parte, la interpretación extensiva del orden público que defendían algunos Tribunales Superiores de Justicia. A partir de ahora los Tribunales no podrán soslayar la interpretación del Tribunal Constitucional que supone un soplo de aire fresco para el arbitraje español.
In an important and very reasoned judgment delivered by the Court of Cassation of France on September 30, 2020, relating to the enforceability of arbitration clauses in international consumer contracts, the Supreme Court judged that these clauses must be considered unfair and cannot be opposed to consumers.
The Supreme Court traditionally insisted on the priority given to the arbitrator to decide on his own jurisdiction, laid down in Article 1448 of the Code of Civil Procedure (principle known as «competence-competence», Jaguar, Civ. 1re, May 21, 1997, nos. 95-11.429 and 95-11.427).
The ECJ expressed its hostility towards such clauses when they are opposed to consumers. In Mostaza Claro (C-168/05), it referred to the internal laws of member states, while considering that the procedural modalities offered by states should not “make it impossible in practice or excessively difficult to exercise the rights conferred by public order to consumers (“Directive 93/13, concerning unfair terms in consumer contracts, must be interpreted as meaning that a national court seized of an action for annulment of an arbitration award must determine whether the arbitration agreement is void and annul that award where that agreement contains an unfair term, even though the consumer has not pleaded that invalidity in the course of the arbitration proceedings, but only in that of the action for annulment”).
It therefore referred to the national judge the right to implement its legislation on unfair terms, and therefore to decide, on a case-by-case basis, whether the arbitration clause should be considered unfair. This is what the Court of Cassation decided, ruling out the case-by-case method, and considering that in any event such a clause must be excluded in relations with consumers.
The Court of Cassation adopted the same solution in international employment contracts, where it traditionally considers that arbitration clauses contained in international employment contracts are enforceable against employee (Soc. 16 Feb. 1999, n ° 96-40.643).
The Supreme Court, although traditionally very favourable to arbitration, gradually builds up a set of specific exceptions to ensure the protection of the «weak» party.
Unfair commercial behaviours between professionals are sanctioned in Sections L442-1 and seq. of the French Commercial Code. French Courts tend to consider that those dispositions of the Commercial Code are mandatory, in particular Section L442-1, II of the Code on abrupt termination of commercial relationships. Based on this section, an operator can be held liable if he terminates a commercial relationship without respecting a prior notice which duration depends on the duration of the relationship.
Although this is considered to be a mandatory law, the French Supreme Court considers that it does not preclude to bring a dispute before foreign Courts in compliance with a jurisdiction clause (Civ.1, 8 July 2010, Doga, n°09-67013). Moreover, Courts have ruled for a long time now that arbitrators are entitled to apply national mandatory laws (Court of Appeal of Paris, 19 March 1993, Labinal, n°9221091). In the case Doga above quoted, the Court concluded that arbitrators are also entitled to apply Sections 442-1, II of the Commercial Code related to the conditions of termination of commercial relationship. Therefore, if a contract contains an arbitration clause, the judge is obliged to give priority to the arbitrators to decide on their own jurisdiction to decide on the case (principle « compétence-compétence ») in conformity with Section 1465 of the French Procedural Code. This solution was confirmed in a recent decision rendered on 5 September 2019 by the Court of Appeal of Paris in Charlivari v. Sté Equivalanza, n°17/03703.
It is noteworthy to underline that two sets of sanctions are considered under Sections 442-1 and seq. of the Commercial Code: the first sanction allows the victim of unfair practice to seek damages (for instance for abrupt termination of commercial relationship) against the author of unfair practices; the second sanction is decided by the public administration, under the authority of the Ministry of Economics : the Ministry is entitled to bring the case to Courts, which can then decide to fine the party who is liable of unfair practices (the fine can be up to 5% of the turnover made in France by the person liable or 5 Million EUR).
Therefore, one single matter can give rise to two procedures at the same time, the first one initiated by the victim and the second one at the request of the Ministry of Economics (Section L442-4 of the Code). In a case Apple v. Ministre de l’Economie, the Supreme Court (Civ.1, 6 juillet 2016, n° 15-21811) considered that the action of the Ministry of Economics cannot be decided by arbitrators, even if the contract contains an arbitration clause, because of the specificity of this action, which is not based on the contract by itself but on powers that the Ministry draws from the law.
Therefore, a clear distinction must be made between the two procedures: one is subject to the application of the dispute resolution clause (either national Courts, even foreign, or arbitration tribunals), when damages are sought from the author of unfair practices, including abrupt termination; the other one can be brought only before French national Courts, and the dispute resolution clause has no effect, in cases which are brought by the Ministry of Economics for administrative sanctions against the same author.
El procedimiento arbitral en España se caracteriza, y constituye una de sus grandes ventajas, por la dificultad de anular o revocar judicialmente el laudo; las partes saben que el laudo que se dicte es en la mayoría de los casos firme y definitivo y pone punto final al conflicto.
El art. 41 de la Ley de Arbitraje únicamente permite la anulación del laudo por razones de forma (inexistencia o invalidez del convenio arbitral, falta de notificación a alguna de las partes sobre la designación del árbitro o de las actuaciones arbitrales, indebida designación de los árbitros o que los árbitros hayan resuelto sobre materias que no eran o no podían ser objeto de arbitraje por imperio de la ley). Y adicionalmente el laudo también es anulable cuando es contrario al “orden público”.
Que cosa sea el “orden público” como para dar lugar, en caso de vulneración, a la anulación del laudo, es cuestión que de siempre ha sido controvertida y debatida; ya en la Convención de Nueva York de 1958 se alude el “orden público” como causa de denegación del reconocimiento de laudos extranjeros. Como recuerda el Tribunal Constitucional (“TC”) en la sentencia que comentamos, citando su propia jurisprudencia, “el orden público material es el conjunto de principios jurídicos públicos y privados, políticos, morales y económicos que son absolutamente obligatorios para la conservación de la sociedad en un pueblo y en una época determinada y el orden público procesal se configura como el conjunto de formalidades y principios necesarios de nuestro ordenamiento jurídico procesal y solo el arbitraje que contradiga alguno o algunos de tales principios podrá ser tachado de nulo por vulneración del orden público”.
A título de ejemplo, durante 2018 se presentaron 38 demandas de anulación de laudos ante los Tribunales Superiores de Justicia (“TSJ”) de los que 31 se fundamentaban en vulneración del orden público; resultaron estimadas 8 de las demandas (21%), 5 por vulneración del orden público y 3 por invalidez del convenio arbitral.
El TSJ de Madrid ha venido manteniendo en los últimos tiempos una interpretación muy “expansiva” del orden público, lo que ha generado dudas y temores en las instituciones y Cortes Arbitrales, por el efecto disuasorio que dicha posición podría tener a la hora de elegir Madrid como sede de arbitrajes, nacionales o internacionales.
Y en la línea interpretativa a la que nos referimos, el TSJ de Madrid ha mantenido el siguiente y sorprendente criterio: dictado un laudo e interpuesta demanda de anulación por una de las partes, los litigantes alcanzaron un acuerdo extrajudicial y solicitaron conjuntamente el archivo de la demanda de anulación; es decir, ambos daban el laudo por bueno y definitivo; el TSJ rechazó la petición y siguió adelante hasta dictar sentencia anulando el laudo, argumentando que como la demanda de anulación se basaba en la infracción del orden público, entonces ya la materia no era disponible por las partes y no era, en opinión del Tribunal, susceptible de transacción o renuncia.
No era esta la primera vez que el TSJ adoptaba esta postura: impetrada la anulación de un laudo por ser contrario al “orden público”, las partes ya no tenían la posibilidad de transar y renunciar a la demanda de anulación.
Por primera vez el asunto ha llegado al Tribunal Constitucional (TC): en un reciente fallo del 15 de junio de 2020, el TC ha sido claro y rotundo; recuerda en su sentencia que el proceso civil se fundamenta en el principio de “disposición de las partes para regular sus intereses privados, es decir, para iniciar la actividad jurisdiccional, determinar el objeto del proceso y ponerle fin cuando estimen conveniente”. Es lo que llamamos “justicia rogada”; y este principio aplica no solo a los procedimientos civiles ante los tribunales ordinarios sino también a los procedimientos arbitrales; asimismo afirma la sentencia que el arbitraje está configurado por la Ley como un mecanismo heterónomo de resolución de conflictos al que es consustancial la mínima intervención de los órganos judiciales a favor de la autonomía de la voluntad.
Y concluye sentando que la acción de anulación debe ser entendida como un proceso de control externo sobre el laudo que no permite una decisión sobre el fondo de la decisión de los árbitros, al estar tasadas las causas, lo que justifica que “el control de los laudos tenga carácter limitado y solo pueda obtenerse la anulación del laudo en casos excepcionales”.
En suma, entiende y proclama el TC que es contrario al derecho a la tutela judicial efectiva que protege el art. 24 de la Constitución la negativa del Tribunal a reconocer la virtualidad de un acuerdo alcanzado entre los litigantes con fundamento en el poder dispositivo de las partes sin que medie norma prohibitiva que así lo autorice e imponiendo una decisión que subvierte el principio dispositivo o de “justicia rogada” que inspira el proceso civil; por lo que concede el amparo solicitado y ordena retrotraer las actuaciones al momento anterior al auto que denegó virtualidad a la solicitud conjunta de archivo para que el TSJ dicte otra resolución acompasada al criterio del TC.
En suma, no podrá ya nunca más el TSJM impedir a los litigantes transar y poner fin a una demanda de anulación de laudo (como ocurre pacífica y habitualmente con los recursos de apelación o de casación) y además deberá tomar en consideración en adelante la interpretación restrictiva del concepto de orden público que ha establecido el TC en esta importante sentencia. En efecto, el arbitraje español sale muy reforzado con esta sentencia del TC.
Are arbitration and jurisdiction clauses contained in insurance contracts enforceable against a third party which is acting directly against the insurer in third party liability insurances?
Such direct action is admitted by French law in liability insurances, as defined in article 124-3 of the Insurance Code.
In just a few months two radically different approaches have been taken by the French Cour de cassation (Civ.1, 19 December 2018, n°17-28.951) and the ECJ in Assens Havn v. Navigator Management UK Ltd (13 July 2017, C-368/16) and KABEG v. MMA IARD (20 July 2017, C-340/16).
The case submitted to the Cour de cassation represented a third party exercising a direct right of action before French Courts against the insurer of a floating barge which had caused him a damage. The Supreme Court accepted that the insurer could validly oppose the arbitration clause, which was in the policy against the third party, and therefore judged that French Court had no jurisdiction to decide on the case. The Supreme Court applied the well-established principle of Compétence-Compétence – materialized in article 1448 of the French Code de Procédure Civile – to stay the case, considering that the arbitration clause could not be set aside. The Court therefore judged that the applicability of the arbitration clause should be determined by the arbitrators by priority.
A year before, the ECJ had ruled in the opposite direction in a case where a jurisdiction clause was applicable in the insurance policy. In Assens Havn v. Navigator Management UK Ltd, the ECJ stated that the clause could not be opposed to the third party acting directly against the insurer. According to the Court, the insurers’ liability towards the insured has a contractual nature when based on the policy, whereas it is extra-contractual when the liability is based on a direct action from a third party. In a previous ruling the Court had considered (Sté financière et industrielle du Peloux (12 May 2005, C-112/03) that the jurisdiction clause cannot be opposed to the beneficiary of an insurance policy if he is not the policyholder (for instance in a collective insurance).
One sees a clear difference in treatment between arbitration clause and jurisdiction clause when it comes to deciding on their opposability to the victim exercising a direct action against the insurer.
Article 2061 paragraph 2 of the Civil Code states that an arbitration cannot be opposed to a party which has not contracted for the purpose of its business activity. The French Cour de cassation grounded its decision on the fact that the clauses of the main contract could be opposed to the third party. If the latter was entitled to apply the insurance contract, it was therefore entitled to invoke article 2061 paragraph 2 of the Civil Code.
On 29 March 2019 new amendments to the federal law “On arbitration in the Russian Federation” entered into force. This law regulates the order of establishment and activities of arbitration courts and permanently acting arbitration institutions (PAAI) in Russia and applies to resolution of both international and local disputes by arbitration in Russia.
The key amendments relate to granting of rights to foreign arbitration centers to perform functions of PAAIs in Russia. Earlier such rights were granted by the government, but as from 29 March 2019 such functions were transferred to the Ministry of Justice. Ministry of Justice grants the rights to perform functions of PAAIs in Russia to foreign arbitration centers based on recommendations received from the Council on improvement of arbitrations.
As of 31 March 2019, there are only 4 (four) PAAIs authorized to administer disputes by arbitration in Russia and all of them are Russian organizations. In accordance with the latest news the Hong Kong International Arbitration Center (HKIAC) is the first international arbitration center that has recently received a recommendation from the Council on improvement of arbitrations to establish PAAI in Russia and has been approved by the Ministry of Justice to establish PAAI in Russia. In accordance with the law an arbitration center is included in the list of PAAIs in Russia within 15 days from the date of approval by the Council, i.e. by the end of April 2019 HKIAC could become the first international arbitration center authorized to administer international disputes in Russia.
Another issue that should be carefully considered by choosing an arbitration center relate to resolution of disputes between companies established in Russia (local disputes) by international arbitration centers not included in the list of PAAIs in Russia and not authorized to consider local disputes in Russia.
Though there is no direct prohibition established by the Russian law to settle disputes between Russian companies by foreign arbitration centers with the seat of arbitration outside of Russia, the possibility of referral of local disputes to foreign arbitration centers is still questionable. In one of the court decisions that caused disputes in legal community (case# А40-219464/16-52-430) the Russian court of first instance ruled that resolution of local disputes by the foreign arbitration institutions violates public policy in Russia. Notwithstanding the fact that such ruling was dismissed by the higher court instance the risk that the Russian courts might deny recognition of awards of foreign arbitration institutions not included in the list of PAAIs in Russia and not authorized to consider local disputes in Russia cannot be excluded.
Therefore, in situations when the disputes arise between companies established in Russia it would be reasonable to choose arbitration institution included in the list of PAAIs in Russia and authorized to administer local disputes in Russia or, alternatively, agree on resolution of disputes by the Russian commercial courts.
Takeaways
- if you agree in international contracts that the seat of arbitration is in Russia, it would be reasonable to choose the arbitration center included in the list of PAAIs in Russia and authorized to resolve international disputes in Russia.
- If you agree in local contracts to resolve disputes by arbitration, it would be reasonable to choose the arbitration center included in the list of PAAIs in Russia and authorized to resolve local disputes in Russia.
Arbitration is a well-known system for dispute resolutions, and works as an alternative to judicial procedures. Parties are free to choose this system and to submit their conflicts to specific arbitrators or institutions.
It is usually considered that arbitration is a good way to solve conflicts but preferable to those arisen between big corporations or involving important amounts of money. Although this assumption is generally accepted, there is an alternative for distribution disputes suitable for smaller companies and cases with lower amounts claimed.
And here is the essential question: why a manufacturer/franchisor or a distributor/agent/franchisee should choose a specialized arbitration for their agreements instead of a more general one or, even, a judicial procedure? The answer seems clear: an arbitrator with knowledge not only in procedural questions but in substantive matters will be able to better understand the conflict between the parties and, therefore, to grant a better award. Take into account that, for instance in my Country, Spain, a Judge of First instance can deal in the same day with a distribution contract, a construction case, a conflict between heirs, and a discussion in a community of owners. All of this requires the analysis of different facts and completely different legislations and it is true that specific commercial problems do not usually have judges experts in international trading. But, how to choose a good specialized arbitrator? And, how to choose the arbitral procedure and the institution in terms of organization, neutrality, costs and time?
The IDArb was created in 2016 by the International Distribution Institute (www.idiproject.com) in collaboration with the Chambre de Commerce d’Industries et de Services de Genève (CCIG www.ccig.ch) and the Swiss Chambers’ Arbitration Institution (SCAI www.swissarbitration.org) and offers to the distribution sector (distribution, agency, franchising, selective distribution) a specialized, expedited and affordable arbitration procedure, not only for big international corporations but also for smaller cases. In fact, the expedited procedure is particularly foreseen for amounts below one million CHF (approx. 880.000 €).
The objectives and main characteristics of IDArb which make it suitable for all the distribution disputes are:
- A list of specialized arbitrators experts in this particular field is available for ad hoc or institutional arbitration and IDArb is able to assist the parties to choose one of them.
Specialized arbitrators from different countries and legal cultures have been appointed by a Selecting Committee reviewing their experience in one or more fields of distribution law. Therefore, parties can trust that the arbitrator will have concrete skills in the business with an in-depth understanding of the disputed issues. This is not a general knowledge on commercial law, but a concrete one on distribution, expressly verified by the Committee. Parties can even examine some examples of cases in which every arbitrator has been involved in.
- In order to maintain its high quality, the IDArb organizes training seminars for its appointed arbitrators. In these seminars, they are able to discuss about the general management of the arbitration, the procedural aspects and how to solve possible incidents in collaboration with the Institutions and their Rules. This will make all the proceedings more manageable and the possible difficulties more easily solved. Last seminar took place in Geneva in November 8, 2018 and participants have discussed, amongst other subjects, on evidences, witnesses and document production.
- The expedited arbitration procedure permits the parties to have a tailored procedure managed by SCAI under the Swiss Rules of International Arbitration, specially adapted for small disputes in the field of distribution.
- Time is also an essential element: the award in the expedited procedure will be issued in a maximum term of six months (only exceptional circumstances permit the Court to extend such time-limit), and, if parties agree, it can be decided only on documentary evidence.
- Costs are reasonable and known in advance.
- And, as final but important remark, IDArb has also adopted some recommendations where, upon request of the parties, mediation is favoured, the arbitrator my consider giving a preliminary non-binding and provisional assessment of the dispute and should have a pro-active position in order to facilitate an amicable settlement.
To have further information about the clause to use in the contracts, the list of specialized arbitrators, their skills, experience and complete CV, and the recommendations for expedited arbitration, you can follow the link: https://www.idiproject.com/content/idarb-idi-arbitration-project
State commercial court in Russia is named in the Russian language – Арбитражный суд. This name of the state commercial court is often translated into English as Arbitration court. Such translation in its turn often causes actual misunderstanding between the parties, since the Russian party will most probably consider the term “Arbitration court” as a state commercial court and the other (non-Russian) party might consider that it agreed to resolve disputes by arbitration rather than in a state court.
Below are some examples of dispute resolution clauses specified by the parties in commercial contracts that caused actual misunderstanding:
“…if there is no agreement, any disputes and claims between the parties relating to the contract will be resolved by arbitration under the Rules of International Chamber of Commerce in Moscow by one or more arbitrators appointed in accordance with the said rules. The Arbitration court shall use the Russian law.”
“…if a dispute is not resolved within 30 days of written notification of the dispute by one party to the other, anyone of the parties may submit the dispute arising out of or in connection with this agreement shall be finally settled under the Rules of Arbitration of the Moscow City Arbitration Court”.
The wording of such clauses and its translation, specifically translation of the term “Arbitration court” might result in resolution of claims by the state commercial courts in Russia, rather than by arbitration. In such situations failure of the non-Russian party to defend itself in the Russian state commercial courts might lead to serious negative consequences.
One of the well-known arbitration institutions in Russia – the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation recommends the following arbitration clause:
“Any dispute, controversy or claim which may arise out of or in connection with the present contract (agreement) [in case a separate arbitration agreement is concluded a particular contract (agreement) is to be indicated], or the entering into force, conclusion, alteration, execution, breach, termination or validity thereof, shall be settled by arbitration at the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation in accordance with its applicable regulations and rules. An arbitral award shall be final for the parties. It shall not be allowed to submit a motion to a state court to make a decision on the lack of jurisdiction of an arbitral tribunal in connection with the issuance by the arbitral tribunal of a separate order on existence of jurisdiction as a matter of preliminary nature”. (http://mkas.tpprf.ru/en/documents/)
As you can see the full name of the arbitration institution is “International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation” and using its short name “Arbitration court” might result in resolution of disputes by the state commercial court.
Another situation is when the parties actually wish to resolve commercial disputes in a state commercial court in Russia but fail to specify the name of the state commercial court correctly. Believe it or not, but there are many lawyers who consider Russian state courts as an effective and less expensive judicial body to resolve commercial disputes as opposed to arbitration.
There was one interesting case mentioned by the Supreme Court of Russia in this regard in its recent overview of court practice on resolving of disputes connected with protection of foreign investors in Russia.
A foreign company filed a claim with the state commercial court in Russia against another foreign company. The court determined that the parties of the dispute concluded prorogation agreement (choice of forum clause) in accordance with which all disputes arising from the specified contract and in connection with it shall be resolved in the courts of general competence of Russia.
The state commercial court of first instance considered that it lacked jurisdiction to resolve this case, because the parties did not agree to resolve their disputes in the state commercial courts, with that the courts of general competence do not resolve commercial disputes between companies in Russia. As a result, the court of first instance returned the claim to the claimant due to the lack of competence of the state commercial court to resolve this dispute.
In the appeal claim the claimant argued that the prorogation agreement was unenforceable, since the court specified by the parties (the courts of general competence) do not consider commercial disputes of legal entities in Russia. The foreign company also argued that there was a close connection of the dispute with the territory of the Russian Federation, and therefore the state commercial court had competence to consider this case.
The appeal court dismissed the ruling of the court of first instance and the case was returned for re-consideration to the court of first instance based on the following grounds.
The appeal court ruled that the enforceable prorogation agreement shall provide possibility to determine the actual intent (true intent) of the parties regarding competence of the state court to resolve disputes.
The appeal court determined that the prorogation agreement agreed by the parties was unenforceable, since such agreement failed to determine the intent of the parties to resolve disputes in a specific court or a system of competent state courts where the specific state court shall be determined based on the rules of internal competence of courts.
The appeal court further ruled that if prorogation agreement is unenforceable the competent court of the Russian Federation shall use general rules of competence of state commercial courts of the Russian Federation set forth in the Commercial procedural code of the Russian Federation.
In this specific case the subject of the disputed transaction was a sale of share in the charter capital of the company registered at the territory of the Russian Federation. The appeal court in this case established close connection of the dispute with the territory of the Russian Federation and ruled that the state commercial court was competent to consider such dispute.
Therefore, if the parties of the contract fail to correctly stipulate the specific state commercial court to consider their disputes in Russia, such prorogation agreement (choice of forum clause) might be considered by the state commercial court in Russia unenforceable and the claim might be returned to the claimant due to the lack of competence of the state commercial court to resolve such dispute.
Conclusions
If you wish to resolve disputes in the state commercial court in Russia, make sure that the full name of the state commercial court is specified correctly.
If you wish to resolve disputes by arbitration in Russia it would be reasonable to use a recommended arbitration clause of respective arbitration institution.
And, of course, be sure to check translation of the English version of the contract into Russian.
France | Arbitration clauses in international contracts with consumers are not enforceable
- Arbitraje
- Contratos
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Francia
France – Direct action against the insurer and enforceability of arbitration clause
- Arbitraje
- Seguros
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Francia
Rusia 
Canadá 
España | Responsabilidad de administradores en sociedad anonima y limitada
- Derecho Societario
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España
Contacta con Javier
France | Arbitration clauses in international contracts with consumers are not enforceable
16 febrero 2021
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Francia
- Arbitraje
- Contratos
- Litigios
El arbitraje es un procedimiento para resolver los conflictos entre las partes que tiene gran éxito en el sistema legal anglosajón. Y bastante menos en nuestro país.
Tiene ventajas e inconvenientes; es más caro que los Tribunales, pero es mucho más rápido; y la velocidad es esencial para que la justicia sea tal.
Típicamente un arbitraje dura seis meses más un par de ellos para el nombramiento del árbitro; en total, en 8 meses puede estar definitivamente resuelto un conflicto, por importante y difícil que pueda ser.
Por comparar con los Tribunales, en España hoy debemos contar con unos 18 meses de media para tener sentencia en primera instancia y otro tanto para el recurso de apelación; sin contar con posible recurso ante el Tribunal Supremo.
La piedra angular sobre la que descansa el arbitraje es que el laudo del árbitro es final y definitivo y no admite revisión ni recurso; esta afirmación tiene determinadas excepciones fundamentalmente de carácter formal o procedimental: básicamente, la legalidad del convenio arbitral, la arbitrabilidad de la materia y la regularidad procedimental en el desarrollo del procedimiento arbitral. Estos vicios o defectos pueden ser atacados a través de un recurso de anulación del que si entiende la jurisdicción ordinaria.
Pero además de los posibles defectos “formales”, la acción de anulación del laudo puede apoyarse en la denuncia de una infracción del “orden público” que el Tribunal Constitucional ha definido y perfilado como “aquellos principios jurídicos públicos y privados, políticos, morales y económicos que son absolutamente obligatorios para la conservación de la sociedad en un pueblo y en una época determinada”.
Como esta definición de “orden público” es, indudablemente, amplia e inconcreta, el recurso a la vulneración del orden público como herramienta para declarar la nulidad de los laudos por la jurisdicción ordinaria, ha producido un efecto de “desbordamiento” que ha exigido, en palabras del Tribunal Constitucional “llevar a cabo una interpretación restrictiva del misma so pena de vulnerar la autonomía de la voluntad de las partes y su renuncia a la tutela jurisdiccional”.
Así lo ha proclamado dicho Tribunal en la muy importante sentencia de 15 de febrero pasado que motiva esta nota.
En estos últimos años el Tribunal Superior de Justicia de Madrid ha recurrido al argumento del “orden público” de manera extensiva y “desbordada” para anular laudos y “suplir al tribunal arbitral en su función de aplicar el derecho”, convirtiéndose en “una segunda instancia revisora de los hechos y derechos aplicados en el laudo, un mecanismo de control de la correcta aplicación de la jurisprudencia”.
Y esta interpretación del orden público expansiva y “desbordada” como herramienta para anular laudos por parte del TSJM se había convertido en un grave problema para la institución arbitral y para la confianza de los contratantes a la hora de incluir convenios arbitrales en sus contratos; el principio de que el laudo era la solución definitiva y final al conflicto que pretende resolver, salvo por infracciones procedimentales o infracción del orden publico limitado a aquellos casos en los que el laudo fuera arbitrario, ilógico, absurdo o irracional, quedaba en entredicho y suponía un elemento claramente disuasorio a la hora de que los contratantes decidieran resolver sus discrepancias por medio de arbitraje.
Pues bien, el Tribunal Constitucional de manera rotunda y explicita, repitiendo lo que ya adelantó en su sentencia de junio del año pasado, confirma que la necesidad de que el laudo no contravenga el orden público, no puede traer como consecuencia que el órgano judicial supla al árbitro en su función de aplicación del derecho, ni puede convertirse en una segunda instancia revisora de los hechos y de los fundamentos de derecho aplicados en el laudo ni un mecanismo de control de la correcta aplicación de la jurisprudencia.
Prima el principio de la autonomía de la voluntad de las partes; y ello significa que cuando existe sometimiento a arbitraje, las partes han convenido que debe ser a través de ese cauce como han de resolverse las controversias entre ellas, mediante la decisión del arbitro que solo podrá ser anulada a través de los estrictos cauces que la propia Ley de Arbitraje regula; insistimos, por razones procedimentales o por vulnerar el orden público en la interpretación restringida que explica la sentencia que comentamos; pero en ningún caso, a modo de una segunda instancia donde se re -evalúen de nuevo los hechos y los fundamentos de derecho aplicados.
En suma, el arbitraje español está de enhorabuena, y podrá recuperar el impulso que le hizo perder, en parte, la interpretación extensiva del orden público que defendían algunos Tribunales Superiores de Justicia. A partir de ahora los Tribunales no podrán soslayar la interpretación del Tribunal Constitucional que supone un soplo de aire fresco para el arbitraje español.
In an important and very reasoned judgment delivered by the Court of Cassation of France on September 30, 2020, relating to the enforceability of arbitration clauses in international consumer contracts, the Supreme Court judged that these clauses must be considered unfair and cannot be opposed to consumers.
The Supreme Court traditionally insisted on the priority given to the arbitrator to decide on his own jurisdiction, laid down in Article 1448 of the Code of Civil Procedure (principle known as «competence-competence», Jaguar, Civ. 1re, May 21, 1997, nos. 95-11.429 and 95-11.427).
The ECJ expressed its hostility towards such clauses when they are opposed to consumers. In Mostaza Claro (C-168/05), it referred to the internal laws of member states, while considering that the procedural modalities offered by states should not “make it impossible in practice or excessively difficult to exercise the rights conferred by public order to consumers (“Directive 93/13, concerning unfair terms in consumer contracts, must be interpreted as meaning that a national court seized of an action for annulment of an arbitration award must determine whether the arbitration agreement is void and annul that award where that agreement contains an unfair term, even though the consumer has not pleaded that invalidity in the course of the arbitration proceedings, but only in that of the action for annulment”).
It therefore referred to the national judge the right to implement its legislation on unfair terms, and therefore to decide, on a case-by-case basis, whether the arbitration clause should be considered unfair. This is what the Court of Cassation decided, ruling out the case-by-case method, and considering that in any event such a clause must be excluded in relations with consumers.
The Court of Cassation adopted the same solution in international employment contracts, where it traditionally considers that arbitration clauses contained in international employment contracts are enforceable against employee (Soc. 16 Feb. 1999, n ° 96-40.643).
The Supreme Court, although traditionally very favourable to arbitration, gradually builds up a set of specific exceptions to ensure the protection of the «weak» party.
Unfair commercial behaviours between professionals are sanctioned in Sections L442-1 and seq. of the French Commercial Code. French Courts tend to consider that those dispositions of the Commercial Code are mandatory, in particular Section L442-1, II of the Code on abrupt termination of commercial relationships. Based on this section, an operator can be held liable if he terminates a commercial relationship without respecting a prior notice which duration depends on the duration of the relationship.
Although this is considered to be a mandatory law, the French Supreme Court considers that it does not preclude to bring a dispute before foreign Courts in compliance with a jurisdiction clause (Civ.1, 8 July 2010, Doga, n°09-67013). Moreover, Courts have ruled for a long time now that arbitrators are entitled to apply national mandatory laws (Court of Appeal of Paris, 19 March 1993, Labinal, n°9221091). In the case Doga above quoted, the Court concluded that arbitrators are also entitled to apply Sections 442-1, II of the Commercial Code related to the conditions of termination of commercial relationship. Therefore, if a contract contains an arbitration clause, the judge is obliged to give priority to the arbitrators to decide on their own jurisdiction to decide on the case (principle « compétence-compétence ») in conformity with Section 1465 of the French Procedural Code. This solution was confirmed in a recent decision rendered on 5 September 2019 by the Court of Appeal of Paris in Charlivari v. Sté Equivalanza, n°17/03703.
It is noteworthy to underline that two sets of sanctions are considered under Sections 442-1 and seq. of the Commercial Code: the first sanction allows the victim of unfair practice to seek damages (for instance for abrupt termination of commercial relationship) against the author of unfair practices; the second sanction is decided by the public administration, under the authority of the Ministry of Economics : the Ministry is entitled to bring the case to Courts, which can then decide to fine the party who is liable of unfair practices (the fine can be up to 5% of the turnover made in France by the person liable or 5 Million EUR).
Therefore, one single matter can give rise to two procedures at the same time, the first one initiated by the victim and the second one at the request of the Ministry of Economics (Section L442-4 of the Code). In a case Apple v. Ministre de l’Economie, the Supreme Court (Civ.1, 6 juillet 2016, n° 15-21811) considered that the action of the Ministry of Economics cannot be decided by arbitrators, even if the contract contains an arbitration clause, because of the specificity of this action, which is not based on the contract by itself but on powers that the Ministry draws from the law.
Therefore, a clear distinction must be made between the two procedures: one is subject to the application of the dispute resolution clause (either national Courts, even foreign, or arbitration tribunals), when damages are sought from the author of unfair practices, including abrupt termination; the other one can be brought only before French national Courts, and the dispute resolution clause has no effect, in cases which are brought by the Ministry of Economics for administrative sanctions against the same author.
El procedimiento arbitral en España se caracteriza, y constituye una de sus grandes ventajas, por la dificultad de anular o revocar judicialmente el laudo; las partes saben que el laudo que se dicte es en la mayoría de los casos firme y definitivo y pone punto final al conflicto.
El art. 41 de la Ley de Arbitraje únicamente permite la anulación del laudo por razones de forma (inexistencia o invalidez del convenio arbitral, falta de notificación a alguna de las partes sobre la designación del árbitro o de las actuaciones arbitrales, indebida designación de los árbitros o que los árbitros hayan resuelto sobre materias que no eran o no podían ser objeto de arbitraje por imperio de la ley). Y adicionalmente el laudo también es anulable cuando es contrario al “orden público”.
Que cosa sea el “orden público” como para dar lugar, en caso de vulneración, a la anulación del laudo, es cuestión que de siempre ha sido controvertida y debatida; ya en la Convención de Nueva York de 1958 se alude el “orden público” como causa de denegación del reconocimiento de laudos extranjeros. Como recuerda el Tribunal Constitucional (“TC”) en la sentencia que comentamos, citando su propia jurisprudencia, “el orden público material es el conjunto de principios jurídicos públicos y privados, políticos, morales y económicos que son absolutamente obligatorios para la conservación de la sociedad en un pueblo y en una época determinada y el orden público procesal se configura como el conjunto de formalidades y principios necesarios de nuestro ordenamiento jurídico procesal y solo el arbitraje que contradiga alguno o algunos de tales principios podrá ser tachado de nulo por vulneración del orden público”.
A título de ejemplo, durante 2018 se presentaron 38 demandas de anulación de laudos ante los Tribunales Superiores de Justicia (“TSJ”) de los que 31 se fundamentaban en vulneración del orden público; resultaron estimadas 8 de las demandas (21%), 5 por vulneración del orden público y 3 por invalidez del convenio arbitral.
El TSJ de Madrid ha venido manteniendo en los últimos tiempos una interpretación muy “expansiva” del orden público, lo que ha generado dudas y temores en las instituciones y Cortes Arbitrales, por el efecto disuasorio que dicha posición podría tener a la hora de elegir Madrid como sede de arbitrajes, nacionales o internacionales.
Y en la línea interpretativa a la que nos referimos, el TSJ de Madrid ha mantenido el siguiente y sorprendente criterio: dictado un laudo e interpuesta demanda de anulación por una de las partes, los litigantes alcanzaron un acuerdo extrajudicial y solicitaron conjuntamente el archivo de la demanda de anulación; es decir, ambos daban el laudo por bueno y definitivo; el TSJ rechazó la petición y siguió adelante hasta dictar sentencia anulando el laudo, argumentando que como la demanda de anulación se basaba en la infracción del orden público, entonces ya la materia no era disponible por las partes y no era, en opinión del Tribunal, susceptible de transacción o renuncia.
No era esta la primera vez que el TSJ adoptaba esta postura: impetrada la anulación de un laudo por ser contrario al “orden público”, las partes ya no tenían la posibilidad de transar y renunciar a la demanda de anulación.
Por primera vez el asunto ha llegado al Tribunal Constitucional (TC): en un reciente fallo del 15 de junio de 2020, el TC ha sido claro y rotundo; recuerda en su sentencia que el proceso civil se fundamenta en el principio de “disposición de las partes para regular sus intereses privados, es decir, para iniciar la actividad jurisdiccional, determinar el objeto del proceso y ponerle fin cuando estimen conveniente”. Es lo que llamamos “justicia rogada”; y este principio aplica no solo a los procedimientos civiles ante los tribunales ordinarios sino también a los procedimientos arbitrales; asimismo afirma la sentencia que el arbitraje está configurado por la Ley como un mecanismo heterónomo de resolución de conflictos al que es consustancial la mínima intervención de los órganos judiciales a favor de la autonomía de la voluntad.
Y concluye sentando que la acción de anulación debe ser entendida como un proceso de control externo sobre el laudo que no permite una decisión sobre el fondo de la decisión de los árbitros, al estar tasadas las causas, lo que justifica que “el control de los laudos tenga carácter limitado y solo pueda obtenerse la anulación del laudo en casos excepcionales”.
En suma, entiende y proclama el TC que es contrario al derecho a la tutela judicial efectiva que protege el art. 24 de la Constitución la negativa del Tribunal a reconocer la virtualidad de un acuerdo alcanzado entre los litigantes con fundamento en el poder dispositivo de las partes sin que medie norma prohibitiva que así lo autorice e imponiendo una decisión que subvierte el principio dispositivo o de “justicia rogada” que inspira el proceso civil; por lo que concede el amparo solicitado y ordena retrotraer las actuaciones al momento anterior al auto que denegó virtualidad a la solicitud conjunta de archivo para que el TSJ dicte otra resolución acompasada al criterio del TC.
En suma, no podrá ya nunca más el TSJM impedir a los litigantes transar y poner fin a una demanda de anulación de laudo (como ocurre pacífica y habitualmente con los recursos de apelación o de casación) y además deberá tomar en consideración en adelante la interpretación restrictiva del concepto de orden público que ha establecido el TC en esta importante sentencia. En efecto, el arbitraje español sale muy reforzado con esta sentencia del TC.
Are arbitration and jurisdiction clauses contained in insurance contracts enforceable against a third party which is acting directly against the insurer in third party liability insurances?
Such direct action is admitted by French law in liability insurances, as defined in article 124-3 of the Insurance Code.
In just a few months two radically different approaches have been taken by the French Cour de cassation (Civ.1, 19 December 2018, n°17-28.951) and the ECJ in Assens Havn v. Navigator Management UK Ltd (13 July 2017, C-368/16) and KABEG v. MMA IARD (20 July 2017, C-340/16).
The case submitted to the Cour de cassation represented a third party exercising a direct right of action before French Courts against the insurer of a floating barge which had caused him a damage. The Supreme Court accepted that the insurer could validly oppose the arbitration clause, which was in the policy against the third party, and therefore judged that French Court had no jurisdiction to decide on the case. The Supreme Court applied the well-established principle of Compétence-Compétence – materialized in article 1448 of the French Code de Procédure Civile – to stay the case, considering that the arbitration clause could not be set aside. The Court therefore judged that the applicability of the arbitration clause should be determined by the arbitrators by priority.
A year before, the ECJ had ruled in the opposite direction in a case where a jurisdiction clause was applicable in the insurance policy. In Assens Havn v. Navigator Management UK Ltd, the ECJ stated that the clause could not be opposed to the third party acting directly against the insurer. According to the Court, the insurers’ liability towards the insured has a contractual nature when based on the policy, whereas it is extra-contractual when the liability is based on a direct action from a third party. In a previous ruling the Court had considered (Sté financière et industrielle du Peloux (12 May 2005, C-112/03) that the jurisdiction clause cannot be opposed to the beneficiary of an insurance policy if he is not the policyholder (for instance in a collective insurance).
One sees a clear difference in treatment between arbitration clause and jurisdiction clause when it comes to deciding on their opposability to the victim exercising a direct action against the insurer.
Article 2061 paragraph 2 of the Civil Code states that an arbitration cannot be opposed to a party which has not contracted for the purpose of its business activity. The French Cour de cassation grounded its decision on the fact that the clauses of the main contract could be opposed to the third party. If the latter was entitled to apply the insurance contract, it was therefore entitled to invoke article 2061 paragraph 2 of the Civil Code.
On 29 March 2019 new amendments to the federal law “On arbitration in the Russian Federation” entered into force. This law regulates the order of establishment and activities of arbitration courts and permanently acting arbitration institutions (PAAI) in Russia and applies to resolution of both international and local disputes by arbitration in Russia.
The key amendments relate to granting of rights to foreign arbitration centers to perform functions of PAAIs in Russia. Earlier such rights were granted by the government, but as from 29 March 2019 such functions were transferred to the Ministry of Justice. Ministry of Justice grants the rights to perform functions of PAAIs in Russia to foreign arbitration centers based on recommendations received from the Council on improvement of arbitrations.
As of 31 March 2019, there are only 4 (four) PAAIs authorized to administer disputes by arbitration in Russia and all of them are Russian organizations. In accordance with the latest news the Hong Kong International Arbitration Center (HKIAC) is the first international arbitration center that has recently received a recommendation from the Council on improvement of arbitrations to establish PAAI in Russia and has been approved by the Ministry of Justice to establish PAAI in Russia. In accordance with the law an arbitration center is included in the list of PAAIs in Russia within 15 days from the date of approval by the Council, i.e. by the end of April 2019 HKIAC could become the first international arbitration center authorized to administer international disputes in Russia.
Another issue that should be carefully considered by choosing an arbitration center relate to resolution of disputes between companies established in Russia (local disputes) by international arbitration centers not included in the list of PAAIs in Russia and not authorized to consider local disputes in Russia.
Though there is no direct prohibition established by the Russian law to settle disputes between Russian companies by foreign arbitration centers with the seat of arbitration outside of Russia, the possibility of referral of local disputes to foreign arbitration centers is still questionable. In one of the court decisions that caused disputes in legal community (case# А40-219464/16-52-430) the Russian court of first instance ruled that resolution of local disputes by the foreign arbitration institutions violates public policy in Russia. Notwithstanding the fact that such ruling was dismissed by the higher court instance the risk that the Russian courts might deny recognition of awards of foreign arbitration institutions not included in the list of PAAIs in Russia and not authorized to consider local disputes in Russia cannot be excluded.
Therefore, in situations when the disputes arise between companies established in Russia it would be reasonable to choose arbitration institution included in the list of PAAIs in Russia and authorized to administer local disputes in Russia or, alternatively, agree on resolution of disputes by the Russian commercial courts.
Takeaways
- if you agree in international contracts that the seat of arbitration is in Russia, it would be reasonable to choose the arbitration center included in the list of PAAIs in Russia and authorized to resolve international disputes in Russia.
- If you agree in local contracts to resolve disputes by arbitration, it would be reasonable to choose the arbitration center included in the list of PAAIs in Russia and authorized to resolve local disputes in Russia.
Arbitration is a well-known system for dispute resolutions, and works as an alternative to judicial procedures. Parties are free to choose this system and to submit their conflicts to specific arbitrators or institutions.
It is usually considered that arbitration is a good way to solve conflicts but preferable to those arisen between big corporations or involving important amounts of money. Although this assumption is generally accepted, there is an alternative for distribution disputes suitable for smaller companies and cases with lower amounts claimed.
And here is the essential question: why a manufacturer/franchisor or a distributor/agent/franchisee should choose a specialized arbitration for their agreements instead of a more general one or, even, a judicial procedure? The answer seems clear: an arbitrator with knowledge not only in procedural questions but in substantive matters will be able to better understand the conflict between the parties and, therefore, to grant a better award. Take into account that, for instance in my Country, Spain, a Judge of First instance can deal in the same day with a distribution contract, a construction case, a conflict between heirs, and a discussion in a community of owners. All of this requires the analysis of different facts and completely different legislations and it is true that specific commercial problems do not usually have judges experts in international trading. But, how to choose a good specialized arbitrator? And, how to choose the arbitral procedure and the institution in terms of organization, neutrality, costs and time?
The IDArb was created in 2016 by the International Distribution Institute (www.idiproject.com) in collaboration with the Chambre de Commerce d’Industries et de Services de Genève (CCIG www.ccig.ch) and the Swiss Chambers’ Arbitration Institution (SCAI www.swissarbitration.org) and offers to the distribution sector (distribution, agency, franchising, selective distribution) a specialized, expedited and affordable arbitration procedure, not only for big international corporations but also for smaller cases. In fact, the expedited procedure is particularly foreseen for amounts below one million CHF (approx. 880.000 €).
The objectives and main characteristics of IDArb which make it suitable for all the distribution disputes are:
- A list of specialized arbitrators experts in this particular field is available for ad hoc or institutional arbitration and IDArb is able to assist the parties to choose one of them.
Specialized arbitrators from different countries and legal cultures have been appointed by a Selecting Committee reviewing their experience in one or more fields of distribution law. Therefore, parties can trust that the arbitrator will have concrete skills in the business with an in-depth understanding of the disputed issues. This is not a general knowledge on commercial law, but a concrete one on distribution, expressly verified by the Committee. Parties can even examine some examples of cases in which every arbitrator has been involved in.
- In order to maintain its high quality, the IDArb organizes training seminars for its appointed arbitrators. In these seminars, they are able to discuss about the general management of the arbitration, the procedural aspects and how to solve possible incidents in collaboration with the Institutions and their Rules. This will make all the proceedings more manageable and the possible difficulties more easily solved. Last seminar took place in Geneva in November 8, 2018 and participants have discussed, amongst other subjects, on evidences, witnesses and document production.
- The expedited arbitration procedure permits the parties to have a tailored procedure managed by SCAI under the Swiss Rules of International Arbitration, specially adapted for small disputes in the field of distribution.
- Time is also an essential element: the award in the expedited procedure will be issued in a maximum term of six months (only exceptional circumstances permit the Court to extend such time-limit), and, if parties agree, it can be decided only on documentary evidence.
- Costs are reasonable and known in advance.
- And, as final but important remark, IDArb has also adopted some recommendations where, upon request of the parties, mediation is favoured, the arbitrator my consider giving a preliminary non-binding and provisional assessment of the dispute and should have a pro-active position in order to facilitate an amicable settlement.
To have further information about the clause to use in the contracts, the list of specialized arbitrators, their skills, experience and complete CV, and the recommendations for expedited arbitration, you can follow the link: https://www.idiproject.com/content/idarb-idi-arbitration-project
State commercial court in Russia is named in the Russian language – Арбитражный суд. This name of the state commercial court is often translated into English as Arbitration court. Such translation in its turn often causes actual misunderstanding between the parties, since the Russian party will most probably consider the term “Arbitration court” as a state commercial court and the other (non-Russian) party might consider that it agreed to resolve disputes by arbitration rather than in a state court.
Below are some examples of dispute resolution clauses specified by the parties in commercial contracts that caused actual misunderstanding:
“…if there is no agreement, any disputes and claims between the parties relating to the contract will be resolved by arbitration under the Rules of International Chamber of Commerce in Moscow by one or more arbitrators appointed in accordance with the said rules. The Arbitration court shall use the Russian law.”
“…if a dispute is not resolved within 30 days of written notification of the dispute by one party to the other, anyone of the parties may submit the dispute arising out of or in connection with this agreement shall be finally settled under the Rules of Arbitration of the Moscow City Arbitration Court”.
The wording of such clauses and its translation, specifically translation of the term “Arbitration court” might result in resolution of claims by the state commercial courts in Russia, rather than by arbitration. In such situations failure of the non-Russian party to defend itself in the Russian state commercial courts might lead to serious negative consequences.
One of the well-known arbitration institutions in Russia – the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation recommends the following arbitration clause:
“Any dispute, controversy or claim which may arise out of or in connection with the present contract (agreement) [in case a separate arbitration agreement is concluded a particular contract (agreement) is to be indicated], or the entering into force, conclusion, alteration, execution, breach, termination or validity thereof, shall be settled by arbitration at the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation in accordance with its applicable regulations and rules. An arbitral award shall be final for the parties. It shall not be allowed to submit a motion to a state court to make a decision on the lack of jurisdiction of an arbitral tribunal in connection with the issuance by the arbitral tribunal of a separate order on existence of jurisdiction as a matter of preliminary nature”. (http://mkas.tpprf.ru/en/documents/)
As you can see the full name of the arbitration institution is “International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation” and using its short name “Arbitration court” might result in resolution of disputes by the state commercial court.
Another situation is when the parties actually wish to resolve commercial disputes in a state commercial court in Russia but fail to specify the name of the state commercial court correctly. Believe it or not, but there are many lawyers who consider Russian state courts as an effective and less expensive judicial body to resolve commercial disputes as opposed to arbitration.
There was one interesting case mentioned by the Supreme Court of Russia in this regard in its recent overview of court practice on resolving of disputes connected with protection of foreign investors in Russia.
A foreign company filed a claim with the state commercial court in Russia against another foreign company. The court determined that the parties of the dispute concluded prorogation agreement (choice of forum clause) in accordance with which all disputes arising from the specified contract and in connection with it shall be resolved in the courts of general competence of Russia.
The state commercial court of first instance considered that it lacked jurisdiction to resolve this case, because the parties did not agree to resolve their disputes in the state commercial courts, with that the courts of general competence do not resolve commercial disputes between companies in Russia. As a result, the court of first instance returned the claim to the claimant due to the lack of competence of the state commercial court to resolve this dispute.
In the appeal claim the claimant argued that the prorogation agreement was unenforceable, since the court specified by the parties (the courts of general competence) do not consider commercial disputes of legal entities in Russia. The foreign company also argued that there was a close connection of the dispute with the territory of the Russian Federation, and therefore the state commercial court had competence to consider this case.
The appeal court dismissed the ruling of the court of first instance and the case was returned for re-consideration to the court of first instance based on the following grounds.
The appeal court ruled that the enforceable prorogation agreement shall provide possibility to determine the actual intent (true intent) of the parties regarding competence of the state court to resolve disputes.
The appeal court determined that the prorogation agreement agreed by the parties was unenforceable, since such agreement failed to determine the intent of the parties to resolve disputes in a specific court or a system of competent state courts where the specific state court shall be determined based on the rules of internal competence of courts.
The appeal court further ruled that if prorogation agreement is unenforceable the competent court of the Russian Federation shall use general rules of competence of state commercial courts of the Russian Federation set forth in the Commercial procedural code of the Russian Federation.
In this specific case the subject of the disputed transaction was a sale of share in the charter capital of the company registered at the territory of the Russian Federation. The appeal court in this case established close connection of the dispute with the territory of the Russian Federation and ruled that the state commercial court was competent to consider such dispute.
Therefore, if the parties of the contract fail to correctly stipulate the specific state commercial court to consider their disputes in Russia, such prorogation agreement (choice of forum clause) might be considered by the state commercial court in Russia unenforceable and the claim might be returned to the claimant due to the lack of competence of the state commercial court to resolve such dispute.
Conclusions
If you wish to resolve disputes in the state commercial court in Russia, make sure that the full name of the state commercial court is specified correctly.
If you wish to resolve disputes by arbitration in Russia it would be reasonable to use a recommended arbitration clause of respective arbitration institution.
And, of course, be sure to check translation of the English version of the contract into Russian.
