London Branch and the Anglo Russian Law Association: Arbitration and Mediation in Russia and the CIS

L-R: Valikhan Shaikenov, Partner and Head of Dispute Resolution at Aequitas; Olena Perepelynska; Partner and Head of CIS Arbitration at Integrites (Kyiv); Paulius Docka, of Counsel, Primus Derling; Paul Rose, Chair, London Branch; Artem Doudko, Partner and Head of Russia and CIS Disputes, Osborne Clarke, and Oleg Todua, senior associate at White & Case.

On 23 May 2019, CIArb’s London Branch and the Anglo Russian Law Association jointly held a seminar entitled “Arbitration and Mediation in Russia and the CIS”. The event was hosted by Osborne Clarke LLP.

Paul Rose, Chair of the London Branch, welcomed attendees and thanked the convenor, Daniel Djanogly, for organising the event.

Artem Doudko, moderator, explained that the distinguished speakers would discuss developments in the use of arbitration and mediation in Kazakhstan, Ukraine, the Baltic states of Lithuania, Latvia and Estonia, and Russia.

Valikhan Shaikenov discussed Kazakhstan, which he compared with countries where the arbitration framework is long-established. There is little commentary and few precedent cases to guide arbitrators in their decision-making. The legal framework for international arbitration is unclear in some respects e.g. Kazakhstan is a signatory to the New York Convention, but it is unclear if it has the status of a ratified treaty or something less. Scholars differ in their view on whether arbitration is purely contractual or has a public law aspect; and the implications of legal changes in July 2018 are still being worked through. This state of development may explain the number of Kazakh commercial disputes reaching the commercial court in London.

Olena Perepelynska discussed Ukraine. She highlighted a number of major changes in arbitration law in Ukraine in 2017. These include a streamlined process for court interventions, a presumption in favour of the validity of an arbitration agreement, and judicial tools to support arbitration e.g. to take and preserve evidence. A new Supreme Court established in December 2017 has been applying the best practices of foreign arbitration-friendly courts. In the last 4 years, the success rate in settling aside awards of the ICAC (the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry) is very low – only 1 of 67 awards was set aside.

Paulius Docka discussed Lithuania, Latvia and Estonia. He opened by saying that there are substantial differences between the various Baltic countries. Lithuania has adopted the UNCITRAL Model Law, and a Lithuanian arbitration would feel very much like a London arbitration. Arbitrations are largely conducted through one institution, the Vilnius Court of Commercial Arbitration. In contrast, Latvia has developed its own arbitral rules and system, which differ substantially from the UNCITRAL model. Arbitrators must be legally qualified. There are over 60 arbitral institutions. It is difficult to challenge an award even if there is a breach of the New York Convention. Estonia has not embraced arbitration, and most commercial disputes in Estonia are heard in court, which is preferred by advisers and the parties.

Oleg Todua discussed Russia, and reported on some recent important changes, including that some types of commercial dispute may only be heard by arbitral institutions that have been licensed by the government. It is not clear whether this was intended to apply only to arbitrations with a Russian seat, or also international arbitrations. The HKIAC (Hong Kong International Arbitration Centre) has obtained a licence for international arbitrations only. Some interesting jurisdictional questions may arise as to when a dispute involving Russian parties is international for this purpose. As regards enforceability of foreign awards, there has been an 80-90% success rate over the last 10 years, but with increasing emphasis on public policy concerns, this has recently fallen to 60%. The May 2019 case of Drass Galeazzi v Lazurit CDB, is an example, where the court considered on public policy grounds a notice had been inadequate and the damages awarded were excessive. The courts have also recently considered the enforceability of an award rendered under a commonly-used but ambiguous arbitration clause in Asida-Pharma v Ortat.

There followed a wide-ranging Q&A session, during which the panel noted that mediation has not yet come of age in the countries discussed due to cultural challenges, and is relatively rarely used in commercial disputes. A drinks reception was kindly hosted by Osborne Clarke LLP.