Supreme Commercial Court: Provisional Arbitral Awards Are Not Enforceable in Russia
In a recently published decision, the Presidium of the Russian Supreme Arbitrazh Court (“SC”) held that provisional awards of arbitral tribunals are not enforceable in the Russian Federation. The SC said Russian law only provides for enforcement of awards that are final and actually resolve the substance of the dispute.
Facts of the case
Living Consulting Group AB (“Living Consulting”) instituted proceedings against Sokotel LLC (“Sokotel”) under SCC Rules. Respondent refused to pay its portion of advance on costs, with the claimant ultimately paying the whole sum. Subsequently the arbitral tribunal issued a separate award ordering Sokotel to reimburse the relevant part of the advance on costs to Living Consulting. Living Consulting applied to the Saint Petersburg Arbitrazh Court for recognition and enforcement of the award and in December 2009 the Court decided to grant enforcement. The Federal Arbitrazh Court for North-Western Circuit upheld this decision on appeal. Sokotel then sought supervisory review of those decisions by the SC.
Decision of the SC
Reviewing the decisions of the lower courts the SC held that they erred by recognizing provisional awards of arbitral tribunals are enforceable. The Court relied on the definition of an arbitral award in the Russian Law on International Commercial Arbitration, which encompasses only awards, which resolve the substantive claims of the parties. According to the SC: “arbitral awards, unlike other decisions issued by the arbitrators, terminate the consideration of the substance of the case in full or in part.”
The SC further relied on Article V(1)(e) of the New York Convention, which provides that national courts may refuse enforcement of an arbitral award if it is shown that the award is not final. The SC then noted that the separate award in question constituted a provisional allocation of costs as between the parties with the final allocation being reserved for the final award. The SC went on to hold that:
…subject to enforcement are only those arbitral awards, which relate to the procedural resolution of the dispute on the merits and are issued upon completion of all of the arbitral proceedings.
the said rules [on enforcement of arbitral awards] do not apply to provisional arbitral awards, including arbitrators’ awards issued on other procedural matters (recovery of costs, determination of competence, provisional measures).
Such awards are not to be enforced in the Russian Federation.
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It must be observed that in the past Russian courts have refused enforcement of provisional measures orders or decisions of foreign courts and arbitral tribunals. However, the position taken by the SC in this case constitutes the clearest and most comprehensive statement of the current position with respect to enforcement of provisional awards in Russia. Further, this position will likely affect future lower court practice, because the SC held that its legal reasoning in this case is binding and should be followed in similar cases.
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Some uncertainly remains as to how this decision would relate to enforcement of partial, not provisional, awards, i.
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e. finally-resolved awards, but rendered in separate parts. On the one hand, the SC referred to the definition of arbitral awards which encompasses awards revolving part of a dispute, while on the other it held that only awards rendered upon completion of all arbitral proceedings are enforceable.
Download English translation of the Resolution as a separate file (translation by CIS Arbitration)
Download the Resolution in Russian
Sergey Usoskin
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