Russian Government to Consider Arbitration Law Reforms in Response to Report from TheCityUK
23 March 2012
LONDON, 23 MARCH 2012 - A report launched today by TheCityUK has found that significant reforms of Russia's arbitration law and practice will be needed if Moscow's ability to handle international commercial disputes is to match its ambitions to become a key global financial centre.
The Interim Report of the Alternative Dispute Resolution (ADR) Work-Stream is now being reviewed and considered by the Russian government, who will respond later this year.
The report examines ways in which alternative dispute resolution (ADR) in Russia may be improved in order for Moscow to serve as an international financial centre.
Key findings from the report include:
• A strong arbitral institution in Moscow is required that is capable of handling major international disputes.
• Over eighty commercial courts spread throughout the territory of the Russian Federation can be called upon to enforce foreign arbitral awards. This, together with the fact that there is no formal system of case law precedent in Russian law, means that there can be inconsistency in the ways in which the norms of the New York Convention are applied.
• The Russian courts are prone to applying a restrictive interpretation to the question of what types of disputes are arbitrable.
• Russia still does not enjoy the reputation or user confidence of a leading arbitration jurisdiction. More often than not London, Stockholm or Geneva is chosen as the forum for resolution of large-scale Russian disputes.
Alexander Scard, Counsel at Hogan Lovells' Moscow office and one of the authors of the report, said:
"With the political will that now exists to make Moscow an attractive place for foreign investors, the time is ripe to introduce a comprehensive package of reform which will address some of these issues that have tended to tarnish the image of arbitration in Russia.
"It should be acknowledged that some reform of arbitration law in Russia is already underway - but many contend that the amendments do not go far enough as they make a number of significant omissions, such as a provision to give the Russian court the power to enforce an interim measure which has been made by an arbitral tribunal in Russia.
"Issues relating to arbitrability and the application of the public policy concept in the non-enforcement of arbitral awards could also be subject to reform, whether through legislation or the guidance of the higher courts."
The Interim Report adopts a comparative approach by analysing the current climate for ADR in Russia and contrasts this with best practice in certain other leading jurisdictions.
The report was written for on behalf of TheCityUK's UK-Russia Liaison Group for the Moscow as an International Financial Centre initiative. The initiative is co-chaired by the Rt Hon. Lord Mayor of London, Alderman David Wootton and Alexander Voloshin, head of the Russian government's taskforce on the creation of a financial centre.
It was prepared by representatives of Hogan Lovells, Herbert Smith, Muranov Chernyakov & Partners and White & Case, under the chairmanship of Khawar Qureshi QC.
The final report will be presented at the next meeting of the initiative's governing body in Moscow in July. The full interim report can be found at www.thecityuk.com
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