Russia calls to overturn foreign rulings prompt strong criticism.

15.06.2012

Top court moots powers to set aside foreign arbitration awards

International arbitration awards could be set for challenges in the Russian courts after the head of the country’s Supreme Commercial Court called for powers to overturn foreign rulings if they are not in the national interest.

At a conference in St Petersburg last month, Anton Ivanov said Russian judges should have the power to set aside arbitral awards made in overseas jurisdictions if they are felt to unfairly prejudice Russian parties. He also proposed customs penalties for states thought to have negatively impacted Russian investments overseas, and also criticised the seizure of Russian assets by foreign courts.

Local partners have warned that Prime Minister Dmitry Medvedev’s support could push the proposals into law, after he described the proposed measures as “a civilised means of resolving issues”.

One Russian partner at an international law firm commented: “This is an absolutely shocking statement. Russia is party to the New York Arbitration Convention, and we have to abide by those rules. We were making progress towards arbitrations being honoured as in any civilised legal system, but this retrograde step is almost Stalinist. It makes me feel deeply ashamed to be Russian.”

Pinsent Masons litigation partner Yuri Botiuk added: “If these comments on Russia having overriding jurisdiction on ‘Russian matters’ were made law, the potential impact on foreign direct investment would probably be too high a price to pay.”

Multinationals with Russian holdings could be affected if laws were changed in line with Ivanov’s proposals, as any attempt to seize overseas assets of a Russian entity could result in the seizure of equivalent assets in Russia.

Goltsblat BLP managing partner Andrey Goltsblat (pictured) cautioned: “It is confusing what is meant by these proposals – how can you legally implement them? Russia doesn’t want to cause problems at the moment, as there are a number of high-profile court cases going on in other jurisdictions. We need to improve the Russian legal system before we can fully attract parties to arbitrate here.”

Author: Rose Orlik

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