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In late November 2018, the Russian Arbitration Association (“RAA”) published a detailed study on the application of the New York Convention in Russia between 2008 and 2017. The Working Group of the RAA analysed 10 consecutive years of case law on the recognition and enforcement of foreign arbitral awards in the Russian courts. The study provides valuable statistical data on the success rates of Russian enforcement proceedings under the New York Convention and uncovers interesting trends for those looking to enforce in the jurisdiction.

Key findings

With the support of lawyers from Russian and international law firms, the RAA Working Group identified 472 publicly available rulings on the recognition and enforcement of foreign arbitral awards between 2008 and 2017.

The study lists a number of key findings:

  • Between 2009 and 2017, the overall success rate of recognition and enforcement applications in the Russian commercial courts fluctuated between 80% and 97%. These numbers exclude applications which were not considered by the courts due to, for example, the set of supporting documents not being complete, or the parties reaching settlement before the court's decision on the application.
  • Defendants most commonly opposed enforcement on the following New York Convention grounds: violation of public policy (Article V(2)(b)), lack of proper notice or inability to present the case (Article V(1)(b)) and excess of mandate by the arbitrators (Article V(1)(c)).
  • Out of 472 cases from 2008 to 2017, the public policy ground was invoked by the parties in 49 cases and by the court in 2 cases. The public policy ground was successful in 39% of all cases in which it was invoked.
  • Higher amounts awarded tended to correlate with a higher likelihood of refusal to enforce.
  • Higher instance courts tended to refuse more enforcement applications than lower instance courts.
  • The average time from the date of the enforcement application to the date of the final ruling was 5 months.

Features of Russian enforcement proceedings

The study also provides helpful detail on the features of the disputes which gave rise to Russian enforcement proceedings in the commercial courts between 2008 and 2017. Notably, in the 472 recognition and enforcement applications considered by the RAA:

  • 41.5% of claimants were Ukrainian and 21.4% were Belorussian.
  • More than 40% of the awards were rendered under the institutional rules of the Ukrainian International Commercial Arbitration Court ("Ukrainian ICAC"), and more than 20% by the Belorussian International Arbitration Court ("Belorussian IAC"). By contrast, only 3.6% of awards studied were rendered under the LCIA rules and 3.4%, under the ICC rules.
  • Ukraine was the seat of the arbitration in 41.3% of cases, and Belarus in 21.1% of cases. By contrast, only 6.1% of the enforcement proceedings identified were brought in relation to arbitrations seated in England.

The RAA study does not individually set out the success rates under each set of institutional rules, although a subsequent study of the RAA's data has concluded that between 2008 and 2017, the success rate of recognition and enforcement applications was 61% for awards under the ICC rules and 47% for awards under the LCIA rules[1]. Despite the relatively small sample size for ICC and LCIA awards, it does indicate a difference in success rates depending on the location of the arbitral institution.

The relevance of the award's provenance is confirmed by another study which builds on the RAA's work and indicates that the overall success rate of enforcement applications to the Russian courts fell to 61% in 2018[2]. (However, if applications to enforce Ukrainian ICAC awards are excluded, then the success rate for 2018 increased to 77%.)

The amount at issue was also important as success rates for 2018 dropped from 93% for enforcement applications below €1 million to 77% for applications between €1 and 10 million, and 34% for applications above €10 million.

Comment

The RAA survey, and subsequent analyses, give a helpful insight into both the types of international arbitration awards that have been presented for enforcement in the Russian commercial courts, and – at a high level – the approach of the Russian commercial courts to such questions of enforcement.

Although the findings demonstrate a generally positive picture of the Russian courts' approach to enforcing foreign awards, that picture appears to reflect a caseload dominated by lower value trading disputes and awards issued by chambers of commerce in neighbouring CIS jurisdictions. What is perhaps equally significant, at least from a London perspective, is the relatively low level of attempts to enforce LCIA and ICC awards through the Russian courts, and the lesser success rate when this was attempted.

As always in cross-border dispute resolution, this underlines the importance for parties and their advisers to consider enforcement options as an integral part of any dispute resolution mechanism.

[1] See https://globalarbitrationreview.com/article/1179107/mixed-messages-developments-in-recognition-of-foreign-arbitral-awards-in-russia

[2] See http://arbitrationblog.practicallaw.com/enforcement-of-foreign-arbitral-awards-in-russia-what-we-can-learn-from-recent-statistics/.

 

For more information, please contact Nicholas Peacock, Partner (London), Alexei Panich, Partner (Moscow), Alexander Khretinin, Senior Associate (Moscow), Rebecca Warder, Professional Support Lawyer, or your usual Herbert Smith Freehills contact.

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